G7 makes new $15B offer to Vietnam to cut coal use -sources

Workers pick out gravel from coal at a coal port in Hanoi. REUTERS/Kham/File photo

HANOI  – The Group of Seven (G7) industrialized nations has made a new $15-billion offer to Vietnam to agree during a summit next week on funding to speed up its transition away from coal, three people familiar with the talks told Reuters.

Vietnam, which is among the world’s top 20 coal users, was initially slated to sign up for the so-called just energy transition partnership with G7 nations at a global COP27 climate summit in November, but high-level talks broke off before the meeting.

To persuade Vietnam to back the offer, Western negotiators led by the European Union and Britain have proposed a bigger financial package, which includes $7.5 billion made up almost exclusively of loans from the public sector and the same amount in pledges from the private sector, the sources said.

All three Western officials, who declined to be named because talks were confidential, said it would be the final offer from the G7 before a summit of European Union and Southeast Asian nations in Brussels on Dec. 14, which EU officials have repeatedly indicated as the new target date for a deal.

The offer has gradually expanded from an initial pledge of just $2 billion in public funds with undefined additional private support.

It is unclear whether it could be further revised if no deal was reached next week.

Vietnam’s government and the European Commission did not reply to emailed requests for comment.

It remains unclear whether Vietnam would be prepared to accept the increased offer, because its main concerns do not appear to have been addressed.

The Southeast Asian country had asked for more grants, because it is traditionally opposed to taking on large loans.

One of the sources said there was a “50/50” chance of a deal next week. Another noted talks were still under way and final figures may still change slightly.

Vietnam’s energy security remains potentially at risk as the G7 plan focuses on renewable energy which may result in power shortages in the booming nation without a credible back-up in the event of low power output from wind farms or solar panels.

Immediately after talks broke off in November, when Vietnam’s authorities canceled a meeting due to take place in Hanoi with top U.S. and EU climate envoys, according to sources, the country’s industry ministry circulated a new draft for its long-term power plans which boosted the use of coal compared to a previous version of the same document.