The G7 countries, Norway, Denmark, and the EU have announced that they will mobilise US$15.5bn in public and private finance over the next 3 to 5 years to support Vietnam's 2050 net zero goals and help the country transition away from fossil fuels, under a new Just Energy Transition Partnership (JETP).
The deal is also intended to support Vietnam’s new target of accelerating the peaking of greenhouse gas (GHG) emissions to 2030 (from 2035 previously) and reducing its peak annual power sector emissions by up to 30%, to 170 MtCO2eq from 240 MtCO2eq. Under the agreement, Vietnam will also limit its peak coal capacity to 30.2 GW instead of an initially planned 37 GW, and source 47% of its power from renewable energy by 2030 (against 36% previously).
Contributions to the JETP include US$7.75bn in pledges from rich nations, the Asian Development Bank and the International Finance Corporation, while private financial institutions under the Glasgow Financial Alliance for Net Zero (GFANZ) committed to work to mobilise the rest.
This JETP is the third one signed by the G7 countries with a developing country, following similar deals signed with South Africa (US$8.5bn) in 2021 and with Indonesia (US$20bn) in November 2022.
Vietnam is still very reliant on coal for its power generation. At the end of 2021, coal represented around 1/3 of the country’s installed capacity with nearly 24 GW. In 2020, about 50% of Vietnam’s power generation came from coal with nearly 123 TWh. In November 2022, Vietnam released its updated nationally determined contribution (NDC) in which the country increases its unconditional GHG emissions reduction target to 15.8% by 2030 relative to a business-as-usual scenario from the reference year 2010. Conditionally to international support and financing, through bilateral and multilateral cooperation, Vietnam has set an emissions reduction target of 43.5% by 2030. In its new NDC, Vietnam also reiterated its intention to reach carbon neutrality by 2050.
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