The European asset manager for Nordea has urged buisnesses involved in the Vung Ang 2 project, such as Japan’s Mitsubishi and Korea’s Kepco, to withdraw. Both of these two firms have annouced they will go forth along with Samsung C&T Corporation, but vowed that they will no longer support future coal-fired projects.
The rising pressure to end fossil fuel financing resulted in Japan’s Mitsubishi Corporation withdrawing from a US$2 billion power plant project in Vietnam last week. Mitsubishi, Korea Electric Power Corporation (Kepco) and the Japanese company Chugoku Electric Power, are the firms/state-run utilities that hold the Vung Ang 2 coal-fired plant in the Ha Tinh province. Despite Japan’s earlier statements, the Netherlands-based finance watcher NGO BankTrack has totaled US$1.7 billion worth of loans have been extended to the project by the state.
Vietnam’s electricity demand has risen by about 12 cent per year in past years, in which more than half of its energy needs are met by coal-fired power stations such as Vung Ang 2. However the country is a signatory to the Paris climate agreement, thus having pledged to reduce its dependence on coal to 27 percent by 2030.
With hope to counter China’s growing influence within the region, Tokyo has moved to expand investments within the region, with Japanese firms being encouraged to support fossil fuel projects in Vietnam, which American and European financiers have stepped away from due to the global decarbonisation trend. Last year Kepco stated that it would spend nearly US$190 million to acquire a 40 per cent stake in Vung Ang 2 from Hong Kong’s CLP Holdings, which withdrew from the initiative.
Kepco, Mitsubishi Corporation and the Seoul-based Samsung C&T Corporation has responded to criticism by stating, “moving ahead with projects that were agreed on prior to these commitments”, stating the companies risk, “undermining the beneficial effects of these decisions” thus missing out on future investments from Nordea because of “elevated climate-related risks”. According to Vietnam’s Environmental Protection Law, locals must be consulted before any future coal-fired thermal plants are constructed in their areas.
As the world begins to conclude the Coronavirus pandemic, another major issue is set forth: climate change, that in order to combat, all countries must be onboard. Pollution and smog clouds most of South-East Asia, and due to the regions high population, comes a high demand for energy. Vietnam alone requires twice as much electricity in order to produce the same real GDP as Thailand. How will countries be able to move forward and away from greenhouse gases such as coal, when the nation is so heavily reliant on it?
When combating climate change and eliminating greenhouse gases from leading economies, challenges will certainly be faced and at times neither side will be pleased. Sacrifies will have to be made from the people, to big firms and highly-invested initiatives. It is no doubt that the end result will not only reward the Earth we are living on, but the people living on it as well. However, in the next years to come, the international community must put its head together and put differences aside if we want to destroy climate change for once, and for good.