From 1 January 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase: importers in the EU must buy carbon certificates matching the emissions embedded in goods. Vietnamese exporters in the six covered sectors — though not directly liable — face heavy pressure through the supply chain.
This article systematizes the CBAM mechanism and what exporting businesses must do now.
1. What is CBAM and who does it cover?
CBAM is the EU’s carbon border adjustment mechanism under Regulation (EU) 2023/956, making imported goods bear carbon costs equivalent to EU-produced goods — preventing “carbon leakage” (firms shifting production to countries with looser climate standards).
Current scope: six high-leakage-risk sectors — cement, iron and steel, aluminium, fertilisers, electricity, hydrogen (around 500 products). The European Commission is considering expansion to more products, value chains and indirect emissions.
2. Timeline: from reporting to payment
- Transitional phase (1 October 2023 – 31 December 2025): EU importers only had to report quarterly the greenhouse gas emissions embedded in imported goods — no certificates to buy, no carbon cost yet;
- Definitive phase (from 1 January 2026): importers must register as an “Authorized CBAM Declarant”, declare emissions annually and purchase and surrender CBAM certificates matching the emissions.
3. Concrete obligations from 2026
- Buy one CBAM certificate per tonne of CO₂ emitted in producing the goods; certificate prices follow the EU Emissions Trading System (EU ETS);
- Deduction allowed for carbon costs already paid in the country of origin — if that country’s carbon pricing mechanism is recognized by the EU;
- Emissions data must be verified by an independent third party recognized by the EU;
- Breaches of reporting and certificate obligations are penalized.
4. Impact on Vietnamese businesses
The key point: direct legal liability sits with EU importers, not Vietnamese firms. But importers declare based on emissions data supplied by producers — so pressure lands squarely on the supply chain:
- Producers unable to measure and report emissions → EU importers must apply default emission factors (usually higher than reality) → carbon costs inflate and Vietnamese goods lose competitiveness;
- Carbon cost becomes part of the goods’ price: higher-emission producers face less competitive export prices;
- Per expert estimates (not official EU figures), certificates currently trade around 75 euros per tonne of CO₂; export costs could rise 5–30%, especially in steel.
5. What businesses must do now
- Build an MRV system (measurement – reporting – verification) that is transparent and meets EU-accepted international standards;
- Cut carbon intensity: technology upgrades, renewable energy use, process optimization;
- Track the domestic carbon market: Vietnam is rolling out a pilot carbon credit trading platform under Decree 06/2022/ND-CP — only with an EU-recognized domestic carbon pricing mechanism can businesses claim deductions;
- Engage proactively with EU importers on emissions data requirements per shipment.
6. Frequently asked questions
Q: From 2026 does CBAM hit all exports to the EU?
A: No — currently only the six covered sectors (cement, iron and steel, aluminium, fertilisers, electricity, hydrogen). But scope may expand, so related industries should prepare early.
Q: Must Vietnamese firms buy CBAM certificates?
A: Not directly — the buyer is the EU importer. Vietnamese firms feel indirect effects through data requirements and pricing.
Q: Can carbon costs paid in Vietnam be deducted yet?
A: Not yet — Vietnam has no EU-recognized carbon pricing mechanism. That is why developing the domestic carbon market is urgent.
Exporting to the EU and need CBAM compliance preparation? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. Content is pending QA Council review before submission for approval; information is for reference only and does not replace legal advice for your specific case.
