Why Aluminium is a Key Focus for CBAM

Aluminium production is extremely energy-intensive, consuming around 15 MWh of electricity per tonne. Depending on the power source, emissions range from 2 tonnes CO₂ per tonne of aluminium (hydro-powered smelters) to over 16 tonnes in coal-based regions. Globally, aluminium contributes ~1.1 Gt CO₂, or 2 % of energy-related emissions.

With aluminium covered by CBAM, exporters to the UK and EU must disclose and pay for embedded carbon, raising input costs across automotive, aerospace, and packaging sectors.

For European buyers, low-carbon aluminium may command a premium but could become a competitive necessity. Smelters face growing pressure to prove renewable sourcing and to adapt to tightening emissions disclosure rules.

The production of aluminium, especially primary aluminium made from bauxite, is notoriously energy-intensive. The smelting process consumes large amounts of electricity, which, if derived from fossil fuels, like coal, translates to high embedded emissions (defined as total greenhouse gas emissions associated with the production of a material)

At CFP Energy, we've been helping businesses comply with CBAM since its inception. We provide insights and expert advice on preparing for full implementation, as well as instant access to CBAM certificates. To see how we can help, contact our carbon team today.

Aluminium production can also involve direct process emissions like perfluorocarbons and PFCs. Classified as ‘potent greenhouse gases’ by the European Environment Agency (EEA), these chemicals are a key contributor to climate change, making their progressive elimination from the atmosphere essential to achieving climate goals like Net Zero.

Designed to tackle the process emissions of aluminium production, CBAM seeks to encourage decarbonisation by putting a carbon price on aluminium produced in countries outside the EU.

It aims to ensure that importing aluminium from countries outside the EU, specifically, those with more relaxed climate policies, carries no financial benefit, thereby creating a "level playing field" where imports from outside the EU are subject to the same carbon costs as goods made within its borders.

Products Under the European Aluminium CBAM

At present, the EU CBAM covers a range of raw and finished aluminium products. These include:

Unwrought aluminium – raw aluminium not yet processed
Aluminium powders and flakes
Semi-finished including:
Bars and rods
Wires
Plates and sheets
Foil
Profiles and structural components
Containers and packaging
Tube or pipe fittings

The inclusion of both raw/unwrought and semi-finished aluminium goods reflects the EU’s intent to capture embedded emissions across the full value chain, not just at the point of extraction or smelting.

The broad scope of aluminium products within CBAM means that producers and importers must work closely to ensure compliance. Importers in particular should be prepared to identify the origin and production method of the aluminium, especially where supplier-specific emissions data for the product is unavailable or inconsistent.

CBAM Aluminium UK

At present, the EU CBAM regulates fertiliser imports into the EU. However, the UK government is also planning its own CBAM. This will place a carbon levy on aluminium imports into the UK, with implementation expected for 2027. It’s essential, therefore, that any UK businesses that rely on aluminium, such as firms in construction and manufacturing, prepare for UK CBAM to avoid unforeseen costs later on.

Navigating the Hurdles of European Aluminium CBAM

Because the energy intensity of aluminium production varies depending on the energy source used (e.g., renewables or coal), the inclusion and monitoring of aluminium emissions in CBAM presents a challenge.

As of 1 January 2026, EU-based importers of aluminium will be required to comply with a series of measures to meet their CBAM obligations. From regulatory complexity to emissions data collection and financial impact, the next section will outline some common hurdles faced by importers.

1. Regulatory Complexity

The significant divergence in carbon intensity associated with different methods of aluminium production makes importing aluminium complex. For instance, while renewable-powered production can have a carbon footprint as low as 4 kg of CO2e per kg of aluminium, coal-fired power can result in emissions as high as 20 kg of CO2e per kg. This makes regulating aluminium within CBAM challenging, as tracing the full carbon footprint of aluminium products requires detailed information about the production process, energy sources, and upstream materials like alumina.

