Vietnam Transport Facility (VTF) - Decarbonisation of the transport sector

Viet Nam, the world's 13^th most carbon-intensive economy, is facing rapid growth in greenhouse gas emissions from the transport sector, which accounts for 15% of national emissions. Road transport, which handles 94% of passenger transport and 76% of freight, is responsible for 89% of these emissions. It also causes significant air pollution, with 70 000 premature deaths every year and a cost that could reach 7% of GDP in the coming years if nothing is done - particularly in Hanoi, which is becoming one of the most polluted cities in the world.

Having pledged at COP26 to achieve carbon neutrality by 2050, Viet Nam has drawn up an ambitious roadmap for the transport sector and has already taken key decisions : construction of a North-South high-speed rail line, expanded powers for Hanoi and Ho Chi Minh City to develop their metro networks, promotion of « Transit Oriented Development » (TOD) approaches to improve the urban integration of public transport, development of electric mobility, etc.

The Facility's main objective is to develop, under the Team Europe format, a portfolio of at least 4 public transport infrastructure projects focused on rail, inland waterway transport and urban mobility. It is structured around 5 components:

1. Preparation of investment projects (€15 M) : financing of upstream technical studies (pre-feasibility, feasibility, E&S impact, institutional diagnostics, etc.) ;
2. Investment projects (target leverage of €1 Bn in loans through co-financing with other donors) : financing of works and equipment for the prepared projects ;
3. Support for the implementation of investment projects (€13 M) : Technical assistance to project owners for project management, supervision, operation and maintenance ;
4. Sector dialogue, strategic studies and capacity building (€4.5 M) : facilitation of strategic-level exchanges between Vietnamese and European actors (public and private). Planned activities will include technical assistance, training, study tours, workshops and seminars. France leads on the rail sector, in liaison with SNCF. An envelope of €2.5 M is allocated to electric mobility and logistics, sectors with a strong environmental stake.
5. Private sector participation and coordination of the Facility (€6.1M) : support to the European private sector in promoting its technological offer and know-how in Viet Nam (upstream studies, business forums, interface with the EU Global Gateway Investment Hub), and coordination of the Facility through the establishment of a Team Europe Secretariat in Hanoi, managed by Expertise France. 

The Facility will be financed by a European Union blending grant of €40M, delegated to AFD, which acts as the Facility's project owner. Expertise France will act as AFD's service provider for the implementation of the Team Europe Secretariat and part of the sector dialogue, strategic studies and capacity building activities.

By the time investments are implemented, the Facility will contribute to Viet Nam's climate objectives by encouraging a modal shift towards low-carbon transport, with a target of reducing GHG emissions by 200 000 tons of CO2eq/year. It will improve national connectivity, make cities more liveable by developing public transport accessible to 10 million people, and improve air quality. Finally, it will strengthen the partnership between Viet Nam and Team Europe, creating business opportunities for European companies, while promoting high-quality, safe and open European standards.