Decarbonising primary aluminium production requires commercial teams to separate emissions linked to electricity supply from direct process emissions produced by smelting technology. Renewable electricity can reduce the broader carbon footprint of output, but it does not remove the need to monitor and cut emissions tied to anode consumption and perfluorocarbon (PFC) releases. For CBAM purposes, this separation affects how emissions are treated in calculations.
European Commission guidance on CBAM implementation timelines
The European Commission published definitive-period sector guidance on 14 August 2026, including dedicated guidance for electricity, iron and steel, and aluminium. It also refreshed its general CBAM questions and answers on 15 October 2026. The guidance supports implementation but does not replace the binding regulation and implementing acts.
For iron-and-steel and aluminium goods currently listed in Annex II, the existing CBAM calculation covers direct emissions. Renewable electricity procurement can provide operational, customer, financing and decarbonisation benefits without automatically reducing certificate liability through purchased-electricity emissions. This approach means purchased electricity does not automatically change the certificate basis under current rules.
Direct process emissions remain central for primary aluminium
For primary aluminium producers, separating electricity-linked emissions from process emissions is described as particularly important. Anode-related CO2 emissions and PFC emissions require their own monitoring and abatement measures. Under current CBAM rules for listed aluminium goods, these direct process emissions remain central to the certificate calculation.
Renewable attributes are handled through contract design and evidence controls. Contracts covering renewable electricity attributes should prevent the same environmental claim from being sold more than once, especially where a renewable project supplies multiple industrial customers. Electricity supply records and Guarantees of Origin (GoOs) can be reconciled to support appropriate claims.
Allocation of Guarantees of Origin for CBAM treatment
Even when GoOs are used, ownership of a renewable attribute does not by itself establish that the electricity qualifies for a particular CBAM treatment. The power contract is therefore described as one element within a wider transition programme. That programme includes cell efficiency, anode management, process control and precursor data.
Electricity traders can support the energy-procurement component without implying that renewable supply resolves the product’s entire embedded-emissions position. This distinction is tied to how direct process emissions are treated under current CBAM rules for listed aluminium goods.
Investment planning aligned with separate carbon models
Capital providers are expected to incorporate both decarbonisation capital expenditure and power purchase agreement (PPA) strategy into the same financial model while keeping revenue and compliance effects distinct. A competitively priced renewable contract may improve cash generation and help finance process upgrades even before purchased electricity gains a broader role in relevant CBAM calculations.
Customer contracts for low-carbon aluminium should specify whether commitments relate to product carbon footprint, renewable electricity sourcing, a maximum emissions threshold or a disclosure requirement. Each commitment type requires its own evidence and may support a different commercial premium. Aluminium buyers are advised to separate power-cost competitiveness from process-carbon compliance when evaluating transition measures.
COM(2025) 989 proposes changes to electricity treatment
The legislative proposal COM(2025) 989 would revise electricity treatment, including methodology for electricity default values and conditions for using actual values. It would also broaden physical power purchase agreements to include intermediaries and modify elements of congestion and nomination framework rules. 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 enacted law.
The same legislative file proposes extending CBAM downstream coverage from 2028 to selected steel- and aluminium-intensive goods. Both institutions support expansion, but their proposed product lists differ and remain subject to negotiation. Until final legislation is adopted, the existing scope remains the operating baseline.
For primary aluminium specifically, renewable electricity is described as an important decarbonisation lever but not a substitute for reducing direct process emissions. Investors are therefore expected to use a disaggregated carbon model reflecting each emissions source and the specific regulatory treatment applicable to the product.