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Dec 15, 2022 / 11:29

GFANZ supports capital mobilization for Vietnam’s Just Energy Transition Partnership

At least $7.75 billion is set to be mobilized in support of Vietnam’s ambitious green energy transition path.

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, on December 14 announced the establishment of a working group to support capital mobilization for Vietnam’s Just Energy Transition Partnership (JETP).

 Vietnam's Minister of Natural Resources and Environment Tran Hong Ha and delegates at a roundtable discussion on Vietnam JETP at COP27. 

According to GFANZ, the Vietnamese Government has announced that it will pursue an ambitious national effort under a JETP to ramp up renewable energy and accelerate the phasing down of fossil fuels, alongside investment in transition-aligned jobs and industries of the future.

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 US$7.75 billion over a three-to-five-year period to support Vietnam in implementation of the JETP.

The GFANZ said it would support these efforts with a particular focus on mobilizing private capital.

“Vietnam has great potential to become a regional leader for clean energy. Through public and private collaboration, we can speed up the investment needed for Vietnam to meet its climate targets, grow its economy, create new jobs, and improve public health all at the same time,” said Michael R. Bloomberg, Co-Chair, GFANZ, and UN Special Envoy on Climate Ambition and Solutions.

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 Vietnam 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, it noted.

“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 Vietnamese Government and IPG JETP announcement,” GFANZ stated.

As firms committed to net zero, GFANZ members – including the named Working Group members – seek to ensure that there are transition-aligned financing opportunities worldwide.

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

As part of the announcement, the GFANZ Working Group members have committed to working closely with the Vietnamese Government and the IPG toward the mobilization and facilitation of at least $7.75 billion in private finance to support an ambitious transition path and investment plan.

“Mobilizing capital to emerge markets and developing economies is critical if the world reaches net zero emissions by 2050. Today’s announcement in Vietnam 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 Vietnam,” said Mary Schapiro, Vice Chair, GFANZ.

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.

The commitment is subject to the involved governments and partners working closely with GFANZ and the private sector to ensure continued progress in improvements to the local and international policy and enabling environment; 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 a robust pipeline of competitively tendered projects that are demonstrably consistent with the JETP’s ambitious transition pathway.

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

“Deutsche Bank is pleased to join the GFANZ Working Group supporting the Vietnam Just Energy Transition Partnership. We have been deeply committed to helping build Vietnam’s financial markets for 30 years; bringing the full force of our firm to deliver climate-aligned investment in Vietnam is a critical next step in that journey. The private sector and markets have an important role in allocating capital to drive development towards a more sustainable future,” Christian Sewing, CEO of Deutsche Bank.

“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,” Noel Quinn, Group Chief Executive, HSBC.

“Vietnam has great potential to rapidly scale its offshore and onshore renewables to support its growth and development. We look forward to supporting the development of this ambitious new Just Energy Transition Partnership by building on our existing presence in the country,” Shemara Wikramanayake, CEO of Macquarie.