Climateworks Centre has launched a new program to facilitate the establishment of net zero industrial precincts in Vietnam.
This follows an MOU signed by Climateworks and Ho Chi Minh Institute of Development Studies on the sideline of Ho Chi Minh City Economic Forum (HEF).
The program aims to support Ho Chi Minh City to accelerate its ambitions of attracting green investment while contributing to national net zero emissions goals.
The role of net zero industrial precincts in Vietnam’s industrial decarbonisation
Like many middle-income nations, Vietnam’s industrial development has been heavily reliant on energy- and emissions-intensive processes.
The industrial sector consumes 54 per cent of Vietnam’s total energy, and emissions have surged by 140 per cent over the past decade.
Power consumption is projected to increase by 10–12 per cent each year over the coming decades to sustain economic growth.
While renewable energy sources such as wind and solar have expanded rapidly, coal and oil remain dominant in Vietnam’s energy mix. In 2023, coal comprised almost 48 per cent of the energy mix, while oil comprised around 24 per cent.
Despite a planned coal phase-out, coal consumption is not expected to peak until 2030, with Vietnam having a higher energy consumption per unit of economic output than neighbouring countries.
For the past 30 years, industrialisation has been a cornerstone of Vietnam’s impressive economic growth.
At the core of that progress lies the development of a network of 422 industrial precincts across 61 provinces, including industrial zones, industrial parks and other economic precincts.
These designated industrial precincts were instrumental in attracting domestic and foreign investment by offering financial incentives, simplified administrative processes, preferential rent fees and supportive infrastructure.
By 2030, the Vietnamese government plans to develop another 153 precincts, bringing the total number to 575.
Decarbonising industrial precincts – the backbone of Vietnam’s industrial sector –is crucial for achieving the nation’s net zero by 2050 goal.
Existing initiatives in Vietnam around ‘eco-industrial zones’ or ‘green industrial zones’ mainly focus on power efficiency, circular economy and waste management.
To attract investment at scale and contribute to emissions reduction targets, a holistic transformation of industrial precincts is needed.
This includes credible transition plans that could attract financing from large investors and global manufacturing companies that are urged to decarbonise their supply chains.
Ho Chi Minh City can establish net zero industrial precincts and attract green investment
In the next twelve months, Climateworks will work with Ho Chi Minh City to develop a roadmap for transforming the city’s industrial zones into net zero industrial precincts (NZIPs)
As Vietnam’s leading business, financial, innovation and skills centre, Ho Chi Minh City has advantages for establishing NZIPs.
The city is Vietnam’s third-largest industrial region, hosting 19 industrial precincts.
To enhance its integration into global supply chains, the city plans to transition five of these precincts to be more environmentally sustainable by adopting green technologies.
A high concentration of foreign direct investment companies in Ho Chi Minh City – many of which are large multinationals with net zero targets – can serve as drivers for more progressive NZIP policies.
Climateworks brings industrial expertise and regional experience to Vietnam
With a place-based investment approach, NZIPs can attract new industries, stimulate green exports, build enabling infrastructure, increase skills development, and decarbonise emission-intensive industries.
Developing NZIPs will require expertise in industrial decarbonisation, developing transition plans and collaboration between governments, investors, developers and industry players.
Climateworks is uniquely positioned to contribute to Vietnam’s net zero journey.
Drawing on our industrial decarbonisation expertise and our work to establish engagement in facilitating the establishment of NZIPs in Australia and Indonesia, Climateworks will facilitate capacity building, policy development and investment mobilisation to help develop NZIPs in Ho Chi Minh City.
In the long term, substantial opportunities exist to establish NZIPs in Vietnam.
Vietnam’s JETP Resource Mobilisation Plan [PDF 221.7mb] and Power Development Plan 8 emphasise the importance of regional and subnational efforts in achieving national net zero targets.
The country’s economic development policies prioritise shifting foreign direct investment to low-emissions or ‘green’ industries, as outlined in the National Green Growth Strategy.
This strategy also highlights the need for low-carbon production processes, reducing greenhouse gas emissions and promoting renewable energy.
These national initiatives create an enabling environment for establishing NZIPs in Vietnam—an outcome Climateworks supports.
Beginning in Ho Chi Minh City, we aim to demonstrate how these precincts benefit affiliated regions and communities and replicate their success throughout Vietnam.
