From 1 January 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase: importers into the EU must surrender certificates matching the emissions embedded in their goods, priced off the ETS market. For Vietnamese exporters of steel, aluminium, cement and fertilisers, the survival question is no longer whether they are affected, but how their emissions are measured and how a carbon price paid at home is credited.
How the domestic carbon price deduction inside CBAM works
Regulation (EU) 2023/956 designs CBAM on an offset principle: the importer’s certificate obligation is reduced by the carbon price effectively paid in the country of production for those embedded emissions, under Article 35 of the regulation. The recognised carbon price must be an amount actually paid — a carbon tax or the purchase price of allowances in the origin country’s ETS — evidenced by documents. This is why a domestic carbon pricing system does not disadvantage Vietnamese businesses: every documented dong of carbon price paid at home is a dong off the obligation at the EU border.
Conversely, two things are not deductible, and false expectations should be cleared away: voluntary carbon credits bought on international markets cannot substitute for CBAM certificates, and abatement investment spending is not itself a carbon price paid. In the definitive regime from 2026, EU importers declare embedded emissions annually and buy and surrender certificates at the average ETS auction price; the Vietnamese producer at the head of the chain must supply emissions data computed under the EU methodology, failing which the importer is forced onto unfavourable default values.
Preparing MRV data and Vietnam’s domestic carbon pricing roadmap
The data foundation is a measurement, reporting and verification (MRV) system: Vietnam already has a greenhouse gas inventory framework in Decree 06/2022/ND-CP, with a list of large emitters required to inventory and report. But the domestic inventory standard and the CBAM embedded-emissions methodology do not fully coincide — CBAM requires product-level data, separating direct emissions from emissions of consumed electricity, with monitoring records at plant level. Exporters into the EU should build a two-layer MRV: comply with domestic reporting while mapping the data into CBAM templates and keeping an auditable data trail at least on the EU partner’s declaration cycle.
On domestic policy, Vietnam has no carbon tax at the time of writing; the carbon market under Decision 232/QD-TTg is in a pilot exchange phase through 2028, with official operation from 2029. Only when domestic allowance allocation and trading operate will a carbon price paid by an allocated Vietnamese business become an amount creditable under Article 35 of the CBAM rules. In the waiting period, competitive advantage lies in low and transparent emissions data: for the same steel product, the plant with lower emission intensity costs its EU customer fewer certificates.
Conclusion and recommendations
Businesses in CBAM sectors should do three things now: build embedded-emissions datasets under the EU methodology for each exported product line; write data-sharing and CBAM certificate cost-allocation clauses into contracts with EU customers as the definitive regime prices the obligation; and track the domestic carbon market roadmap so that, once a domestic carbon price forms, the business’s payment records are up to the standard of deduction evidence in the EU. Early preparation in this direction turns CBAM from a surprise cost into a negotiating asset with buyers.
Frequently asked questions
1. How does the deduction of a domestic carbon price work when calculating CBAM?
Under Article 35 of Regulation (EU) 2023/956, the CBAM declarant may reduce the certificates to be surrendered by the carbon price effectively paid in the country of origin for the goods’ embedded emissions, provided it can be evidenced with valid documents. The credited price is the amount paid as a carbon tax or as allowance cost in the producing country’s emissions trading system, net of any rebates or free allocation benefits. If Vietnam does not yet price carbon for that sector, the corresponding deduction is zero and the CBAM obligation is computed in full on emission intensity.
2. To what standard must businesses prepare emissions data (MRV)?
Data must follow an MRV standard compatible with the CBAM methodology: direct emissions from the production process and indirect emissions from consumed electricity, computed per goods type by CN code from plant-level activity data (output, fuel and material consumption, emission factors). A business already inventorying greenhouse gases under Decree 06/2022/ND-CP has a starting dataset but must still map it into CBAM formats and arrange independent verification when the EU partner requires it. Unverifiable figures are replaced by default values that tend to sit above reality.
3. Are steel, aluminium, cement and fertilisers affected first?
Yes — they are four of the six goods groups in CBAM’s first phase, together with electricity and hydrogen. Vietnamese exporters of steel and steel products, aluminium, cement and nitrogen fertilisers into the EU are in the scope for which their customers must declare and, from the 2026 definitive phase, surrender certificates matching embedded emissions. The impact travels down the chain: EU importers will demand emissions data from Vietnamese producers and typically renegotiate prices to share certificate costs, so the financial impact on the Vietnamese side is real even though the surrender obligation formally sits in the EU.
4. Should we buy carbon credits to reduce the CBAM obligation?
No. CBAM does not accept voluntary carbon credits to offset the certificate obligation: the obligation is computed on the goods’ actual embedded emissions less any carbon price paid in the country of origin under Article 35, and a voluntary credit is not a carbon price paid within a mandatory system. Buying credits still has value for ESG goals and voluntary climate commitments, but it does not shrink the CBAM bill. There are only two real routes to a lower obligation: reduce the product’s emission intensity, or operate within a recognised domestic carbon pricing system.
This article has been quality-reviewed by the FLAW AI Legal Council