European Aluminium voices CBAM concern

The EU’s CBAM regulation will accelerate carbon leakage in the aluminium sector, states European Aluminium.

It has commissioned a study to assess the potential impact of CBAM on the alumina and aluminium scrap markets in light of the European Commission’s review to expand the mechanism’s scope and address circumvention risks.

The study claims a major flaw is the incentive to over-declare scrap content in products to avoid paying carbon fees at the border.

Paul Voss, Director General of European Aluminium, said: “Without urgent adjustments, it will punish European producers for being cleaner while rewarding importers with less transparency and fewer obligations,

“We strongly urge the European Commission to immediately pause the implementation of CBAM for aluminium until key design flaws are fixed and the impact on our industry’s competitiveness is properly assessed.”

The research, conducted by Ramboll Management Consulting, comes during European Commission’s on-going review to expand the mechanism’s scope and address circumvention risks.

The concerns of Voss and European Aluminium are also echoed by several Members of the European Parliament as they look to table amendments calling for a pause in CBAM implementation for aluminium until necessary fixes are made.

Under CBAM, scrap is assigned a zero-emissions value, meaning importers can over-declare scrap content to reduce or avoid carbon cost, with no reliable way to verify claims.

As a result, the study shows foreign producers could pocket between 3.6% and 6.5% of the London Metal Exchange aluminium price, whilst transparent EU producers will have to pay carbon costs across their full value chain.

The study also highlighted that the potential inclusion of alumina in CBAM could lead to the market price of the raw material increasing up to 24% by 2034.

Voss concluded: “If the ongoing changes and the European Commission review show that CBAM continues to do more harm than good, aluminium should be removed from its scope entirely.”

The European Parliament are set to vote in Plenary on the CBAM simplification proposals, on 22 May.

Source: www.aluminiumtoday.com