Currently, Vietnamese businesses are adapting to the Carbon Border Adjustment Mechanism (CBAM) of the European Union (EU). From October 1, 2023 to the end of 2025, importers must report the amount of goods affected by CBAM.
Ms. Mai Kim Lien, Deputy Director of the Department of Climate Change (Ministry of Natural Resources and Environment), said that cutting carbon emissions is the new "rules of the game" of global trade and investment, so the policies are similar to the Carbon Border Adjustment Mechanism (CBAM) will be inevitable.
Accordingly, in addition to applying new technologies and innovating processes to reduce emissions, Ms. Lien said that Viet Nam needs to use carbon pricing tools, including carbon tax and carbon credit exchange. This is also a solution being applied by many countries around the world.
Currently, Viet Nam is determined to use the domestic carbon credit trading system as a carbon pricing tool to achieve emissions reduction goals. In addition, the Prime Minister is also assigning carbon tax to relevant ministries and branches to research and propose.
Sharing the same opinion as above, Mr. Do Manh Toan, National Coordinator of the Southeast Asia Energy Transition Partnership Fund in Viet Nam, recognizes that building and applying a carbon pricing and tax mechanism is necessary to meet economic and climate goals. The carbon tax will help retain the money that must be paid under the CBAM mechanism to serve long-term actions to reduce emissions and combat climate change in Viet Nam.
Suggesting how to implement a carbon tax, Mr. Axel Michaelowa, an expert from Perspectives Climate Group, said that the tax level needs to be designed so that it is not too low to create incentives to reduce emissions but also not too high to avoid negative impacts on economic stability. The use of money collected from carbon taxes needs to ensure transparency, thereby promoting community support. Carbon taxes can also be exempted or gradually applied to some industry groups with remote areas, related to vulnerable subjects or important industries of the country.
It is expected that by the end of 2023, the Ministry of Finance will submit to the Government for consideration a draft decree on environmental protection fees for emissions. According to Mr. Minh, this is an important opportunity to integrate carbon tax into this fee before CBAM comes into effect in 2026.
According to assessments of domestic experts, environmental taxes and fees in Viet Nam are relatively complete and complete as Vietnamese businesses have to pay for both emissions, wastewater and solid waste. However, compared to the EU, the tax and environmental fees in Viet Nam are still very small. Specifically, the environmental protection tax in Viet Nam is about 10 USD for each ton of carbon emissions. In the EU, carbon prices can be up to about 100 USD per ton. With such a large difference, it is clear that even if it can be proven that it has paid environmental protection tax as a carbon fee, businesses still have to compensate a large amount of money to meet CBAM's requirements.