Finance and Governance Accelerators for a Just Energy Transition
July 29, 2022
Ha Noi 29 July 2022 – Initial results of the energy transition over the past time have proven that finance is not a constraint. New governance solutions are key to a Just Energy Transition (JET).
This was confirmed at today’s roundtable on Finance and Governance Accelerators for a Just Energy Transitions, co-host by the UN Development Programme (UNDP) and Viet Nam Investment Review.
At the United Nations Climate Change Summit in 2021, the Vietnamese government pledged to achieve net zero carbon emissions by 2050, and halt investments in new coal power generation, scale up deployment of clean power and phase out coal power by the 2040s.
One of the central challenges facing Viet Nam is to meet climate change and energy transition commitments, while ensuring that the country maintains its focus on achieving the Sustainable Development Goals, ending poverty, and promoting long-term economic transformation that leaves no one behind.
The discussion focused on the issue of development finance for a just energy transition, with in-depth discussion on the wider context of development financing, the role of domestic and international finance, lessons learnt from international experience, and domestic policy innovations that can support a just energy transition.
Following opening remarks by UNDP Resident Representative in Viet Nam Caitlin Wiesen and VIR Editor-in-Chief Le Trong Minh, UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific Kanni Wignaraja, who is on a visit to Viet Nam, delivered a keynote address entitle: “Financing Viet Nam’s Transition to Renewable Energy: Beyond the Big Numbers”.
Policy maker and experts presented policy recommendations that help attract the required finance for energy transition, lessons from Southeast Asian experience, and the role of green public development banks in accelerating climate action.
Mr. Pham Xuan Hoe, Former Deputy Director, Banking strategy Institute, had a presentation on “Opportunities and challenges for green finance market development in Viet Nam towards sustainable governance and development according to ESG practices”, followed by a presentation on: “Financing the Energy Transition: The Role of Green Public Development Banks in Accelerating Climate Action – International Experiences and Lessons for Viet Nam” jointly by Dr. Thomas Marois and Prof. Uli Volz from SOAS University of London.
The subsequent panel discussion focused on how policies could support private sector participation in the just energy transition.
Finance is a key factor in achieving a just energy transition. Profitability and predictability are key factors in financing the JET. The lack of these two factors limits the financing of renewable energy projects, not the other way around.
Governance issues such as competitive, transparent market; Direct (bankable) Power Purchase Agreements; transparent investment environment; and curtailment, transmission and distribution issues for power producers play important role in unlocking finance.
When governance accelerators are in place, financing will come from public investment through taxation, domestic bond issuance; international private finance sources; and domestic private sector financing.
It is evident that most of the capital needed will be derived from domestic sources. National development banks in other countries can provide long-term domestic finance for complex and slow-gestating projects.
Viet Nam’s demand for energy will grow rapidly over the coming three decades with transport, industry, agriculture, and construction transitioning from fossil fuels to electricity generated by solar, wind and other renewable systems. If renewable electricity generation is used to decarbonize the energy system as projected, the demand could increase five-fold by 2050.
In the context that Viet Nam both fulfills its climate change and energy transition commitments, and ensures that the country maintains its focus on achieving the Sustainable Development Goals, governance and finance are effective accelerators for a Just Energy Transition.
This roundtable is the first of a series of discussions, roundtables, and conferences that the UNDP in Viet Nam intends to hold, in cooperation with the Government of Viet Nam to clarify policy options available to the Government as it seeks to promote financial system deepening and development.
For more information, please contact: Nguyen Viet Lan, UNDP Communication Lead; phone: 0914436769
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