- 30.01.2025
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The World Bank Group’s private sector arm, the International Finance Corporation (IFC), has indirectly financed new coal production in Vietnam, despite commitments to stop doing so. This is the latest in a series of exposés which have demonstrated how the IFC, and peer institutions like the Asian Development Bank, have funded new coal megaprojects despite claiming to have ended all funding for coal – for example, Java 9 & 10 in Indonesia.
How is IFC facilitating more coal production in Vietnam?
- Location: Ky Loi, Ky Anh, Ha Tinh, Vietnam
- Projects: Vung Ang Power Station
- Project owners: PetroVietnam Power Corporation JSC (Phase 1), Vung Ang 2 Thermal Power JSC (Phase 2)
- Insured by: PetroVietnam Holdings
- Indirectly supported by: International Finance Corporation, HDI Global SE (part of the Talanx group)
In 2021, the IFC invested in PVI Holdings, a Vietnamese company which insures numerous energy projects. Following this investment, PVI Holdings provided insurance for eight new coal-fired power plants, including six connected to the state energy company.
When all fully operational, these plants will add nearly 4GW of coal capacity in Vietnam, taking it ahead of Poland to have the 10th highest coal capacity in the world. It would also mean Vietnam exceeded the 30.2GW of peak coal capacity that it committed to in the political declaration on its Just Energy Transition Partnership (JETP) deal.
PVI is highly unlikely to meet the conditions of the IFC’s Green Equity Approach, which requires its clients to reduce their coal exposure by half by 2025, and to zero by 2030. World Bank President Ajay Banga cited the Green Equity Approach as an example of the Bank’s successful climate action during its most recent Annual Meetings in October 2024.
Furthermore, the lack of civil society space in Vietnam means that it is highly unlikely that this investment complies with IFC standards on public consultation and stakeholder engagement.
In response to Recourse’s research, the IFC stated that, as an insurance company rather than a bank providing project finance, PVI is not subject to all of the requirements of the Green Equity Approach (such as disclosing high-risk projects and committing to stop funding new coal projects). However, IFC confirmed that PVI is required to reduce its coal exposure by at least half by 2025 – a feat that now seems highly unlikely given the wave of new coal projects that PVI is insuring.
Environmental, social, and gender-based harms of coal production in Vietnam
Burning coal generates extremely high carbon emissions, which threaten to intensify climate breakdown. It also causes pollution, health problems and displacement. Vietnam’s greenhouse gas emissions from coal rose significantly in 2024 and will climb further if all of these projects become operational.
These problems and more have been noted in relation to the Vung Ang power station. Local residents have complained that the Vung Ang 1 project has already contributed to toxic air and water quality, dried out paddy fields, dying fish and banana trees failing to produce fruit. The LA Times reported that proper relocation and compensation processes have not been followed for the construction of Vung Ang 1 and 2, with residents asked to sign papers without compensation amounts being agreed.
The social, economic, environmental and health-related impacts of coal development disproportionately harm women. This has been acknowledged in World Bank reports, which highlight that women are often excluded from job opportunities and development programmes that come with coal development, and may face increased poverty, food insecurity and gender-based violence.
The World Bank Group is committed, under its Gender Strategy, to support gender equality, inclusive growth and the empowerment of all women and girls. It is therefore completely contradictory for the IFC to continue to support coal, or any fossil fuel development, as these impacts will undermine the Group’s commitments to foster inclusive growth and gender equality.
Fortunately, some planned coal projects in Vietnam, such as Song Hau 2 and Quang Trach 2 (expansions of the power plants of the same names mentioned above), have struggled to find financing and have since been cancelled. But with more coal capacity currently being developed, both for power generation and for industrial uses such as steel production, it is imperative that the multilateral development banks are not helping to finance more coal projects, but are instead supporting a genuinely just and sustainable energy transition in Vietnam.
What should the IFC do in this case?
Ensure that PVI does not insure any further coal projects and reduces coal exposure
Ensure that PVI discloses its annual coal exposure and any coal subprojects it has insured
Amend its Green Equity Approach to apply to all forms of financing for coal projects
Contribute to the remediation of harms
Download the case study on the right hand side.
Photo: Vung Ang 2 coal-fired power plant, an example of booming coal production in Vietnam. Source: Fossil Free Japan.
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