Indian aluminium suppliers should prepare early for CBAM to maintain access to EU customers

The interview revolves around the European Union’s Carbon Border Adjustment Mechanism (CBAM) and its implications for the aluminium sector, particularly Indian exporters. Alberto Monje Gama, global Sustainability Policy Manager at TIC Council explains that CBAM is not primarily designed to reduce emissions within the EU aluminium industry but to prevent carbon leakage and maintain a level playing field for global producers. He emphasises that Indian exporters must focus on verified emissions data, robust monitoring, reporting, and verification (MRV) systems, and decarbonisation strategies to remain competitive.

With a background in European studies and policy, Alberto Monje Gama has spent the last five years in Brussels developing his career around the European and global institutions and industry. For the last three years, he has served as the global Sustainability Policy Manager at TIC Council, where he manages the association’s global and European sustainability activities. Among his portfolio, he manages the association positioning and engagement with stakeholders around the issues of CBAM, carbon markets, carbon removals, sustainability reporting, eco-design and renewable energy. 

AL Circle: A draft report released on April 10, 2026, suggests that the CBAM will likely expand to include around 180 additional steel and aluminium-based products starting January 1, 2028. Given this looming development, how do you foresee this affecting India’s aluminium exports to the European Union? Furthermore, what measures should India adopt to mitigate the impact of this expansion on aluminium sector?

Alberto Monje Gama: TIC Council believes, or understands, that the European Union’s intention is not to keep CBAM limited to the current covered sectors but to progressively align it more closely with the scope of the EU ETS and reduce the risk that EU production is outsourced to jurisdictions with lower or no carbon costs. The proposed expansion to around 180 steel- and aluminium-intensive downstream products from January 1, 2028, should therefore be seen as part of a broader direction of travel, even if the final scope and timing still depend on the EU legislative process.

For India’s aluminium sector, the impact will depend largely on the emissions intensity of production and, equally importantly, on the ability of exporters to provide robust and verified emissions data. EU importers are the entities bearing CBAM compliance obligations, so they are likely to prioritise suppliers that can provide reliable product-level emissions data. Where such data is unavailable or considered insufficient, importers may need to rely on default values, which are intentionally conservative and can increase the CBAM cost of the product.

We therefore recommend that Indian companies may view this as a transition signal rather than purely a trade barrier to build mature monitoring, reporting and verification systems across operations and supply chains. This includes collecting reliable emissions data, engaging suppliers, improving traceability, and preparing for independent verification. In parallel, companies should also consider measures to reduce embedded emissions, including energy efficiency, cleaner electricity sourcing, process optimisation and better management of recycled aluminium inputs.

EU is a premium market for Indian aluminium suppliers, while EU and India regulatory diplomacy will continue around transparent and non-discriminatory implementation of CBAM. We recommend that companies should prepare early to be better placed to maintain access to EU customers and differentiate themselves from competitors. TIC companies can support this process by helping producers assess their supply chains, implement MRV systems, improve data quality and prepare for third-party verification. In this sense, the key to succeeding under CBAM is not only reducing emissions but being able to demonstrate emissions performance credibly and consistently.

AL Circle: The report highlights the tightening of carbon accounting regulations for scrap-based production, now including emissions from pre-consumer scrap. While this stricter rule could potentially lower the carbon footprint, could it also have the unintended consequence of disrupting the recycled aluminium supply chain?

Alberto Monje Gama: This is a valid concern, but I would frame it less as a risk caused by stricter carbon accounting itself and more as a risk linked to how the rule is implemented. Including pre-consumer scrap in CBAM accounting helps close a genuine loophole: without it, high-carbon primary aluminium can be indirectly channelled through scrap-based routes and appear artificially low-carbon. We believe that the Commission’s proposal recognises this by stating that emissions from pre-consumer aluminium scrap should be counted when used as a precursor for CBAM goods.

However, there is a potential unintended consequence. If the methodology is too rigid, administratively burdensome, or treats different types of scrap inconsistently, it could distort scrap flows, increase compliance costs, and make recycled aluminium supply chains less predictable. This is particularly relevant because European industry already faces concerns about scrap availability, export leakage, and competition from jurisdictions able to pay more for EU scrap.

The right policy balance is therefore to prevent carbon leakage and resource shuffling without penalising genuine circularity. The objective should not be to make recycled aluminium less attractive but to ensure that recycled-content claims reflect real emissions performance and do not become a route for CBAM circumvention.

In the TIC Council, we have advocated for better traceability and transparency requirements for precursors and other CBAM-covered goods. TIC companies, in their emissions report, can also verify the origin and supply chain traceability of the different goods so exporters, importers and regulators can have a deeper assurance on the real origin and use of all the goods.

AL Circle: The potential expansion of CBAM is poised to significantly raise carbon tax costs for Indian manufacturers, including the aluminium sector. In light of this, could this policy be a double-edged sword for India, as increased carbon tax burden may strain the country’s economy, while a decline in exports resulting from these higher costs could further dampen revenue streams. Alternatively, can the expected rise in domestic consumption offset these challenges?

Alberto Monje Gama: On behalf of the TIC Council, we advocate for balanced solutions that support companies’ competitiveness while also advancing climate objectives. CBAM is a highly complex instrument because it aims to address both priorities: reducing carbon leakage while preserving a level playing field between EU and non-EU producers.

