Opportunities and challenges brought by EVFTA to Vietnamese exporters

The EU-Vietnam Free Trade Agreement (EVFTA) has opened up opportunities for Vietnamese goods to penetrate the European market. It can be said that the export of iron, steel, aluminum, etc. has benefited a lot from this agreement, with the result that in recent years, iron and steel exports of all kinds have significantly increased and flourished right from the beginning of 2024.

However, since the third year of the EVFTA implementation roadmap, these advantages and results have been somewhat affected because the EU is applying higher standards, increasing special quality requirements in the fields of environment, climate, and sustainable development, etc. with imported goods, which we collectively call “green standards”.

The European Green Deal

From October 1, 2023, the EU’s Carbon Border Adjustment Mechanism (CBAM) has officially entered a transitional phase. This phase will last until the end of 2025, which requires importers in the EU market to report a list of goods related to CBAM and the emissions (direct and indirect) of the product during production.

CBAM is a new EU policy that allows additional tariffs on imports in sectors with a high risk of carbon leakage and high carbon emissions such as steel, cement, fertilizers, aluminum, electricity, and hydrogen (accounting for 94% of EU industrial emissions). This additional tax is called a carbon tax and is calculated based on the product’s emission level during production.

Studying the impacts of CBAM to prepare for a process of adaptation

Thus, Vietnam’s iron, steel, aluminum, cement, and fertilizer products exported to the EU will officially be taxed on carbon from January 1, 2026. In the future, CBAM is expected to be expanded to apply to other industries, towards the goal of net zero emissions by 2050. This is not only a challenge for new businesses exporting to the EU but also for even businesses with a wealth of experience in this market.

6 sectors covered in the first phase of the CBAM

Furthermore, in the current face of regulations on greenhouse emissions, many global leading corporations such as Nike, Adidas, Coca-Cola, and Heineken, etc. also issue important environmental supplier selection criteria. This requires Vietnamese businesses that want to participate in the chain of global brands to meet regulations on reducing carbon emissions.

Therefore, reducing greenhouse gas emissions is both a trend and a requirement that businesses must implement if Vietnam wants to participate in the global chain. Vietnamese businesses that want to export to the EU sustainably are forced to convert to developing green production, applying high-standard technology to ensure the supply of green, clean products that meet the technical and environmental standards of the EU market and participate more deeply in the market’s sustainable supply chain.

Accelerating the clean energy transition

Facing the above challenges, businesses producing and exporting products such as iron, steel, aluminum, cement, fertilizer, etc. need to accelerate the energy transition and gradually apply decarbonization technology in their production. Many iron and steel industry enterprises are trying to use renewable energy sources, such as rooftop solar power, to replace traditional power sources, helping to significantly reduce emissions into the environment.

Customers in Binh Duong and Hai Phong choose VSSES for greening their iron and steel manufacturing process

“In line with the Corporation’s sustainable development strategy, we have collaborated with VSSES to power our manufacturing site with rooftop solar energy. Now, we can confidently consume green energy from this system without incurring any costs, which also helps enhance our competitive advantages when exporting to the international markets. The professionalism of VSSES is demonstrated throughout from the roof structure evaluation stage to the final inspection, ensuring strict compliance with safety regulations. We highly appreciate the VSSES team who are always ready to make every effort to provide us the top-notch services.”

-From our valued customer based in Hai Phong Province-

VSSES is honored to be a companion with Vietnam enterprises to unlock the gateway towards the green transition, contributing to reducing negative impacts on the environment, and helping businesses improve their brand recognition and competitiveness in the market. Our PPA solution is a tailor-made plan that offers business owners the power to:

• Earn a favorable discount off the prevailing retail tariff to benefit from savings on monthly electricity bills.
• Decide a tailor-made PPA tenure to suit your business conditions.
• Own the solar energy system without a capital investment at the end of the PPA contract term.

You can reach our PPA Solution to better understand VSSES’s electricity sales model. Click here to see more featured projects implemented by VSSES.

Contact VSSES now to enjoy clean energy with zero upfront investment.