Introduction and Background: Viet Nam is the third-largest cement producer in the world, with the sector representing a major share of national industrial emissions. Cement production accounts for an estimated 10–12% of Viet Nam’s total CO₂ emissions, driven by high energy intensity, heavy reliance on clinker and continued demand from infrastructure and urban development. The sector is therefore a priority area for industrial decarbonization under national and international climate commitments. The project directly contributes to the implementation of Viet Nam’s National Green Growth Strategy, the Nationally Determined Contribution (NDC) and the Power Development Plan VIII. These plans collectively aim to reduce GHG emissions by 43.5% by 2030, achieve net-zero emissions by 2050 and promote energy efficiency and circular economy practices across key industrial sectors. The National Energy Efficiency Programme further emphasizes improving energy intensity and competitiveness of energy-intensive industries, including cement. 

Project Goals and Approach to Transformational Change: The project seeks to transform Viet Nam’s cement sector by deploying a mix of technological, financial and institutional innovations that accelerate deep decarbonization. Its core goals are to improve energy efficiency, reduce process emissions and demonstrate scalable low-carbon cement solutions such as Limestone Calcined Clay Cement (LC3). Through integrated carbon technologies, including AI driven process optimization, Waste Heat Recovery (WHR) and the exploration of carbon capture and utilization (CCUS), the project introduces practices that move beyond incremental efficiency toward systemic change. By linking performance to Sustainability-Linked Loans and leveraging ESCO and SPV models, it mobilizes private finance for green industrial transformation. The expected outcome is a competitive, low-emission cement industry that sets new national benchmarks for productivity, resource efficiency as well as carbon reduction, supporting long-term climate neutrality. 

Project Components and Support Mechanisms: The project combines Financial Cooperation (FC) and Technical Cooperation (TC) to accelerate industrial decarbonization in Viet Nam’s cement sector. The FC component, managed by IFC with co-financing from AFD and BIDV, provides concessional loans, sustainability-linked credit lines and SPV-based financing to firms adopting low-carbon technologies such as LC3 and Waste Heat Recovery. It mobilizes private capital at a 1:2 – 1:5 leverage ratio and includes targeted support for women-led SMEs through reduced guarantee premiums and blended advisory grants. The TC component, implemented by UNIDO, delivers policy advice, feasibility studies and training to strengthen institutional, technical and financial capacity. It supports regulatory reform, sectoral roadmaps and carbon management strategies, while promoting gender equality and social inclusion through dedicated training and scholarships. Together, both components create a self-sustaining ecosystem for green industrial finance and innovation. 

Mitigation Potential and Long-Term Impact: The project is expected to achieve direct emission reductions of 12.1 Mt CO₂e during implementation and 46.7 Mt CO₂e over ten years after completion, with an estimated cost-efficiency of €0.54 per tCO₂e. By integrating carbon-reduction technologies and sustainable finance mechanisms, it will create lasting structural change, enabling continued decarbonization of Viet Nam’s cement sector and broader industrial transition toward net-zero.