With the entry into force of Regulation (EU) 2023/956, the European Union has introduced the Carbon Border Adjustment Mechanism (CBAM), the new carbon adjustment mechanism at the borders that is set to become a central tool in its climate strategy.
After a transitional phase, which began on 1st October 2023, during which there were no tax charges on imported goods, but only the collection of data on the quantity of incoming products and the authorisation of obligated parties, CBAM became fully operational on 1st January 2026. From that date, certain imported carbon intensive goods, such as aluminium, are subjected to a levy on embedded emissions, similar to that paid by European companies under the EU ETS.
OBJECTIVES AND LIMITATIONS OF CBAM
A pillar of the Green Deal and an integral part of the ‘Fit for 55’ package, CBAM was created with the aim of significantly reducing greenhouse gas emissions: -55 per cent by 2030, compared to 1990 levels, to achieve climate neutrality by 2050. The new environmental tax also aims to ensure “fair competition between European producers and non-EU operators”. However innovative, this tool has several limitations, both operational and economic.
Here Giorgio Di Betta, commercial director of Eural Gnutti, president of CentroAl and of the extrusion division at the European Aluminium Association answers questions on the matter.
Recently, a number of MEPs submitted a question to the Commission about the impact that the CBAM mechanism could have on the aluminium industry in the EU. Among the limitations are loss of competitiveness, market distortions and risks to industrial sovereignty. Can you elaborate on the situation?
Despite the objective of rebalancing competition between European and non-EU producers and preventing carbon leakage, i.e. the relocation of carbon emissions, CBAM has numerous limitations. One of the main weaknesses is the risk of so-called ‘resource shuffling’, i.e. the possibility for non-EU producers to allocate only the ‘cleanest’ volumes, obtained from low emission sources, to Europe, diverting the most polluting production to other, less regulated markets. This practice distorts competition because non-EU exporters only need to self certify their emission values, without being able to prove their actual reliability. The danger of ‘data greenwashing’ is just around the corner, as the declared values may not reflect actual embedded emissions. On top of that, CBAM may result in a double penalty for European producers, who are already subject to a carbon dioxide emissions compensation system that requires them to purchase the corresponding amount of ETS certificates, regardless of the level of decarbonisation already achieved in their production processes.
Is the CBAM mechanism as it is structured today applied fairly?
Currently, CBAM is not applied fairly because it does not include a wide range of processed products containing aluminium, such as wheels, cans, packaging, automotive components and architectural elements. The exclusion of these downstream items creates significant competitive imbalances along the supply chain because those who produce semi finished or finished products outside the EU can continue to export to Europe without incurring equivalent costs, significantly increasing the risk of carbon leakage. Furthermore, the mechanism does not cover competing materials, such as copper, plastic and brass, whose production and processing are equally energy intensive and polluting.
Is the CBAM mechanism really an incentive for aluminium recycling, as envisaged by the Green Deal?
Although strategic and consistent with the Green Deal, aluminium recycling is currently penalised because there is no specific benchmark for it in the ETS. The reference parameters are generic and based on data relating to heat and fuel consumption in very different and less energy intensive sectors. The latter include, among other things, the use of alternative sources such as biomass to power plants. This solution is not technically applicable to aluminium recycling, which requires high temperatures. In essence, this approach does not favour aluminium recyclers.
What measures could be implemented?
With regard to the problem of ‘resource shuffling’, it would be necessary to apply a standard carbon value predefined and set by individual countries on the basis of known values and on all aluminium products, based exclusively on the CO2 values of primary aluminium in the country of reference. It would also be appropriate to consider introducing a specific ETS benchmark for aluminium recycling, which would allow quotas to be allocated more fairly, in proportion to production efficiency. These measures could act as a disincentive to unfair competition, truly rewarding the decarbonisation efforts of the European aluminium supply chain.
What is the European Union doing?
In general, we note that the European Union is moving towards simplifying the CBAM mechanism and introducing a monitoring system for scrap imports and exports to address the problem of scrap leakage. The European institutions’ intention, recently announced by Maroš Šefcovic (European Commissioner for Trade and Economic Security) on 18th November at the European Aluminium Summit 2025, is not to completely block exports of aluminium scrap, but rather to define balanced measures to access adequate quantities of this strategic material at competitive prices. This is a plus for all players in the aluminium supply chain, who will thus be able to continue the path towards decarbonisation, fully in line with the principle of the circular economy. A new development concerns the CBAM benchmark for aluminium recycling. The Commission has recently confirmed (November 2025) that, once the ETS parameters have been revised in 2026, a reference value will be made available that will reflect the ‘typical production processes’ for each category of CBAM goods, including aluminium.
Founded in 1968 in Rovato, Eural Gnutti specialises in the production of semi finished aluminium alloy products. Based in Italy, the company also has strategic direct presence in America and Germany through its wholly owned subsidiaries Eural USA Inc and Eural Deutschland GmbH.