The Aluminium Federation (ALFED) has written to the UK Government to seek urgent clarification on whether an aluminium-specific impact assessment has been carried out as part of the latest developments in the Carbon Border Adjustment Mechanism (CBAM) legislation.
On 25 April 2025, the Government published the draft primary legislation for the UK CBAM, opening a technical consultation ahead of its planned implementation. This represents a significant step in the development of the UK’s carbon pricing policy for imported industrial materials, including aluminium.
Given the unique nature of aluminium pricing – where costs are largely driven by marginal carbon pricing irrespective of an individual producer’s emissions – ALFED has requested confirmation from HMRC and HM Treasury as to whether the potential impact on aluminium competitiveness, material pricing, and carbon leakage has been formally assessed.
Commenting on the announcement, ALFED CEO Nadine Bloxsome said:
“Aluminium is a critical material for the UK’s industrial future and net zero ambitions. It is essential that the specific characteristics of the aluminium market are properly understood and considered in the design of any new carbon measures. We have asked the Government to clarify whether an aluminium-specific impact assessment has been undertaken, and we look forward to their response.”
Context and Ongoing Concerns
This request for clarification follows the recent publication of a new Position Paper by European Aluminium, which raises significant concerns about the competitiveness impacts of the EU CBAM on aluminium producers. Similar risks exist for the UK industry if CBAM design does not fully account for the market dynamics and high trade exposure of the aluminium sector.
ALFED’s key points of interest include:
- How CBAM will interact with the marginal pricing structure of aluminium.
- The risk of unintended cost increases for UK producers and manufacturers.
- Potential carbon leakage through trade diversion or circumvention.
- The relationship between CBAM, UK energy prices, and the domestic ETS.
ALFED will continue to engage with Government through the CBAM Working Group and formal consultation processes. A full response to the draft legislation will be prepared in due course, once further clarity on the impact assessment is received.
The Federation is also preparing a member-led response to the CBAM technical consultation, ensuring the UK aluminium sector’s competitiveness, sustainability, and contribution to net zero are properly protected.
Bloxsome added:
“We are committed to representing the aluminium sector’s interests at every stage of this process, working constructively with Government and partners to help shape an approach that supports long-term growth, resilience, and decarbonisation across the supply chain. Aluminium has a pivotal role to play in a greener, stronger economy – and policy decisions must reflect that reality.”
Member Engagement
ALFED encourages all members to review the draft CBAM legislation available here and to stay actively involved as this work progresses.
Further updates will be provided to members as soon as Government responses are received.
