The agreement will help Vietnam achieve its goal of reducing its greenhouse gas emissions to "net zero" by 2050, a goal which experts say is necessary to cap global warming.

With the help of the funding, Vietnam will be able to expand its electricity grid and increase renewable energy production.
With the help of the funding, Vietnam will be able to expand its electricity grid and increase renewable energy production. (Reuters)

Vietnam has reached a $15.5 billion agreement with a group of nine rich industrialised countries that would help the Southeast Asian nation cut its greenhouse gas emissions by shifting away from coal to renewable energy.

In an announcement made on Wednesday, the Group of Seven (G7) major economies, along with Norway and Denmark, said the aim is to help Vietnam reduce its emissions to "net zero" by 2050.

The announcement comes as Vietnamese Prime Minister Pham Minh Chinh is visiting Brussels to attend the ASEAN-EU Commemorative Summit marking 45 years of diplomatic ties between the two regional blocs. 

"Net zero", is a target that experts say needs to be met globally to cap global warming at 1.5 degrees Celsius (2.7 degrees Fahrenheit).

The Just Energy Transition Partnership with Vietnam is among a series of agreements that developing and rich nations are negotiating.

The first such deal was signed with South Africa last year, and a similar agreement was reached with Indonesia last month.

"Vietnam is a dynamic, emerging economy at the heart of Southeast Asia," British Prime Minister Rishi Sunak said.

"The investment we are making today means the country can cut its emissions while simultaneously creating new jobs and growth."

The UK, Canada, France, Germany, Italy, Japan and the United States comprise the G-7.

READ MORE: Coal generated energy hits record high despite climate pledges

'Energy security'

US President Joe Biden said the deal would help Vietnam "deliver long-term energy security," create opportunities for the country's population and advance "the fight against the global climate crisis."

The $15.5 billion of funding will come from public and private sources over the coming three to five years, much of it in the form of loans, according to the agreement.

By using the money to expand its electricity grid and increase renewable energy production, Vietnam will be able to bring forward its target for peaking emissions from 2035 to 2030.

The country will also raise its 2030 target for electricity from renewable sources to 47 percent from a previous forecast of 36 percent.

The successful delivery of these ambitious targets is expected to result in around 500 megatonnes (0.5 billion tonnes) of cumulative emissions saved by 2035.

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Source: TRTWorld and agencies