Mitsubishi withdraws from Vietnam coal plant due to climate concerns

Out-Law News | 04 Mar 2021 | 1:27 am | 1 min. read

Japan’s Mitsubishi Corporation has decided to withdraw from the 2 gigawatts (GW) Vinh Tan 3 coal-fired power plant project in the Binh Thuan province of Vietnam because of concerns about its climate impact.

According to Reuters, in response to questions about Vinh Tan 3, a Mitsubishi spokesman said that Mitsubishi is committed to reducing its investment in coal power to keep in line with international climate goals.

John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “Whilst the Kyoto Protocol dates back to 1997 and entered into force in 2005, one could argue climate change probably went mainstream round about 2009 with the UN climate change conference in Copenhagen, which is also round about the time development work on this Vinh Tan 3 coal fired project first started in Vietnam. Over the decade since then the global drive for decarbonisation has gathered such tremendous pace that projects such as this would inevitably find financing a major challenge.“

“With Chinese financing currently the principal option available for coal fired power projects, not just in Vietnam but elsewhere where coal fired projects are still being developed, we are likely to see such projects primarily being undertaken through Chinese debt and equity, and even this will likely tighten given China’s own net zero agenda, ” he said.

“For growing economies such as Vietnam, new base load power generation is unavoidable and whilst renewable energy offers a partial solution, it also introduces new challenges such as grid stability issues. Nevertheless, by reducing its reliance on coal fired power plants, and increasing investments in its grid as well as in gas generation and renewable energy, Vietnam is embracing a cleaner and more sustainable future. Hopefully though, the challenges to project development in the past, such as long gestation periods, can be avoided going forward, through a more collaborative process in identifying and implementing the optimal contractual arrangements for financing these grid, gas or RE projects,” he said.

Vinh Tan 3 is part of a Vinh Tan complex in Bình Thuan province, Vietnam. It is expected to generate 12bn kilowatt-hours each year from three 660MW supercritical units.

It is reported that Vinh Tan 3 is separate from the Vung Ang 2 and planned to start operation in 2024.

In January, the Japan Bank for International Cooperation agreed to lend $636 million to Vung Ang 2 coal power project.