Special edition  » The climate for change

Vietnam’s future official development assistance-funded investments will be strongly driven by climate change initiatives.

The majority of international donors who participated in a climate change response meeting between local government and donors in Hanoi in October, 2009, believed that Vietnam was particularly vulnerable to climate change’s adverse effects.

They also agreed that while Vietnam would become a middle income country soon, it would be eligible for a significant share of “new and additional” official development assistance (ODA) in the form of grants and concession loans, as per the UN Framework Convention on Climate Change (UNFCCC) for adaptation measures and greenhouse gas (GHG) emissions mitigation.

The United Nations Development Programme (UNDP) anticipated that future ODA to Vietnam would be strongly dominated by climate change investment. “Over the coming years, this public finance could rise from tens of millions to possibly hundreds of millions of US dollars per year and be joined by private sector proceeds from carbon trade and low-carbon foreign direct investment,” according to the UNDP.

The United Kingdom’s Department for International Development (DFID) Vietnam head Fiona Louise Lappin said Vietnam needed to ensure sustainable development, poverty reduction, reduce the rich-poor gap, enhance the economy’s competitiveness and provide clean environment for future generations.

“We have clearly seen the role of ODA in helping Vietnam respond to these challenges. ODA will focus more greatly on technical assistance to the Vietnamese government to achieve these strategic targets,” Lappin said.

According to the UNDP, the number of climate change initiatives and projects in Vietnam is large and ongoing negotiations over a new climate deal expected in Copenhagen in December, 2009 are set to increase climate change financing opportunities.

The UNDP has already committed US$4.6 million in ODA for capacity building on adaptation to climate change and controlling GHGs in Vietnam during 2009-2012 and US$3.6 million for sustainable development and climate change planning. It has also backed a series of other climate change mitigation activities, including energy efficiency projects.

The governments of Japan and France also plan to provide Vietnam with US$100-US$150 million and €20 million (US$35 million) a year respectively in soft loans for the Support Programme to Respond to Climate Change (SP-RCC) during 2009-2011.

During the recent signing of the first soft loan package for the 2009 fiscal year between the governments of Japan and Vietnam, Japan pledged to provide 4.68 billion yen (US$55.9 million) for an energy renewal and effectiveness promotion project in Vietnam, which will help the country’s sustainable development and GHG mitigation.

Ayumi Konishi, Asian Development Bank’s (ADB) country director in Vietnam, said ODA’s critical role would ensure the country’s economic development benefited all people, not just a part of society.

“Environmental issues, including adaptation and climate change minimising measures and natural resource management will be considered priorities in ODA projects,” Konishi said.

In October, Denmark committed US$40 million in ODA for Vietnam’s climate change and rising sea level response projects. In June, the European Investment Bank granted Vietnam a 100 million euro soft loan package to fund climate change adaptation projects, with 70 per cent used for energy renewal and effectiveness development projects.

The Australian government plans to provide Vietnam with US$3.07 million in ODA during the 2009-2010 fiscal year to implement integrated disaster mitigation approaches, including addressing climate change. The focal areas for Australia’s assistance include supporting a pro-poor approach to economic integration, assisting ethnic poverty alleviation, strengthening disaster preparedness in relation to climate change and other disasters and helping Vietnam prepare for challenges of middle income status beyond 2010.

The Ministry of Natural Resources and Environment estimated that Vietnam would need about VND2.4 trillion (US$133.3 million) for climate change adaptation programmes from now to 2015. The capital is expected to be spent on science and technology studies and applications, climate change adaptation action plans and human resource training.

“It is essential for Vietnam to make greater efforts in coming years to achieve its sustainable development goals, proactively responding to climate change based on the effective use of valuable support and assistance from donors and close cooperation with the international community as well,” Deputy Prime Minister Hoang Trung Hai said in the meeting with international donors.