Capital mobilization for the Vietnam energy transition

The Government of Viet Nam will pursue an ambitious national effort under the Just Energy Transition Partnership (JETP) to ramp up renewable energy and accelerate the phasing out of fossil fuels.

>> Vietnam has opportunity for energy transition towards green growth

Recognizing the scale of the investment needed to deliver on these ambitious goals, the International Partners Group (IPG), co-led by the European Union and the United Kingdom, is committing to mobilize an initial $7.75 billion over a three-to-five year period to support the Government of Viet Nam in the implementation of the Viet Nam JETP.

Given the importance of ensuring that the leadership shown by the government of Viet Nam, with the support of the IPG, catalyzes significant private investment, the Glasgow Financial Alliance for Net Zero (GFANZ), the world’s largest coalition of financial institutions with ambitious science-based commitments to the net-zero transition, confirms today that it will work in support of these efforts, with a particular focus on the mobilization of private capital.

To this end, GFANZ has established a working group of net-zero-committed financial institutions. The initial Working Group members – Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, Mizuho Financial Group, MUFG, Prudential Plc, Shinhan Financial Group, SMBC Group, and Standard Chartered – have been working with partners in support of the Viet Nam JETP by identifying barriers to sourcing the necessary private investment, advocating for the reforms necessary to address those barriers, and identifying approaches that could help crowd in private finance at scale.

The financing needed to support transition is significant, and it will be imperative that serious levels of private finance are mobilized to meet the ambitious goals laid out in the Viet Nam Government and IPG JETP announcement. As firms commit to net zero, GFANZ members, including the named Working Group members, are seeking to ensure that there are transition-aligned financing opportunities around the world.

By working through the Viet Nam JETP, these firms and others with similar levels of commitment to unlocking transition finance have the opportunity to significantly increase the amount of finance allocated to transition-aligned companies and projects.

The GFANZ Working Group members have committed to working closely with the Viet Nam Government and the IPG toward the mobilization and facilitation of at least $7.75 billion in private finance in support of an ambitious transition path and investment plan. With collective ambition by all parties, including using public financing catalytically to crowd in private finance, the initial $7.75 billion commitment by the public sector has the potential to generate significantly more in private finance.

Ms. Mary Schapiro, vice chair of GFANZ, said: "Mobilizing capital to emerging markets and developing economies is critical if the world is to reach net zero emissions by 2050. Today’s announcement in Viet Nam is an important development and the latest example of how private finance can work with governments to secure a cleaner and more sustainable future. We look forward to working with the partners and delivering for the people of Viet Nam."

>> Challenges of energy transition in Vietnam

The commitment is subject to the involved governments and partners working closely with GFANZ and the private sector to ensure (i) continued progress in improvements to the local and international policy and enabling environment; (ii) the availability and deployment of catalytic public finance, including in structures and forms that can be used to appropriately de-risk and crowd in private finance; and (iii) a robust pipeline of competitively tendered projects that are demonstrably consistent with the JETP’s ambitious transition pathway.

At the COP27 in Egypt, an HSBC official took part in a debate on the JETP Vietnam.

In the coming months, the GFANZ Working Group will work with Viet Nam, the IPG, public financial institutions, and other JETP partners to take the next steps needed to implement the vision of the JETP.

Mr. Noel Quinn, Group Chief Executive, HSBC, said: "HSBC is committed to supporting its clients in emerging markets to reduce their emissions in a way that supports continued economic growth and ensures a secure long-term energy supply. The JETP is a mechanism through which we can get into the detail of how we achieve these goals, and we look forward to working with our partners in Vietnam to support its transition to net zero."

Mr. Mark FitzPatrick, CEO of Prudential Plc, stated: "As the first foreign insurer in Vietnam, over the past thirty years, we have been a proud partner in the country’s financial sector development, deepening the capital market, insuring Vietnamese families, and building resilience in the economy. In recent years, both our asset management and insurance businesses have been working with Vietnamese policy and regulatory partners on the question of sustainability, and we are therefore thrilled to represent our sector on the JETP Working Group. A just and inclusive transition to net zero is of critical importance across Asia, and we believe that the financial community has an important role to play. We will therefore look forward to supporting the Vietnamese and the IPG government partners, along with other financial institutions in Vietnam, to realize their own vision of a just transition".