CBAM’s importance for the global aluminium industry How CBAM in its current and future forms could affect the trading relationship between UK exporters and the EU
Gabriel Rozenberg Cbamboo
An introduction to CBAM and its implications for the aluminium industry
Aluminium Federation, 30 November 2023
Gabriel Rozenberg CEO, Cbamboo Cbamboo
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Gabriel Rozenberg
Cbamboo
Founded Cbamboo in May 2023. Previously worked in investment management and financial journalism
The operating system for the world’s carbon border taxes
CEO, Cbamboo
Cbamboo
Software platform for CBAM compliance and data, launching January 2024
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🏳 st
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Europe’s biggest ever carbon law A revolution in trade and supply chains A hugely complicated tax
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EU producers today get free allowances against ETS
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The EU is phasing these out – creating a risk of ‘carbon leakage’
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CBAM levels the playing field on carbon prices
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And it’s a model for carbon price regimes everywhere
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Thousands of EU businesses must now comply… Every day: 30,000 tonnes of aluminium 30,000 tonnes of cement 50,000 tonnes of fertiliser 210,000 tonnes of iron and steel
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Imported by:
✈ Aerospace & defence
Automotive
Chemicals
Construction
Consumer
Energy
Engineering
Forestry
Manufacturing
Metals & mining
Paper & packaging
Pharma & life science
Power & utilities
Retail
Technology
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… with the world’s most complex tax
Compliance
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Report on your company
Report on your sales and purchases
Report on your suppliers, and their suppliers, down to the specific factory, for each product imported
Corporation Tax
VAT
CBAM
CSRD
EU ETS
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CBAM in a nutshell Non-EU Manufacturer / Distributor
Assess production process and relevant calculation methods. Monitor emissions
Attribute emissions to production processes and then goods
EU Reporting Declarant
Collect data on precursor emissions and add these to your own emissions
Report on the specific embedded emissions of your CBAM goods
Share the CBAM emissions report with EU customer, for all installations & goods
Determine the scope of goods covered by CBAM
Identify all the parameters you need to report on
Receive CBAM data from suppliers
Collect data on carbon price due in third country
Definitive period Create CBAM reports and file with National Authority
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Contact your suppliers and request CBAM data
Jan 2026: purchase CBAM certificates in proportion to embedded CO2e
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From 2026, CBAM becomes a financial responsibility Product volume imported from China
Embedded Direct1 emissions
CBAM price (Average of weekly ETS)
Carbon price paid at origin
500 tonnes of aluminium
3 tonnes of CO2e per tonne
€85 per tonne of CO2e
€8 per tonne of CO2e
CBAM Cost
€115 500
Product Cost (at €2 000 per tonne) Cost increase % Cbamboo
€1 000 000 11.6%
1. As the regulation stands today, CBAM tax will only cover direct emissions for aluminium
Note: CBAM costs will be phased in progressively from 2026 (2.5% of total) to 2034 (100% of total)
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CBAM charge is phased in over nine years
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Scope of CBAM – Aluminium industry Aggregated goods category
CN Code
Product and description
Unwrought aluminium Aluminium products
7601 7603 7604 7605 7606 7607
Unwrought aluminium Aluminium powders and flakes Aluminium bars, rods and profiles Aluminium wire Aluminium plates, sheets and strip, of a thickness exceeding 0,2 mm Aluminium foil (whether or not printed or backed with paper, paper-board, plastics or similar backing materials) of a
7608 7609 00 00 7610
Aluminium tubes and pipes Aluminium tube or pipe fittings (for example, couplings, elbows, sleeves) Aluminium structures (excluding prefabricated buildings of heading 9406) and parts of structures (for
thickness (excluding any backing) not exceeding 0,2 mm
example, bridges and bridge-sections, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, balustrades, pillars and columns); aluminium plates, rods, profiles, tubes and
the like, prepared for use in structures
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7611 00 00
7611 00 00 – Aluminium reservoirs, tanks, vats and similar containers, for any material (other
7612
7612 – Aluminium casks, drums, cans, boxes and similar containers (including rigid or
7613 00 00 7614
7613 00 00 – Aluminium containers for compressed or liquefied gas 7614 – Stranded wire, cables, plaited bands and the like, of aluminium, not electrically insulated
7616
7616 – Other articles of aluminium
than compressed or liquefied gas), of a capacity exceeding 300 litres, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment collapsible tubular containers), for any material (other than compressed or liquefied gas), of a capacity not exceeding 300 litres, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment
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New obligations for non-EU aluminium producers What is in scope and not in scope of CBAM reporting obligations?
