Following the release of the UK Government’s draft legislation on the Carbon Border Adjustment Mechanism (CBAM), the Aluminium Federation (ALFED) has formally requested confirmation on whether a sector-specific impact assessment for aluminium has been conducted. No official response has been received to date. While ALFED welcomed the Government’s acknowledgment of potential trade shifts in the accompanying Tax Information and Impact Note, the Federation remains concerned that the current framework assumes UK importers will seamlessly transition to lower-carbon suppliers. This assumption may overlook the risks of trade diversion, circumvention via downstream products, and unintended consequences for domestic aluminium producers. ALFED argues that the current approach lacks detailed modelling to account for the complex nature of the aluminium sector, its supply chains, and market pricing structure, which already incorporates carbon costs. Without targeted analysis, the CBAM could threaten the cost competitiveness of UK producers, discourage investment, and lead to increased carbon leakage.
ALFED is calling for a dedicated aluminium impact assessment that evaluates price dynamics, trade competitiveness, and potential investment implications. The organisation also seeks a thorough analysis of circumvention risks and transparency regarding any aluminium-focused modelling already carried out by HMRC or the Treasury. These concerns align with those voiced by European Aluminium in its April 2025 position paper, which highlighted the potential for CBAM to weaken Europe’s aluminium sector if not carefully implemented. ALFED stresses the strategic role of aluminium in key sectors such as clean energy, defense, and transportation, and underscores the importance of linking the UK and EU Emissions Trading Schemes. CEO Nadine Bloxsome emphasized the urgency of a collaborative and data-driven approach to shaping a fair and sustainable CBAM policy, reinforcing the industry’s commitment to decarbonization without compromising its global competitiveness.
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