Scenario: three companies — a steel mill, an aluminium smelter, a cement plant — all exporting to the EU, all receiving one demand: supply embedded-emissions data per shipment so importers can buy CBAM certificates. All three stumble at the same point: “how do we calculate embedded emissions to EU standards — and what if we can’t?” This is a hands-on playbook for the three sectors hit hardest by CBAM.
Why steel, aluminium and cement are CBAM’s “eye of the storm”
Of the 6 CBAM goods under Regulation (EU) 2023/956, iron/steel, cement and aluminium carry the highest embedded emissions per product unit — and Vietnam exports meaningful volumes of all three to the EU. The EU’s logic: these are the top carbon-leakage sectors — production moving abroad to dodge EU carbon prices. The transitional phase (01/10/2023–31/12/2025) required reporting only; from 01/01/2026, EU importers must buy CBAM certificates matching declared embedded emissions — costs flowing back to exporters through pricing. Bluntly: from 2026, every tonne of steel, aluminium or cement shipped to the EU carries a “carbon invoice” — those who can’t compute it pay dearly.
Step 1: measure embedded emissions to EU methodology
Embedded emissions comprise direct emissions from production (steel: blast/basic-oxygen or electric-arc furnaces; cement: clinker kilns; aluminium: electrolysis) and in some cases indirect emissions from electricity consumed. Build EU-methodology measurement per product and production line — fuel, material and power data collected systematically and verifiably. Key warning: without your data, the EU side applies default values — standardized figures usually above an efficient plant’s reality — making your goods “carbon-expensive” versus rivals, unfairly. Investing in measurement today costs far less than paying default-based charges for years.
Step 2: coordinate with EU importers and manage contracts
Legally, the certificate-buying duty sits with EU importers — but they can’t perform without your data. Be proactive: supply emissions data periodically, agree the calculation method in contracts, and — the commercial crux — negotiate explicitly who bears CBAM costs in pricing terms. Many export contracts signed before 2026 never mention CBAM; review and renegotiate pricing clauses to avoid absorbing the full carbon cost unshared. Also track domestic carbon pricing: as Vietnam’s carbon market operates and firms pay local carbon prices, those payments deduct from CBAM duties — money staying in Vietnam instead of flowing to the EU.
Step 3: genuine emission cuts — the long-term edge
Long-term, the only way to shrink CBAM bills is real embedded-emission cuts: steel — shift toward electric-arc furnaces on renewable power, more scrap; cement — lower clinker ratios, alternative fuels, waste-heat recovery; aluminium — electrolysis on renewable electricity (power dominates aluminium’s footprint). Every tonne cut is CBAM money unspent — and a “ticket” to keep EU customers in greening supply chains. Build a reduction roadmap tied to technology investment, serving both CBAM and the domestic allowance market (Decree 119/2025).
Conclusion
For steel, aluminium and cement — CBAM’s hardest-hit trio — the formula is three steps: measure embedded emissions to EU standards (avoid defaults), negotiate CBAM cost allocation in importer contracts, and invest in genuine cuts. CBAM’s 01/01/2026 definitive phase isn’t the future — it’s the per-shipment cost math of exports today.
Frequently asked questions
1. Which Vietnamese sectors does CBAM hit hardest?
Steel, cement, aluminium — highest embedded emissions among the 6 CBAM goods with significant EU exports.
2. What if we can’t supply emissions data?
The EU applies default values — usually above reality, inflating your CBAM costs unfairly.
3. Who bears CBAM costs — exporter or importer?
Legally: EU importers buy certificates. In practice: costs pass to exporters via pricing — agree it in contracts.
4. Does paying carbon prices in Vietnam reduce CBAM?
Yes — carbon prices paid in the exporting country deduct from CBAM certificate duties.
This article has been quality-reviewed by the FLAW AI Legal Council