Border Carbon Adjustment Mechanisms and Impacts on Vietnam

The report examines how the EU's CBAM and potential future BCAs from other nations affect Vietnam's export-oriented economy, focusing on the iron, steel, aluminum, cement, and fertilizer sectors. It highlights the administrative and financial burdens on Vietnamese enterprises, particularly SMEs, and argues for the development of a domestic carbon pricing mechanism to retain revenues and improve competitiveness. The document also emphasizes the need for technical assistance and the application of the 'common but differentiated responsibilities' principle to ensure fairness for developing nations.

• The EU's CBAM primarily affects Vietnam's exports of iron and steel, aluminum, cement, and fertilizers. Between 2017 and 2023, iron and steel exports to the EU averaged USD 1.1 billion (12% of total value), while aluminum averaged USD 48 million (7%), cement USD 12 million (1%), and fertilizers USD 0.2 million.
• The Vietnamese steel industry is particularly vulnerable due to its reliance on high-emission blast furnace technology. While exports to the EU grew sixfold from June 2020 to 2022, the industry faces challenges in reducing emissions, with a roadmap to reduce carbon emissions by 10% to 30% between 2021 and 2025.
• The aluminum industry in Vietnam faces oversupply and low capacity utilization, with plants operating at only 30%–40% of designed capacity in Q1/2023. It is estimated that the EU's CBAM will decrease aluminum exports by more than 4% in value and 0.4% in quantity by 2030.
• While Vietnam is a top global cement producer, the impact of CBAM is considered insignificant because exports to the EU have accounted for less than 2% of total cement export volume over the last five years.
• Small and medium-sized enterprises (SMEs) in the cement and other sectors struggle more than large companies to comply with CBAM because they lack the financial resources to hire legal staff or consultants for carbon reporting.
• Vietnam's government is developing a domestic carbon market and regulatory framework, including a roadmap to pilot a carbon credit exchange from 2025 and a goal of net-zero emissions by 2050.
• Stakeholders argue that the EU's CBAM overlooks the principle of 'common but differentiated responsibilities' by imposing the same carbon requirements on developing nations regardless of their technology levels or historical emissions.
• Vietnamese exporters face a significant administrative burden in monitoring and reporting embedded emissions, as CBAM requires data for raw materials across the supply chain, which many Vietnamese firms cannot currently provide.
• The financial sector is increasingly supporting the green transition through specialized products; for example, OCB partnered with the IFC for a USD 150 million investment to lend to green enterprises, and Asia Commercial Bank launched a VND 2,000 billion green and social credit package.
• Future BCA risks extend beyond the EU, as Canada, the UK, Japan, Australia, and the US intend to apply similar mechanisms. In Canada, sectors such as iron, steel, and furniture products may be impacted.

APA

Ngan, V. K., Ha, N. N., Hang, H. T. M., Ngoc, T. P., Phu, T. D., & Tam, L. T. T. (2024). Border Carbon Adjustment Mechanisms and Impacts on Vietnam. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-09/border-carbon-adjustments-vietnam.pdf

Chicago

Ngan, VU Kim, NGUYEN Ngoc Ha, HOANG Thi Minh Hang, TRAN Phuong Ngoc, TRAN Duc Phu, and LE Thi Thanh Tam. Border Carbon Adjustment Mechanisms and Impacts on Vietnam. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-09/border-carbon-adjustments-vietnam.pdf.

Wikipedia

{{cite report |last1=Ngan |first1=VU Kim |last2=Ha |first2=NGUYEN Ngoc |last3=Hang |first3=HOANG Thi Minh |last4=Ngoc |first4=TRAN Phuong |last5=Phu |first5=TRAN Duc |last6=Tam |first6=LE Thi Thanh |title=Border Carbon Adjustment Mechanisms and Impacts on Vietnam |publisher=International Institute for Sustainable Development |date=September 2024 |url=https://www.iisd.org/system/files/2024-09/border-carbon-adjustments-vietnam.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ngan2024border, author = {Ngan, VU Kim and Ha, NGUYEN Ngoc and Hang, HOANG Thi Minh and Ngoc, TRAN Phuong and Phu, TRAN Duc and Tam, LE Thi Thanh}, title = {{Border Carbon Adjustment Mechanisms and Impacts on Vietnam}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = sep, url = {https://www.iisd.org/system/files/2024-09/border-carbon-adjustments-vietnam.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }