CBAM IN THE ALUMINIUM SECTOR
The Carbon Border Adjustment Mechanism (CBAM), is a groundbreaking policy introduced by the European Union (EU) to address carbon leakage and support its climate-neutrality goals by 2050, with CBAM in the aluminium sector becoming a key focus due to the carbon-intensive nature of aluminium production.
This mechanism now operates under its definitive phase and applies to imported goods, including aluminium, which are subject to a carbon price designed to mirror the EU Emissions Trading System (ETS).
CBAM in the Aluminium Sector is particularly significant, as aluminium, due to its carbon-intensive production, is one of the key sectors directly impacted by this policy.
What is CBAM?
CBAM combats carbon leakage, which occurs when industries relocate to regions with less stringent climate policies or when EU goods are replaced by higher-carbon imports. By assigning a carbon price to imports, CBAM levels the playing field for domestic and international producers, while promoting sustainable practices worldwide.
CBAM’s Impact on the Aluminium Sector
With CBAM now in its definitive phase, aluminium importers and producers face specific obligations:
- Emission Reporting:
During the transitional period from 2023 to 2025, importers were required to submit quarterly CBAM reports. These transitional reports have now ended, and compliance has shifted to the definitive phase. Reporting covered the quantity and origin of imported aluminium, as well as the embedded emissions linked to those imports.
- Embedded Emissions Calculations: CBAM requires a detailed calculation of embedded emissions:
- Direct emissions from fuel combustion or production processes like electrolysis.
- For aluminium, indirect electricity emissions are not currently included in the same way and should not be presented as a standard requirement.
- Any reference to precursor emissions should be removed unless it is specifically verified for the product in question. or recycled aluminium.
- Mandatory Certification (From 2026): The definitive CBAM phase began on 1 January 2026, but the first annual CBAM declaration and the corresponding surrender of certificates for 2026 imports will take place in 2027. These certificates reflect the emissions embedded in aluminium imports and are linked to the EU ETS price.
- Cost Mitigation via Sustainability: Producers can minimize CBAM-related costs by adopting low-carbon technologies, such as renewable energy-powered smelting.
Preparing for CBAM: Current Status and Deadlines
- Quarterly Reporting: Importers were required to submit quarterly reports during the transitional period from October 2023 through the end of 2025, detailing:
- Quantity and origin of imported aluminium.
- Associated embedded emissions.
- Any applicable carbon pricing mechanisms in the country of origin.
- Authorization as a CBAM Declarant: Companies importing aluminium into the EU must now ensure they are authorised CBAM declarants where required under the definitive regime. Only authorised entities can import goods covered by CBAM under the current rules.
By now, importers have moved beyond transitional reporting, and the focus is now on definitive-phase compliance and the first annual declaration cycle.
Challenges and Opportunities in the CBAM Aluminium Sector
CBAM presents both challenges and opportunities for businesses in the aluminium sector:
- Challenges: Compliance with CBAM reporting and certification introduces operational costs and demands accurate emissions monitoring across supply chains.
- Opportunities: CBAM encourages innovation, such as renewable-powered smelting or energy-efficient processes, which can reduce emissions and align companies with global sustainability trends.
CBAM has already begun reshaping the aluminium industry by enforcing carbon accountability across global supply chains. Proactive compliance is now essential. For businesses, this is not merely a regulatory hurdle but an opportunity to lead in sustainability and innovation.
Need help with CBAM compliance?
Carbon Complete offers expert CBAM services to ensure your business meets current CBAM requirements. With accurate carbon emissions reporting and strategic insights, we help you navigate the definitive phase with confidence.
