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

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 lead Dario Brescia
• Expert Axel Michaelowa
• Expert Sherri Ombuya