2. Emissions Data Collection

To effectively comply with CBAM, importers must also measure and report emissions. However, because the ‘carbon intensity’ of electricity used in aluminium smelting can vary dramatically from country to country, measuring and reporting emissions can be difficult. To address this, where supplier data is unavailable, importers can rely on regional default emission factors published by the European Commission. This ensures a much simpler way of emissions reporting, while also guaranteeing the accuracy of data submitted across different countries or regions.

3. Financial Impact

The specific financial impact of CBAM aluminium lies with coal-based grids, which generally lead to higher emissions and thus higher CBAM costs. However, this only applies, for the most part, to primary production of aluminium (e.g. bauxite ore). Secondary, recycled aluminium, meanwhile, has much lower emissions and therefore enjoys much more favourable cost exposure under CBAM. The financial burden on primary aluminium, therefore, creates an incentive for importers to shift towards the purchase of secondary aluminium.

Delving Deeper into Aluminium: The "Scrap Loophole"

The “Scrap Loophole" refers to the CBAM’s exclusion of pre-consumer aluminium and steel scrap from its scope. In effect, the loophole means there is a zero-emissions value assigned to imported remelted scrap, regardless of its country of origin or the energy used in its remelting.

It’s important to understand this loophole as it creates a disparity between EU and non-EU producers: while European recyclers pay a carbon cost via the EU Emissions Trading System (ETS) that’s embedded in the price of their scrap, foreign competitors can import remelted scrap under a "zero-emissions" label. This provides foreign producers with a significant cost advantage, estimated to be over €200 per tonne by 2035.

There is also a parallel risk of greenwashing directly related to this oversight: the scrap loophole incentivises non-EU producers to over-declare scrap content to avoid carbon costs, potentially leading to misleading claims where such materials are labelled as "green".

To address regulatory gaps like these, the EU CBAM may be amended in future. Amendments may include expanding the scope to include pre-consumer scrap with carbon accounting based on the exact remelting processes used, or new verification requirements for scrap declarations, including third-party auditing and material traceability systems.

CBAM Aluminium UK: Exploring the UK’s own CBAM

Although UK exporters into the EU are already affected by the EU CBAM, as of 1^st January 2027, importers of aluminium into the UK will also be impacted when the UK introduces its own version of CBAM.

The scope of the mechanism will likely cover much of the same goods, including unwrought aluminium and semi-finished products. The main difference will be the way that carbon is priced. Rather than being based on certificates – bought and traded on exchanges - the UK CBAM will be a direct levy system. This means that the carbon cost placed on aluminium will be set as a fixed monetary charge per tonne of embedded emissions, rather than fluctuating with market dynamics.

To see if your business will be affected, it’s essential to review your commodity codes to confirm if your products fall within the CBAM scope. It’s also important to note that the UK CBAM will only apply to imports of aluminium that exceed an annual cost of £50,000. Any businesses importing aluminium below this cost threshold will not be impacted.

How Sourcing Low-Carbon Aluminium Can Mitigate CBAM Costs

In the short term, the effect of CBAM on aluminium will almost certainly be to add extra costs and further administration. However, CBAM also represents an opportunity to decarbonise through sustainable practice. By sourcing low-carbon aluminium (i.e., aluminium produced using renewable energy or secondary aluminium made from recycled aluminium scrap), importers of aluminium can reduce their exposure to carbon pricing, while also demonstrating a commitment to sustainability to investors.

In practice, recycled aluminium typically uses 95% less energy than primary production, so these are significant reductions in energy usage. In addition, because aluminium falls under "purchased goods and services," typically one of the highest impact Scope 3 categories, businesses that use low-carbon aluminium can also reduce their Scope 3 emissions. This not only supports broader Environmental, Social, and Governance goals, but signals credibility amongst stakeholders, regulators and customers.

Navigate the Aluminium Sector Challenges with CFP Energy

At CFP Energy, we’re experts in guiding businesses through complex carbon compliance regulations. We help aluminium importers meet their carbon obligations to gain a competitive advantage. Our expertise means we can help you align with the EU and future UK CBAM framework - from phase-in timelines to each of the key implementation stages.

To see how you can prepare your business for CBAM, contact our carbon team today.