The European Union (EU) will provide development funding to countries affected by the carbon border adjustment mechanism (CBAM)...
Illustration photo: Photo: moit.gov.vn
The European Commission (EC) has just published a document on the priorities of the European Union (EU) in the field of climate and energy diplomacy. Accordingly, it will provide financial support to developing countries affected by the Carbon Border Adjustment Mechanism (CBAM) through the "Global Europe" program.
The EC is proposing a 200 billion euro ($233 billion) package in the EU budget for 2028–2034. This funding would help ease partners' concerns about new EU rules, while strengthening partnerships and supporting broader regulatory reforms.
The support is expected to help developing countries invest in technology to reduce emissions in industry and transition to clean energy – thereby reducing the costs of the EU's border carbon tax.
“As the CBAM mechanism is gradually implemented, the EU will maximize the contribution of the Global Europe programme to meeting the emission reduction and climate change adaptation needs of developing countries,” the document states.
Energy Commissioner Dan Jørgensen said the bloc would not roll back climate rules in response to pressure from trading partners, but was ready to cooperate and invest in green industries that benefit both sides, such as renewable energy and hydrogen production in Africa – a region the EU is aiming to import clean energy from. Mr. Jørgensen said he was ready to support these countries, not only through financial agreements but also in the form of technical assistance. The EU will not go against the green transition, but also will not ignore the legitimate concerns of partners.
The EU document also said the bloc would promote the role of the business sector in energy diplomacy, while identifying clean technology investment priorities abroad.
CBAM is an EU policy that imposes a tax on imported goods based on the carbon emissions during production. The aim is to prevent “carbon leakage” caused by businesses moving production to countries with looser environmental regulations, creating a level playing field for domestic EU producers.
According to the roadmap, the CBAM transition period will last from now until the end of 2025, and from January 2026 it will be fully applied to many key product groups such as steel, aluminum, cement, fertilizer, electricity, and hydrogen. Statistics from experts show that for aluminum alone, the value and volume of exports to the EU are forecast to decrease by 4% and 0,4%, respectively.
However, CBAM has been criticized by Brazil, South Africa and India for being disadvantageous to developing economies.
Vietnam is the 11th largest partner in terms of imported goods into the EU. According to experts, currently most of the exported goods from Vietnam do not belong to these groups. Up to now, only a few of Vietnam's export products are subject to the EU CBAM regulations such as: iron, aluminum, steel, aluminum, hydrogen, cement and fertilizer...
However, it should be noted that if this mechanism is extended to other sectors in the future, CBAM will create significant additional costs for Vietnam's export goods.
Ngoc Lan
Sources: VnEconomy