Negotiations to secure US$11 billion in funding to help Vietnam shift its economy off coal are in the home stretch, with the country’s debt wariness and donor concerns about suppression of dissent among the thorny issues still to be resolved.
Odds are that the Southeast Asian country will soon follow Indonesia and South Africa in obtaining a climate financing package to help it kick coal and boost the rollout of renewable energy sources, reports Bloomberg. Vietnam and donor countries—led by the European Union and the United Kingdom—are expected to announce a Just Energy Transition Partnership (JETP) deal at the EU-ASEAN summit in Brussels this December.
The funding deal could total between $11 and $14 billion, says Bloomberg, with $5 to $7 billion coming from loans and grants, and the rest from private investors that include the Glasgow Financial Alliance for Net Zero (GFANZ).
“About 85% of the package has been done, but the issue of decarbonizing the country’s power sector still needs to be finalized,” Bloomberg says. Vietnam’s current electricity mix consists of 34% coal, 31% hydropower, including imports from neighbouring Laos, 24% solar, and 15% gas turbines and oil-fired thermal, with biomass and wind supplying 1% each.
This last may be set to increase substantially as Vietnam’s “2,000 miles of coastline are seen as ideal for generating wind power,” Bloomberg says.
But “key members of the country’s leadership still need to be won over,” the news story states. Sticking points include a disagreement on the amount of funding coming from grants and how much debt Vietnam will agree to. Even at “highly concessional rates,” Bloomberg says, Vietnam is skittish about taking on more debt.
And then there are the anti-coal activists languishing in its jails. It’s “not clear that a deal can be reached” without Vietnam releasing the activists, who supporters say are imprisoned on trumped-up charges of tax evasion.
If Vietnam’s funding package goes through, it will be the third time in just over a year that a coal-reliant middle-income country has been lent a significant financial and technical hand by wealthy nations to help its low-carbon transition. South Africa secured its $8.5-billion Just Energy Transition Partnership at COP 26 in Glasgow, and Indonesia announced its own $20-billion deal at the G20 meeting in Bali last week.