We support the EU’s intention to prevent carbon leakage. Instruments like the CBAM, which intends to encourage decarbonisation globally by adding a carbon price for imported goods comparable to the costs paid by EU producers, represent a highly attractive idea in principle.
Unfortunately, independent analysis requested by European Aluminium has shown why the CBAM cannot yet be considered a suitable alternative to existing EU carbon leakage protection measures. This is mainly because of the electro-intensive nature of primary aluminium production and the unique indirect carbon costs only European producers face in their power price due to the EU ETS (see a short explanation here). These costs will remain significant, even when consuming decarbonised electricity or signing long-term power contracts. Also, including indirect emissions in the CBAM increases the risk of circumvention and will not lead to a reduction in global emissions. Rather the opposite!
We therefore support the final agreement on the CBAM which initially excludes the application of the CBAM on indirect emissions for sectors today eligible to indirect costs compensation under EU state aid rules. The inclusion of indirect emissions in the CBAM should be considered only once the EU electricity grid is close to being completely emission-free (very likely not before 2035) and all circumvention risks and downstream impacts have been assessed across the entire European aluminium value chain. This should include as well a detailed assessment on the consequences of the inclusion of more products upstream or downstream, including precursors such as alumina (see a paper about this topic here).
European aluminium is now closely working with the European Commission and broader stakeholders on the rules for the initial emissions’ reporting period applicable to importers beginning in October 2023. A first review of the mechanism is expected in 2025.
For further information, please find our detailed position paper on the CBAM here.
Our industry is ready to work with national governments and the Commission to phase out Russian fossil fuel imports while ensuring adequate gas and electricity supplies this winter. We see this as an opportunity for boosting renewable energy capacity across the EU, which in turn spurs the demand for our metal because of its critical role in clean energy technologies.
As an electricity-intensive industry that also heavily relies on gas, any measure to reduce energy consumption will greatly impact our industry, particularly as there are few substitution possibilities in the short term. Measures must be carefully tailored and be introduced alongside adequate state aid. Moreover, further development of storage technologies or other forms of dispatchable low-carbon electricity generation (such as PPAs) is needed to address the challenge of intermittent renewable generation.
We must ensure that we do not shift from energy dependency to a broader raw material dependency, making our economy and downstream industries weaker and less resilient than our global competitors.
The European Emission Trading System Reform (Phase IV: 2021-2030), presented in July 2021, is one of the cornerstones of the European climate policy and one of the most cost-effective ways to reduce carbon emissions. Our association monitors and supports the European Commission with technical know-how to ensure the reform comprises essential elements, including adapted benchmarks and support for decarbonisation projects, while ensuring protection against carbon leakage.
The newly adopted CEEAG will be crucial to ensure the necessary national and EU funding to achieve the Green Deal’s decarbonisation objectives, regulated via the “Fit For 55” legislative package while accelerating the transformation of energy-intensive and circular industries like aluminium. State Aid can be a powerful instrument to accelerate the transformation of our industry, especially by supporting key investments and research in decarbonisation technologies that are not yet available at scale on the market today and providing regulatory relief where appropriate.
In particular, the possibility for targeted Renewable Energy Sources (RES) charge reductions under EU State Aid Rules has played a crucial role in limiting carbon leakage for our sector, given that aluminium smelters are particularly sensitive to any increase in the cost of electricity. We are working in close cooperation with the EU and the Member States to ensure they encompass all potential charges caused by the integration of new decarbonisation technologies or policies stemming from the new legislation to be proposed. It is crucial to note that new decarbonisation policies introduced in legislation often have the intended or unintended effect of increasing the electricity price for industrial consumers. These more ambitious renewable policies across Europe must be balanced by ensuring the stability of its financing base.
We are providing policymakers with all the necessary data and evidence to ensure that the CEEAG are adequately implemented and provide European aluminium producers with predictable support for the next decade (2021-2030).
As an energy-intensive industry, the aluminium sector depends on a massive and constant supply of energy. That is why European Aluminium is committed to feeding into the work of the EU institutions on the upcoming Reform of the Energy Market Design.
