Aluminium procurement contracts increasingly need to distinguish between the commercial premium attached to lower-carbon metal and the statutory carbon cost arising under the EU Carbon Border Adjustment Mechanism (CBAM).
A Fastmarkets market briefing published on September 23 made the distinction while comparing low-carbon aluminium and copper. In aluminium markets, low-carbon premiums are applied alongside established regional premiums and reflect buyers’ willingness to pay for specified environmental characteristics.
The two price components address different aspects of the transaction. A premium negotiated for aluminium with particular environmental attributes does not, by itself, determine the importer’s CBAM liability.
Electricity emissions and CBAM treatment
Electricity-related emissions are an important component of commercial assessments of low-carbon aluminium. The current EU CBAM treatment of aluminium, however, focuses on direct emissions.
As a result, a substantial reduction in the broader emissions footprint of aluminium does not necessarily translate into an equivalent reduction in the carbon-border liability associated with the imported metal.
Procurement teams therefore have to distinguish between the environmental characteristic being purchased and the emissions liability remaining under the EU border mechanism. The commercial value assigned to lower-carbon production cannot automatically be treated as evidence of a corresponding CBAM reduction.
Metal premiums remain separate from certificate pricing
The European Commission expresses CBAM certificate prices in euros per tonne of CO₂, while aluminium premiums are negotiated in relation to the physical metal. These are separate pricing units and should not be treated as interchangeable components of the same charge.
A buyer may choose to pay a premium for aluminium that provides a lower reported product footprint. Establishing a reduction in CBAM costs, however, requires a separate calculation based on the applicable regulatory treatment rather than on the product’s low-carbon designation alone.
The distinction leaves aluminium buyers managing two different forms of value: the market premium associated with specified environmental attributes and the regulatory carbon liability attached to the import.
