The European Union's Carbon Border Adjustment Mechanism (CBAM) has entered a new stage, bringing carbon emissions data into sharper focus across international aluminium trade.

Following a transitional reporting period from 2023 to 2025, CBAM entered its definitive phase on 1 January 2026. For aluminium producers, processors and businesses involved in recycled aluminium supply chains, understanding how embedded emissions are calculated, documented and verified is becoming increasingly important.

While aluminium recycling plays an important role in reducing the industry's overall energy use and carbon footprint, the new regulatory framework is also drawing greater attention to production processes, material inputs and emissions traceability.

Recent guidance from the European Commission provides greater clarity on implementation, with the first major compliance deadline approaching in September 2027.

From Emissions Reporting to Carbon-Related Costs

Under the definitive CBAM regime, EU importers exceeding the applicable annual threshold of 50 tonnes of covered CBAM goods are generally required to obtain authorised CBAM declarant status and meet the relevant reporting and financial obligations. Electricity and hydrogen are subject to separate threshold rules.

The mechanism links the carbon costs of covered imported goods to the EU Emissions Trading System (EU ETS) through CBAM certificates.

For imports made in 2026, certificate prices are calculated using quarterly averages of EU ETS auction prices. From 2027, prices will be calculated weekly.

The European Commission published the Q3 2026 CBAM certificate price of €82.32 per tonne of CO₂e on 5 October 2026, compared with €75.28 for Q2.

However, this reference price does not represent the final CBAM cost per tonne of aluminium. The actual obligation depends on the applicable embedded emissions, adjustments reflecting EU ETS free allocation and any eligible carbon price already paid in the country of origin.

Although the definitive regime began in 2026, purchases of CBAM certificates covering 2026 imports will begin in February 2027.

For suppliers of aluminium products entering the European market, the new system makes reliable emissions information increasingly relevant to compliance and commercial planning.

Photo from European Commission

Recycled Aluminium and CBAM: Understanding the Scope

An important distinction for the recycling industry is the difference between aluminium scrap and aluminium products manufactured using recycled materials.

Under the current CBAM framework, aluminium waste and scrap classified under CN code 7602 are not directly covered. However, products manufactured from recycled aluminium, including certain unwrought aluminium and semi-finished products, may fall within CBAM depending on their customs classification.

The European Commission's methodology also recognises secondary aluminium production as a distinct production route.

For secondary melting, relevant direct emissions can include those associated with fuel consumption during scrap preparation, preheating, melting, casting and certain related treatment processes. Where primary or other unwrought aluminium is added, the applicable rules also address how those inputs are accounted for.

This distinction is important for recycled aluminium producers supplying international markets.

Recycled content alone does not determine a product's CBAM obligation. Product classification, production processes, applicable emissions boundaries and the supporting data must all be considered.

It also highlights the growing relevance of process control, energy efficiency and traceable material inputs throughout the recycled aluminium value chain.

New Guidance and Verification Requirements

On 14 August 2026, the European Commission published ten guidance documents to support CBAM implementation during its definitive phase, including a dedicated guide for the aluminium sector.

The guidance covers production processes, value chains, emissions monitoring and the calculation of embedded emissions.

One important distinction concerns the use of actual emissions data versus EU default values.

Under the applicable rules, importers may use default values provided by the European Commission or verified actual emissions data. Where actual values are used, the relevant emissions information must be independently verified under the CBAM framework.

According to the Commission's implementation timeline, accredited verifiers began registering in the CBAM Registry in September 2026, with verification reports expected to be issued from January 2027.

For secondary aluminium producers, maintaining reliable production records and emissions data can support the exchange of information with EU importers wishing to use actual verified values.

Relevant records may include material inputs, production volumes, fuel consumption, process-related emissions and other information required by the applicable methodology.

An important distinction also remains between a product's overall lifecycle carbon footprint and the emissions currently covered by CBAM. The role of recycled content and electricity sources must therefore be assessed within the relevant regulatory calculation boundaries.

The First Compliance Deadline and Future Developments

The first annual CBAM declaration, covering imports made during 2026, must be submitted by 30 September 2027, together with the surrender of the corresponding CBAM certificates.

For businesses supplying covered aluminium products to the European market, this establishes a clear timetable for preparing the necessary emissions information and supporting documentation.

The EU is also considering further changes to the CBAM framework.

Proposals currently under legislative consideration include extending CBAM to additional aluminium- and steel-intensive downstream products and changing how emissions associated with certain pre-consumer metal scrap inputs are accounted for.

These proposals have not yet become binding requirements. Nevertheless, they represent an important area to monitor for companies involved in aluminium scrap processing, secondary production and downstream manufacturing.

Carbon Transparency Across the Recycled Aluminium Value Chain

The development of CBAM highlights a broader shift towards greater carbon transparency in international aluminium supply chains.

For recycled aluminium producers, reliable production data and emissions monitoring can help demonstrate process performance and support customers' information requirements.

For scrap processors and recycling technology providers, the growing focus on traceability reinforces the importance of effective material sorting, scrap preparation, efficient remelting and process monitoring.

These technologies remain important for improving resource recovery, production efficiency and material quality, regardless of whether individual products fall directly within CBAM.

For downstream manufacturers and international buyers, better information on material inputs, production processes and embedded emissions can support more informed sourcing and compliance decisions.

As the industry advances towards more circular and lower-carbon production, material quality, recycling efficiency and credible carbon data are becoming increasingly interconnected elements of supply-chain competitiveness.

These developments reinforce the importance of technological innovation and international cooperation across the recycled metals industry.

Shanghai International Metal Recycling Expo 2027, taking place from 7–9 July 2027 at Hall E5, Shanghai New International Expo Centre, will bring together recycled metal producers, scrap processors, equipment manufacturers and downstream industry professionals to explore technologies, market developments and opportunities across the recycled metals value chain.

Sources:

European Commission