December 2022
Clean energy investment is expected to exceed US$1.4tn in 2022, following a 12% annual growth in 2021. However, limiting global warming to 1.5 degrees Celsius requires an estimate of over US$4tn in annual clean-energy investment.

Financing clean energy transitions in emerging and developing economies is crucial to driving global decarbonisation.

Vietnam’s fast-growing economy seemed the perfect candidate to enter the Just Energy Transition Partnership (JETP) in Egypt’s COP27. However, the deal remained stalled in international and domestic disagreements about its financial structure, the pace of the country’s transition to clean energy and human rights concerns.

EU officials and other Western negotiators had hoped Vietnam would become the second country to settle on a funding plan to accelerate its coal phasedown, after a similar deal was reached last year with South Africa.

However, Vietnam is reluctant to agree to a package requiring the country to accept a substantial amount of public debt, regardless of how much of it comes at concessional rates.

Vietnam is not willing to follow South Africa’s JETP deal, of which only 3% of the US$8.5bn would be in the form of grants. The rest of the money will be loans, about half at below-market interest rates, requiring the government and the state-owned utility Eskom to take on billions of dollars in debt.

Vietnam requires investments between $8bn and $14bn a year through to 2030 to develop new power plants and expand its grid. 75% of this would be expected to support new power plants with renewables as a priority, and 25% on grid expansion. Following the disagreements at COP27, a US$11bn JEPT for Vietnam is still expected to be announced at the ASEAN-EU summit in December.


Scaling Up to Phase Down

Vietnam recently shared a revised draft energy plan committing to reduce its coal-fired power capacity target from 50GW to 30-36GW by 2030. The country is withdrawing plans to expand its coal power fleet in light of the potential US$11bn funding package for energy transition.

However, this latest plan is a backpedal on a draft issued in October where the government aimed to limit coal capacity to about 30 GW by the end of the decade.



As of September, Vietnam had 39 operating coal-fired power plants with a total capacity of 24.7GW. After 2030, the country’s coal power capacity will be progressively reduced to fully disappear by 2050, switching to biomass and ammonia. Vietnam aims to cut GHG emissions by 15.8% by 2030, up from a previous target of 9%, and by 43.5% up from 27% with international support.

On 11th November, the Vietnamese Ministry of Industry and Trade sent to the central government of Vietnam its latest update on the draft Power Development Plan over 2021-2030 with a vision to 2050 (PDP8), which still includes 6.8GW of planned coal plants. This comprises the 1.2GW Quang Tri 1, the 600MW Cong Thanh, the 1.2GW Nam Dinh 1, the 1.8GW Vinh Tan 3 and the 2GW Song Hau 2.

However, most of these projects have already been delayed for years and face severe funding issues, making their completion very unlikely except for the Cong Thanh plant which will switch to LNG. Although more than 50% of Vietnam’s primary energy supply is coal-based, the country has seen a boom in renewable energy and aims to dominate renewable energy growth in the region with 40% of capacity additions in Southeast Asia from 2021 to 2026.

The new Law on Environmental Protection introduces a domestic carbon market and a carbon tax. Vietnam also joined over 100 countries to decrease methane emissions by 30% and to stop deforestation by 2030. Coal currently accounts for over 50% of the total primary energy supply and power generation in the country. Vietnam has pledged to phase out coal in the 2040s.



This includes a halt on building or investing in new coal-fired power generation. The government aims to reduce coal use by 30% by 2030, with gas and renewable energy sources filling the gap.

Vietnam accounts for only 0.8% of the global GHG emissions. However, the country has emerged as one of the fastest-growing GHG emissions per capita in the world over the last two decades.

Vietnam’s National Power Development Plan for the 2021-2030 period, with a vision to 2045 includes a roadmap to cut the share of coal-fired plants to less than 10% of the total capacity by 2045. The Vietnamese government is expecting to reduce coalfired power generation by 2030 to 39.7GW, down from the 46.4GW targeted in the previous draft.

It also seeks to double its clean energy capacity by 31-38GW, supporting a share of 15-20% of renewables in the country’s total energy supply.


The Future of Coal

For the last five years, Vietnam’s electricity demand has grown by 10% annually. This has been driven by the country’s economic boom, population growth and heavy industrialisation and urbanisation. As of 2021, Vietnam had 16.5GW of solar power and 11.8GW of wind power. A further 6.6GW capacity is expected in 2022.

The government plans to further boost this by adding 12GW of onshore and offshore wind by 2025. Vietnam has one of the best wind resources in Southeast Asia, with an estimated potential of 311GW.

AME forecasts that Vietnam will import 41Mt of thermal coal in 2022, up 14% from 2021. This increase has been partially driven by 660MW of new coal-fired power capacity added in the first half of 2022. Vietnam Electricity (EVN) is the largest power company in the country, dominating the market with 11.9GW of operating capacity and 1.2GW under construction.

The utility has cancelled over 6.7GW of coal fired capacity over the last decade, adjusting to Vietnam’s changing carbon reduction targets. EVN expects to put into operation around 5.5GW of electricity from renewables, with wind power accounting for 4GW and solar power for 1.5GW by 2025.

Over the medium term, AME forecasts that Vietnam’s thermal coal import demand will increase at a CAGR of 15.7%, to total 84Mt by 2027. Vietnam will not add new coal-fired power plants to its master power development plan and will only continue coal projects that are under construction until 2030.

Although Vietnam currently has 7.4GW of coal-fired power capacity under construction supporting the forecast rise in coal demand, the country has already shelved 14.2GW as of 2022, compared to 3.5GW shelved by the end of 2021. China’s withdrawal of overseas coal financing raised pressure in the country as Vietnam required US$44bn to expand its coal fleet over the next decade.

AME forecasts Vietnam’s thermal coal import demand will continue rising at a CAGR of 4.9% between 2027 and 2040, reaching 156Mt in 2040. The Ministry of Industry and Trade (MoIT) plans to shelve a 14GW of coal-fired power in the national power master plan to achieve net zero emissions by 2050. State corporations had invested in 8.4GW of this capacity.