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Vietnam charts uncertain coal path as finance falls short

Vietnam’s just energy transition partnership plan has no timeline for retiring coal, as backers offer mainly commercial loans, not grants

By Matteo Civillini

When Vietnam and a group of rich countries struck up a $15.5 billion energy transition deal nearly a year ago, they set out an enticing prospect: cheap financing would help the nation leave coal behind. 

But, as vague ambitions now turn into concrete plans, the reality looks rather different.

A timeline for the early closure of coal power plants is absent from the investment blueprint for the Just Energy Transition Partnership (Jetp) unveiled at a Cop28 side event on Friday. The government expects instead to operate plants “flexibly” and to rely on the controversial co-firing of biomass and ammonia with coal.

Rich countries have also largely backtracked on their initial promise to offer financial support on more attractive terms than Vietnam could already secure from investors. Nearly 60% of the money will be provided as commercial loans, while the tiny share of grants available is primarily earmarked for technical support, the 223-page document shows.

Leo Roberts, a coal transition expert at E3G, said there are “major reasons” to be concerned.

“The investment plan is no longer the pathway to replacing coal power with clean alternatives the Jetp originally promised. Instead, it focuses on expensive or unproven technologies,” he added. “Those directly undermine the pace and scale of the energy transition.”

Hydropower push

Nearly a year after the initial announcement, Vietnam’s prime minister Pham Minh Chinh has mapped out how Vietnam aims to spend the $15.5 billion pledged by G7 nations to boost the deployment of renewables and cut dependence on coal.

Under the agreement, Vietnam aims to peak its emissions by 2030 – five years earlier than planned – and source close to half of its power from renewable energy within the same timeframe.

The development of dozens of hydropower projects across the country forms the backbone of the government’s strategy to hit the targets. A significant proportion of the donors’ money is already directly allocated to those projects. While the plants are a source of low-emission energy, the construction of dams and reservoirs has caused social and environmental issues in the country, including displacement and water scarcity.

The Vietnamese government also plans to expand its power grid, bolster battery storage, and invest in offshore wind and solar.