EU carbon tax on the primary aluminium market will be ineffective and push up prices

Wood Mackenzie’s report says new border adjustment mechanism regulations won’t encourage decarbonization unless indirect emissions are included

The implementation of a Carbon Border Adjustment Mechanism (CBAM) by the European Union (EU) in the primary aluminium market would disproportionately impact European producers and raise prices for consumers, according to a new report by Wood Mackenzie.

The report “CBAM and Aluminum: The Devil Is in the Details” states that in its current form CBAM only takes into account direct emissions from the respective smelter and does not include indirect emissions from power generation. This means that older European foundries would be more affected than newer foundries in other parts of the world. “The implementation of CBAM in the EU will inevitably lead to higher aluminium prices for EU consumers,” says Uday Patel, principal aluminium analyst at Wood Mackenzie. “As it stands, CBAM will be ineffective and penalize domestic producers and consumers of aluminum, failing to achieve its main objective.”

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