CBAM & Vietnam Steel: Adapting for Sustainable Exports
Strengthening CBAM Implementation: Steel Industry Adapts for Sustainable Exports
The Government has assigned the Ministry of Industry and Trade (MOIT) as the focal agency to coordinate with relevant Ministries and sectors to build and deploy effective measures to respond to the Carbon Border Adjustment Mechanism (CBAM).
MOIT Leads the Charge The Government Office recently issued Notice No. 6082/VPCP-NN to key Ministries (Industry and Trade, Natural Resources and Environment, Public Security, Finance, etc.) regarding the deployment of tasks related to the European Union’s CBAM.
In this notice, the Government assigns MOIT as the focal agency to:
- Preside over and coordinate the construction and deployment of the “Scheme on Responding to CBAM.”
- Coordinate with the Ministry of Foreign Affairs to study response solutions from countries similarly impacted (Indonesia, South Africa, Colombia) and coordinate positions at multilateral forums (WTO, ASEAN).
- Lead training activities on Greenhouse Gas (GHG) inventory for associations and enterprises.
- Coordinate with the Ministry of Public Security to appraise foreign cooperation projects related to CBAM.
Double Challenge for Vietnam Steel CBAM is currently one of two major challenges facing Vietnamese steel enterprises, alongside safeguard measures on steel imported into the EU (valid until June 30, 2026).
Assessing this issue, Mr. Pham Cong Thao, Deputy General Director of Vietnam Steel Corporation (VNSteel), stated:
“Currently, this mechanism is in Phase 1 (Oct 1, 2023 – Dec 31, 2025) where exporters must declare emission levels. However, in the future, when CBAM enters subsequent phases, steel enterprises, including those in Vietnam, will be forced to purchase CBAM emission certificates from 2026. This will increase costs and make price competition difficult if enterprises do not plan to reduce carbon emissions in production.”
WTO Estimation: The steel sector is likely to see a decrease of approximately 4% in export value under the impact of CBAM. Reduced demand entails a production decrease of about 0.8%, along with adverse impacts on market competitiveness.
Removing Long-term Bottlenecks Since early 2024, steel exports to the EU have had to comply with new regulations. Additionally, domestic finished steel price competition has become increasingly fierce due to production capacity exceeding domestic demand and pressure from imported steel (China, ASEAN).
Many experts believe that while CBAM is a significant challenge in the short and medium term, in the long term, it presents an opportunity for Vietnamese steel enterprises to improve product quality, meet international standards, and develop sustainably.
Recommendations: The Vietnam Steel Association (VSA) recommends the Government provide financial support measures to encourage steel producers to upgrade production techniques to reduce energy consumption and carbon emissions, while phasing out obsolete production capacity.
State Management Perspective From the regulatory side, Mr. Do Nam Binh, Head of Minerals and Metallurgy Division, Vietnam Industry Agency (MOIT), recommends steel enterprises continue to comply with legal regulations such as:
- Law on Environmental Protection.
- Decree 06/2022/ND-CP.
- Decision 01/2022/QD-TTg.
- National Strategy on Climate Change and COP26 commitments.
Since the EU is a top export market, failure to respond well to CBAM risks losing market share, especially as other countries consider similar regulations.
Strategic Advice for Enterprises:
- Green Transition: Compulsory transition to “greening” production.
- Optimization: Optimize technology, save energy, and apply digital transformation.
- Waste Heat Recovery: Apply technology to reduce carbon emissions for residual heat power generation.
- Quality & Coding: Announce product quality standards and unify the HS Code management system with import-export authorities to be ready for CBAM implementation.
Note: CBAM is a policy under the European Green Deal, the EU’s new growth strategy aimed at building a fair and prosperous society and promoting industries based on a clean and sustainable economy.
