Viet Nam will launch a carbon-finance programme that will help green the country’s national electricity grid in a commercially sustainable manner.
Under an agreement signed last Friday between the Government and the World Bank’s Carbon Partnership Facility (CPF), the CPF will purchase carbon credits generated by the World Bank-funded Renewable Energy Development Project (REDP) under the UN’s Clean Development Mechanism.
The CPF, with Sweden, Norway and Spain as Buyer Participants, will buy the first three million metric tonnes of carbon credits generated through small hydropower development under REDP, creating a revenue stream for the projects.
The REDP is a US$202 million credit from the International Development Association (IDA), the World Bank Group’s concessional lending window.
“Carbon credits will help create a revenue stream that enhances the financial attractiveness of private investments in renewable energy, by providing performance-based payments in hard currency,” said Victoria Kwakwa, World Bank country director for Viet Nam.
To date, the Viet Nam Ministry of Industry Trade has received around 20 applications to develop small hydropower projects under the REDP.
The REDP is expected to add 250 MW of installed capacity of renewable energy to the grid, with a total of 965 GWh of electricity per year and will also expand local employment opportunities and increase reliability of the electricity supply, especially in rural areas.
About 15-25 sub-projects, which have total investment cost in the range of $5-$20 million each, may be financed by the REDP.
The programme will green Viet Nam’s national electricity grid on a commercially sustainable basis by addressing barriers to renewable energy and providing financial support, including carbon revenue provided by the CPF to improve the financial viability of the projects.
“Signing this agreement with the CPF is very encouraging for Viet Nam, which intends to pursue additional opportunities to use carbon credits to support economic development and climate change mitigation goals,” said Le Duong Quang, Deputy Minister for Industry and Trade.
