The EU's carbon border adjustment mechanism (CBAM) places administrative and cost burdens on the aluminium sector while risking not achieving its stated aims, delegates at the Triland Global Metals Outlook in London on Wednesday heard.
"None of my members love CBAM," secretary general of industry body the International Aluminium Institute Jonathan Grant said, pointing to the complexities of implementation and the lack of willingness from consumers to pay for more expensive low-carbon products.
And EU producers see CBAM as a "zero-sum game", he said, at best making up for the associated reduction in their free EU emissions trading system allocations, but with loopholes meaning it might not cover all imports.
Although CBAM is meant to support competitiveness by levelling carbon costs between jurisdictions, it could have the opposite effect for aluminium, said Grant, given that it makes the metal less competitive against other materials. Aluminium competes with copper, plastics, glass and steel, he said, of which only steel must pay CBAM costs.
A lot of aluminium deals in 2026 have been transacted assuming CBAM costs based on goods' actual embedded emissions, managing director of metals trader Metal Exchange International Boris Santosi said. But smelters may not be able to get these emissions verified in time, forcing them to use intentionally punitive default emissions values and leaving them with a "massive exposure", he said.
To use actual emissions values to calculate CBAM liabilities, producers must have their emissions verified by a third party. But the first emissions verification body only received accreditation under CBAM last month, leaving limited time and availability for producers to get their emissions verified.
CBAM has well-meaning goals, said Anastasia Kuskova, chief executive of metals due diligence platform beSirius. But Europe has to ask itself if it is in a position to limit its access to critical materials. It should instead look for a way of reaching its objectives in a "commercially sensible" way, she said.
Consumers will pay for CBAM, Santosi said, because exporters are unwilling to shoulder this price. If they do not pass it on they will either export their goods elsewhere or use resource shuffling to avoid the charges, he said, highlighting that some view the policy as "climate colonialism" and do not see why they should pay. Some producers might alternatively try to convince their own governments to implement CBAM-style policies, he said.
EU imports of aluminium are on track to fall by around 16pc year on year in 2026, said senior research analyst at Triland Metals Jonathan Sims, as a result of the combined impact of CBAM and the conflict in the Middle East, which has hindered aluminium exports through the closure of the strait of Hormuz and drone attacks on production facilities. He calculates additional costs for importers at current Emissions Trading System (ETS) prices at around $45/t, increasing to $115/t in 2030 based on rising ETS prices and CBAM exposure as the mechanism is phased in.
CBAM could re-emerge as a focus of aluminium sector discussions if tensions in the Middle East ease, Sims said. Market participants indicated earlier this year that CBAM concerns had been overshadowed by events in the Middle East.
