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European aluminium producers oppose the use of a Carbon Border Adjustment Measure (CBAM) in the European Union and do not want to be involved in a pilot program to introduce it, industry group European Aluminium announced this week.

No to CBAM: European Aluminium rejects pilot phase
No to CBAM: European Aluminium rejects pilot phase

CBAM hard to calculate and disrupts value chains

The group, which represents more than 80% of producers in 30 European countries with about 600 plants, is united in its concern that a CBAM would be difficult to calculate, disrupt value chains and encourage carbon leakage out of the EU by driving downstream producers out of the EU and failing to incentivize their decarbonization. Crucially, Europe is a net importer of aluminum.

As a framework for more effective ways to avoid carbon leakage, European Aluminium cites, for example, revision of the EU ETS system, a clear strategy for providing carbon-neutral energy, and improvement of existing measures to avoid carbon leakage (Source).

Aluminium industry benefits from free EU ETS allowances

As an energy-intensive industry, European Aluminium also points out that it benefits from the allocation of free ETS allowances (as does the European steel industry). And that, should CBAM be introduced, aluminum producers must be compensated for rising energy prices.

CBAM not in line with WTO regulations

The association is also convinced that the Carbon Border Adjustment Measure in its current form would not comply with WTO regulations. And thus international problems are pre-programmed.

European Aluminium sees existing measures as better protection

“The existing carbon leakage and trade defense measures protect us better and must be complemented with new tools to ensure decarbonisation investments by 2030 and beyond,” Gerd Götz, director general of European Aluminium, said in a tweet.

Group can’t see CBAM protecting against carbon leakage

“We really cannot see how a CBAM can protect against carbon leakage” in the complex integrated value chain that spans bauxite mining outside Europe, alumina refining, growing primary aluminum production, diverse product manufacturing and recycling, said Emanuele Manigrassi, climate specialist for the industry group.

China’s carbon footprint currently even higher

The carbon footprint of primary aluminum production in China is on average currently still three times more carbon intensive than production of the same aluminum in Europe, it said.
With a CBAM, there is a risk of trade flow diversion rather than decarbonization: for example, the 10% of China’s aluminum production that is hydropower-based could be exported to the EU, while the remaining 90%, which is coal-based, remains in Asia, Manigrassi said.

Same consequences when looking at steel

It should be noted here that the Aluminium Europe Group’s arguments against CBAM can be transferred almost one-to-one to the argument for steel. CBAM, considering the current and announced investment movements e.g. in China, cannot be an effective means against carbon leakage.

European steel producers only want to further close the EU market

The efforts of EUROFER and the European steel producers to push through CBAM in Europe can thus only be justified in wanting to have another administrative monster as a market protection measure. CBAM cannot contribute any meaningful and real ecological benefit for a climate-neutral Europe by 2050. We reported: Green Steel and CBAM: Or how the steel producing industry is artificially kept alive.

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