Making the most of Vietnam's Just Energy Transition Partnership

By Luong Phuong Mai
Thu, July 20, 2023 | 10:45 am GMT+7

Vietnam’s efforts toward carbon neutrality and international institutions’ support for the transition offer various business opportunities, but challenges exist, writes Luong Phuong Mai from HSBC Vietnam's commercial real estate and wholesale banking division.

Since COP26, everyone has started to talk about JETP, making the acronym popular in news articles and social media. It stands for Just Energy Transition Partnership – a financing cooperation mechanism designed to help a selection of heavily coal-dependent emerging economies make a just energy transition.

The aims of such multilateral financial agreements are to support the phase-out of fossil fuels in a tailor-made and country-driven pathway that addresses the social consequences involved, such as training and reskilling affected workers and new economic opportunities for affected communities.

The first JETP - South Africa JETP - was announced at COP26 or the 26th UN Climate Change Conference of the Parties in Glasgow two years ago. Since then, a few additional countries have taken part in these mechanisms, with Vietnam becoming the third country to adopt a JETP with the International Partners Group (IPG) including the EU, UK, the U.S., France, Germany, Italy, Canada, Japan, Norway, and Denmark.

Opportunities and challenges

Under the terms of Vietnam JETP, IPG commits an initial $7.75 billion in public capital over a three-to-five-year period to support Vietnam achieve a number of energy transition targets. In support of these efforts, the Glasgow Financial Alliance for Net Zero (GFANZ) established a Working Group, of which HSBC Bank is a member, to help mobilize and facilitate a matching $7.75 billion of private capital.

In short, Vietnam JETP involves the mobilization of $15.5 billion of public and private financing to achieve net zero ambition. Following Vietnam's bold commitment at CO26 where Prime Minister Pham Minh Chinh put forward the ask that the country requires external support to achieve net zero transition, Vietnam JETP absolutely will be helpful for Vietnam to drive its climate agenda.

We see huge potential for shifting in energy and transportation, the top two emitting sectors in Vietnam, in implementing Vietnam JETP. Leapfrogging from coal straight to wind and solar would enable the country to make use of its own natural resources to provide its people with an economically secure source of energy given its considerable wind and solar potential.

Vietnam has exceptional natural endowments – wind speed and solar power potential - to generate renewable energy among Southeast Asian peers. However, key barriers to financing to flow into the energy transition is the bankability of power purchase agreements (PPA), and to transportation transition is the pace of the transition, which in turn is a result of an absence of any regulatory push and limited availability of charging infrastructure.

Unlocking possibilities

Vietnam JETP bears the potential to represent a turning point in the climate finance agenda. One of the three goals at its core is to mobilize private sector capital to finance decarbonization efforts.

Bankability and recovery in case of distress would be the first main aspects to present to lenders if businesses are to explore sustainable finance opportunities. They should be prudent with their business case, and better build in a buffer in their sensitivity analysis, for instance, curtailment, operational and maintenance cost, hike in interest rate, volatility in FX and so on.

Second, lenders like HSBC will pay much attention to greenwashing risk. Indeed, mitigating this risk is wired into our strategy. When providing green or sustainability-linked facilities, it’s important for us to “green proof” the investment or the use of proceeds by proper certification, monitoring and audit. We typically demand such certification/audit to come from a qualified third-party organization to obtain independent assessments, meet international standards and maintain consistency across markets.

Moreover, our green loans must comply with the Green Loan Principles issued by the Loan Market Association and our green bonds must comply with the International Capital Market Association’s Green Bond Principles.

A key benefit for Vietnam in a JETP is to attract greener FDI and to become a champion in clean energy. The Vietnamese government has been focusing on high-quality FDI, including green FDI. Like-minded partners attract each other, and therefore to attract investors who are serious about green development, the country needs to profile itself accordingly, from green policy, infrastructure to supply chain ecosystem. And JETP, backed by the G7 governments, is a very strong platform to make such aspirations of the country known to international communities.

