"Green Transition" Pressure on the Steel Industry: Individual Company Efforts are Not Enough
[tintuc]
Steel companies face immense pressure to transition to green practices to meet the EU's carbon tax requirements starting in 2026. Experts say that the efforts of the steel industry alone are not enough and require comprehensive support policies for businesses.
Significant Green Transition Pressure
The global steel industry is estimated to account for 7% of total greenhouse gas emissions. Currently, sustainability regulations are becoming stricter, especially regarding emission reductions in production processes.
For example, the European Union (EU) has announced the Carbon Border Adjustment Mechanism (CBAM), which imposes a carbon tax on exporters to the EU market, including steel products. This policy will take effect in January 2026.
In response to the EU's new move towards emission reduction and sustainable development, the Vietnam Steel Association (VSA) issued a notice in mid-June, seeking member companies' feedback on the EU's planned implementation of the full CBAM in 2026.
At the recent seminar titled "Protecting Steel Manufacturing Businesses in the Squeeze," VSA Vice President Pham Cong Thao highlighted that carbon emission reduction is critically important globally. Developed countries are leading this effort. They have set emission taxes on imported goods, and if Vietnam does not transition to green practices in time, it will be challenging to enter the EU market. Emission reduction is crucial for the steel industry due to its significant emissions. The steel industry itself is ahead and can achieve various emission reduction goals.
According to the World Steel Association, the steel industry emits 79% of the CO2 released into the environment. Meanwhile, the Vietnamese government aims for net-zero emissions by 2050, which is more than 20 years away. While 20 years seems long, it is not for the steel industry. The green transition pressure on the steel industry is immense, requiring significant efforts.
To transition to green practices, significant technological changes are necessary. Developed countries are ahead in this regard, while Vietnam is mainly applying existing technologies, making the transition pressure immense and requiring substantial capital to switch from old to new technologies.
Mr. Thao also emphasized the need for green energy since the steel industry consumes significant amounts of energy, such as fossil fuels and electricity.
"To go green, there must be green electricity, reducing fossil fuel usage and switching to other fuels. It has to be layered, starting with green energy," Mr. Thao said.
Carbon emission reduction is a long-term and significant national issue. The steel industry has organized many seminars on green transition to adapt to market trends and sustainable development. Each company has its own transition plan.
However, Mr. Thao believes that achieving green transition goals requires government support in building policies that incentivize investment in green production technologies. This could include mechanisms related to interest rates and capital incentives. The government also needs to support the early transition to green energy to achieve emission reduction goals.
Mandatory Market Requirements
Ms. Nguyen Thi Thu Trang, Director of the WTO and Integration Center (Vietnam Chamber of Commerce and Industry - VCCI), stated that different markets are at various stages of implementing green transition and emission reduction requirements. Nonetheless, this trend is irreversible.
"I empathize with the challenges facing the steel industry but am also pleased that the industry recognizes this and is ready to transition. However, more resources and policy support are needed for the industry and businesses to perform better," Ms. Trang said.
From an export perspective, some markets do not wait for readiness but apply their standards to their products and those imported into their markets.
For instance, the EU's green transition program is part of a larger policy package known as the European Green Deal. This includes around six major sectors, with the carbon border tax being one of over 100 specific policies impacting exports. Before implementing CBAM, the EU had already applied an emissions trading system to its domestic businesses.
To ensure competitive parity for steel products within the EU, the requirements are also applied to imported steel products. If Vietnamese businesses meet the EU's carbon standards, their exports will not face obstacles.
"In other words, meeting the green standards of specific markets for Vietnamese export products, particularly steel, is mandatory. Each market has different requirements, but this trend is irreversible. If we move faster and stronger and gain recognition from importing countries, businesses may avoid additional barriers. However, moving too quickly can be overwhelming," Ms. Trang emphasized.
Comprehensive Transformation Needed
Experts argue that green transition and emission reduction efforts require a systemic approach, not just individual company efforts. For example, the steel industry's energy transition must keep pace for the industry to go green. Similarly, the textile industry needs green materials and factories to produce green products.
"Efforts from businesses and industries alone are insufficient. A comprehensive and inclusive movement involving supportive policies for businesses is necessary. Vietnam needs an overall approach with the participation of multiple sectors simultaneously," an expert shared.
Agreeing with Ms. Trang's broader approach, Mr. Phan Duc Hieu, a standing member of the National Assembly's Economic Committee, suggested policies to create a favorable and fair business environment for the development of the Vietnamese steel industry.
In the green transition, although businesses understand the necessity of going green, doing it alone is a major challenge. The steel industry cannot handle all aspects of the green transition, such as energy conversion, alone. It requires the proactive support and involvement of all stakeholders.
Additionally, mobilizing resources and the participation of private sector businesses and the collaboration between the state and the private sector are crucial. Support measures must follow market mechanisms.