We will ensure the market is adapted to the long-term realities our industry will face in the years to come. To safeguard the aluminium industry in Europe, it is paramount that any reform or intervention on the market’s functioning accounts for the future predominance of renewable generation in the grid while preventing supply disruption risks.
European Aluminium will work together with EU stakeholders to guarantee the new market design leads to efficient and swift decarbonisation of the European energy system, while safeguarding security and affordability of supply, and incentivising investment into and dispatch signal for renewable energy, grid infrastructure, and storage capacity.
Because of the importance of our industry in the green transition and our electro-intensiveness, we are part of the current list of eligible sectors for the indirect carbon cost compensation regime under the ETS Phase IV.
Our association provides EU policy makers with technical know-how to provide adequate protection against carbon leakage for EU producers.
As a circular material with permanent properties, aluminium has been designated as a sustainable economic activity under the EU Taxonomy, which will facilitate investments in our industry for financial undertakings. European Aluminium provides its expertise to EU policy makers to ensure the new framework is smoothly implemented and creates an adequate and efficient framework tailored to our industry. In particular, our association focuses on developing efficient criteria for the designation of sustainable aluminium to ensure that European producers benefit from this new mechanism.
Electricity is aluminium’s lifeblood, and our industry is constantly searching for new ways to use greener energy and produce more efficiently.
To achieve our sustainability objectives, we need more rapid deployment of renewable electricity capacity and access to long-term power purchase agreements (PPAs) to shield it against extreme fluctuations in the energy markets. That’s why we are working with the energy sector and policymakers to set up long-term mechanisms to facilitate decarbonised energy production, accessibility, and consumption at globally competitive prices for energy-intensive consumers.
We actively encourage national financial guarantees that support the uptake of Renewable Energy (RES) PPAs. RES production costs have risen because of the increase in raw material costs and shortages, making it even more challenging to enter into long-term contracts. We also support the development of a future-proof legislative framework for carbon capture technologies, which will be key in fulfilling the EU’s decarbonisation objectives.
The Energy Performance of Buildings Directive (EPBD) promotes improving the energy performance of buildings in the EU. It requires Member States to apply a methodology for calculating the energy performance of buildings and to set minimum performance requirements for new buildings, buildings undergoing major renovations and for building elements. The EPBD was amended in June 2018 and is currently under revision.
We encourage the calculation of life cycle global warming potential (GWP) of buildings to include the environmental benefits from reuse and recycling at end-of-life.
When Member States set minimum performance requirements for transparent building elements like windows, European Aluminium recommends using the ‘energy balance’ methodology that considers both insulation and solar heat gains to assess their thermal performance.
Did you know aluminium is both an enabler and a consumer of solar power?
Discover how the aluminium and solar industries can work together to bolster the broad roll-out of solar photovoltaic production in Europe.
Our production and competitiveness relies on a constant supply of affordable green energy.
In this video, our members discuss what we need from policy makers to access green, affordable energy.
To prevent carbon leakage because of the EU’s high regulatory and energy costs, the CBAM must be designed well.
Read our proposal for a Carbon Border Adjustment Mechanism that works for aluminium.
Accelerated renewable deployment is critical to achieving the EU’s Green Deal ambitions and our independence from Russian fossil energy.
Our joint letter to EU Heads of State and Governments calling for a European-wide 45% - or higher - renewable energy target for 2030.
Driving the climate-neutrality agenda
The European aluminium industry sits at the heart of the climate-neutrality agenda and plays a critical role in applications like renewable energy technologies, batteries, electricity systems, resource-efficient packaging, energy-efficient buildings, and clean mobility.
European aluminium already has one of the lowest carbon footprints globally, but we want to lower our carbon emissions even further. To achieve climate neutrality by 2050, we continuously invest in decarbonisation and work with suppliers, customers, and other partners in and out of the industry. But our sustainability efforts are being challenged by an influx of carbon-intensive, subsidised imports and higher energy prices compared to other regions of the world, eroding our cost competitiveness. To keep serving the European green transition, we need access to affordable green energy and long-term regulatory certainty from policy makers.
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