Carbon tax loophole could flood Europe with emissions heavy metal

afr.com:

Brussels/London | European aluminium producers are warning that a loophole in the EU’s carbon border tax will lead heavily polluting exporters such as China to circumvent the rules and flood the bloc with low cost, emissions heavy metal.

Under the EU’s proposed carbon border tax – a levy on the amount of carbon dioxide emissions produced during the manufacture of goods imported into the bloc – offcuts of aluminium which are remelted can be sold as a zero carbon product even if the virgin material was produced with coal or other fossil fuel power.

Producers warn a loophole in the EU’s carbon border tax could allow remelted aluminium from Asia to be dumped in Europe.  Reuters

Aluminium companies including Norsk Hydro and Speira told the Financial Times that the so-called carbon border adjustment mechanism (CBAM) incentivised producers outside the EU to generate as much scrap as possible which would then be remelted and exported to Europe.

“This loophole enables the widespread greenwashing of imported aluminium products and undermines the effectiveness of CBAM in preventing carbon leakage,” said Hilde Merete Aasheim, chief executive of Norway’s Norsk Hydro.

Lightweight and durable, aluminium is vital for building aircraft and cars and is used in solar power components. However, it is the most energy-intensive metal known in the industry and is sometimes referred to as “solid electricity”.

Aluminium production accounts for around 3 per cent of the world’s industrial emissions, according to the International Energy Agency.

The adjustment mechanism will initially be introduced without charges during a trial phase that starts in October this year; producers will have to pay the levy from 2026.

In the initial phase, it will