Perspectives Climate Group

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Project Overview

Perspectives Climate Group

12/2022 – 1/2024

Impact Assessment of EU's Carbon Border Adjustment Mechanism in Vietnam
Client

United Nations Office for Project Services (UNOPS)

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Name of Project

Impact Assessment of EU’s Carbon Border Adjustment Mechanism in Vietnam

Date

12/2022 – 1/2024

Location
Client

United Nations Office for Project Services (UNOPS)

Position held

Team Member

Main project features:

The project’s goal was to increase the preparedness of Vietnam before the official introduction of the Carbon Border Adjustment Mechanism (CBAM), through an assessment of the expected economic and environmental impacts in the power generation, steel, aluminum, cement and fertilizer sectors. The assessment comprised extensive modelling work based on data collected from relevant institutions and stakeholders (including private companies) on the impacts of CBAM in the selected sectors, to understand the quantitative impacts on Vietnamese export products to EU and more broadly on the Vietnamese economy, in particular on its support to the energy transition and the achievement of NDC targets. The assignment provided recommendations on possible negotiation options for Vietnam. In addition, the assignment looked at the possibility of introducing a carbon tax in Vietnam to mitigate the impacts of CBAM and support faster decarbonization of the economy potentially also in sectors not covered by the CBA, stimulating the domestic carbon market. The assignment identified most promising design options of the carbon tax, as well as its limitations, including the option available for introducing the carbon tax in the existing legal and fiscal environment in Vietnam, including the associated roadmap for implementation. Throughout the assignment, close interactions with national stakeholders have been conducted, including a series of technical workshops and consultations that took place in Vietnam as capacity-building efforts as well as to collect and feedback on the finding and recommendations of the reports.

Project Overview

a) Assessment of the Carbon Border Adjustment Mechanism (CBAM) impacts in five selected sectors (power generation, steel, cement, aluminum and fertilizers). Quantification of the economic and environmental impacts of the CBAM in Vietnam
b) Data collection from domestic stakeholders (including private companies) to perform the modelling of the CBAM impacts
c) Policy recommendations and identification of possible negotiation positions for Vietnam on the CBAM introduction.
d) Stocktaking of relevant experiences in foreign countries (Colombia, Indonesia, Mexico, Singapore, South Africa) with the design, introduction and actual results of the carbon tax

e) Stocktaking of the Vietnamese fiscal and legal landscape to identify the most promising option for the introduction of the carbon tax

f) proposals on key design elements (tax rate, sectoral coverage, phased introduction, et.) and roadmap for the introduction of the tax (see item d above)

g) continuous interactions with national stakeholders, from private companies providing data and information for the modelling of the CBAM impacts, to national authorities. Stakeholder engagement and capacity building through two workshops held in Vietnam.

Experts
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Project Managers
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