Plans to build a new coal plant in Vietnam are drawing scrutiny from rich nations that bankrolled a multi-billion dollar finance package designed to help the Southeast Asian nation shift away from the fuel.
At issue is the 2.1-gigawatt Song Hau 2 power plant, now advancing with a grid connection agreement and a nearly US$1 billion ($1.35 billion) loan, according to filings.
The plant’s construction could put the country in breach of a limit on coal power generation embedded in the US$15.5 billion “Just Energy Transition Partnership” — or JETP — announced in 2022.
In an emailed statement, the US State Department said it and other international partners continue to encourage Vietnam to pursue its JETP targets for deploying renewable energy and transitioning away from coal-fired power.
“We are closely monitoring reports of possible additional coal plant construction and operation that could complicate those efforts,” the State Department said. “We will continue to engage closely with Vietnam to implement necessary reforms, phase out unabated coal-fired power generation, ramp up renewables and transmission to meet electricity demand, and mobilise committed finance to achieving these goals.”
The development underscores the limits of the JETP model, which is also being used to curb coal power in South Africa and Indonesia.
See also: Vietnam coal power project moving forward despite JETP phase-out deal
Under the Vietnam partnership, the European Union, the UK, the US, Japan and other nations agreed to mobilise US$7.75 billion in grants and loans, alongside US$7.75 billion from a group of investors.
“It’s not a great sign if a country like Vietnam is continuing to invest in coal,” said Jake Schmidt, senior strategic director of international climate at the Natural Resources Defense Council. “It doesn’t totally undercut the concept that we need to have an energy transition platform, and it was always going to be hard work. But it gets much more difficult.”
