Shanatu Chakraborty, ADB Country Director for Việt Nam.

The Asian Development Bank (ADB) has positioned itself as the climate bank for the Asia Pacific region, continuing to support countries in the region in general and Việt Nam in particular in terms of green growth.

Việt Nam News reporter Vũ Hoa interviewed Shanatu Chakraborty, the ADB Country Director for Việt Nam about the bank’s support for Việt Nam during the ADB 57th annual meeting held in Tbilisi, Georgia last week.

How does ADB envision supporting Việt Nam’s transition into a sustainable and environmentally friendly economy? Are there specific projects or policies aimed at promoting renewable energy, conservation, or climate resilience?

ADB, as the Climate Bank of the Asia Pacific, is well-positioned to support Việt Nam in addressing climate change risks and impacts and in transitioning to a green economy aligned with the country’s net-zero by 2050 target. This is outlined in the ADB Country Partnership Strategy 2023-26 for Việt Nam, in which one of the two strategic pillars is transitioning to a green economy. For this purpose, ADB has a full suite of services to offer Việt Nam, namely project financing both in public and private sector investment, technical assistance for policy advice and project preparation, relevant expertise and capacity development and transaction advisory services for public-private partnerships.

ADB is already assisting the Vietnamese government in several areas, including climate adaptation and mitigation and strengthening the Paris Agreement. On climate change adaptation, ADB’s projects are promoting climate-resilient agriculture through the upgrading of the irrigation systems for more efficient water use and improved water resource planning, along with mainstream climate-proofing into critical rural, transport and urban infrastructure investments. On climate change mitigation, ADB’s ongoing support for green growth in Việt Nam is contributing to the attainment of the country’s Nationally Determined Contribution (NDC) targets through investments in renewable energy and power systems for energy transition, green city development and a low-carbon public transport system.

ADB is also supporting Việt Nam to put climate change adaptation and mitigation into mainstream national policies and with its plans to accelerate green growth transition.

ADB has facilitated knowledge sharing, policy formulation, capacity building and regional co-operation on climate change topics, as well as preparing projects on climate change, through the implementation of technical assistance projects amounting to around US$32 million.

ADB has also identified a sizable pipeline of climate-positive projects which was agreed with the Government to be approved during 2024-26, but progress has not been to our satisfaction to say the least. The indicative sovereign lending pipeline will focus on climate-resilient urban and infrastructure, climate adaptation water resources management and agriculture and nature-based solutions. Should we be able to accelerate their approval and implementation, they will make significant contributions to Việt Nam’s green growth transition.

How is ADB collaborating with Việt Nam to accelerate investment in renewable energy?

ADB adopted a new Energy Policy in 2021 reflecting the changing contexts and responding to the need to expand access to reliable, affordable energy and work toward the clean energy transition. ADB's new energy policy is aligned with global climate commitments such as the Paris Agreement. ADB’s Climate Change Action Plan approved in November 2023 also helped guide our climate shift to better support our developing member countries.

ADB is spearheading the Energy Transition Mechanism (ETM) initiative to facilitate the transition to sustainable, lower-carbon, and resilient energy systems.

ADB’s Energy Transition Mechanism has the potential to be one of the biggest carbon reduction programs in the world. ETM is a scalable, collaborative initiative developed in partnership with development member countries that will leverage a market-based approach to accelerate the transition from fossil fuels to clean energy. ADB is presently piloting ETM in five countries: Indonesia, Kazakhstan, Pakistan, the Philippines and Việt Nam.

In 2023, in the whole Asia Pacific region, ADB committed a record $9.8 billion of climate finance.

In Việt Nam, ADB’s support for energy transition focuses on improving market-based policy and regulatory environments as well as developing new infrastructure required for accelerating renewable energy deployment.

Could you elaborate on ADB’s role in promoting green finance within Việt Nam? Are there mechanisms to incentivise private sector investments in sustainable projects?

As earlier mentioned, ADB has initiated a major reform to become the climate bank of Asia and the Pacific, with an increased ambition to provide $100 billion of its own funds, across public and private sector operations, for climate finance from 2019 to 2030.

ADB is a major participant in sustainable capital markets as an issuer itself, we have issued a total of $10 billion equivalent of green bonds and have also issued our first blue bond of $300 million in 2021.

ADB has allocated about $300 million of its recent green bonds proceeds to eligible low-carbon transport and climate adaptation projects in Việt Nam. To support Việt Nam’s green finance development, ADB can leverage its extensive experience in the region supporting developing member countries to develop green finance including developing the green frameworks, issue green bonds (government and state-owned enterprises) and investment in green bonds.

Việt Nam can also explore innovative modalities for green public finance, including the potential issuance of green government bonds, and the possible establishment of a green finance scheme or facility to be a catalyst for investments in green infrastructure projects. If operational it could become a policy vehicle for incentivising both public and private investment in green and sustainable projects.

In addition to providing public sector financing, ADB is also proactively exploring innovative ways to mobilise private sector climate financing, as the estimated needs are beyond the capacity of the public sector alone to raise climate finance scale from billions to trillions of dollars.

ADB is spearheading the Innovative Financing for Climate in Asia and the Pacific or IF-CAP, which will use guarantees of ADB’s sovereign loan portfolios to leverage billions of dollars for much-needed climate change investments. With a model of '$1 in, $5 out', the initial ambition of $3 billion in guarantees could create up to $15 billion in new loans for much-needed climate projects across Asia and the Pacific.

In Việt Nam, ADB has committed some green loan transactions (including those certified by Climate Bond Initiatives) for Vietnamese enterprises, particularly in renewable energy and electric vehicles. We expect the Việt Nam market has strong potential for green finance development aligning with the government’s strong focus on green growth.

Việt Nam is striving for a circular economy. How is ADB supporting initiatives related to waste reduction, recycling and resource efficiency?

The Việt Nam Country Partnership Strategy has a pillar that aims to support Việt Nam in adopting a holistic approach to transitioning to a green economy, aligned with the goals of the Paris Agreement, while expanding its response in addressing climate change risks and impacts.

ADB will support Việt Nam in transforming the economy (production and consumption) toward a more energy-efficient and greener growth. Through policy and knowledge support, ADB will assist Việt Nam to review its policy framework to operationalise the zero-carbon net emissions commitment by 2050 and develop a national action plan for implementing a circular economy. Non-sovereign financing will support renewable energy; with non-sovereign and sovereign financing supporting the application of energy-saving technologies in power consumption, transmission and distribution, urban waste treatment, wastewater treatment and drainage.

Currently, ADB is implementing technical assistance to support Việt Nam to reduce marine plastic pollution from source to sea. One example is to develop the Circular Plastic Packaging Guidelines that will serve as a technical guide and recommendations on what constitutes circular plastic packaging in Việt Nam.

ADB technical assistance also supports reducing plastic waste, developing provincial green growth action plans and promoting and facilitating regional cooperation and knowledge-sharing. — VNS