CN codes set the functional unit for embedded emissions
The European Commission has clarified that aluminium products sharing the same Combined Nomenclature (CN) code cannot automatically receive separate CBAM emissions intensities based on alloy grade or recycled content. Guidance issued on 15 October states that embedded emissions must be calculated per functional unit. Normally, this corresponds to the quantity of goods produced under the same CN code. Differences in alloy composition or the proportion of scrap used as an input do not automatically justify separate emissions values within that code.
Recycled content and carbon footprint differences under CBAM
The clarification affects how aluminium producers market 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, whether that difference can be reflected in statutory emissions reporting depends on the applicable production process and the CN-based functional unit. The Commission’s guidance therefore links reporting outcomes to how production is aggregated for CBAM purposes.
Secondary production and limits on bespoke emissions intensities
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 distinction is relevant as recycled content becomes an increasingly important commercial attribute. A lower physical carbon footprint does not automatically result in a separately reportable CBAM emissions value.
Market implications for EU buyers and regional suppliers
For EU aluminium buyers, the reporting rules intersect with a market where premiums have begun 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 processors, aligning product specifications with CBAM data requirements is a key challenge.
Suppliers selling recycled-content products need to determine whether associated carbon benefits can be reflected in the statutory functional unit, a voluntary product carbon footprint, or both. This requirement follows from how CBAM calculations are tied to the applicable functional unit rather than marketing claims about low-carbon characteristics. The Commission’s clarification therefore separates product positioning from statutory emissions accounting under CBAM.
Downstream expansion could extend upstream-linked reporting
The issue could become more significant if proposed changes extending CBAM to additional downstream products are adopted. The proposed changes would bring further aluminium-intensive goods within the mechanism from 2028. This would link emissions associated with upstream metal more directly to the landed cost of fabricated components. In that context, differences in physical carbon footprint would still depend on how emissions are calculated under the statutory framework.