Cement, plastic, and steel industries in Vietnam are being expected to actively participate in Vietnam’s circular economy as decarbonisation will be key to ensure their sustainable development.

Addressing the need for decarbonisation at a hybrid conference in Ho Chi Minh City on March 16, the International Finance Corporation (IFC) under the World Bank Group noted that remaining behind in technology adoption and being shut out from traditional export destinations due to high emissions will result in dire consequences.

“The decarbonisation trends in manufacturing including the cement industry is becoming more and more populous,” said Li Tu, global manufacturing sector lead and senior investment officer from the IFC. According to Tu, customers, governments, and investors are all seeking more sustainable development paths and therefore underline decarbonisation.

“The demands of customers in developed markets such as the United States and Europe are pushing producers in the supply chain to focus on decarbonisation. Governments globally are also moving very fast in this space,” she noted.

Vietnam is the world’s third-biggest cement producer after China and India. According to associate professor Luong Duc Long from the Vietnam Cement Association, low carbon cement production is possible with reuse of waste or alternative materials in production, or use of alternative fuels from industrial waste. As in the circular economy, cement production can open the door for biomass development and reducing plastic waste.

“Over the past 20 years, the heat consumed to burn clinker has decreased from around 1,000 kcal per kg to 750-850. Electricity consumption has decreased by about 5-10 per cent and some plants have used up to 20-27 per cent of alternative fuels over the years,” Long said.

To be able to reduce carbon emissions in cement production even more and to meet net-zero targets by mid-century, Long suggested continuing to accelerate the achievements of past years, developing a mechanism to compensate for carbon emissions when using alternative raw materials and fuels, and using waste as an alternative fuel for burning cement clinker. In addition, a domestic carbon market will provide more incentives.

Meanwhile, figures from the Vietnam Plastic Association showed that, last year, the Vietnamese plastic industry produced 9.54 million tonnes and generated $25.18 billion in revenues. According to Huynh Thi My, the association’s secretary general, the country imported about 7,000 tonnes of plastic beads to process.

Bhardwaj Vinay, Vietnam country head of Indorama Ventures who took over PET manufacturer Ngoc Nghia JSC last year said, “When we talk about the circular economy, we operate around the three key principles of reuse, reduce, and recycle. In order to facilitate recycling, the design stage is important. For shopping bags and flexible packaging, for example, the latest trend is using homogeneous materials. If you use two different kinds of polymers, then you cannot recycle them because separating them then recycling them is impossible.”

Vietnam’s steel industry is also a big energy consumer and greenhouse gas (GHG) producer that needs to change its practice. According to the Energy Conservation Research and Development Centre (ENERTEAM) in Ho Chi Minh City, the industry is currently characterised by high raw material consumption, high energy demand, and high emissions of GHGs and others such as dust, heavy metals, dioxins, and pollutants in wastewater and noise.

To decarbonise the steel industry, ENERTEAM suggests focusing on areas including energy saving, environmental protection, and material recycling. Nguyen Sy Linh, head of Climate Change and Global Issues at the Institute of Strategy and Policy on Natural Resources and Environment, pointed out policy implications for manufacturing sector decarbonisation, including following a domestic carbon market that includes an emissions trading scheme.

“Currently, the Ministry of Natural Resources and Environment is developing the market including a GHG inventory database, which is a positive sign for carbon market. In addition, competent authorities should review the list of facilities that must conduct inventory to prepare for reduction measures, such as carbon capture and storage technology, along with taking advantage of Vietnam’s fresh commitments to tap into green funds under the Just Energy Transition Partnership,” Linh said.

According to Decision No.01/2022/QD-TTg, all GHG-emitting establishments must carry out inventory, which could pave the way to establish a carbon exchange mechanism sooner rather than later.

Vietnam Investment Review