The G7 initiative Just Energy Transition Partnership (JETP) has agreed to support Vietnam’s green energy transition and mobilise an initial US$15.5 billion of public and private finance over the next three to five years.
The partnership will work towards a series of targets, including the acceleration of renewable energy so that it reaches 47% of Vietnam’s electricity generation by 2030, instead of 36% currently planned, as well as reducing the peak coal capacity from the 37GW planned towards 30.2GW.
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Over the next 12 months, partner countries will work with Vietnam to develop and adopt a JETP Resource Mobilisation Plan that will enable the implementation of the funding.
This mechanism could potentially help the country resolve issues it has had with solar power in recent years after a boom between 2018-2020 that was abruptly stopped, in part due to its grid capacity issues.
The financing includes US$7.75 billion of public pledges from the International Partners Group together with the Asian Development Bank and the International Finance Corporation, while private sector financing will be coordinated by the world’s largest coalition of financial institutions, the Glasgow Financial Alliance for Net Zero (GFANZ).
GFANZ has established a working group with several financing entities – including Bank of America, Citi and HSBC, among others – to identify barriers to sourcing private investments and advocating for the necessary reforms to solve these barriers.
This is the third of such pledges from the JETP, with South Africa receiving US$8.5 billion of support in 2021 at the COP26 in Glasgow and Indonesia securing a US$20 billion deal, announced during COP27 in Egypt to support its coal phase-out.
Ursula von der Leyen, president of the European Commission, said: “With investments from international partners, Vietnam can boost renewable energies and enhance its energy security and autonomy. We will help Vietnam to start reducing its greenhouse gas emissions five years earlier than planned, and dramatically reduce its coal power use.”
Moreover, during an EU-ASEAN summit, the EU announced the mobilisation of €10 billion (US$10.6 billion) to accelerate infrastructure investments in Southeast Asia, with a focus on green transition and sustainable connectivity.
Within that package, two initiatives were launched – the Sustainable Connectivity Initiative and the Green Team Europe Initiative – with the first one aimed at supporting the Association of Southeast Asian Nations’ (ASEAN) electric grid interconnections to improve access to renewable energy and the investment in digitalisation, which includes connectivity via submarine cables for which it will have a funding of €1 billion.
“The Indo-Pacific region is becoming the new global centre of gravity. The Indo-Pacific generates 40% of global GDP and represents 60% of the world’s population,” said Josep Borrell, vice-president of the European Commission.