The G7 industrialised nations are set to provide $15.5 billion to help Vietnam’s shift away from coal, according to a statement by the UK foreign office.

This deal, initially reported by the Reuters news agency, will be the third of its kind reached by G7 nations as pressure mounts on wealthier countries to help poorer nations with climate change and the move to cleaner energy.

Similar agreements were reached by the G7 in 2021 with South Africa and in November with Indonesia.

Over the next three to five years, an initial amount of $15.5 billion in public and private finance will be distributed, according to the foreign office.

The deal will help Vietnam to peak greenhouse gas emissions by 2030, advancing a prior 2035 forecast, as well as curbing peak coal capacity to 30.2 gigawatts rather than 37, and source up to 47% of its power from renewable energy by 2030, the statement added.

“Today, Vietnam has demonstrated leadership in charting an ambitious clean energy transition that will deliver long-term energy security,” US President Biden said in a statement.

The deal is also supported by non-G7 members Denmark and Norway, Reuters reports.

In addition, Vietnam was due to sign the ‘Just Energy Transition Partnership’ (JETP) with G7 nations at the COP27 summit last month, but talks came to a standstill ahead of the meeting.

As such, to encourage Vietnam to support the offer, EU and UK negotiators have repeatedly hiked the level of funding offered to the country.

The public sector will provide half of the $15.5 billion, whilst the remainder will stem from private investors, according to sources.

A small section of the funding will be grants, whilst the majority of the public investment will be loans, the Reuters report adds.

UK Prime Minister Rishi Sunak said of the agreement: “The JETP model is a game changer in the fight against climate change – using international aid to unlock billions of dollars of private finance.

“Vietnam is a dynamic, emerging economy at the heart of Southeast Asia. The investment we are making today means the country can cut its emissions while simultaneously creating new jobs and growth. Together we will deliver a cleaner, greener future for Vietnam and our planet,” he added.