As we look ahead to the European Parliament’s vote on CBAM simplification proposals, ALRO is closely monitoring the ongoing discussions and the potential impact of the Carbon Border Adjustment Mechanism (CBAM) on our industry.
A new study by Ramboll Management Consulting, commissioned by European Aluminium, has highlighted serious flaws in the current design of CBAM that could inadvertently harm European aluminium producers. These findings echo concerns raised by industry leaders and policymakers, urging urgent reforms to ensure fairness and protect Europe’s competitiveness.
Key Takeaways from the Study:
- Circumvention Risk: The current rules create a major loophole, enabling importers to over-declare scrap content in products to avoid carbon fees. Without reliable verification mechanisms, this risks distorting the market and undermining the carbon pricing system.
- Increased Costs for Alumina: Including alumina (a key material for aluminium production) under CBAM could lead to significant price hikes, impacting both primary smelters and downstream manufacturers. This would increase costs across the entire value chain, hurting European producers’ competitiveness.
- Indirect Emissions: The inclusion of indirect emissions in CBAM would place a disproportionate burden on European aluminium producers, creating market distortions. Since producers outside the EU are not subject to equivalent carbon costs, this imbalance could have a detrimental effect on demand, supply, and pricing.
We firmly support the call to pause CBAM implementation for aluminium until these critical design flaws are addressed. It is essential that the European Commission reevaluates the impact of CBAM on the industry to ensure it doesn't undermine European aluminium production or lead to unintended consequences.
