The aluminum market anticipates that the European Commission’s proposed changes to the Carbon Border Adjustment Mechanism, which include a one-year delay in the purchase timeline for CBAM certificates, will only postpone its financial burden rather than eliminate it.
The EC proposed Feb. 26 to tweak the timeline for the sale of carbon pricing certificates under its CBAM and move to a mass-based threshold to make the tax more streamlined and effective.
Hydro Head of Media Relations Anders Vindegg told Platts, part of S&P Global Commodity Insights, that the financial burden for importers was only deferred, not removed.
“This is important as the European industry will still face increased costs from 2026 due to the start of free allocation phase out,” Vindegg said. “It is key that any simplifications to the CBAM regulation do not create further discrepancies in carbon costs between European and third country industry, including increasing the risk of circumvention.”
He said the proposed changes on the exemption threshold for small importers were a step in the right direction, but effective enforcement would be essential.
“The Commission references new risk assessment tools to detect circumvention tactics, such as artificially splitting shipments to bypass CBAM thresholds, but the specifics of these measures remain unclear,” Vindegg said. “The European Commission is moving at a fast pace to simplify CBAM. While simplification is important to make CBAM workable, it must go hand in hand with its effectiveness as a carbon leakage tool for European industry, including aluminum.”
He said loopholes still exist and that the CBAM risked becoming a bureaucratic exercise rather than a mechanism that ensures fair competition and prevents carbon leakage.
“In addition to simplifying CBAM, this means expanding product scope, closing the aluminium scrap loophole, and keeping indirect emissions out of scope until the electricity grid is closer to full decarbonization,” Vindegg said.
Louis Redshaw, CEO of Redshaw Advisors, said in a note that the CBAM changes may relieve some immediate pressure, but the financial risk exposure stayed the same. Companies are still on the hook for 2026 emissions but would not need to fully account for them until 2027.
“This delay doesn’t remove the financial burden, it just shifts when it hits,” Redshaw said.
A Europe-based trader told Platts that the changes meant delaying the financial impact. However, companies would continue to do “blind reporting” for another year.
“I hope this helps to establish values that can be chosen via drop-down or so, instead of 100 companies asking the very same from producers,” he said.
The trader said companies were looking forward to the “more simple reporting.”
However, he described as cynical the claim that, if adopted and implemented as currently outlined, the proposals would conservatively save around Eur6.3 billion ($6.6 billion) in annual administrative costs and mobilize additional public and private investment capacity of Eur50 billion to support policy priorities.
“So, they celebrate the saving of cost that, without everything, you wouldn’t have in the first place,” he said.
Another trader source said he did not believe the changes would significantly impact the aluminum market.
European nonferrous metals association Eurometaux Director General James Watson previously told Platts the EC’s proposed changes were clearly aimed at making CBAM’s landing easier and smoother and delaying the purchase of allowances would help the financial situation of smaller CBAM declarants.
“However, it remains crucial that these changes do not undermine the mechanism’s integrity and robustness and open the door for circumvention,” he said. “We are still thoroughly analyzing the text of the leaked document.”
Platts assessed the daily low-carbon aluminum prices at $235/mt duty unpaid in-warehouse Rotterdam and $360/mt duty paid in-warehouse Rotterdam Feb. 26, down 31% and 32%, respectively, since the start of 2025.
Steel
Meanwhile, German Steel Association WV Stahl CEO Kerstin Maria Rippel told Platts the CBAM was indispensable for the steel industry to create a level playing field with international competitors who did not have to bear additional CO2 costs.
“The European Commission was, therefore, right to develop the CBAM instrument to protect the steel industry in Germany and the EU from carbon leakage, i.e. the relocation of production to countries with less stringent climate regulations,” she said.
“Unfortunately, the CBAM has had gaps and weaknesses from the start. For example, there has been a lack of relief for EU exports to third countries that are burdened by CO2 costs, as well as a lack of effective measures against circumvention strategies,” Rippel added.
She said concerns about excessive bureaucracy were entirely understandable, but the CBAM must not be watered down, “especially at a time when China is flooding the EU with cheap imports and the situation threatens to get worse under Trump 2.0, the industry in Europe must be protected.”
“The EU Commission should, therefore, now focus on fixing the existing glaring weaknesses and ensuring the effectiveness of the instrument along the entire value chain,” Rippel said.
