HANOI: Rich nations have pledged billions of dollars to help Vietnam cut its coal consumption but are struggling to seal a deal with the Southeast Asian country ahead of a global climate summit next week, two sources familiar with the talks said.
Vietnam would be the world’s second country to benefit from a commitment by rich nations to provide funds for the so-called just energy transition after the United States, European Union, Britain, France and Germany agreed last year to invest US$8.5 billion over three to five years in South Africa to help it cut carbon emissions.
But domestic politics in Vietnam are holding up the deal, according to Western sources, while the financial offer, which is mostly made up of loans and only marginally grants, may also make it less appealing.
No agreement with Vietnam by the middle of next month would be seen as a major blow to UN and G7 efforts to involve coal-reliant countries in the fight against climate change after little progress was achieved with India, the second largest consumer of coal after China.
Vietnam is among the world’s top 20 consumers of coal, and its carbon emissions are expected to increase exponentially as the country of 100 million people grows quickly, unless it rapidly shifts towards renewables and other less polluting sources of energy.
At last year’s COP26 climate summit, Vietnam committed to phasing out coal-fired power by 2040 – a plan that would, however, require significant investment and the support of wealthier nations.
To back Vietnam’s commitment, rich countries have offered it about US$2 billion in cheap loans and are considering more, but smaller, financial support in handouts, a European Union official told Reuters.
However, the official who declined to be identified because the talks are confidential and still going on said that there was a risk that a deal with Vietnam would not be concluded by next month.
“We are quite far away from an agreement,” the official said, noting that talks in Hanoi last week between a delegation of EU experts and their Vietnamese counterparts failed to achieve a breakthrough.
A second Western source confirmed it was uncertain whether progress could be made in time for the COP27 global climate summit in Egypt, which is due to begin on Nov 6.
The European Commission, the EU executive, declined to comment on the matter. The EU is leading, together with Britain, the talks with Vietnam on behalf of G7 donors.
Vietnam’s government did not respond to requests for comment.