top of page

Businesses respond when the EU imposes a carbon tax on imported goods

Iron and steel, cement, fertilizer, aluminum, electricity, and hydrogen are products that will be subject to carbon tax when exporting to the EU, while Vietnamese enterprises lack emissions data, and the energy transition is incomplete. Investment in renewable energy is not enough.


Photo: Internet


Which sector emits the most carbon?


In December 2022, the European Union (EU) announced that it would implement a "carbon border adjustment mechanism (CBAM)". Accordingly, it will impose a carbon tax on all goods exported to this market based on the intensity of greenhouse gas emissions in the production process in the host country.


CBAM will initially apply to six types of imported goods with a high risk of contamination: iron and steel, cement, fertilizer, aluminum, electricity, and hydrogen. These are sectors that account for 94% of EU industrial emissions.


Importers will have to report emissions contained in imported goods, and if these emissions exceed EU standards will have to purchase "emissions certificates" at current carbon prices in the EU.


While Vietnamese enterprises lack emissions data, energy transition is incomplete, renewable energy investment is not enough... is a big challenge... So what should be done to cope when the EU is about to impose a carbon tax on imported goods?


Discussing this issue at the seminar "Carbon market, what opportunities for Vietnam?" organized by the Traffic Newspaper on April 20, Mr. Nguyen Thanh Cong - Deputy Head of the Climate Change Information and Economy Department - Department of Climate Change, Ministry of Natural Resources and Environment said, through the greenhouse gas inventory of According to the Ministry of Natural Resources and Environment, our country's emission level fluctuates around 300 million tons/year, equivalent to 3 tons/year per person.


The sector that emits the most is energy, because Vietnam is a developing country, using a large energy source, especially fossil energy. In the opposite direction, the area that reduces emissions and absorbs the most is forests.


According to Mr. Nguyen Thanh Cong, there are 3 levels of GHG emissions inventory. The first level is the national level, and the Ministry of Natural Resources and Environment is the lead agency.


The second level is the sectoral level, including high-emitting industries such as energy, transportation, and construction. The third level is the grassroots level, including factories and emission facilities.


"Currently, the Government stipulates that about 1,900 enterprises must inventory greenhouse gas. According to the roadmap, by 2025, enterprises must send activity data to the governing units, so that the line ministries can calculate the GHG inventory. glass, emissions," said Mr.


What to do for Vietnamese goods to avoid being taxed on carbon?


Currently, the European Union is the first region to implement a carbon tax on imported goods.


According to a representative of the Ministry of Natural Resources and Environment, there are two solutions to this problem. Firstly, can the Vietnamese Government negotiate with European importers on whether to impose such tariffs immediately?


Second, when exporting to Europe, Vietnamese enterprises need to prove that they have made a contribution to reducing emissions on each exported product, so they may not be subject to that tax.


Mr. Nguyen Thanh Cong said that in the future, it is necessary to focus more on renewable energy sources, especially solar, wind, and biomass energy. At the same time focus on energy-saving projects.


For example, businesses investing in refrigeration products need to research inverter (power-saving) products and focus on developing green transport, and electric vehicles.


In fact, there are many energy companies, banking, financial institutions, transportation, and services abroad that want to buy carbon credits in Vietnam. However, they expressed concern because Vietnam did not have a clear legal corridor, so they did not know what to do.


A carbon credit is a tradable certificate that represents the right to emit one ton of CO2 or one ton of other greenhouse gases.


Mr. Vu Chi Cong - Senior Manager of ESG at Vinacapital - said that Vietnam is in the process of forming a compulsory carbon credit market. It is expected that by 2028, we will have a carbon market.


“As there are currently no regulations on the carbon market, we want to focus on the voluntary market and sell carbon credits in this market.


In Vietnam, there are currently two projects selling carbon credits internationally, the North Central forest project costs about 6 USD/ton and the project in Quang Nam is 10 USD/ton," said Cong.


(Lao Dong)


Comments


bottom of page