While still struggling to measure carbon emissions in order to meet increasingly stringent sustainability requirements from key export markets, heavy industrial manufacturers in Viet Nam are now facing additional pressure from the European Union’s Carbon Border Adjustment Mechanism (CBAM).

CBAM officially entered its implementation phase on 1 January 2026, requiring EU importers to purchase certificates to cover the embedded carbon emissions of imported goods from six high-emission sectors: iron and steel, aluminium, cement, fertilizers, electricity, and hydrogen.

The €80-per-tonne CO₂ question

The price of CBAM certificates is calculated based on the auction price of emission allowances under the EU Emissions Trading System (EU ETS). With the EU ETS currently trading at around €80 per tonne of CO₂, the potential financial impact is substantial.

While Viet Nam’s steel industry is expected to be the most heavily affected due to billions of dollars in exports to the EU, the cement and fertilizer sectors face specific challenges of their own. Under CBAM rules, indirect emissions from electricity used in the production of these goods must also be declared and calculated.

“This means that energy-intensive production activities can significantly increase the carbon costs of Vietnamese exports,” said Dr. Scott McDonald, a lecturer in Supply Chain Management and Logistics at RMIT University Vietnam.

He added that carbon-intensive production methods and reliance on fossil fuels create a major competitive disadvantage, as emissions intensity in Viet Nam is considerably higher than the EU average.

Legal experts have urged Vietnamese businesses to establish emissions tracking and measurement systems across their entire production processes. For supply chain managers, this requires identifying potential blind spots that are not currently monitored.

“For example, every kilowatt-hour of electricity consumed in materials production could soon be priced using European carbon certificates,” Dr. McDonald pointed out.

A compliance maze

From 1 January 2026, customs declarations for goods subject to CBAM require new documentation and reporting obligations, adding to the administrative burden of already complex export procedures.

However, many Vietnamese businesses still lack sufficient awareness of carbon accounting and greenhouse gas emissions regulations—an issue that could undermine their ability to comply with CBAM requirements.

A 2023 survey found that more than 60% of businesses had heard of CBAM, but most were unfamiliar with its details. Moreover, 36% did not believe the regulation would affect their operations, and only 4% had developed any preparation plans.

Dr. McDonald emphasized the importance of addressing potential costs arising from insufficient documentation. If Vietnamese exporters cannot provide verified emissions data, or if no reliable country-specific data are available, default values will be applied. These are based on the average emissions intensity of the ten highest-emitting exporting countries, adjusted for regional factors.

“This can lead to significantly higher costs,” he warned.

Recommendations for Vietnamese exporters

Ahead of the first CBAM declaration deadline on 30 September 2027, Dr. McDonald recommends that Vietnamese companies in affected sectors take immediate action.

First, they should implement carbon measurement systems covering both direct emissions and indirect emissions from electricity use in production.

Second, businesses should engage certified verification bodies to validate actual emissions data, as companies relying on EU default values will face substantially higher certification costs.

Third, exporters should make use of existing national frameworks, including guidance under Circular 38/2023/TT-BCT, to measure and report greenhouse gas emissions.

Fourth, they should engage with industry associations such as the Vietnam Steel Association to access technical training and participate in relevant workshops.

Finally, businesses may benefit from exploring green finance options and energy-efficient technologies to reduce emissions at source.

“Companies that act decisively can turn CBAM compliance from a cost burden into a competitive advantage through more sustainable production practices,” Dr. McDonald concluded.