[/tintuc]
Steel companies face immense pressure to transition to green practices to meet the EU's carbon tax requirements starting in 2026. Experts say that the efforts of the steel industry alone are not enough and require comprehensive support policies for businesses.
Significant Green Transition Pressure
The global steel industry is estimated to account for 7% of total greenhouse gas emissions. Currently, sustainability regulations are becoming stricter, especially regarding emission reductions in production processes.
For example, the European Union (EU) has announced the Carbon Border Adjustment Mechanism (CBAM), which imposes a carbon tax on exporters to the EU market, including steel products. This policy will take effect in January 2026.
In response to the EU's new move towards emission reduction and sustainable development, the Vietnam Steel Association (VSA) issued a notice in mid-June, seeking member companies' feedback on the EU's planned implementation of the full CBAM in 2026.
At the recent seminar titled "Protecting Steel Manufacturing Businesses in the Squeeze," VSA Vice President Pham Cong Thao highlighted that carbon emission reduction is critically important globally. Developed countries are leading this effort. They have set emission taxes on imported goods, and if Vietnam does not transition to green practices in time, it will be challenging to enter the EU market. Emission reduction is crucial for the steel industry due to its significant emissions. The steel industry itself is ahead and can achieve various emission reduction goals.
According to the World Steel Association, the steel industry emits 79% of the CO2 released into the environment. Meanwhile, the Vietnamese government aims for net-zero emissions by 2050, which is more than 20 years away. While 20 years seems long, it is not for the steel industry. The green transition pressure on the steel industry is immense, requiring significant efforts.
To transition to green practices, significant technological changes are necessary. Developed countries are ahead in this regard, while Vietnam is mainly applying existing technologies, making the transition pressure immense and requiring substantial capital to switch from old to new technologies.
Mr. Thao also emphasized the need for green energy since the steel industry consumes significant amounts of energy, such as fossil fuels and electricity.
"To go green, there must be green electricity, reducing fossil fuel usage and switching to other fuels. It has to be layered, starting with green energy," Mr. Thao said.
Carbon emission reduction is a long-term and significant national issue. The steel industry has organized many seminars on green transition to adapt to market trends and sustainable development. Each company has its own transition plan.
However, Mr. Thao believes that achieving green transition goals requires government support in building policies that incentivize investment in green production technologies. This could include mechanisms related to interest rates and capital incentives. The government also needs to support the early transition to green energy to achieve emission reduction goals.
Mandatory Market Requirements
Ms. Nguyen Thi Thu Trang, Director of the WTO and Integration Center (Vietnam Chamber of Commerce and Industry - VCCI), stated that different markets are at various stages of implementing green transition and emission reduction requirements. Nonetheless, this trend is irreversible.
"I empathize with the challenges facing the steel industry but am also pleased that the industry recognizes this and is ready to transition. However, more resources and policy support are needed for the industry and businesses to perform better," Ms. Trang said.
From an export perspective, some markets do not wait for readiness but apply their standards to their products and those imported into their markets.
For instance, the EU's green transition program is part of a larger policy package known as the European Green Deal. This includes around six major sectors, with the carbon border tax being one of over 100 specific policies impacting exports. Before implementing CBAM, the EU had already applied an emissions trading system to its domestic businesses.
To ensure competitive parity for steel products within the EU, the requirements are also applied to imported steel products. If Vietnamese businesses meet the EU's carbon standards, their exports will not face obstacles.
"In other words, meeting the green standards of specific markets for Vietnamese export products, particularly steel, is mandatory. Each market has different requirements, but this trend is irreversible. If we move faster and stronger and gain recognition from importing countries, businesses may avoid additional barriers. However, moving too quickly can be overwhelming," Ms. Trang emphasized.
Comprehensive Transformation Needed
Experts argue that green transition and emission reduction efforts require a systemic approach, not just individual company efforts. For example, the steel industry's energy transition must keep pace for the industry to go green. Similarly, the textile industry needs green materials and factories to produce green products.
"Efforts from businesses and industries alone are insufficient. A comprehensive and inclusive movement involving supportive policies for businesses is necessary. Vietnam needs an overall approach with the participation of multiple sectors simultaneously," an expert shared.
Agreeing with Ms. Trang's broader approach, Mr. Phan Duc Hieu, a standing member of the National Assembly's Economic Committee, suggested policies to create a favorable and fair business environment for the development of the Vietnamese steel industry.
In the green transition, although businesses understand the necessity of going green, doing it alone is a major challenge. The steel industry cannot handle all aspects of the green transition, such as energy conversion, alone. It requires the proactive support and involvement of all stakeholders.
Additionally, mobilizing resources and the participation of private sector businesses and the collaboration between the state and the private sector are crucial. Support measures must follow market mechanisms.
