The European Investment Bank (EIB) has signed an agreement to finance Vietnam's implementation of the $15.5-billion Just Energy Transition Partnership (JETP) in the country.
In a Wednesday announcement, the European Commission (EC) said the signed memorandum of understanding (MoU) between the two sides would put in place a multi-projects credit facility worth €500 million ($528.8 million).
Once this credit facility is finalized and inked in the near term, it will establish a framework loan that will finance projects supporting decarbonization and energy transition.
In addition, the European Union (EU) will make available €16.6 million ($17.5 million) in technical assistance for Agence Française de Développement (AFD) to support state utility Vietnam Electricity (EVN) in the preparation and implementation of projects linked to the JETP.
The technical assistance facility will accompany a total of €1 billion ($1.06 billion) sovereign and non-sovereign loans provided by Team Europe, comprising of France’s AFD, Germany’s promotional bank KfW, and the EIB.
On the policy side, the EU is supporting the reforms in the energy sector, including to establish the legislative and technical conditions related to renewable energy, energy efficiency, transmission lines/grids, for the JETP to deliver sustainably, through the Sustainable Energy Transition budget support Program (SETP), to the tune of €142 million ($149.9 million)
“We are taking an important step to support Vietnam’s ambitious Net Zero goal for 2050,” said Ursula von der Leyen, President of the EC. “The EC, the EIB, and Vietnam are partnering to support the renewable energy transition and energy security,” she added.
“The EIB's €500 million commitment goes beyond finance, driving a transition to sustainable energy and a resilient economy in Vietnam, said Teresa Czerwińska,” Vice-President of the EIB.
“Through initiatives like Global Gateway, together with the European Commission we’re turning global challenges into opportunities for sustainable development and innovation,” she added.
Vietnam and the International Partners Group (IPG) signed the JETP in December 2022. The latter comprised of the EU, the UK, France, Germany, the U.S., Italy, Canada, Japan, Norway and Denmark.
The JETP will support Vietnam to deliver on its ambitious Net Zero 2050 goal, accelerate the peaking of its greenhouse gas emissions and transition away from fossil fuels to clean energy. The JETP will mobilize an initial $15.5 billion of public and private finance over the next three to five years to support Vietnam's green transition.
The successful delivery of these ambitious targets will result in around 500 megatons of emissions saved by 2035.
Initial contributions to the Vietnam JETP include $7.75 billion in pledges from the IPG together with the ADB and the IFC.
Vietnam is the third country to launch a JETP, following the successful launch of the South Africa JETP at COP26 and the Indonesia JETP at this year's G20 Leaders' Summit. As a rapidly growing economy, Vietnam's JETP will demonstrate that economic growth can be decoupled from fossil fuel energy consumption.