System boundaries: embedded emissions of basic aluminium products
Unwrought aluminium – primary smelting Alumina
Electricity
Pre-baked anodes
Primary smelting
Unformed aluminium
Anode paste (Søderberg route)
Optional: fuels
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CO2
PFCs
CF4 and C2F6
Input
CBAM good
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New obligations for non-EU aluminium producers What is in scope and not in scope of CBAM reporting obligations?
Unwrought aluminium – secondary melting
System boundaries: embedded emissions of aluminium (secondary smelting)
Aluminium scrap
Fuels
Secondary production (re-melting)
Unformed aluminium
CO2
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Input
CBAM good
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New obligations for non-EU aluminium producers What is in scope and not in scope of CBAM reporting obligations?
System boundaries: embedded emissions of basic aluminium products
Aluminium products production process
Unformed aluminium
Forming steps
(alloying, casting, extrusion, rolling, etc)
Basic aluminium products
Fuels
CO2
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Input
CBAM good
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Monitoring and reporting obligations for aluminium producers
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Figure 7-16, CBAM Guidance for Installation Operators, European Commission
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To send data to importers, you can use the EU’s Excel template (Other user-friendly systems are also available…)
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What must EU aluminium importers do? Transitional period Oct 2023 to December 2025
Definitive period January 2026 onwards
- Collect the data you need to submit the first report, using default values where required.
- Continue monitoring your CBAM imports and submit the reports yearly.
- Communicate with your suppliers to obtain their emissions data as soon as possible. - Analyse your supplier’s carbon risk to change your procurement strategy and/or renegotiate contracts in advance of tax implementation.
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- Monitor regulatory updates, as product scope will be broadened. - Financially plan your CBAM certificate purchases to minimise impact on working capital. - Optimise your procurement strategy to use less emissions intensive suppliers and lower your tax bill. 19
Key facts Scope ❖
Aluminium producers must report on both direct and indirect embedded emissions in the Transitional Period.
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But the CBAM charge will only apply to direct emissions
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Commission hopes to include indirect emissions “as soon as possible”
Aluminium scrap ❖
No CBAM charge applies to scrap
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However, installation operators must measure the tonnes of scrap used and the percentage that is pre-consumer scrap
Timeline ❖
Full data on supplier emissions is mandatory from July 2024
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Limited data from suppliers (ie location of installations) will be required from the first report
Thresholds and fines ❖
The threshold for CBAM declarations is just €150
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Fines are €10-€50 per tCO2e of unreported emissions
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UK CBAM: ready, or not? Treasury plans a UK CBAM in 2026
MARCH
“The changes proposed by the UK government are the furthest reaching carbon leakage measure proposed by any country to date. … will go beyond the EU’s own proposed measures” – Redshaw Advisors
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But deadlines are missed…
…as divergent prices store up trouble for UK plc
NOVEMBER
30 Nov: EUA €70.8 vs UKA €48.2
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The long-term opportunity for global aluminium
Carbon anode consumption + anode effects
Source: Net Zero by 2050: Science-based decarbonisation pathways for the European aluminium industry, European Aluminium, November 2023
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CBAM will reward capex for green breakthroughs
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CIM Magazine, 15/6/23. FT, 29/11/23
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Thank you! Contact: Gabriel Rozenberg, CEO gabriel@cbamboo.com
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