The European Aluminium Association has expressed strong dissatisfaction with the carbon boundary adjustment mechanism, saying it will lead to an increase in carbon emissions from the global aluminium

The European Aluminium Association, which represents the Aluminium value chain in Europe, said in a statement that it was particularly disappointed by the result of the plenary vote in the European Parliament on the Carbon Boundary Adjustment Mechanism (CBAM). Alcan argues that the European Parliament's choice to include indirect emissions in its proposal will instead lead to an increase in carbon emissions from global aluminium production. The package voted for does not have any reliable way of calculating the indirect carbon cost of imports, nor does it recognise that Europe's electricity grid must move closer to decarbonisation to benefit from indirect emissions of CBAM. Alsa called for a more cautious approach to phasing out indirect emissions and stressed that forthcoming inter-agency negotiations with EU member states could play an important role in reversing the current increasing carbon leakage.

According to the European Aluminium Association, electricity typically accounts for 40 per cent of the cost of producing high-power intensive primary aluminium. Since October 2021, Europe has lost 50% of its primary aluminium production (1.1 million tons) due to historically high electricity costs in Europe. The loss of production in Europe was immediately replaced by increased production in third countries, notably China. Countries such as India and Malaysia are installing new capacity. The average carbon footprint of primary aluminium production in these countries is three times higher than in Europe. As a result of the shift in primary aluminium capacity, global net co2 emissions increased by 10.3 million tonnes in 2022, equivalent to the annual emissions of 2 million cars. The carbon intensity of primary aluminium production in Europe (eu, efta, UK) is about 6.8kg CO2 per kg aluminium compared to a global average of 16.1kg and a Chinese average of 20kg (this figure is old and not factual - editor). The European Aluminium Association warned that this was only the beginning of a rise in global emissions.

"Our industry is accelerating the green energy transition by working with clean technology producers to develop new solutions based on sustainable aluminium produced in Europe," said Paul Voss, DIRECTOR General of ALSA Europe. However, we have evidence that including indirect emissions in CBAM now would hinder these decarbonization efforts, as it would reinforce our industry's current high energy prices and stimulate carbon leakage. The design of CBAM, contrary to its actual intent, the loss of the aluminium industry in Europe is not only bad news for our EU strategic autonomy, but also hinders the EU's efforts to combat global warming."

CRU was commissioned by the European Aluminium Association to conduct a study evaluating the regulation of the European carbon boundary Adjustment Mechanism. The results show that European primary aluminium smelters will lose their economic viability compared to international competitors if indirect emissions are included in CBAM before grid decarbonization and existing carbon leakage measures are removed. This is because carbon-intensive aluminium producers in third countries will pay less indirect carbon costs than European producers using green electricity because of the eu's unique electricity market design. Replacing a larger share of European production with carbon-intensive imports could increase imports of primary aluminium used in semi-finished manufacturing by 43 per cent and result in a loss of total value added of up to 77 per cent.

Voss said: "We welcome parliament's proposed review mechanism to test the impact of phasing out industry allocations on the industry, but unfortunately today's CBAM expression is tragic and will do more harm than good. The purpose of the rules is to protect European industry, but the fact that CBAM has inflicted too much pain on European manufacturers should give lawmakers pause for thought. We believe that indirect emissions will be introduced gradually at a later stage to enable our producers to compete on a more level playing field as Europe's electricity grid is decarbonised. Including indirect emissions until CBAM is properly tested will slow our progress towards carbon neutrality by 2050. Voss concluded: "We cannot remain a sustainability leader and we cannot compete with carbon-intensive producers if aluminium production facilities do not exist in Europe and investment dries up."