Paul Wos, the director general of the European Aluminum Association, said in an interview with Fastmarkets that after a brief period of optimism following the COVID-19 pandemic, the European aluminum industry has been hit by a series of crises including the conflict between Russia and Ukraine, soaring energy prices, increased trade pressure, and rising carbon costs. Although the industry has been impacted, it remains resilient, with companies continuing to invest and advance decarbonization technologies. He emphasized that European aluminum companies still have the willingness to develop in Europe, but whether they can maintain competitiveness in the future depends on whether the EU's climate policy can balance industrial costs and emission reduction targets.
Since the implementation of the Carbon Border Adjustment Mechanism (CBAM) on January 1, 2026, its potential costs have become a focus of attention for the European aluminum industry. The industry's greatest concern is that the EU may include indirect emissions, namely scope two emissions, in the CBAM. Wos pointed out that European aluminum producers have already borne carbon costs through electricity prices, and regardless of whether the power used by the smelters comes from high-carbon energy sources, they may be affected. At the same time, as the CBAM progresses, existing carbon leakage protection measures such as free carbon emission quotas and indirect cost compensation are also facing adjustments. If indirect emissions are included, European companies may continue to bear the carbon cost in electricity, while overseas competitors can reduce their burden through different power arrangements, further weakening the competitiveness of the European aluminum industry. Wos believes that including scope two emissions in the near future may cause a serious impact on European producers.
The carbon emissions accounting of scrap aluminum is another key controversy. The European Aluminum Association hopes that regardless of whether the non-rolled aluminum uses pre-consumption or post-consumption scrap materials, a unified default emission value should be adopted to avoid the distortion of competition between European producers and importers caused by different accounting methods. In addition, the continuous increase in the cost of the EU Emissions Trading System (ETS) also puts pressure on enterprises. Wos opposes linking ETS financial support with additional green investment by enterprises, believing that the funds should first be used to offset the costs borne by European enterprises that overseas competitors do not need to bear, which is necessary support for maintaining production and survival, rather than additional funds for decarbonization investment.
Regarding the low-carbon aluminum premium, market performance has been relatively stable, but the uncertainty of the US tariffs on Canadian aluminum products has affected some low-carbon P1020 aluminum premiums, as Canada has a large-scale production of low-carbon aluminum. Fastmarkets' assessment shows that on October 2, the European P1020A low-carbon aluminum premium was $15 - $30 per ton, higher than $10 - $25 per ton on August 7. In the future, the market needs to pay attention to the supply of low-carbon aluminum in the duty-free market, and it is expected that the new aluminum materials from Indonesia will not be low-carbon materials.
Wos pointed out that European political discussions have gradually shifted from simply emphasizing climate policies to taking into account industrial competitiveness, but policy adjustments still need to be implemented. He particularly emphasized that although the market recognizes green materials, there is a lack of willingness to pay a higher price for them. The core challenge for the European aluminum industry in the future is to continue promoting decarbonization and maintaining local production capacity in the context of rising carbon costs and intensified global competition.
