Vietnam is focusing on energy transition, after it has pledged to attain net-zero emissions by 2050 at the 26th Conference of Parties to the United Nations Framework Convention on Climate Change (COP26) in Glasgow in November 2021.
To this end, the country has the opportunity to seek external financial support to achieve its ambitious climate objectives, including funds from the UK for green transition and sustainable development, as per the Just Energy Transition Partnership (JETP).
Various notable steps have been taken by the Vietnam to boost its renewable energy capacity and the latest was the endorsement of the National Power Development Plan (PDP8), which set out to phase out coal-fired power, bolster the growth of renewable energy and new energy sources, and cut greenhouse gas emissions.
According to Phạm Nguyên Hùng, Deputy Director of the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade. The PDP8 offered significant opportunities for investment in green energy development in Vietnam.
He said, “Vietnam would need around US$135 billion to invest in the development of power sources and transmission grids by 2030 to realise this ambitious power plan. It was estimated that another $500 billion would be required for the 2030-50 period.”
“Under the PDP8, Vietnam would promote a just energy transition through increasing renewable sources to a proportion of 67.5 – 71.5 per cent by 2050 and reduce greenhouse gas emissions to less than 170 million tonnes in 2030, noted he.
The World Bank estimated that Vietnam would need a cumulative $368 billion through 2040, or 6.8 per cent of GDP, to pursue a climate-resilient and net zero emissions development pathway. The World Bank stressed that the commitments can and should be bolstered by the engagement of the domestic private sector and through external finance.
Given the limited public finance for climate ambitions, external finance was an important source of funding for Việt Nam to move towards a net-zero economy, Hung said.
It may be noted that in late August, Vietnam sanctioned a plan for the execution of the JETP, stressing that a resource mobilisation strategy would be implemented to draw international financial backing and technology transfer to hasten the green transition. As per the JETP framework with the International Partners Group, comprising the UK, a starting sum of at least $15.5 billion is set to be raised over the next three to five years using a mix of suitable financial tools to bolster Vietnam’s economy growth.
Considering UKVFTA, 2021, Vietnam has major opportunities to strengthen ties with the UK and tap into billions of dollars for its green transition journey. As per Nguyen Canh Cuong, Vietnamese Trade Counselor to the UK, said that enterprises from the UK had strengths in renewable energy, including wind power, solar power, sustainable agriculture, environment pollution treatment and green finance in which Vietnam was seeking to increase cooperation during the country’s green economy pathway.
As per local reports, it is a valuable opportunity for Vietnam to learn from and cooperate with the UK in the field of clean energy development. Recently, in July, both the nations have agreed to promote specific renewable energy projects with the participation of leading enterprises as platforms to exchange experiences and enhance cooperation.
Several investors, including those from the UK, were looking to invest in Vietnam’s renewable energy market. As per reports, in mid-May, British International Investment, the UK’s development finance institution and impact investor, announced plans to invest $15 million in a fund focusing on developing energy transition infrastructure for Southeast Asia, including Vietnam.
According to a report by the United Nations Conference on Trade and Development, Việt Nam ranked second among developing economies by international investment in renewable energy, with $106.8 billion registered to be poured into renewable energy projects in the 2015-22 period, accounting for 32 per cent of the total project value.
Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan said on the sidelines of the 13th APEC Energy Ministerial Meeting in August that the Vietnamese Government always encouraged and created favourable conditions for foreign investors to participate in the development of renewable energy projects in Vietnam and enhance the transfer of energy-efficient technologies.
According to Senior economist Vo Trí Thanh, it was critical for Vietnam to ensure transparency in electricity pricing. Also the country should not subsidise and oversubsidise sectors that consume traditional primary resources such as coal, oil and gas and the resource should be used to encourage green energy transition instead.
“In addition, policies should be raised to provide support to disadvantaged groups such as poor households and those in difficult circumstances to access clean energy,” he said.
The Ministry of Industry and Trade was speeding up the development of the Direct Power Purchase Agreement (DPPA) to attract investment in renewable energy development. Under PDP8, it aimed to increase renewable energy to 30.9 – 39.2 per cent of the total energy source by 2030 and 67.5 – 71.5 per cent by 2050.