CN codes set the functional unit for embedded emissions
The European Commission has clarified that aluminium products sharing the same Combined Nomenclature (CN) code cannot automatically be given separate CBAM emissions intensities based on alloy grade or recycled content. Guidance issued on 15 October says embedded emissions must be calculated per functional unit, normally the quantity of goods produced under the same CN code. Differences in alloy composition or the proportion of scrap used as an input do not automatically justify separate emissions values within that code.
The clarification affects how aluminium producers present recycled content as a low-carbon attribute. Billets, slabs and other semi-finished products with a high proportion of scrap can have a substantially different physical carbon footprint from primary aluminium. Under CBAM, whether that difference can be reflected in statutory emissions reporting depends on the applicable production process and the CN-based functional unit.
Recycled input does not automatically change statutory CBAM intensities
Secondary aluminium production can reduce actual emissions across the production process. However, operators should not assume that individual alloy production campaigns can be separated and assigned bespoke CBAM intensities when the applicable functional unit requires aggregation. The rules therefore limit how far differences tied to input scrap proportions can be reflected in reporting.
The distinction is relevant as recycled content becomes an increasingly important commercial attribute. A lower physical carbon footprint does not automatically result in a separately reportable CBAM emissions value. This means carbon-related claims tied to recycled input may not translate directly into distinct statutory emissions intensities under the mechanism.
Market impact for EU buyers and regional suppliers
For EU aluminium buyers, the reporting approach intersects with a market where premiums have begun to reflect CBAM-related costs. European market assessments were adjusted from the start of 2026 to account for the new border cost. Producers and consumers continue to debate how those costs can be passed through in spot transactions.
For Serbian and other Southeast European aluminium processors, aligning product specifications with CBAM data requirements is a key challenge. Suppliers selling recycled-content products need to determine whether any associated carbon benefit can be reflected in the statutory functional unit, a voluntary product carbon footprint, or both. This requirement links commercial documentation to how embedded emissions are calculated under CBAM.
Downstream CBAM expansion could increase linkage to upstream metal
The issue could become more significant if proposed changes extend CBAM to additional downstream products. Under the proposal, further aluminium-intensive goods would be brought within the mechanism from 2028. The changes would link emissions associated with upstream metal more directly to the landed cost of fabricated components.
The Commission’s clarification also draws a line between marketing low-carbon characteristics and calculating emissions under the statutory CBAM framework. Aluminium may have a lower physical carbon footprint without automatically qualifying for a separate CBAM emissions value when products fall under the same CN code.