In my opinion, CBAM have some characteristics for a double-edged instrument for India. Higher carbon costs could affect the competitiveness of Indian exports to the EU, including in the aluminium sector, particularly where production is emissions-intensive or where companies cannot provide reliable, verified emissions data. This could create pressure on exporters and on revenue streams linked to EU trade. However, the impact should not be assessed only as a cost. CBAM also creates a strong incentive for Indian producers to improve emissions monitoring, invest in lower-carbon production, and strengthen their position in international markets where carbon performance is becoming increasingly important.

Domestic consumption may help absorb part of the pressure, especially given India’s expected industrial and infrastructure growth. However, it should not be seen as a complete offset. The EU remains a high-value market, and losing competitiveness there could have broader implications for companies’ international positioning. The strategic objective should therefore be twofold: support domestic demand while ensuring Indian producers remain competitive in export markets that increasingly require verifiable low-carbon credentials.

This is where carbon markets and robust MRV systems become important. TIC Council supports the development of carbon markets as a way to create market-based incentives for decarbonisation and to encourage the use of verifiable, actual emissions data. The EU ETS shows that such systems can deliver results: emissions from sectors covered by the EU ETS dropped by around 50 per cent compared with 2005 levels. If synergies are developed between CBAM, the EU ETS and India’s Carbon Credit Trading Scheme, India could use this transition to support a more market-based and credible decarbonisation pathway.

The real application of CBAM started on January 1, 2026, with the first annual CBAM declaration and certificate surrender due in 2027. Time will tell how significant the global economic consequences will be, but the TIC industry stands ready to support companies by helping them implement MRV systems, strengthen supply-chain data, prepare for verification, and demonstrate emissions performance credibly.

AL Circle: To what extent do you believe the European Union's CBAM policy will effectively reduce carbon emissions within its domestic aluminium industry? Is the potential for significant environmental impact outweighed by the policy’s broader economic consequences?

Alberto Monje Gama: The direct purpose of CBAM is not, in itself, to reduce emissions within the EU aluminium industry. That objective is primarily pursued through the EU Emissions Trading System, which puts a carbon price on energy-intensive sectors and creates an incentive for industrial decarbonisation.

CBAM should be understood as a complementary instrument to the EU ETS. As free allowances under the EU ETS are gradually phased out and European producers face a stronger carbon price, there is a risk that production shifts to countries with lower or no carbon costs. CBAM aims to prevent this carbon leakage by ensuring that imported products face an equivalent carbon price, regardless of where they are produced. In other words, it seeks to preserve a level playing field between EU manufacturers and global exporters.

Therefore, CBAM is unlikely to be the main driver of emissions reductions inside the EU aluminium sector. Its more direct environmental contribution is to protect the integrity of the EU ETS and prevent emissions from being displaced outside Europe. It may also create incentives for producers outside the EU, including in India, to improve emissions monitoring, invest in lower-carbon production and participate in credible carbon pricing systems.

The economic consequences are real and should not be underestimated, particularly for trade-exposed sectors and exporters in emerging economies. However, these consequences do not necessarily outweigh the environmental rationale if the system is implemented in a proportionate and predictable way. The key is to ensure that CBAM relies on actual, verified emissions data, recognises carbon prices effectively paid in third countries where relevant, and avoids unnecessary administrative burdens.

From the TIC sector’s perspective, the priority is to support balanced implementation: robust enough to prevent carbon leakage and support climate objectives, but practical enough to preserve competitiveness and enable companies to comply. TIC companies can support this by helping manufacturers build reliable emissions data systems, prepare for verification, and demonstrate their carbon performance credibly.

AL Circle: How is the TIC Council supporting major aluminium-exporting nations to the European Union in navigating the challenges posed by CBAM? Are these efforts sufficient to mitigate the policy’s effects, or are they merely a temporary palliative?

Alberto Monje Gama: The TIC sector is in a strong position to support aluminium-exporting countries and companies in navigating CBAM. Under the EU framework, accredited verifiers will play an important role in ensuring that reported embedded emissions are reliable, consistent and based on actual data. This is essential because companies that can demonstrate their real emissions performance are better placed to avoid reliance on conservative default values and to reflect their local realities and decarbonisation efforts.

This expertise does not come from nowhere. TIC companies already have extensive experience in certification, inspection, testing, validation and verification, including in relation to emissions data, regulatory compliance, voluntary carbon markets and industrial decarbonisation schemes. Many TIC companies also support verification activities under systems such as the EU ETS and emerging carbon market frameworks, including India’s Carbon Credit Trading Scheme.

As TIC Council, we engage with key stakeholders, including the European Commission, accreditation bodies, industry representatives and authorities in major exporting countries, including India. Our objective is to support balanced and workable implementation, ensuring that CBAM requirements are robust but also practical for companies to apply. This includes promoting reliable monitoring, reporting and verification systems, supply-chain data quality, and recognition of credible local decarbonisation efforts where the regulation allows it.

These efforts are not merely a temporary palliative. They are part of the long-term infrastructure that companies need to operate in a market where carbon performance increasingly matters. At the same time, TIC support cannot, on its own, remove the economic impact of CBAM. Verification and MRV systems help companies demonstrate their real emissions and remain competitive, but they need to be accompanied by broader industrial measures, including emissions reduction, cleaner energy sourcing, process improvements and effective carbon market development.

Therefore, the TIC sector’s contribution is best understood as an enabler. It helps companies comply, reduce uncertainty, and credibly demonstrate their emissions performance. This does not neutralise all CBAM-related costs, but it can significantly reduce compliance risk and support the competitiveness of aluminium exporters in the EU market.