European institutions are preparing negotiations on revisions to the Carbon Border Adjustment Mechanism (CBAM), with European aluminium producers calling for tighter carbon accounting and a reduced import exemption. The disputes highlighted by industry focus on how post-consumer scrap is treated and on the annual import threshold applied to smaller operators. The results are expected to affect competition between EU manufacturers and suppliers from 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 pressing 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 are brought into CBAM from 2028.
Scrap accounting: pre-consumer included, post-consumer excluded
Under the Commission’s proposed revisions, pre-consumer aluminium scrap generated during manufacturing would be included in relevant precursor emissions calculations. Post-consumer scrap recovered from products at the end of their useful lives would remain excluded. European Aluminium argues that this distinction 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, describing cases where producers direct lower-emission materials to 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 favourable accounting rather than demonstrable reductions in total emissions.
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 is described as 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 linked to embedded emissions calculations because recycled aluminium generally requires substantially less energy than primary aluminium production. A revised methodology would need to distinguish between artificial reductions in reported emissions and genuine environmental gains from recycling. European Aluminium warns that excessively high emissions assumptions for recycled inputs could weaken incentives for circular production, while insufficiently rigorous accounting could give imported products an unjustified carbon-cost advantage.
Import exemption: 50 tonnes versus a 5-tonne aluminium threshold
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 retaining coverage of most embedded emissions. European Aluminium argues that this exemption is unsuitable for some aluminium product categories because the metal can be lightweight but still carry high commercial value.
The association points to imports of aluminium extrusions, profiles, industrial components and specialised fabricated products, which it says can represent substantial sales even when their 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 the broader exemption by citing its limited effect on total embedded emissions.
In its September assessment, the Commission estimated that a 50-tonne threshold would exclude approximately 0.87% of embedded emissions across assessed import sectors, below a 1% limit referenced in the regulation. The figures reflect a trade-off between reducing administrative costs in carbon-intensive industries and limiting competitive distortions in individual product markets. A lower aluminium-specific threshold could reduce opportunities for regulatory arbitrage while extending reporting, verification and certificate-related obligations to more small-scale importers.
Downstream scope from 2028 and implications for premiums
CBAM-related effects described by European Aluminium extend beyond certificate purchase costs. It notes that European aluminium producers already face energy expenditure, obligations under the EU Emissions Trading System (EU ETS), and investment costs associated with 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, increasing input costs for manufacturers buying aluminium within the bloc. It also states that physical premiums are influenced by supply availability, trade restrictions and logistics, and cannot automatically be attributed to CBAM movements alone. 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 identified as another element of ongoing 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 coverage subject to negotiation.
The final product list could affect whether processing and fabrication remain commercially attractive within the EU or shift to third countries. This is described as 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.
Non-EU suppliers face documentation requirements
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. EU customers are expected to seek stronger evidence distinguishing pre-consumer from post-consumer material.
The evidence expected includes supplier records, material balances, production documentation and independently verifiable emissions calculations. For exporters, demonstrating actual environmental characteristics could become increasingly important compared with declaring high recycled-content percentages alone. Producers using genuinely low-carbon electricity and efficient recycling processes could benefit if final methodology recognises verified emissions performance.
The proposed expansion to downstream products also makes accurate product classification relevant because not every finished product containing aluminium is currently covered by CBAM. Future obligations would depend on which scope is ultimately adopted by EU institutions. Banks financing aluminium production facilities, recycling plants 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.
October trilogue focuses on recycled scrap rules and exemptions
The immediate negotiating question described is whether the Commission and Council move toward the European Parliament’s stronger position on recycled aluminium accounting and smaller import exemptions or retain a more limited approach. An agreement would provide manufacturers greater certainty when 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 argues 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 would face higher compliance costs under tighter rules while suppliers able to demonstrate credible emissions reductions and maintain reliable production records could see potential benefits.
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.