European institutions are preparing negotiations on revisions to the Carbon Border Adjustment Mechanism (CBAM), with European aluminium producers calling for stricter carbon accounting and a reduced import exemption. The main points of contention relate to how post-consumer aluminium scrap is treated and to 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 between imported aluminium products and comparable goods produced in the EU. The negotiations will also cover whether additional downstream steel and aluminium products should be brought into CBAM from 2028.
Revisions to recycled input accounting for aluminium scrap
Under the Commission’s proposed CBAM 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-produced products.
The association also raised concerns about “resource shuffling,” where producers could direct lower-emission materials toward EU customers without 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. The dispute is therefore linked to how scrap declarations are supported by evidence.
In September, the European Parliament adopted amendments that 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.
The treatment of recycled inputs is also tied to embedded emissions calculations because recycled aluminium generally requires substantially less energy than primary production. A revised methodology would need to distinguish between artificial reductions in reported emissions and genuine environmental gains from recycling. European Aluminium’s concerns include both overly high emissions assumptions for recycled inputs weakening incentives for circular production and insufficiently rigorous accounting creating an unjustified carbon-cost advantage for imported products.
Lowering the annual CBAM exemption for aluminium imports
A separate 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 retaining coverage of most embedded emissions. European Aluminium argues that this level is unsuitable for certain 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, but the final outcome depends 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, relevant imports for that year become subject to CBAM obligations. The Commission has defended maintaining a broader exemption by citing its limited effect on total embedded emissions, estimating in September that a 50-tonne threshold would exclude about 0.87% of embedded emissions across assessed import sectors, below a 1% limit referenced in the regulation.
European Aluminium frames the issue as balancing administrative cost reductions against competitive distortions in specific product markets. It says a lower aluminium-specific threshold could reduce opportunities for regulatory arbitrage while also extending reporting, verification and certificate-related obligations to more small-scale importers. This link between threshold design and compliance workload is part of the negotiation context.
Potential impact on regional premiums and downstream coverage from 2028
European Aluminium says CBAM-related effects extend beyond certificate purchase costs. It notes that EU producers already face energy expenditure, obligations under the EU Emissions Trading System (EU ETS), and investment costs connected with industrial decarbonisation. Imported aluminium competes with EU output through pricing that includes 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, increasing input costs for manufacturers buying within the bloc. It also notes that physical premiums are influenced by supply availability, trade restrictions and logistics, meaning changes cannot automatically be attributed solely to CBAM. The competitive concern described is that EU manufacturers may face higher input costs while some competing finished products enter without equivalent carbon-related charges.
The treatment of downstream products is therefore highlighted as another element of negotiations. The Commission has proposed extending CBAM from 2028 to selected downstream steel and aluminium products. The European Parliament has advocated a substantially broader product list than either the Commission or the Council, leaving final scope subject to negotiation.
The eventual product list could affect whether processing and fabrication remain commercially attractive inside the EU or shift to third countries. European Aluminium says this is particularly relevant for manufacturers using aluminium in automotive production, construction and industrial equipment, where input costs and carbon treatment of finished goods can affect procurement and production decisions.
Emissions documentation requirements for exporters supplying Europe
The proposed changes are expected to affect aluminium producers, recyclers and fabricators supplying customers in Europe 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 expectation described is that EU customers will seek stronger evidence distinguishing pre-consumer from post-consumer material. This evidence would be supported by supplier records, material balances, production documentation and independently verifiable emissions calculations. For exporters, demonstrating actual environmental characteristics could become more important relative to declaring a high recycled-content percentage alone.
The methodology described as under consideration could recognise verified emissions performance where producers use genuinely low-carbon electricity and efficient recycling processes. Accurate product classification is also identified as important because not every finished product containing aluminium is currently covered by CBAM. Future obligations would depend on what scope EU institutions ultimately adopt during negotiations.
Banks financing aluminium production, recycling facilities and export-oriented manufacturing may also need to assess how changes in CBAM treatment affect customer margins, working capital requirements, competitive positions and longer-term investment returns. These considerations are linked to how compliance obligations evolve under revised rules.
October trilogue sets direction on recycled scrap rules and exemptions
The immediate negotiating question is whether the Commission and Council move toward the European Parliament’s stronger positions on recycled aluminium accounting and smaller import exemptions or retain a more limited approach. An agreement would provide manufacturers with greater certainty when planning investment in recycling, electrification and downstream production activities. 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 intended 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 determine how differences in scrap accounting, importer exemptions and downstream product coverage are reflected in EU carbon border requirements. The resulting rules will influence compliance obligations applied to aluminium entering the European market as well as criteria used to distinguish lower-emission production from products benefiting from differences in regulatory treatment.