European institutions are preparing negotiations on revisions to the Carbon Border Adjustment Mechanism (CBAM), with European aluminium producers pressing for stricter carbon accounting and a lower import exemption. The main points of disagreement relate to how post-consumer aluminium scrap is treated and the annual import threshold for smaller operators. The outcome is expected to affect competition between manufacturers in the EU and suppliers outside the bloc.
The first political trilogue involving the European Parliament, European Commission and EU Council is scheduled for 20 October 2026. Industry association European Aluminium is urging negotiators to address provisions it says could lead to unequal carbon costs for imported aluminium products versus comparable goods made in the EU. The discussions will also cover whether additional downstream steel and aluminium products will be added from 2028.
Accounting dispute over pre- and post-consumer scrap
Under the Commission’s proposed revisions, pre-consumer aluminium scrap generated during manufacturing would be included in relevant precursor emissions calculations. By contrast, post-consumer scrap recovered from products at the end of their useful lives would remain excluded. European Aluminium argues that this split could allow imported aluminium products containing post-consumer scrap to show lower calculated carbon costs than comparable EU-made products.
The association also raises concerns about “resource shuffling,” where producers direct lower-emission materials to EU customers without necessarily reducing emissions across their overall operations. It says that if scrap content can be declared without sufficiently robust traceability and verification, importers could gain a commercial advantage through accounting rather than demonstrable reductions in total emissions. European Parliament amendments adopted in September would bring post-consumer aluminium scrap into the proposed precursor accounting framework.
The Council’s negotiating position remains closer to the Commission’s original approach, leaving the issue unresolved ahead of the October trilogue. The accounting rules are described as particularly relevant for secondary aluminium producers, whose economics depend on scrap availability, electricity prices, collection infrastructure and remelting efficiency. Recycled aluminium generally requires substantially less energy than primary production, making the treatment of recycled inputs important for embedded emissions calculations.
A revised methodology would need to distinguish between artificial reductions in reported emissions and genuine environmental gains from recycling. European Aluminium says excessively high emissions assumptions for recycled inputs could weaken incentives for circular production. It also warns that insufficiently rigorous accounting could give imported products an unjustified carbon-cost advantage over European manufacturers.
Aluminium import exemption contested: 50 tonnes versus 5 tonnes
A second major disagreement concerns the 50-tonne annual CBAM exemption for importers whose cumulative imports of covered goods do not exceed that amount. The threshold was introduced to limit administrative burdens for smaller operators while keeping coverage of most embedded emissions. European Aluminium argues that the 50-tonne level is unsuitable for some aluminium product categories because the metal can be lightweight yet have high commercial value.
The association points to imports such as aluminium extrusions, profiles, industrial components and specialised fabricated products, which it says can represent substantial sales even when combined weight remains below 50 tonnes. It supports reducing the threshold specifically for aluminium to 5 tonnes annually. The European Parliament adopted this position in September, with the final outcome dependent on negotiations with the Commission and Council.
The exemption applies based on an importer’s cumulative annual imports of covered goods rather than each individual shipment. If the threshold is exceeded, imports for that year become subject to CBAM obligations. The Commission has defended the broader exemption by citing its limited effect on total embedded emissions.
In its September assessment, it estimated that a 50-tonne threshold would exclude approximately 0.87% of embedded emissions across assessed import sectors, below a stated 1% limit under the regulation. European Aluminium describes this as reflecting tension between reducing administrative costs across carbon-intensive industries and limiting competitive distortions in individual product markets.
Potential impact on premiums and downstream product coverage
The commercial effects discussed by European Aluminium extend beyond certificate purchase costs under CBAM. It says European aluminium producers already face energy expenditure, obligations under the EU Emissions Trading System (EU ETS), and investment costs linked to industrial decarbonisation. Imported aluminium competes with EU production through pricing structures that include international metal benchmarks, regional physical premiums, fabrication charges, transport and customs-related costs.
The association argues that CBAM-related costs could contribute to higher regional premiums, raising input costs for manufacturers buying aluminium within the bloc. It notes that physical premiums are also influenced by supply availability, trade restrictions and logistics, and cannot automatically be attributed to CBAM. It frames a competitive concern around higher input costs for EU manufacturers while some competing finished products enter without equivalent carbon-related charges.
The treatment of downstream products is therefore described as another key element of negotiations. The Commission has proposed extending CBAM to selected downstream steel and aluminium products from 2028. The European Parliament has advocated a substantially broader product list than either the Commission or the Council, leaving eventual scope subject to negotiation.
The final product list could affect whether processing and fabrication remain commercially attractive within the EU or shift to third countries. The decision is described as relevant for manufacturers using aluminium in automotive production, construction and industrial equipment, where input costs and carbon treatment of finished goods can influence procurement and production decisions.
Emissions documentation requirements for exporters from non-EU markets
The proposed changes could affect aluminium producers, recyclers and fabricators supplying European customers from Serbia, Montenegro, Bosnia and Herzegovina, North Macedonia, Turkey and other non-EU markets. Suppliers of unwrought aluminium, extrusions, profiles and fabricated products may face more detailed requirements covering production routes, scrap content and embedded emissions.
The article notes that EU customers are expected to seek stronger evidence distinguishing pre-consumer from post-consumer material. It says this would be supported by supplier records, material balances, production documentation and independently verifiable emissions calculations. For exporters, demonstrating actual environmental characteristics could become increasingly important compared with declaring a high recycled-content percentage alone.
The proposed expansion to downstream products is also said to make accurate product classification important because not every finished product containing aluminium is currently covered by CBAM. Future obligations would depend on the scope ultimately adopted by EU institutions. Banks financing aluminium production and recycling facilities may need to assess how changes in CBAM treatment affect customer margins, working capital requirements, competitive positions and longer-term investment returns.
October trilogue expected to determine compliance scope
The immediate negotiating issue is whether the Commission and Council move toward the European Parliament’s stronger position on recycled aluminium accounting and smaller imports or retain a more limited approach. An agreement would provide manufacturers with greater certainty for planning investment in recycling, electrification and downstream production. Continued disagreement would prolong uncertainty over future carbon liabilities and the commercial value of recycled feedstock in cross-border trade.
European Aluminium’s stated position is that a mechanism designed to prevent carbon leakage should not create incentives for imports benefiting from less stringent emissions accounting or exemptions unavailable to competing EU producers. It says importers and non-EU manufacturers could face higher compliance costs under tighter rules while suppliers able to demonstrate credible emissions reductions and maintain reliable production records could benefit.
The negotiations are expected to establish how differences in scrap accounting, importer exemptions and downstream product coverage are reflected in EU carbon border requirements. The resulting rules will determine compliance obligations applied to aluminium entering the European market. They will also set criteria used to distinguish lower-emission production from products benefiting from differences in regulatory treatment.