The European Commission priced carbon at the border for aluminum for the first time in April 2026, with CBAM certificates costing around EUR 75 per tonne of CO2 equivalent. Every tonne of aluminum entering the EU now carries a carbon price based on its production emissions. But the first-year rules contain a critical blind spot: only direct emissions count, not electricity use, which is the largest source of emissions for most smelters. This means the mechanism rewards producers with strong paperwork rather than those with genuinely low-carbon metal. Producers in the Middle East who use gas-fired power but cannot document their indirect emissions get no advantage over coal-based smelters in Asia that also lack verification. European recyclers benefit because secondary aluminum has lower direct emissions and is easier to document. The real winners in year one are organizations that invested early in emissions verification and reporting systems, not necessarily those with the cleanest physical production. Importers face a choice between paying the carbon cost or sourcing from suppliers who can prove low direct emissions. For Asian producers, especially those relying on coal power, the lack of indirect emissions accounting is a temporary reprieve but not a permanent advantage. The EU plans to include indirect emissions by 2030, which would flip the competitive landscape. Companies that start building verified emissions data now will be better positioned when the full carbon cost applies.
