Experience from the EU shows that an effective energy transition requires a synchronized set of factors, including a stable policy framework, strong technical capacity, and the ability to mobilize financing.

Under Prime Ministerial Decision No. 458/QD-TTg of March 23, 2026, an updated implementation plan for the Political Declaration on establishing the
Just Energy Transition Partnership (JETP) has been approved, with a focus placed on coordinating with international partners to mobilize resources
for JETP projects.

The approval of the plan not only
reaffirms Vietnam’s commitment to energy transition and its net-zero emissions
target by 2050, but also highlights key challenges related to mobilizing
international resources, improving policy frameworks, and accelerating project
implementation. These issues were also emphasized by experts, policymakers, and
international partners at the “JETP Energy Transition: A Key Platform for
Policy Dialogue and Joint Projects” session held within the recent EU-Vietnam
Global Gateway Business and Investment Forum.

Policy as a
foundation

Sharing strategic
directions, Mr. Dao Duy Anh, Deputy Director General of the Department of
Innovation, Green Transition and Industrial Promotion at the Ministry of
Industry and Trade (MoIT), noted that energy transition, green growth, and the
circular economy are consistent priorities of Vietnam’s Party and government,
especially in recent years as the country works toward the net-zero commitment
it made at COP26. “There are many solutions, including participation in
international initiatives such as the JETP,” he said.

Since joining the JETP
in 2022, Vietnam approved a financial mobilization mechanism in 2023 and has
actively pursued regulatory reforms to address bottlenecks. The Politburo
issued Resolution No. 70 on ensuring national energy security to 2030, with a
vision to 2045, outlining a transition toward renewable energy, reducing
reliance on fossil fuels, and supporting environmental protection and economic
stability. “Amid current challenges in fossil fuel supply, this direction has
proven to be appropriate,” he emphasized.

To institutionalize
these policies, the National Assembly and government have issued additional
resolutions, while the MoIT has proposed amendments to the Law on Electricity
and regulations on Direct Power Purchase Agreements (DPPAs), as well as
mechanisms to receive JETP funding.

As a result, over the
past five years, Vietnam has experienced one of the fastest renewable energy expansions
globally, reaching about 23 GW of installed capacity as of the end of 2024,
making it a leader within ASEAN.

However, Mr. Nguyen
Phan Dinh, Vietnam Market Director at EDP Global and Head of EuroCham’s Energy
Working Group, noted that coal still accounted for around 50 per cent of
electricity generation in 2024, indicating significant space for transition and
investment opportunities. He highlighted that the first opportunity lies in
political commitments, such as the Prime Minister’s pledge to achieve net-zero
emissions by 2050 at COP26. “This is a clear commitment, creating momentum for
building a policy framework and paving the way for investment,” he said.

The next opportunity
is development planning. Specifically, the revised National Power Development
Plan VIII (PDP8) has set very ambitious targets for renewable energy. To
realize these goals, Vietnam needs to mobilize some $130 billion in capital for
the 2031-2035 period. “I hope that about 20 per cent of that will be allocated
to the power grid, with the remainder for renewable energy sources, and this
represents a significant opportunity,” Mr. Dinh added.

Regarding
participation in the JETP, the MoIT, along with international partners, has
reviewed and selected 44 projects that meet JETP criteria. However, Mr. Duy Anh
said that after more than two years, only three projects have received funding
from JETP, with capital exceeding $700 million, while the remaining projects
are being considered for funding and implementation in the near future.

“To accelerate the
implementation of the JETP in the coming period, efforts are needed not only
from the Vietnamese Government but also from partners participating in the JETP
and the governments of countries interested in Vietnam’s energy transition,” he
added. “We are committed to continuously improving policy mechanisms to remove
bottlenecks in the implementation process, and to finding and developing
projects that meet JETP criteria in order to support more projects in the time
to come.”

Financing and technical
support

Mr. Do Duc Tuong, a
JETP Energy Project Development Specialist at the United Nations Development
Programme (UNDP) Vietnam, believes that one of the major bottlenecks in the
implementation of the JETP in Vietnam is the lack of resources for new
projects, especially those without precedent. Therefore, in addition to
traditional bank credit, the establishment and effective operation of technical
assistance funds play a crucial role.

