ADB reaffirms its support to Vietnam in its move to become a green economy

The Asian Development Bank (ADB) has positioned itself as the climate bank for the Asia Pacific region, continuing to support countries in the region in general and Việt Nam in particular in terms of green development.

Vietnam News Reporter Vũ Hoa interviewed Shanatu Chakraborty, ADB Country Director for Việt Nam, about the Bank’s support for Việt Nam during the ADB 57th Annual Meeting in Tbilisi, Georgia last week.

How does ADB envision supporting Việt Nam’s transition to a sustainable and environmentally friendly economy? Are there specific programs or policies aimed at promoting renewable energy, conservation or climate resilience?

As the Asia Pacific Climate Bank, ADB is well positioned to support Việt Nam in addressing climate change risks and impacts and transitioning to a green economy aligned with the country’s net zero goal by 2050. This is outlined in the 2023-26 ADB Country Partnership Strategy for Việt Nam, in which one of the two strategic pillars is transitioning to a green economy. To this end, ADB has a full range of services to offer Việt Nam, such as project financing in public and private sector investment, policy advice and technical assistance for project preparation, relevant expertise and capacity building, and transaction advisory services for public-private partnerships. .

ADB is already assisting the Vietnamese government in several areas, including climate adaptation and mitigation and strengthening the Paris Agreement. In climate change adaptation, ADB’s programs promote climate-resilient agriculture through improved water resource planning and improved irrigation systems for more efficient water use, along with key climate-proofing of critical rural, transport and urban infrastructure investments. In mitigating climate change, ADB’s ongoing support for green growth in Vietnam contributes to the country’s achievement of its Nationally Determined Contribution (NDC) targets through investments in renewable energy and energy systems. Transport system.

ADB is supporting Việt Nam to place climate change adaptation and mitigation in key national policies and plans to accelerate the green growth transition.

ADB facilitated regional cooperation on knowledge sharing, policy development, capacity building and climate change topics, as well as preparation of climate change plans, through the implementation of technical assistance projects worth approximately US$32 million.

ADB has also identified a substantial pipeline of climate-positive projects, which it has agreed with the government for approval in 2024-26, but we are not satisfied with the progress. The indicative sovereign debt pipeline will focus on climate-resilient urban and infrastructure, climate-adaptive water resource management, and agriculture and nature-based solutions. If we can speed up their approval and implementation, they will make a significant contribution to Việt Nam’s green growth transition.

How is ADB collaborating with Việt Nam to accelerate investment in renewable energy?

ADB adopted a new energy policy in 2021 that reflects changing environments and responds to the need to expand access to reliable, affordable energy and work toward a clean energy transition. ADB’s new energy policy aligns with global climate commitments such as the Paris Agreement. ADB’s Climate Change Action Plan, approved in November 2023, helped guide our climate change efforts to better support our developing member countries.

ADB is leading the Energy Transition Mechanism (ETM) initiative to facilitate the transition to sustainable, low-carbon and resilient energy systems.

ADB’s Energy Transition Mechanism has the potential to be one of the largest carbon reduction programs in the world. The ETM is a scalable, collaborative initiative developed with developing member countries that uses a market-based approach to accelerate the transition from fossil fuels to clean energy. ADB currently operates ETM in five countries: Indonesia, Kazakhstan, Pakistan, Philippines and Vietnam.

By 2023, ADB has committed a record $9.8 billion in climate finance to the entire Asia Pacific region.

In Việt Nam, ADB’s support for energy transition focuses on improving market-based policy and regulatory environments and developing the new infrastructure needed to accelerate renewable energy supply.

Can you elaborate on ADB’s role in promoting green finance in Việt Nam? Are there mechanisms to encourage private sector investment in sustainable projects?

As mentioned earlier, the ADB has embarked on a major reform to become the Climate Bank of Asia and the Pacific, with an increased ambition to provide $100 billion of its own funds for climate finance from 2019 to 2030, across public and private sector operations.

ADB is a major participant in the fixed capital markets.

ADB has earmarked about $300 million of its latest green bonds for eligible low-carbon transportation and climate adaptation projects in Vietnam. In support of Việt Nam’s green finance development, ADB will use its extensive experience to help developing member countries develop green finance, including building green infrastructure, issuing green bonds (government and state-owned enterprises) and investing in green bonds.

Việt Nam could also explore innovative mechanisms for green public finance, including the issuance of green government bonds and a green financing program or facility that would act as a catalyst for investment in green infrastructure projects. If implemented, it will become a policy vehicle to encourage public and private investment in green and sustainable projects.

In addition to providing public sector financing, ADB is also exploring innovative ways to mobilize private sector climate finance, as estimated needs exceed the capacity of the public sector, raising climate finance levels from billions to trillions of dollars.

ADB is leading the Innovative Financing for Climate in Asia and the Pacific, or IF-CAP, which leverages guarantees from ADB’s sovereign debt portfolios to channel billions of dollars into much-needed climate change investments. With a '$1 in, $5 out’ model, the initial ambition of $3 billion in guarantees could generate up to $15 billion in new loans for much-needed climate projects across Asia and the Pacific.

In Việt Nam, ADB has made some green loan transactions (including those certified by climate bond initiatives) for Vietnamese companies, particularly in renewable energy and electric vehicles. We expect the Việt Nam market to have strong potential for green finance development coupled with the government’s strong focus on green growth.

Việt Nam strives for a circular economy. How does ADB support initiatives related to waste reduction, recycling and resource efficiency?

The Việt Nam Country Partnership Strategy has a pillar supporting Việt Nam in pursuing a holistic approach to transition to a green economy aligned with the goals of the Paris Agreement, while expanding its response to address climate change risks and impacts.

ADB will support Việt Nam in transitioning the economy (production and consumption) towards more energy efficiency and greener growth. Through policy and knowledge support, ADB will help Việt Nam review its policy framework to implement a zero carbon net emissions commitment by 2050 and develop a national action plan to implement a circular economy Non-sovereign financing will support renewable energy; Non-sovereign and sovereign funding to support the use of energy saving technologies in energy consumption, transmission and distribution, urban waste treatment, wastewater treatment and drainage.

Currently, ADB is implementing technical assistance to support Việt Nam to reduce marine plastic pollution from source to sea. An example is the development of circular plastic packaging guidelines that serve as technical guidance and recommendations on what constitutes circular plastic packaging in Vietnam.

ADB technical assistance supports reducing plastic waste, developing provincial green development action plans, and promoting and facilitating regional cooperation and knowledge sharing. VNS