V I E TN A M GREENHOUSE GAS MITIGATION INDUSTRY SECTOR 58031 Overview of Sector: One of the major engines for economic growth in Vietnam Vietnam Industry Sector At-a-Glance over the past 15 years has been industry. Gross Domestic Product (2007): Production (2006): Since 1990 the industrial sector has grown Total industry and construction: Cement: 33 m tons an average of 10 percent per year, and its 49% of GDP Steel products: 6.6 m tons 10.4% growth per year Brick: 16 billion bricks share of GDP has grown from 25 to 45 Pulp and paper: 1.8 m tons percent. Sector growth is led by the "non- Manufacturing: GDP state" industries, growing as much as 20 25% ofgrowth per year 12.8% Sources of energy (2000): Coal: 57% of energy use; percent annually, and foreign-invested Electricity: 21% of energy use companies, growing at 15.3 percent per Construction: 8% of GDP Projected Energy Use (2010): year. State-owned industries are also 11% growth per year 15.8 MTOE growing but less significantly. In addition 33% of country's energy use; to its rapid growth rate, industry consumes Growth rate 7.1% per year more energy than any other sector, accounting for 36 percent of Vietnam's total energy Projected Energy Use by industry use in 2000. The sector's main sources of energy are coal (57 percent) and electricity (21 percent). Forecasts indicate the growth rate for energy consumption in industry will be, on average, 7.1 percent per year, with coal maintaining over time its position as the main fuel source. The subsectors consuming the most energy are construction materials, including cement and brick, iron and steel, and pulp and paper. Cement Industry: The Vietnam cement industry produced an estimated 32,600,000 tons of cement in 2006, and production is growing at an average rate of between 10 and 14 percent per year. While many plants are converting to more modern kiln technology, older less efficient kilns remain in wide use. In particular, many plants employ wet-kiln technology, which relies on wet or semi-wet raw materials and therefore requires more energy for evaporation, or on vertical shaft kilns, an outdated technology that produces lower-quality cement and is difficult to operate in an energy- efficient manner. Over the past 10 years plants have been converting to a variety of modern technologies that improve energy use relative to these older technologies. Iron and Steel: Vietnam produces writing paper is for domestic use; the major 6,633,000 tons of steel products per year, export product is carton boxes and other including 3,656,000 tons of "long products," packaging. Domestic demand for pulp and such as bars, rods, rails, and other elongated paper cannot be met by the existing forms, and 2,977,000 tons of pipes and "flat capacity, forcing Vietnam to import 63 products," such as flattened sheets and percent of its pulp and 39 percent of its strips. The raw material supply comes paper. Overall the pulp and paper industry mostly from domestic and imported scrap consumes energy at high levels, accounting metal (77 percent; 693,000 tons per year), for 7 percent of electricity use and 9 percent which is further refined into steel; the of coal consumption in Vietnam's industrial sector overall. Many of the facilities depend on technologies that are 10 to 30 years old, and only 27 percent of pulp and 36 percent of paper production employ more advanced technologies involving the use of synchronous motors, automated process lines, and more recently manufactured equipment. Older plants have lower energy efficiencies than do their more modern counterparts, cogeneration using pulp and wood wastes is employed in only some plants, and technologies for waste heat remainder (202,000 tons per year) comes recovery and reuse are not fully exploited. from domestic iron-ore extraction and iron production facilities, the products of which Brick Making: As with are further processed into pig iron and then the cement industry, into steel. Because the sector is largely rapid growth of the dependent on scrap steel as a raw material, construction sector has production takes place predominantly in led to dramatic increases "mini-mills" that use both steel scrap and in brick production over steel from electric-arc furnaces to produce the last 10 years: the steel that is then rolled into long products. volume of baked brick is The sector also uses imported flat products expected to reach 20 along with cold-rolling technologies, pipe billion pieces in 2010 fitters, and various coating technologies to and 40 billion pieces in produce pipes and flat products. The most 2020. The brick rapidly modernizing part of the subsector industry is dominated by surrounds the expansion and construction small-scale activities of joint-venture companies. Some manufacturers, including older facilities are undergoing selective more than 10,000 upgrades as well. The very small traditional traditional brick kilns metal processing facilities are the least that utilize coal or modern. firewood and account for 65 percent of Pulp and Paper: Total pulp and paper production. A small percentage of production in Vietnam in 2006 was 835,000 Vietnam's bricks are produced in tunnel and 958,000 tons, respectively. Paper kilns or blast furnaces; these are more production has tripled since 2000 and is efficient than the traditional batch kilns, but currently growing at 16 percent per year. they also use coal as their major source of Much of the production of printing and energy. Greenhouse gas emissions: Estimates from Cement blending: Standards allow the Initial National Communication of production of PCB30 cement containing as Vietnam indicated that in 1994 greenhouse much as 40 percent additives, yet the ratio of gas emissions from industry and additives in Vietnamese cement products is construction were 11.5 million tCO2-e -- only 18 to 20 