In Indonesia, the European Union’s Carbon Border Adjustment Mechanism (CBAM) applies to only part of the nickel value chain. Ferronickel is included within the iron-and-steel products covered by the mechanism. Refined nickel and several battery intermediates are not within CBAM’s current scope. As a result, the carbon-border treatment of Indonesian exports depends partly on product classification and processing route.
Indonesia’s export restrictions and industrial policies have attracted investment into ferronickel, nickel pig iron, nickel matte and battery intermediates. New processing capacity has been built around coal-intensive electricity use. This highlights the challenge of aligning industrial decarbonisation with access to critical minerals. Differences in CBAM treatment can influence trade and procurement decisions across product forms.
Where product restructuring is aimed at avoiding carbon costs, opportunities for regulatory arbitrage may emerge. Changes in product form can also reflect demand from industry rather than a compliance strategy. EU anti-circumvention measures could become relevant if authorities identify attempts to bypass CBAM requirements. The scope of carbon-border treatment therefore interacts with both commercial processing choices and enforcement risk.
Emissions standards for nickel used in battery supply chains
European battery manufacturers require dependable nickel supplies while facing pressure to reduce supply-chain emissions. Because CBAM does not cover all nickel products, buyers rely on procurement standards to encourage lower-carbon production. Battery regulation, sustainability reporting and customer requirements also play a role in shaping supplier practices. These measures can apply even when CBAM does not directly cover a specific input.
Buyer requirements can extend beyond formal CBAM coverage because environmental expectations may be set through customer specifications. For Indonesia’s nickel sector, investment in renewable electricity, grid upgrades and cleaner processing is presented as a way to improve export competitiveness. International customers that place greater weight on emissions performance may respond to these changes. Such improvements target emissions in production regardless of whether a particular nickel product falls under CBAM.
Limits of carbon border measures for mineral supply diversification
Indonesia’s nickel expansion illustrates that carbon-border measures alone cannot reshape complex global mineral supply chains. Expanding CBAM coverage could narrow differences in how products are treated across the market. However, broader coverage would not by itself create alternative supplies or reduce Europe’s reliance on established producers. The carbon-border approach therefore does not replace upstream supply development.
Europe’s policy mix is described as needing battery regulation, raw-material partnerships and supply diversification alongside carbon pricing. Aligning these elements is presented as necessary for securing nickel for industry and the energy transition while reducing emissions from its production. This alignment is framed around reducing emissions across production routes rather than relying only on CBAM scope changes.