As a bank supporting inbound FDI flows, we saw this with our own eyes. Right after Vietnam announced its net-zero commitment at COP26, Lego announced its plans to build the first carbon-neutral factory in Binh Duong province in the south, marking its second investment in Asia. HSBC is proud to support such flows and we believe that any member of JETP and GFANZ would be a champion echoing the “Vietnam green effects” to the international investor communities via our own network.

An artist's impression of the Lego manufacturing facility in Binh Duong, southern Vietnam, Photo courtesy of the company.

An artist's impression of the Lego manufacturing facility in Binh Duong, southern Vietnam, Photo courtesy of the company.

Finally, experts are looking into the possibility of applying the JETP model to other sectors beyond energy if Vietnam and other countries can prove JETP a successful approach for delivering climate finance. It, of course, will take time to see the results but it's an opportunity not to be wasted to make a leap forward for realizing decarbonization goals.

Comments (0)
  • Read More
Vietnam business lobby urges easing of football betting limits

Vietnam business lobby urges easing of football betting limits

Vietnam’s leading business lobby VCCI has called on the government to sharply ease limits on international football betting and relax foreign ownership rules to make the industry more appealing to investors.

Finance - Thu, October 23, 2025 | 9:30 pm GMT+7

Powering growth from within

Powering growth from within

The development of a strong domestic private sector is essential for building a resilient, independent, and self-reliant economy that is less dependent on state-owned enterprises or foreign investment, writes Tim Evans, CEO of HSBC Vietnam.

Economy - Thu, October 23, 2025 | 9:09 pm GMT+7

Vietnam's stock market regulator appoints 2 new vice chairpersons

Vietnam's stock market regulator appoints 2 new vice chairpersons

The State Securities Commission of Vietnam (SSC) has appointed Nguyen Hoang Duong and Le Thi Viet Nga as its new vice chairpersons.

Finance - Thu, October 23, 2025 | 4:14 pm GMT+7

Vinhomes chairman appointed CEO of VinSpeed

Vinhomes chairman appointed CEO of VinSpeed

Pham Thieu Hoa, chairman of Vinhomes, has been appointed CEO of VinSpeed, a newly established company specializing in railway construction.

Companies - Thu, October 23, 2025 | 3:40 pm GMT+7

De Heus, Hung Nhon to invest $380 mln in high-tech agriculture hub in southern Vietnam

De Heus, Hung Nhon to invest $380 mln in high-tech agriculture hub in southern Vietnam

Dutch agribusiness group Royal De Heus and Vietnam’s Hung Nhon Group plan to invest VND10 trillion ($380 million) to develop a high-tech agricultural ecosystem in Tay Ninh province between 2025 and 2030.

Industries - Thu, October 23, 2025 | 2:35 pm GMT+7

Consumer finance major F88’s credit rating upgraded on improved funding capability, liquidity

Consumer finance major F88’s credit rating upgraded on improved funding capability, liquidity

Vietnamese credit ratings agency FiinRatings has upgraded F88's credit rating from “BBB-” to “BBB”, with a “stable” outlook, citing the company's enhanced capital-raising ability and improved liquidity position.

Companies - Thu, October 23, 2025 | 2:00 pm GMT+7

Vietnam's benchmark VN-Index could surpass 2,000 points in 2026: exec

Vietnam's benchmark VN-Index could surpass 2,000 points in 2026: exec

VN-Index could top 2,000 points next year, said Huynh Minh Tuan, founder of FIDT - a Ho Chi Minh City-based investment consulting firm.

Finance - Thu, October 23, 2025 | 10:55 am GMT+7

Key factors helping firms export to demanding markets: DH Foods exec

Key factors helping firms export to demanding markets: DH Foods exec

Don’t treat business as a week-to-week or month-to-month affair. To go the distance, you must conduct business ethically, writes Nguyen Trung Dung, CEO of DH Foods.

