Aluminium: EU ETS reform raises cost risks – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank’s Norman Liebke highlights that EU ETS reform, including new benchmark calculations, could significantly raise costs for European Aluminium recyclers and refineries. With fallback benchmarks set to drop sharply, companies may need to buy more allowances, pressuring profitability in a globally priced market. Industry group European Aluminium warns this could undermine Aluminium recycling competitiveness in Europe.

EU ETS threatens recyclers’ margins

"The upcoming reform of the EU Emissions Trading System (EU ETS I) is intended to ease the burden on companies and give them more time to decarbonize. To this end, in addition to the reform of the market stability reserve and plans for a decarbonization fund, a new method for calculating benchmark values - which is crucial for the free allocation of allowances - has recently been presented."

"These are set to decrease by 34% for the 2026–2030 period compared to the 2021–2025 values, which would require recyclers and refineries to purchase significantly more allowances."

"According to the association, this would have a massive impact on profitability, as the higher costs cannot simply be passed on and aluminium prices are set globally. Thus, the reform of the EU ETS threatens to undermine aluminium recycling in Europe."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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