percent. Further blending of 11.1 percent of the total emissions in the cement can reduce the quantity of clinker country. The majority of these emissions used and were from energy use (7.7 million tCO2e). the The remainder were from industrial correspo processes (3.8 million tCO2-e), including nding the reactions in cement and steel making. energy Given the sector's high dependence on fossil needed fuels and its rapid growth, these sources to have been growing and are expected to produce continue to grow in magnitude. a ton of cement. Potential Mitigation Measures for The potential reduction in greenhouse gas 2010 to 2015 emissions in the largest cement plants is up to 924,000 tCO2-e per year. Cement Energy efficiency: Cement plants in Fuel switch: Vietnam's cement industry Vietnam that use traditional technologies currently relies on coal as fuel and does not have been shown to use twice as much fuel commonly make use of waste (tires, plastic, and 40 percent more energy than do etc.) or biomass (rice husk, saw dust, etc.). international comparators. A variety of Vietnam has large quantities of unused rice improvements that are common husk, wood waste, and other biomass that internationally can be made to improve could be used in the cement industry. A 20 energy efficiency in cases where traditional percent use of biomass or waste at two technologies are used or would otherwise be production facilities could save as much as adopted. These include 175,000 tons of CO2 per year, and the replacing wet kilns or overall potential for reductions at Vietnam's vertical shaft kilns with 41 largest cement plants is 2.2 million tons more modern of CO2 per year. technologies and improving grinders and clinker mills, Waste-heat recovery: Using waste-heat preheaters, and fan recovery systems, waste heat from controls. Based on preheaters and clinker coolers in steam estimates of potential boilers can be recovered and used in improvements in condensing turbines to generate power. The energy efficiency over power produced can be consumed by the current levels, the 41 plant itself or, whenever possible, delivered largest plants in the to the grid. These efforts can have country could achieve substantial results, especially in large kilns. emission reductions of The total potential reduction for this up to 6.2 million tCO2- intervention is 537,000 tCO2-e per year. e per year. Iron and Steel Waste-heat recovery: Many steel production processes offer opportunities for waste-heat recovery, resulting in fuel savings, yet are not widely adopted in the country. These include coke dry quenching (CDQ) during Brick coke production, use of top pressure Making recovery turbines in iron making, and use of blast furnace gas (BFG) or basic oxygen Energy furnace (BOF) gas for heat and/or power efficiency: While not common practice, generation. The estimated potential emission limited adoption of vertical shaft brick kilns reduction is 108,000 tCO2-e per year if (VSBK) has demonstrated that using this applied to the 10 largest plants. technology can improve energy efficiency and productivity and reduce energy consumption by up to 50 percent. This technology could be applied to the more than 10,000 traditional kilns found in the country, reducing carbon dioxide emissions by up to 170,000 tCO2-e per year. Pulp and Paper Cogeneration: One of the biggest opportunities to reduce greenhouse gas emissions in the pulp and paper industry is installation of cogeneration systems that use waste byproducts and other fuels with lower GHG emissions to produce both heat and Energy efficiency: Energy efficiency in power for this coal-dependent subsector. Vietnam's steel and iron industry is low; for While initially some mills installed example, energy use per ton of steel in cogeneration units, others built more Vietnam's electric-arc furnaces is 40 percent recently have not done so, mainly due to the higher than for international comparators. high investment costs. The potential Possible electricity and fuel saving measures emission reduction for the 150 plants in the in the iron and steel industry include use of subsector is 381,000 tCO2-e per year. more energy-efficient furnaces and drying systems. If implemented in the country's largest plants, the estimated potential emissions reduction is 199,000 tCO2-e per year. Note: Estimates based on annual reductions during 2010-2015 Contact Information References: Ministry of Natural Resources GSO. 2007. Vietnam Statistical Yearbook 2006. and Environment (MoNRE) MOI. 2005. Strategies of Vietnam Industry Development. MOIT. 2007. Master Plan for Vietnam Power Development, Period 2006­2015, Prospective to 2025. 83 Nguyen Chi Thanh MONRE. 2004a. Summarizing, Correcting, and Editing Results on Dong Da - Ha Noi, Vietnam Identification of GHG Reduction Demand in Energy, Transport and Non-Energy Sectors. ------. 2004b. Evaluating the Effectiveness of the Economy- Phone: Environment Factor in GHG Emission Reduction in the Energy Ph: (84-4) 3775-9385 Sector. ------. 2005. Assessment of the Demand for GHG Reduction Technology in the Industry Sector in Vietnam. E-Mail: RCEE. 2005. Assessment of GHG Emission and CDM Potential in vnccoffice@fpt.vn Some Selected Industries. Final Report to MONRE. ------. 2008. Energy Efficiency Potentials in the Cement Sector of Contact Information Vietnam. Final Report to the Ministry of Industry and Trade, Ministry of Natural Resources December 2008. VSC. 2005. Preliminary Report on Energy Saving Measures in the and Environment (MoNRE) Steel Industry. VSC. Vietnam Steel Development Plan up to 2010 and Prospective 83 Nguyen Chi Thanh to 2020. VABM. 2007. Yearly Report of VABM. Dong Da - Ha Noi, Vietnam Technical Assistance provided by Phone: Carbon Finance Assist Ph: (84-4) 3775-9385 World Bank 1818 H. Street, NW Washington, DC 2043 E-Mail: vnccoffice@fpt.vn