Vietnam boosts coal and rejects 14 billion to reduce dependency

Stalemate in negotiations with Hanoi for the 3rd Energy Partnership Agreement for the right transition

(sustainabilityenvironment.com) – Vietnam boosts coal in the electricity mix with the new energy plan to 2030, slowing the expansion of renewables. The decision puts a brake on negotiations with the G7 countries to facilitate the phasing out of the most polluting fossil fuel. Negotiations were to close at the COP27 in Sharm el-Sheikh, where 11 to 14 billion dollars were offered in Hanoi to set a fair transition along the lines of what was already agreed with South Africa and Indonesia.

Two points weigh on the turn of Vietnam. The first concerns the pace and breadth of the decarbonization process, and the other is the nature of the funds promised. On the first front, Hanoi does not want to risk damaging the economy, on the second it fears ending up like South Africa, which has found itself with 97% of the funding in the form of loans, without any balance with subsidies. The issue is very sensitive for the executive: so much so that last year some environmental activists were imprisoned including Nguy Thi Khanh, the leader of the anti-carbon campaign.

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The G7 offer, formulated by Europe and Britain, provided for 5 to 7 billion dollars in loans and grants and the rest to be recovered from the private sector. The country of almost 100 million inhabitants has for decades one of the growth rates of the demand for primary energy and electricity among the highest in the world that are met especially with coal. This source 2021 met 51.5% of the national energy needs. With little prospect of rapid decrease since this coal comes almost entirely from domestic deposits.

With the agreement for the right transition has come to an end – at least for the moment – the Hanoi government has circulated a draft of the new national energy plan for 2030. Where the Vietnam boosts coal use is delayed to 2045 and, by the end of the decade, the share of this fossil source in the country’s energy mix is expected to expand. The increase in installed capacity from 21 GW in 2020 to 30 in 2025 until 36 in 2030, was achieved with the construction of at least 11 new coal-fired power plants in this decade.