Aluminium production is highly sensitive to electricity prices and supply conditions. Under the current CBAM treatment for listed aluminium goods, buying renewable electricity does not automatically reduce certificate liability. This distinction separates electricity’s industrial role from its function in the current emissions calculation.
Direct emissions in current CBAM calculations for listed goods
For iron-and-steel and aluminium goods currently listed in Annex II, the existing CBAM calculation accounts for direct emissions. Renewable electricity procurement can still provide operational, customer, financing and decarbonisation benefits without automatically lowering certificate liability through purchased-electricity emissions.
For aluminium producers, the separation is particularly relevant. Electricity can dominate smelting costs and influence product carbon intensity, while the current Annex II treatment for listed aluminium goods focuses on direct emissions. Process sources, including anode consumption and perfluorocarbon emissions, therefore remain central to the current CBAM calculation.
Electricity procurement versus product emissions methodology
Commercial teams are expected to evaluate two connected but distinct dimensions. One concerns the economics of physical electricity supply, while the other concerns the emissions methodology applicable to the product. Both dimensions affect business outcomes, but they do not necessarily apply the same carbon boundary.
Renewable electricity is also described as a strategic asset for industrial operations. It can reduce operational carbon intensity, support customer requirements, strengthen corporate reporting and differentiate low-carbon aluminium products. Long-term power purchase agreements (PPAs) can additionally support new renewable generation projects by securing industrial offtake.
PPA valuation and contractual cost allocation
For lenders, the PPA should be assessed based on demonstrable effects on electricity costs, supply security and market positioning. This approach is contrasted with an assumed direct CBAM saving that the current calculation does not automatically provide.
Aluminium smelters with stable baseload demand are also referenced as valuable offtake for renewable energy portfolios. The contractual structure must specify who bears costs linked to hourly shaping, balancing and imbalances. These costs can materially affect the delivered PPA price and should be identified separately rather than included within an environmental premium.
COM(2025) 989 and proposed changes to electricity treatment
The legislative proposal COM(2025) 989 would revise electricity treatment in future rules. It includes changes to the methodology for electricity default values and conditions for using actual values. It would also broaden physical PPAs to include intermediaries and modify elements of congestion and nomination arrangements.
The Council adopted its negotiating position on 12 June 2026, followed by the European Parliament on 15 September 2026. The proposal remains under interinstitutional negotiation and is not treated as enacted law. The same file proposes expanding CBAM downstream coverage from 2028 to selected steel- and aluminium-intensive goods.
Both institutions support expanding downstream coverage, but their proposed product lists differ and remain subject to negotiation. Until final legislation is adopted, the existing scope remains the operating baseline for coverage.
Separating power competitiveness from process-carbon compliance
Aluminium buyers and producers are advised to assess electricity procurement based on defined benefits such as power costs, supply reliability, customer requirements and decarbonisation. In parallel, process-carbon compliance should be evaluated separately using the emissions categories and methodology applicable to the relevant product.
The commercial opportunity is described as substantial because aluminium production depends heavily on electricity. At the same time, capturing that value requires distinguishing what renewable power delivers industrially from what current CBAM rules recognise in the certificate calculation.