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.”