The aluminium value chain and implications for CBAM design
AUTHOR(S): Alexandra Maratou and Andrei Marcu
When designing the Carbon Border Adjustment Mechanism (CBAM), the EU has to determine not only the type of materials/sectors to be covered, but also how far downstream in the value chain to go in terms of product coverage.
The aluminium sector has complex downstream value chains where trading of semi-finished products is significant. At the same time, the EU aluminium industry depends on imports of primary aluminium in a significant way, with EU dependency on imports of aluminium ingot requirements reaching close to 50% in 2020.
In particular, this paper demonstrates how the application a CBAM only on primary aluminium would lead to higher costs for downstream producers, either incentivizing the relocation of that production outside Europe, or increasing imports of products at the next step in the value chain.