Consulting - Thu, October 23, 2025 | 8:00 am GMT+7

Gold exchange, gold derivatives, gold ETFs proposed to be launched in Vietnam

Gold exchange, gold derivatives, gold ETFs proposed to be launched in Vietnam

Forming a gold exchange under state management in Vietnam is suitable to the reality, said Dao Xuan Tuan, head of the foreign exchange management department under the State Bank of Vietnam (SBV).

Finance - Wed, October 22, 2025 | 9:00 pm GMT+7

Real estate major Novaland wins key approval for $5 bln project in central Vietnam

Real estate major Novaland wins key approval for $5 bln project in central Vietnam

Novaland Group (HoSE: NVL), one of Vietnam’s leading property developers, has received investment approval for its flagship project worth $5 billion in the central province of Lam Dong after years of delay due to legal obstacles.

Real Estate - Wed, October 22, 2025 | 4:20 pm GMT+7

Vietnam's plastics heavyweights Tien Phong, Binh Minh report profit surges

Vietnam's plastics heavyweights Tien Phong, Binh Minh report profit surges

Tien Phong Plastic (HNX: NTP) recorded pre-tax profit of nearly VND949 billion ($36.04 million) in the first nine months of the year, exceeding its full-year target by 10.85%, while Binh Minh Plastic (HoSE: BMP) achieved record net profit of VND350 billion ($13.29 million) in Q3, surpassing its VND330 billion milestone set in the previous quarter.

Companies - Wed, October 22, 2025 | 4:17 pm GMT+7

Vietnam, Finland firms sign multiple MoUs on satellite, cybersecurity, aviation partnerships

Vietnam, Finland firms sign multiple MoUs on satellite, cybersecurity, aviation partnerships

A series of cooperation agreements were signed between Vietnam and Finland on Tuesday, within the framework of Party chief To Lam's official visit to Helsinki, while bilateral relationship was lifted to a "strategic partnership".

Economy - Wed, October 22, 2025 | 12:43 pm GMT+7

Trung Nam Ca Na seeks to convert agri-forest land for $147 mln industrial park in central Vietnam

Trung Nam Ca Na seeks to convert agri-forest land for $147 mln industrial park in central Vietnam

Industrial park developer Trung Nam Ca Na is seeking approval to convert about 170 hectares of agricultural and forest land for the construction of a VND3,875 billion ($147 million) project in Vietnam’s central coastal province of Khanh Hoa.

Industrial real estate - Wed, October 22, 2025 | 10:54 am GMT+7

PV Power's arm posts 5-fold jump in Q3 profit on margin recovery

PV Power's arm posts 5-fold jump in Q3 profit on margin recovery

PetroVietnam Power Nhon Trach 2 JSC (HoSE: NT2) reported a sharp rebound in third-quarter earnings as improved margins and higher revenue lifted profits nearly fivefold from a year earlier.

Companies - Wed, October 22, 2025 | 8:37 am GMT+7

TCBS overtakes SSI to become Vietnam’s largest securities company by market cap

TCBS overtakes SSI to become Vietnam’s largest securities company by market cap

Over 2.3 billion shares of Techcom Securities JSC (TCBS) debuted on the Ho Chi Minh City Stock Exchange (HoSE) on Tuesday. The stock, TCX, recorded the highest price and the largest market capitalization in the Vietnamese securities sector.

Finance - Tue, October 21, 2025 | 10:27 pm GMT+7

Indonesia’s palm oil industry becomes investment magnet

Indonesia’s palm oil industry becomes investment magnet

Indonesia’s palm oil sector attracted IDR52.7 trillion, or approximately $3.2 billion, in investment during the first nine months of this year, with the money going into enabling the country to capture more value out of its top commodity, the country’s Ministry of Investment reported.

Southeast Asia - Tue, October 21, 2025 | 9:34 pm GMT+7