Hanoi (VNS/VNA) - The European Union (EU)’s Carbon Border AdjustmentMechanism (CBAM), which is set to take effect in 2024, will impact productionand trade activities of Vietnamese manufacturers, especially in high carbonemission industries like iron and steel, aluminium and cement, as well as thewhole economy, said experts.
The mechanism, just updated by the EU and the European Parliament (PE) thisFebruary, is created to make a fair playing field for European businessesfacing carbon prices by imposing a carbon border tax on imports from countriesthat do not apply equivalent carbon pricing measures.
CBAM will directly affect Vietnamese products and exporters to the EU, saidSirpa Jarvenpaa, Director of Southeast Asia Energy Transition Partnership(ETP), adding that exporters will have to ensure that products exported to theEU meet a corresponding tax rate as EU manufacturers are imposed.
“CBAM has a crucial meaning to Vietnam as the country is a major exporter tothe EU,” Jarvenpaa said.
“The results of the impact assessment of the CBAM at this workshop provide acomprehensive view of the difficulties and policies affecting Vietnam and howCBAM contributes to the energy transition to help Vietnam reduce carbonemissions.”
"It also shows the difficulties due to the technical complexity indetermining the carbon tax rate in Vietnam.”
CBAM will initially apply to imported goods such as steel, cement, fertiliser,aluminium, electricity and hydrogen. They are sectors with a high risk ofcarbon leakage and high carbon emissions, accounting for 94% of the EU'sindustrial emissions.
All 27 EU member countries are expected to begin piloting CBAM in October.
Reducing greenhouse gas emissions is now a trend and a requirement thatbusinesses must follow if Vietnam wants to compete in the internationalplayground.
In research published at the consultation workshop, Vietnam’s steel industrysuffers the most from CBAM, followed by the aluminium sector.
According to the research, steel production is estimated to drop 0.8% in 2030under the effect of CBAM, while export value decreased by 2.3%. In thealuminium industry, the output is estimated to fall by 0.4%, and the exportvalue will be down 4.3% in 2030.
Many surveyed businesses currently do not see CBAM as a threat, but the impactwill be significant if the mechanism is expanded.
Even though many countries like the US and Japan showed mixed reactions towardCBAM, they are considering their regulations and raising the need to accelerateglobal decarbonisation.
Therefore, early preparation for CBAM is necessary, said Do Nam Thang, apolitical expert from Applied Economic Modelling and Data Analysis.
“CBAM is evolving with many uncertainties, its impacts may grow fast, and weshould take early prepare for them," Thang said. "The mechanism willaffect enterprises and the country's competitiveness in global markets.”/.
The mechanism, just updated by the EU and the European Parliament (PE) thisFebruary, is created to make a fair playing field for European businessesfacing carbon prices by imposing a carbon border tax on imports from countriesthat do not apply equivalent carbon pricing measures.
CBAM will directly affect Vietnamese products and exporters to the EU, saidSirpa Jarvenpaa, Director of Southeast Asia Energy Transition Partnership(ETP), adding that exporters will have to ensure that products exported to theEU meet a corresponding tax rate as EU manufacturers are imposed.
“CBAM has a crucial meaning to Vietnam as the country is a major exporter tothe EU,” Jarvenpaa said.
“The results of the impact assessment of the CBAM at this workshop provide acomprehensive view of the difficulties and policies affecting Vietnam and howCBAM contributes to the energy transition to help Vietnam reduce carbonemissions.”
"It also shows the difficulties due to the technical complexity indetermining the carbon tax rate in Vietnam.”
CBAM will initially apply to imported goods such as steel, cement, fertiliser,aluminium, electricity and hydrogen. They are sectors with a high risk ofcarbon leakage and high carbon emissions, accounting for 94% of the EU'sindustrial emissions.
All 27 EU member countries are expected to begin piloting CBAM in October.
Reducing greenhouse gas emissions is now a trend and a requirement thatbusinesses must follow if Vietnam wants to compete in the internationalplayground.
In research published at the consultation workshop, Vietnam’s steel industrysuffers the most from CBAM, followed by the aluminium sector.
According to the research, steel production is estimated to drop 0.8% in 2030under the effect of CBAM, while export value decreased by 2.3%. In thealuminium industry, the output is estimated to fall by 0.4%, and the exportvalue will be down 4.3% in 2030.
Many surveyed businesses currently do not see CBAM as a threat, but the impactwill be significant if the mechanism is expanded.
Even though many countries like the US and Japan showed mixed reactions towardCBAM, they are considering their regulations and raising the need to accelerateglobal decarbonisation.
Therefore, early preparation for CBAM is necessary, said Do Nam Thang, apolitical expert from Applied Economic Modelling and Data Analysis.
“CBAM is evolving with many uncertainties, its impacts may grow fast, and weshould take early prepare for them," Thang said. "The mechanism willaffect enterprises and the country's competitiveness in global markets.”/.
VNA
