G7, Vietnam reach $15.5bn climate deal to cut coal use, say sources

The deal will be the third agreement of this type reached by G7 nations.

HANOI, Dec 14 (Reuters) - The Group of Seven (G7) industrialised nations will provide $15.5 billion to Vietnam to help the country transition away from coal, two Western sources told Reuters on Wednesday.

The deal will be the third agreement of this type reached by G7 nations, as pressure mounts on rich, heavy-emitting nations to help poorer countries cope with climate change and transition to cleaner energy.

The group signed similar deals last year with South Africa and last month with Indonesia.

Vietnam, which is among the world’s top 20 coal users, was initially slated to sign 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 agreed $15.5 billion will come from the public sector and the rest 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 loans, one of the sources said.

An initial amount of at least $15.5 billion will be disbursed over the next three to five years, one source said.

The G7’s deal with Indonesia promised $10 billion in public funds to shut down coal plants in the country and bring forward the sector’s peak emissions date by seven years to 2030. South Africa was promised $8.5 billion.

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

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