Public Opinion, Limited Finance Drive Vietnam to Curtail Coal Development
Facing a rapidly shrinking pool of willing lenders and growing opposition from a population concerned about air quality, Vietnam may be putting the brakes on further coal plant development. The policy is not certain, however, as the pressures of economic development become daunting roadblocks to an energy shift in the country.
Vietnam’s National Steering Committee for Power Development has recommended the elimination of “about 15 gigawatts of planned new coal plants by 2025,” writes Bloomberg Green, a development that points to “slow progress and the unwillingness of some regions to develop them” as motivations for the proposed change in policy.
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Such inertia owes in part to the fact that “global banks are refusing to lend, making it more difficult and costly to build plants burning the dirtiest fossil fuel, while costs are tumbling for competing renewable generation,” Bloomberg adds.
Under s new energy cost framework, the committee is recommending an expansion of renewable power to make up for the cut in coal. The increase will bring renewables to “about a quarter of the country’s power,” up from 13% in the current plan.
This recommendation is particularly significant given that Vietnam’s prospective coal fleet is “the fourth-largest pipeline of proposed plants” in the world, according to Bloomberg. With the stakes so high, “threats of power shortages and the need to support economic growth mean the government will probably maintain its commitment to coal,” said Fitch Solutions analyst Daine Loh. At present, she added, “about 17 gigawatts of coal power is already under construction with another 29 gigawatts at various pre-construction phases.”
But financing shifts could still help pull Vietnam’s future decisions away from coal. “Several banks in Japan, as well as South Korea and Singapore, last year joined lenders from Europe and the U.S. in limiting financing in the fuel because of concerns that climate change would mean the polluting projects would have to be shut before loans could be paid off,” reports Bloomberg. A Bloomberg New Energy Finance report released in February found that of the 20.3 gigawatts of new coal plants that private interests had proposed in the country through 2030, “less than eight gigawatts of that has reached financial close, and many of the remaining plants will never get financing.”
Adding to coal’s woes in Vietnam, and in Asia more broadly, is escalating resistance to the dirty fuel as a chief culprit in destroying air quality. Case in point, reports Bloomberg, is the recent demand by an alliance of Hanoi-based health and environmental professionals that the country suspend construction of 14 coal plants with combined capacity of 17.4 GW.