The European Union (EU)’s Carbon Border Adjustment Mechanism (CBAM), which is scheduled to be effective in 2024, will impact production and trade activities of Vietnamese producers, especially in high carbon emission industries like iron and steel, aluminum and cement, as well as the whole economy, said experts.
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| All 27 EU member countries are expected to begin piloting CBAM in October__Photo: VNA |
The mechanism, just updated by the EU and the European Parliament (PE) this February, is created to make a fair playing field for European businesses facing carbon prices by imposing a carbon border tax on imports from countries that do not apply equivalent carbon pricing measures.
CBAM will directly affect Vietnamese products and exporters to the EU, said Sirpa Jarvenpaa, Director of Southeast Asia Energy Transition Partnership (ETP), adding that exporters will have to ensure that products exported to the EU meet a corresponding tax rate as EU manufacturers are imposed.
“CBAM has a crucial meaning to Vietnam as the country is a major exporter to the EU,” Jarvenpaa said.
“The results of the impact assessment of the CBAM at this workshop provide a comprehensive view of the difficulties and policies affecting Vietnam and how CBAM contributes to the energy transition to help Vietnam reduce carbon emissions.”
“It also shows the difficulties due to the technical complexity in determining the carbon tax rate in Vietnam.”
CBAM will initially apply to imported goods such as steel, cement, fertilizer, aluminum, electricity and hydrogen. They are sectors with a high risk of carbon leakage and high carbon emissions, accounting for 94 percent of the EU's industrial 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 that businesses must follow if Vietnam wants to compete in the international playground.- (VNA/VLLF)
