Sembcorp drives Vietnam's shift towards a future powered by low-carbon industries
In a significant move towards a greener future, Sembcorp Development has announced the addition of three Vietnam Singapore Industrial Parks (VSIP) to its portfolio. This expansion comes as Vietnam charts a path for sustainable, low-carbon industrial growth.
Vietnam, one of Asia's most dynamic manufacturing economies, is known for its ambitious GDP targets and a net-zero goal by 2050. The country is advancing its transition to renewable energy, aiming for a cleaner energy mix by 2030. Low-carbon Industrial Parks (IPs) powered by renewables are in high demand in Vietnam.
Sembcorp's VSIPs integrate renewable energy and ESG-enabling technologies, attracting high-value investors seeking to build greener supply chains. The company's approach to embedding low-carbon practices across the VSIP network includes solar-ready rooftops, smart grid-ready infrastructure, and site designs promoting industrial clustering and circular resource use.
The main challenges in rolling out low-carbon IPs in Vietnam include regulatory restrictions and high upfront costs for green infrastructure. However, supportive regulations in Vietnam, such as allowing park developers to supply renewable energy, provide energy-sharing models, or sign direct power purchase agreements, can unlock significant private investment and speed up adoption of integrated energy solutions.
Vietnam's key policy priorities to accelerate low-carbon industrial development and lead in the sector include implementing a national emissions trading system (ETS), supporting renewable energy transitions, promoting industrial symbiosis, advancing energy efficiency and circular economy principles, and fostering innovation in low-carbon technologies.
The pilot phase of Vietnam's ETS, starting in 2025, targets carbon-intensive industries like electricity generation, iron, steel, and cement production. This system will initially allocate emissions allowances freely to key installations and later transition to government auctions by 2029. The ETS aims to regulate emissions intensity linked to production rather than enforcing hard caps, enabling gradual decarbonization of heavy industries.
Policy focus also includes creating supportive regulatory frameworks that enable low-carbon industrial parks powered by renewables and promoting industrial symbiosis—sharing energy, water, and materials among industries to optimize resource use and reduce waste. The VSIPs exemplify this approach, helping align economic growth with climate goals and prepare for net-zero by 2050.
The government promotes circular economy frameworks in the energy sector, aiming to minimize resource consumption and waste while maximizing efficiency. Emphasis is placed on increasing renewables in the energy mix by 2030, with pilot projects encouraging shifts to cleaner energy sources in manufacturing.
The steel industry, a major emitter, prioritizes adopting renewable energy, energy efficiency, direct reduced iron-electric arc furnace (DRI-EAF) technology with hydrogen readiness, limiting new blast furnaces, and researching carbon capture, utilization, and storage (CCUS) to meet national emission reduction targets.
Sembcorp continues to expand in Vietnam with the development of ready-built facilities and its flagship Vietnam-Singapore Industrial Parks. The rejuvenation of older industrial parks and incentives for retrofits, digital upgrades, and water circularity can reduce emissions and extend the operational life for these legacy zones. Regulatory recognition of internal energy networks managed by developers can lower government capex burden and deliver smarter, cleaner power to tenants.
The LEGO Group's $1 billion factory at VSIP Binh Duong III is a testament to the viability of low-carbon industrialisation. It is the company's most environmentally sustainable factory to date, demonstrating the potential for a greener future in Vietnam's manufacturing sector.
References:
- Vietnam to Launch Carbon Market in 2025
- Vietnam's Green Industrial Revolution
- Vietnam's Steel Industry Embraces Green Transition
- Circular Economy in Vietnam
- Vietnam's Energy Transition
- Incorporating environmental-science principles and leveraging technology, Sembcorp's Vietnam-Singapore Industrial Parks (VSIPs) are integrating renewable energy and ESG-enabling technologies to cater to high-value investors seeking to build greener supply chains, thereby advancing Vietnam's transition to renewable energy.
- As part of its national policy priorities, Vietnam aims to promote industrial symbiosis, which includes sharing energy, water, and materials among industries to optimize resource use and reduce waste, a approach exemplified by Sembcorp's VSIPs, contributing to both economic growth and climate goals.
