G7, Vietnam reach $15.5-B climate deal to cut coal use – sources

HANOI, Vietnam -The Group of Seven (G7) industrialized nations has agreed with Vietnam to fund the Southeast Asian country’s transition away from coal with $15.5 billion, two Western sources told Reuters on Wednesday.

The deal is expected to be announced later on Wednesday on the sidelines of a summit of EU and Southeast Asian leaders in Brussels.

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 the global COP27 climate summit in November, but high-level talks stalled before the meeting.

To persuade Vietnam to back the offer, Western negotiators led by the European Union and Britain have repeatedly increased the amount of funding offered to Hanoi.

Half of the funding for the final deal will come from the public sector and the other half from private investors, sources said, declining to be named because they were not allowed to speak to media.

Only a minor part of the funding will be provided as grants, while most of the public investment will be in loans, one of the sources said.

Western countries have pushed for funding to be directed at projects like offshore wind farms and upgrades to the national power grid.

Vietnam’s Environment Ministry did not immediately respond to a request for comment.

The deal is the third agreement of this type reached by G7 nations, as pressure mounts on rich nations to help poorer countries cope with climate change and transition to greener energy. The group signed similar compacts last year with South Africa and last month with Indonesia.