Vietnam’s steelmakers cut emissions with cleaner energy and upgraded production lines amid decarbonization push. (Photo: Hoa Phat)
The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to take effect in 2027, will impose carbon tariffs on high-emission imports. As one of Vietnam’s primary export destinations for steel, the EU’s new carbon pricing policy is expected to have a major impact on the Vietnamese steel sector.
In response to this growing external pressure, Vietnam’s two steel giants—Hoa Phat Group and Vietnam Steel Corporation (VNSteel)—are launching decarbonization initiatives and investing in green energy.
Hoa Phat launches 8 decarbonization measures
Founded in 1992 as a machinery and equipment trader, Hoa Phat has grown into one of Southeast Asia’s largest steel producers, exporting to over 40 countries. While steelmaking is known as a carbon-intensive industry, Hoa Phat is striving toward its 2050 carbon neutrality goal. The group—comprising five main companies and 18 subsidiaries—has completed a full carbon inventory across its operations by 2025, with certification from the British Standards Institution (BSI).
In addition to aligning with international carbon accounting standards, Hoa Phat has allocated 30% of its total investment capital toward environmental protection. All of its steel plants employ advanced closed-loop production technologies from G7 countries to optimize energy efficiency and reduce emissions. According to company data, Hoa Phat has already implemented at least 8 emission-reduction actions:
- Conducting employee training based on national GHG regulations, energy audits, and CBAM requirements
- Recovering waste heat from coke ovens for power generation
- Generating electricity using heat from the Coke Dry Quenching (CDQ) process
- Utilizing heat from the sintering process to produce electricity
- Applying continuous casting and rolling to reduce reheating energy consumption
- Installing Blast Furnace Power Recovery Turbines (BPRT) equipment
- Replacing truck-based raw material transport with conveyor systems
- Launching large-scale tree planting initiatives
Hoa Phat has also established in-house power plants to monitor electricity-related emissions. At its Dung Quat facility, waste heat systems generated 2.39 billion kWh in 2024—enough to cover 90% of the plant’s electricity demand. While the company claims its power sources emit significantly less CO₂ than conventional coal-fired plants, it has not disclosed specific emission reduction figures.
Though its primary production still relies on blast furnaces, Hoa Phat is able to recycle blast furnace slag into S95 cement-grade materials, contributing to resource reuse. Unlike many global competitors shifting to electric arc furnace (EAF) technologies to lower emissions, Hoa Phat has not expanded in this area recently—though company records indicate it adopted EAF as early as 2001.
Looking ahead, the company’s leadership has signaled its intention to collaborate with leading global metallurgical partners on a carbon-neutral technology roadmap. This includes expanding renewable energy use and exploring low-emission methods such as Direct Reduced Iron (DRI), all aimed at developing green steel.
VNSteel eyes green energy to mitigate CBAM impact
Hoa Phat’s rival, Vietnam Steel Corporation (VNSteel), is also accelerating its green transition—especially in anticipation of the EU’s carbon tariffs. According to trade data, Vietnam’s top four exports to the EU—aluminum, steel, cement, and chemical fertilizers—are heavily dominated by steel, which accounts for 96% of the total volume. This leaves VNSteel highly exposed to CBAM risks.
To counter this trade barrier, VNSteel has laid out a decarbonization roadmap. In the short term, the company is prioritizing carbon inventory efforts in compliance with EU and domestic regulations, improving production processes, and switching to greener raw materials. It also plans to prioritize the export of lower-carbon steel products. Over the medium and long term, VNSteel will invest in breakthrough technologies to cut process-related emissions.
The company has committed to using renewable energy—such as wind and solar—and intends to work alongside industry peers, associations, and government agencies to support low-carbon energy development and integration into steel production.
Though VNSteel produces over 80% of its crude steel via electric arc furnaces—resulting in lower emissions due to its downstream-focused operations—it admits that its technological capabilities still lag behind global benchmarks. The company aims to reduce its carbon emissions by 5–10% by 2025 and reach net-zero by 2050.
Source: Hoa Phat, 2024 Annual Report, VN Steel
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