The European Union (E.U.) introduced the CBAM to address greenhouse gas emissions in specific imported goods entering the E.U. In effect since October 1, 2023, the mechanism currently targets six imported commodity groups: cement, electricity, fertilizers, iron and steel, aluminum, and hydrogen.
From January 1, 2026, the CBAM will transition into its full operational phase, applying carbon taxes on regulated goods exported to the E.U. based on their greenhouse gas emissions during production.
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A worker at a steel production line at Thai Nguyen Iron and Steel JSC |
One year after the CBAM’s official rollout, awareness among Vietnamese businesses about the mechanism remains limited.
A survey conducted in January 2023, before the mechanism's transitional phase, revealed that business awareness at the time was relatively low, said Nguyen Hong Loan, a project specialist in technical assistance for the CBAM Impact Assessment, at a recent event.
Except for a few businesses in directly affected sectors that have done thorough research and preparation, the majority of businesses have not responded or made efforts to reduce emissions in their export products to meet European standards, Loan said.
According to her, many businesses mistakenly believe the CBAM will only affect them if their exported goods exceed Europe’s emission thresholds. In reality, the mechanism covers emissions across the entire product lifecycle.
Additionally, companies in industries such as rice and plastics, which are not yet directly affected, are seeking advice on how to prepare for the CBAM.
Some businesses have overreacted, expressing concerns about potentially facing carbon prices equivalent to those in Europe once the CBAM is fully implemented.
Regarding new mechanisms like the CBAM, businesses may face challenges in understanding the information and preparing appropriately, Loan said.
Without submitting greenhouse gas emission reports for their products, businesses will be unable to export to Europe. Without official guidance from relevant authorities, companies will need to invest significant time and resources into preparing.
This could lead to inefficiencies, ineffective responses to the mechanism's requirements, and even unnecessary purchases of carbon credits, according to the specialist.
Meanwhile, European guidelines on carbon pricing mechanisms and credit offsets remain ambiguous and lack widespread recognition. This uncertainty may result in unfocused preparations that don’t utilize formal channels, potentially leading to financial losses.
Source: VNA