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Vietnam Environment Spotlight - November 2021
Freshfields' Vietnam Environment Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive our Vietnam M&A Spotlight, Vietnam Infrastructure Spotlight or our Vietnam Competition Law Spotlight.
Preliminary note: A new Environmental Working Group of the Vietnam Business Forum has recently been established. Please contact either the Secretariat at info@vbf.org.vn if you are interested in joining or us at Freshfields if you would like further information. A Freshfields representative sits on the Steering Committee.
MARKET UPDATES
Shutting down the old
International institutions are making plans to raise US$9-17 billion to buy back a number of coal-fired power plants that are currently operating in Vietnam, in order to shut them down as quickly as possible. While this could reduce greenhouse gas emissions drastically, it needs to be balanced with national energy security. Source: Vn Express International
Drying up the new?
Vietnam will find it hard to mobilize foreign funding for coal-fired electricity plants because many nations are becoming more concerned about the environment. Most of the investments in coal-fired electricity plants in Vietnam in 2015-21 came from China, South Korea and Japan, but the three countries have now pledged to stop investing in such power stations. Source: Vn Express International
Or doubling everything?
Vietnam may double the amount of coal-fired electric generation it installs by 2030 under the draft power development plan recently submitted to the Prime Minister for his approval. The draft plan guarantees that Vietnam will become more reliant on coal to power its fast-growing economy at a time when financiers and insurers are refusing to back new projects because of the fuel’s large climate change impact. Source: Reuters
Moving away from coal
Posco Energy will cash out on a 30 per cent stake in the Mong Duong II thermal power plant project in Vietnam for 275 billion won (US$184.3 million) by October 2024, earlier than expected. It is following the project’s biggest stakeholder AES Corporation that is selling its 51 per cent stake amid a global campaign to reduce carbon emissions. Source: Pulse News
Alternatives
Ninh Thuan People’s Committee has sent a document seeking the prime minister's approval to replace a 4,600MW nuclear power project, that was approved in the national Power Development Plan (PDP) VII, with LNG in the new PDPVIII. The move would pave the way for the province to go ahead with LNG power projects at the Ca Na Power Centre, which will be an important driver of development for the province. Source: Vietnam Investment Review
Environmental nod
The Ministry of Natural Resources and Environment has approved the environmental impact assessment report of the US$4 billion Bac Lieu LNG-to-power project sponsored by Delta Offshore Energy Pte., Ltd., which is the largest 100% foreign direct investment project in the Mekong Delta region. The project is expected to be completed in December 2027. Source: Vietnam Investment Review
Eco-friendly homes
The Covid-19 pandemic has changed homebuyers’ views of an ideal living environment. They want a private, balanced, and healthy space close to nature to restore energy and spirit after stressful days. Since the Covid-19 outbreak, this trend has been seen in Vietnam as well as in many other countries in the world. Source: Vietnam Investment Review
Plastics pollution
Vietnam is losing from US$2.2-2.9 billion a year for failing to recycle most of its disposed plastics. A new study by International Finance Corporation (IFC) and World Bank shows that only 33 per cent of the total 3.9 million tons of commonly used plastics disposed per year in Vietnam are recovered and recycled. Investments in waste management infrastructure have not kept pace while the rapid urbanization, and a rising middle class has significantly increased consumption of plastics. Source: Vn Express International
The value of recognition
Intensive efforts are underway with support from diverse stakeholders to promote the sustainable use of rice husks and other biomass resources for electricity and heat production throughout Vietnam. In the past, rice husks were viewed as a waste and dumped into rivers or burned in fields, wasting a remarkable source of energy while badly affecting the environment. The value of rice husks as one of the largest biomass resources in Vietnam is now being recognized. Source: Vietnam Net
The world-first ESB
Vinpearl, a major hospitality-recreation developer and operator in Vietnam, has successfully issued a US$425 million Exchangeable Sustainable Bond (ESB), convertible into new shares of its parent company Vingroup. This issuance is the world’s first ESB. The Joint Book-runners and Joint Lead Managers for the bonds included Credit Suisse, HSBC and BNP Paribas. Source: Hanoi Times
Green lending
Proparco, the French development finance organization, recently granted a US$50 million loan for HDBank to finance green projects and promote sustainable development in Vietnam. This is the first time HDBank has borrowed capital from the organization, but HDBank has started to finance green projects in Vietnam since 2018. Source: Vietnam Net
Green support by IFC
IFC is considering a proposal to provide US$30 million as financing to a project being developed by Thuan Thanh Environment JSC and JFE Engineering Corporation of Japan. The financing would support the construction of an 11.6MW waste-to-energy plant located in Bac Ninh province. The project would process up to 350 tons per day of municipal solid waste and up to 150 tons per day of non-hazardous industrial solid waste generated in factories in northern Vietnam. Source: Deal Street Asia
