Strengthening the EU-Vietnam Partnership: Financing a Green and Just Energy Transition

Vietnam is one of the fastest growing economies in Southeast Asia, expected to become one of the world’s top 20 leading countries by 2050. The country’s export-oriented economy and efforts to transform Vietnam into a manufacturing hub, make it well-placed to keep on attracting trade and investment from external partners from within and outside the region. Yet, despite its climate ambitions and corresponding engagements, Vietnam is also one of the most vulnerable countries in terms of facing high risk disaster levels. The question is how to finance Vietnam’s green and just energy transition.

Ranking 91 out of 191 countries by 2019, it particularly faces extreme exposure to natural hazards such as floods, drought and tropical cyclones. In this regard, the country will need to adapt to climate change in order to maintain its economic resilience and competitiveness. 

It was against this background that Vietnam approved its National Strategy on Climate Change (NSCC) in July 2022, in order to mitigate the impact from climate change by 2050. The strategy not only aims to effectively reduce GHG emissions with the goal to achieve a net-zero target by 2050, but also to work with international partners to develop adaptation techniques. Following the country’s commitment to the fight against climate change in the international arena, Vietnam has pledged its commitment to the climate case at the 2021 Glasgow summit (COP26). Hanoi took this opportunity to highlight the importance of clean energy installations and the reduction of coal-fired power installations at the world leaders’ stage, in tandem with emphasising the need for financial, technological, and expertise support from global investors to achieve its clean energy targets. 
To power its commitments, Vietnam has gradually shifted towards renewable energy sources, notably solar, wind, biomass, and hydropower, to meet the escalating demand and to increase its energy supply through alternative power generation, as Vietnam’s economy continues to grow rapidly. In 2021, the country required approximately 60 GW of power to be generated, which is expected to see a dramatic increase up to 97 GW in 2025. While Vietnam’s dedication to the climate case is clear, the funding of its implementation remains a challenge and a major topic of discussion in its partnerships with other global actors like the European Union.

Authors: Lin GOETHALS, EIAS Director; Jutaporn SINGCHUM, EIAS Junior Researcher; Eirini BOULIA, EIAS Junior Researcher; EIAS Simmi SAINI, Junior Researcher

Photo credits: Unsplash