Coal Power Expansion Plans Slow in Vietnam, But Banks Haven’t Gotten the Memo
This blog was originally published as a case study in Banking on Climate Change: Fossil Fuel Finance Report Card 2017, by RAN, BankTrack, Sierra Club, and Oil Change International, in partnership with 28 organizations around the world -- including CHANGE VN, an organization fighting coal based in Ho Chi Minh City.
Six months after the signing of the Paris Agreement by 175 nations including Vietnam, World Bank president Jim Yong Kim told a gathering of government and corporate leaders in unscripted remarks of his fears for planetary survival: “If Vietnam goes forward with 40 GW of coal, if the entire [Asia] region implements the coal-based plans right now, I think we are finished.” Given Vietnam’s huge renewable energy potential — a 2016 study by Vietnam Sustainable Energy Alliance and WWF-Vietnam has described how 100 percent of the country’s power can be generated by renewable energy technologies by 2050 — this disastrous coal expansion is completely unnecessary.
Thankfully, there are indications that Vietnam’s rush of coal-fired power plant projects has been tempered to some extent. In January 2016, the country’s prime minister signaled a shift away from coal by announcing that the government intends to “review development plans of all new coal plants and halt any new coal power development.” Two months later, the country’s national development plan was revised to cancel or postpone 20,000 MW of proposed coal plants.
There are still, however, many coal plants on the drawing board, backed by a string of private banks. Three projects with a combined installed capacity of 4,380 MW are aiming to reach financial close this year:
Vinh Tan III: HSBC is the lead arranger for the estimated $2 billion project, with China Development Bank and Standard Chartered considering financing it.
Vung Ang II: BNP Paribas is advising on the $2 billion project, while MUFG, Mizuho, Sumitomo Mitsui Financial Group (SMFG), and Standard Chartered are potential lenders.
Nam Dinh: This is another $2 billion project involving primarily project finance, where Mizuho is acting as advisor and MUFG and Standard Chartered are again among the potential financiers.
In April 2015, local people reportedly blocked a national highway for 30 hours in a protest against the extreme levels of pollution emanating from the Vinh Tan II unit, in operation since 2014. The peaceful protestors were met by a police riot squad using teargas. Following the protest, only minor improvements to the plant’s woeful waste ash dumping practices were made.
The waste management plans at the adjoining, still incomplete Vinh Tan III unit look even more alarming; in November 2016 as part of the project preparations, the companies behind Vinh Tan III requested permission to dump 1.5 million cubic meters of industrial waste into a Marine Protected Area offshore, arguing it's only “natural sediment.”
Jim Yong Kim’s warning that “we are finished” if Vietnamese coal plants go ahead came from an acute concern about climate change, but it also applies in the very short term to human lives and rich marine ecosystems. “We are finished” now needs to be the call of banks as they exit financing for potentially disastrous Vietnamese coal power expansion.