Climateworks Centre Launches New Program for Net Zero Industrial Precincts in Vietnam
The Climateworks Centre has recently unveiled an ambitious program aimed at the establishment of net zero industrial precincts in Vietnam. This strategic initiative emerged following a Memorandum of Understanding (MOU) signed between Climateworks and the Ho Chi Minh Institute of Development Studies during the Ho Chi Minh City Economic Forum (HEF). The program seeks to expedite Ho Chi Minh City’s aspirations for attracting green investments while supporting Vietnam’s national net zero emissions goals.
The Significance of Net Zero Industrial Precincts in Industrial Decarbonisation
As a rapidly developing middle-income country, Vietnam’s industrial landscape has relied heavily on energy-intensive and emissions-generating processes. The industrial sector is responsible for consuming a staggering 54 percent of the nation’s total energy. Over the past decade, emissions have surged by 140 percent, prompting a crucial need for transformation.
Projections suggest that power consumption will continue to increase by 10-12 percent annually to fuel ongoing economic growth. While the country has made notable strides in renewable energy deployment—boasting substantial growth in solar and wind power—coal and oil continue to dominate its energy mix. In 2023, coal represented almost 48 percent and oil around 24 percent of the total energy consumption, with expectations that coal consumption will not peak until 2030.
This scenario places Vietnam in a precarious position, as it has a higher energy consumption per unit of economic output than many neighboring nations. The decade-long reliance on fossil fuels underscores the need for a comprehensive strategy to decarbonise the industrial sector, especially as the government prepares to launch an additional 153 industrial precincts by 2030, totaling 575 across the country.
The backbone of Vietnam’s growth has historically been its network of industrial precincts—currently numbering 422 across 61 provinces. These zones have played a vital role in attracting both domestic and foreign investments by providing financial incentives and simplifying administrative processes. As part of its commitment to sustainable development, the Vietnamese government is emphasizing the importance of eco-industrial zones. However, for these zones to significantly contribute to net zero targets by 2050, a more holistic and ambitious transformation is necessary.
Ho Chi Minh City: A Model for Net Zero Industrial Precincts
In the coming year, Climateworks will collaborate with Ho Chi Minh City to devise a roadmap aimed at transmuting its current industrial zones into net zero industrial precincts (NZIPs). With its status as Vietnam’s leading business hub, Ho Chi Minh City possesses unique advantages for establishing NZIPs. Currently, it ranks as the third-largest industrial region in the country, home to 19 industrial precincts.
The city is on a path to enhance its global supply chain integration by transforming five of its industrial precincts into more environmentally sustainable operations through green technologies. This shift is particularly timely as a significant concentration of foreign direct investment companies, many with their own net zero ambitions, can act as catalysts for progressive policies in NZIPs.
Climateworks’ Expertise in Industrial Decarbonisation
Climateworks aims to bring its vast experience in industrial decarbonisation to Vietnam. Through a localized investment approach, the establishment of NZIPs has the potential to spur new industries, promote green exports, and build essential infrastructure while fostering skills development and reducing emissions in heavy industries.
Realising the vision of NZIPs will require adeptness in crafting transition plans and synergistic collaboration among governments, investors, and industry stakeholders. Drawing on its expertise from projects in Australia and Indonesia, Climateworks is poised to facilitate policy development, investment mobilization, and capacity building to support the establishment of NZIPs in Ho Chi Minh City.
Looking ahead, the opportunities for NZIPs in Vietnam are substantial. The country’s Jim and Power Development Plan 8 underscore the need for regional and subnational initiatives in achieving national net zero goals. Economic policies are increasingly prioritizing the shift of foreign direct investments toward low-emissions industries, as detailed in the National Green Growth Strategy.
This strategy highlights the importance of low-carbon production processes and the promotion of renewable energy, creating a conducive environment for the establishment of NZIPs. As the program begins in Ho Chi Minh City, both Climateworks and local authorities hope to showcase the benefits of such precincts, ultimately replicating their success throughout the country.