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Campaigners urge IFC to ditch reported backing for Vietnam gas project

A group of 26 influential climate organisations are urging the International Finance Corporation (IFC) to abandon plans to support construction of an LNG-to-power plant in Vietnam. 

The project would see a 4,000MW facility built in the Thua Thien Hue province in Central Vietnam. It is being overseen by Chan May LNG, a joint stock company that says on its website it is “working hand-in-hand with the Vietnamese government and the IFC” to meet the country’s rapidly expanding energy needs. 

In an open letter published on September 28, a group led by three NGOs – Friends of the Earth US, Recourse and Trend Asia – argues that embarking on a new fossil fuel project is unnecessary and harmful for the environment, and that the IFC should withdraw its support. Other signatories include BankTrack, Oil Change International and Stand.Earth.

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“According to an analysis of different energy transition scenarios, Vietnam can transition to clean energy without any new LNG development,” the letter says, referring to research by the Energy Transition Partnership, which includes representatives from the German, Canadian and UK governments. 

“While this will require significant upfront investments in the short term, in the long term this pathway will represent cost savings as compared to other scenarios. Developing LNG would only crowd out investments in renewable energy, delaying Vietnam’s green transition.” 

The letter adds that supporting the project appears to be at odds with climate commitments made by the US government, whose Treasury Department is the largest IFC shareholder. 

US guidance on fossil fuel financing involving multilateral development banks states that support will only be provided “in exceptional circumstances, after a series of criteria are met”. 

Recipients have to be borrowers of the World Bank’s International Development Association concessional fund, it says, which does not apply to Vietnam. 

“In addition, IFC shareholders representing 45% of the institution’s voting power signed on to the Glasgow statement saying that they will not finance fossil fuels after 2022,” the letter says. 

“Therefore, it is difficult to understand why the IFC is engaging in conversations about potentially supporting this project when there is nearly enough collective commitment from shareholders to foreclose board support for it.

A spokesperson for the IFC tells GTR its involvement with Chan May LNG “is in very early stages”.  

“If an investment is eventually considered, it would be subject to IFC’s robust and world-leading ESG performance standards,” they say, adding that the organisation has mobilised around US$200mn in the last five years to fund renewable energy projects in Vietnam. 

“To date, IFC’s investment in Vietnam’s power sector has been entirely in renewable energy, supporting a transition to cleaner, low-carbon power generation,” the spokesperson says. 

The letter also calls on the IFC and its shareholders to fight back against action taken against campaigners, citing four Vietnamese climate and environmental leaders arrested in the past year for alleged violations of tax laws. 

The IFC spokesperson says: “The World Bank Group (WBG) does not tolerate reprisals and retaliation against those who do not share their views about WBG-financed projects.  

“Any form of intimidation against people who comment on WBG projects, research, activities, and their impact goes against our core values of respecting the people we work for and acting with utmost integrity.” 

More broadly, the climate groups refute suggestions that gas can be seen as a transitional fuel, pointing out that it is only “marginally less polluting” than coal. Gas projects also typically take several decades to become financially viable, the letter adds.  

Vietnamese newspaper The Saigon Times reported in November 2020 that Chan May LNG had assured officials the project had received full financing, including from the US International Development Finance Corporation (DFC) and US Export-Import Bank (US Exim). 

Representatives from DFC and US Exim did not immediately respond when contacted. 

The post Campaigners urge IFC to ditch reported backing for Vietnam gas project appeared first on Global Trade Review (GTR).

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Published 23 November 2022