EU considers broader CBAM scope for aluminium products; industry concern intensifies

The European Union is evaluating an expansion of its Carbon Border Adjustment Mechanism (CBAM). After setting carbon tax certificates at EUR 75.36 (USD 88.14) per tonne of aluminium and steel imports for Q1 2026, the push could widen the scope of carbon-linked import costs for global exporters. 

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A draft proposal presented within the European Parliament indicates the bloc’s extension of CBAM to cover a broader range across steel and aluminium products. Marking a shift from raw materials to processed goods, the proposal is intensifying concerns among traders and exporters.  

As per recommendations issued on April 10 by the European Parliament Committee on the Environment, Climate and Food Safety, about 180 additional aluminium- and steel- based items could be accumulated under CBAM starting January 1, 2028.

In case of a successful implementation, the revised regulatory framework would surpass the boundaries of primary and raw metals and absorb products from downstream and manufactured sectors, bringing suppliers to the EU market under stricter regulatory scope. 

By 2028, CBAM is expected to add carbon-linked costs to aluminium extrusion imports into Europe, climbing to EUR 230 (USD 271.26) per tonne, driven by high emissions. The impact, a gradual cost build-up rather than a sudden tariff shock, will vary based on emission intensity and EU ETS prices. 

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The proposed expansion has raised concerns among several trading partners, including India, considering the potential impact on the country as regards export competitiveness and cost structures.

Coming at a notable juncture, both sides are in the final stages of a Free Trade Agreement, which undoubtedly contains CBAM as a key point of discussion, given its implications for trade and the broader market scenario.

Industry analysts, such as the Global Trade Research Initiative, have noted that continued expansion of CBAM could bring a substantial share of industrial imports under carbon pricing by 2030. Industry expert Glen Hodgson, Founder and CEO of Free Trade Europa, has questioned the viability and effectiveness of CBAM from a realistic point of view of the market.

While Q1 2026 is unlikely to display immediate impacts of the mechanism, aluminium market disruption is likely to unfold from April 2026 onward. As carbon pricing is woven deeper into trade policies, the broader industrial base would likely be affected, prompting exporters to reassess production and supply chains to abide by the regulations while maintaining competitiveness in the global market. 

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