CN codes set the functional unit for embedded emissions
The European Commission clarified that aluminium products sharing the same Combined Nomenclature (CN) code cannot automatically be assigned separate CBAM emissions intensities based on alloy grade or recycled content. Guidance issued on 15 October says embedded emissions should be calculated per functional unit, normally the quantity of goods produced under the same CN code. Differences in alloy composition or the share 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 the Carbon Border Adjustment Mechanism (CBAM), whether that difference can be reflected in statutory reporting depends on the applicable production process and the CN-based functional unit.
Recycled production reduces emissions but does not change CBAM intensity rules by default
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 Commission’s clarification therefore limits how far recycled-content claims can translate directly into different statutory emissions values.
The distinction is relevant as recycled content becomes a more prominent commercial attribute. A lower physical carbon footprint does not automatically result in a separately reportable CBAM emissions value. This means carbon performance linked to recycled inputs may not align with statutory intensity reporting unless it fits within the required functional unit approach.
EU buyers and Southeast European suppliers face reporting and specification alignment
For EU aluminium buyers, the reporting rules intersect with a market where premiums have started 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 far those costs can be passed through in spot transactions.
For Serbian and other Southeast European aluminium processors, aligning commercial 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.
Downstream CBAM expansion could link upstream metal emissions to component costs
The issue could become more significant if CBAM is extended to additional downstream products. Proposed changes would bring further aluminium-intensive goods within the mechanism from 2028. The changes would connect emissions associated with upstream metal more directly to the landed cost of fabricated components.
The Commission’s clarification also distinguishes between marketing low-carbon characteristics and calculating emissions under the statutory CBAM framework. Aluminium may have a lower physical carbon footprint without automatically meeting conditions for a separate CBAM emissions value under the shared CN-code approach.