HANOI - The Group of Seven (G-7) industrialised nations will provide US$15.5 billion (S$21 billion) to help Vietnam transition away from coal, the British foreign office said on Wednesday.
The deal, previously reported by Reuters, will be the third agreement of this type reached by G-7 nations, as pressure mounts on rich, polluting nations to help poorer countries cope with climate change and transition to cleaner energy.
The group signed similar deals last year with South Africa and last month with Indonesia.
An initial amount of US$15.5 billion in public and private finance will be disbursed over the next three to five years, the British foreign office said in a statement. The French presidential office also confirmed the deal in a statement on Wednesday.
The deal will help Vietnam to peak its greenhouse gas emissions by 2030, bringing forward a previous 2035 projection, limit its peak coal capacity to 30.2 gigawatts (GW) instead of an initially planned 37 GW, and source 47 per cent of its power from renewable energy by 2030, the statement said.
“Today, Vietnam has demonstrated leadership in charting an ambitious clean energy transition that will deliver long-term energy security,” US President Joe Biden said in a statement.
The deal is backed by Denmark and Norway, which are not G-7 members.
Vietnam, among the world’s top 20 coal users, was initially slated to sign the “Just Energy Transition Partnership” with G-7 nations at the global COP27 climate summit in November, but high-level talks stalled before the meeting.
To persuade Vietnam to back the offer, Western negotiators led by the European Union and Britain have repeatedly increased the amount of funding offered to Hanoi.
Half of the package will take the form of mainly loans from country donors, with the other half coming from a group of investors known as Glasgow Financial Alliance for Net Zero. The funding will go toward cleaning up Vietnam’s power sector by moving away from coal, one of the dirtiest fossil fuels.
A minor part of the funding will be grants, said a source, declining to be named because they are not allowed to speak to the media.
The G-7‘s deal with Indonesia promised US$10 billion in public funds to shut down coal plants there and bring forward the sector’s peak emissions by seven years to 2030. South Africa was promised US$8.5 billion.
Vietnam’s Environment Ministry did not immediately respond to a request for comment.
A key concerns by environmental groups leading up to the deal was that it would overlook jailed activists in the country. The agreement will have a reference to building “societal consensus” but the money will not be conditioned on the release of activists, according to a person familiar with the matter.
Two further partnerships with Senegal and India are being lined up for next year.
REUTERS, BLOOMBERG
