Vietnam is one of the most vulnerable countries to climate change – ranked in the top 5 countries with the highest climate risks in the world according to some estimates. Recognizing this reality, after Prime Minister Pham Minh Chinh made a strong commitment to Net Zero at COP 26, the Vietnamese Government has made strong legislative moves to promote the national emission reduction process.
However, according to a McKinsey report, even in the most optimistic scenario where current policies and transformation technologies are effectively implemented, Vietnam can only reduce about half of its emissions target by 2050. It can be seen that stronger efforts from stakeholders will be needed to narrow this gap.
As a key driver of economic growth but also one of the largest sources of emissions, the industrial sector currently accounts for nearly 30% of the country’s total emissions. Focusing on emissions reductions in this sector will be key to helping Vietnam realize its Net Zero 2050 commitment. This paper analyses the emission reduction potential and transition challenges of three key industries: seafood processing, pulp & paper, and steel.
1. Main emission sources and challenges in emission reduction
The seafood processing industry plays a particularly important role in the Vietnamese economy, providing livelihoods for millions of workers in coastal provinces and contributing greatly to export turnover. The industry's emissions mainly come from energy, of which there are two main sources: boilers using DO oil or natural gas for cooking and drying; and electricity for refrigeration systems and cold storage. Studies have shown that refrigeration systems can account for up to 70% of a processing facility's total energy consumption, so this is the sector with the greatest potential for energy savings.
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DO oil boiler (Source: thietbiaplucdonganh)
However, reducing emissions in the sector also faces many difficulties due to its fragmented and small-scale nature. Most processing enterprises are small and medium-sized enterprises (SMEs), which still face many limitations in technical capacity, finance and investment vision. Seasonality in production also makes it difficult to design and finance suitable renewable energy systems. Therefore, raising awareness and building energy management capacity are important first steps towards reducing emissions in this key export sector.
The pulp and paper industry, one of Vietnam’s fastest growing manufacturing sectors, is also a significant emitter. Emissions mainly come from fuel combustion in boilers (many mills still use coal or heavy fuel oil) and electricity consumption in pulping, drying and paper machine operations. Although many low-cost and commercialized emission reduction solutions exist, the industry’s momentum for transformation remains limited.
This is mainly due to the fact that Vietnam’s main export market is China, where the requirements for low-emission products are not as strict as in Europe. In addition, many factories still operate with old, low-efficiency equipment, while switching to renewable fuels such as biomass requires large initial investment costs. The lack of cheap green finance is a major bottleneck. To overcome this, innovative financial mechanisms and stronger incentives are needed to promote investment in clean technology.
The steel industry is one of the most emission-intensive industries and plays a fundamental role in the Vietnamese economy. In primary steel production, emissions mainly come from the iron smelting process in blast furnaces, a process that uses large amounts of coal as both fuel and reducing agent. Meanwhile, the production of recycled steel from scrap steel using electric arc furnaces (EAFs) emits less but consumes more electricity. Emission reduction in the steel industry is particularly complex due to technological barriers and large investments. Steel plants have long equipment life cycles and high capital costs, making it difficult and expensive to renovate or change technology.
Electric arc furnace (Source: eastcarb)
New solutions such as green hydrogen or direct iron reduction (DRI) are still in their early stages globally and require a stable supply of renewable energy – something Vietnam is still developing. The lack of incentive policies and high financial risks also make businesses hesitant to invest. Therefore, the steel industry needs a long-term transformation plan, international cooperation and strong policy support to realize the goal of deep emission reduction.
2. Potential for emission reduction
In the seafood processing industry, the potential for emissions reductions lies largely in improving energy efficiency and increasing the use of renewable energy. In the short term, upgrading to high-efficiency refrigeration systems – through measures such as replacing old compressors, optimizing condenser and evaporator designs, and improving control systems – can deliver significant energy savings. Optimizing boiler operations and switching to cleaner fuels such as biomass can also bring tangible benefits.
Green seafood products are gradually becoming a trend.
In the long term, the application of artificial intelligence (AI) in real-time energy monitoring will help optimize electricity consumption, while the direct power purchase mechanism (DPPA) allows businesses to buy renewable electricity directly from power plants, significantly reducing indirect emissions.
Read more about ESCO & DPPA - Two breakthrough mechanisms in renewable energy electricity development
The pulp and paper industry has great potential for implementing low-cost and technologically feasible emission reduction solutions. In the short term, mills can switch from coal to biomass, install rooftop solar, and optimize production processes through measures such as condensate recovery, steam trap monitoring and waste heat utilization.
These solutions not only reduce emissions but also improve operational efficiency. In the long term, the industry can consider using hydrogen or green ammonia as alternative fuels, and participate in the DPPA mechanism to purchase renewable electricity. Combining these measures will help the pulp and paper industry reduce emissions while increasing its competitiveness in an international market that increasingly demands green products.
For the steel industry, waste heat recovery is a potential and cost-effective solution that can be implemented in the short term. Heat from blast furnace exhaust and ore cooling can be used to generate electricity, dry raw materials or preheat combustion air. This solution not only reduces energy consumption but also improves operational efficiency. In addition, installing rooftop solar and switching to cleaner fuels for auxiliary furnaces will also help reduce indirect emissions. In the long term, the transition to green hydrogen steelmaking technology and the use of renewable electricity in arc furnaces will be key to achieving deep emissions reductions. However, this requires Vietnam to strongly develop renewable energy infrastructure and an appropriate supporting policy framework.
3. Key recommendations for businesses
To accelerate emissions reductions, businesses across all three sectors should start by undertaking comprehensive energy and greenhouse gas emissions inventories to identify hot spots and opportunities for efficiency improvement. From there, they can develop a roadmap for emissions reductions with short- and long-term targets. Investing in mature, cost-effective solutions is a strategic step to achieve rapid results while preparing for deeper transformation.
At the same time, businesses need to improve human resources capacity in energy management, emissions calculation and project finance to ensure sustainable implementation of solutions. Finally, cooperation in the value chain - from suppliers to customers - is a decisive factor, helping to create low-carbon supply chains and enhance the competitive position of Vietnamese industry in the global green economy.