Data reveals that of
the total of $15.5 billion committed by the JETP’s international partners,
approximately $300 million is specifically allocated to technical assistance,
with allocation depending on the priorities of each partner. To date, about 80
per cent of bilateral cooperation projects have been implemented, with the
remainder in the preparation and funding connection stages.

Sharing the same view,
Ms. Alice Carr, Executive Director for Public Policy at the Glasgow Financial
Alliance for Net Zero (GFANZ), noted that technical assistance resources are
still not being effectively utilized. She argued that many projects might be
unsuitable if they retain their original models, but could become viable if
restructured, for example, by adopting a DPPA or receiving support for
feasibility studies in line with international standards. “Vietnamese
businesses have strengths in attracting capital, but still need to improve
their technological and project implementation capabilities to more effectively
utilize technical assistance resources,” she added.

From an international
finance perspective, Mr. Stephan Opitz, Member of the KfW Management Board for
Asia and Europe, said international experience shows that providing credit
lines accompanied by technical assistance is a useful tool. These facilities
are typically geared toward specific sectors, with clear requirements regarding
standards and technology. “However, for commercial banks, this is still a
relatively new area, requiring technological assessment capabilities and a team
of specialized experts,” he added. “Given the relatively low profitability of
loans to small and medium-sized enterprises, banks may be hesitant, but
consolidating multiple loans and providing technical support will help reduce
risk and expand access to capital for the private sector.”

Systemic approach

Vietnam’s energy
sector is a focus of investment. “To date, we have committed approximately €1
billion ($1.15 billion) to transmission, distribution, and power generation
projects, primarily in collaboration with EVN [Vietnam Electricity],” he said.
“However, the key is not just capital, but a systemic approach. We are not only
financing but also promoting a systemic approach to the transition to renewable
energy, something we are also doing in many other countries.”

A prime example of KfW’s
investments in Vietnam is the Bac Ai pumped-storage hydropower project, a key
component of this transition. This project acts as a form of “battery storage,”
balancing the volatility of renewable energy, thus playing a crucial role in
the system.

Similarly, the Tri An
project is not simply an expansion of a hydropower plant. It will take on the
role of supplying peak-load electricity, a task previously handled primarily by
coal- and gas-fired power plants. Thus, renewable energy sources such as hydropower
can replace and provide this crucial power supply.

Ten years ago, KfW
also financed the first wind power project in Vietnam. Another role of KfW is
to introduce new technologies into a country, thereby allowing all parties to
better understand the costs, risks, and necessary framework conditions to
attract private investors later on.

In addition, projects
are often implemented through co-financing with multiple partners such as the
French Development Agency (AFD), Proparco, Italian partners, and possibly the
European Investment Bank (EIB) and the EU, to enhance resources and investment
efficiency. “We also particularly appreciate the role of the EU, as the funding
provided by the EU has been very helpful in preparing and promoting these
investments,” Mr. Opitz said.

Regarding actual
investments, he shared insights into mobilizing international capital based on
policy-based lending. He suggested that, within a systems approach to energy
transition, several directions could be pursued. Firstly, continuing to finance
the projects mentioned, and secondly, providing credit to domestic banks,
thereby facilitating private sector participation in energy investment.

In particular, the
third, and equally important, direction is policy support loans, which KfW has
successfully implemented in many countries such as South Africa and Indonesia;
key partners in the JETP. In South Africa, from the outset, this model has been
combined with infrastructure financing to create a synergistic impact.

According to Mr.
Opitz, the essence of policy-based financing is that financial institutions
collaborate with the government to develop and agree upon a set of effective
policy criteria to promote investment, especially to attract more private
capital into the energy sector, as well as to remove bottlenecks in the system.

“The advantage of this
approach is the ability to combine experience from real-world projects with
knowledge and recommendations from the business sector, thereby bringing policy
dialogue into more effective engagement,” Mr. Opitz emphasized. “At the same
time, financing is often implemented in the form of co-financing with many
large financial partners, creating sufficiently strong resources to promote
quality and ambitious policy reforms while integrating experiences from many
countries. I believe this could also be an effective direction for Vietnam in
the future, leveraging this tool for the energy transition process.”

VET-Ngoc Lan