The EU’s Carbon Border Adjustment Mechanism charges importers of steel, aluminium and other goods for the carbon embedded in them. Scrap-based production has low embedded carbon, which changes the value of scrap and has started a debate about keeping European scrap in Europe.
The EU’s Carbon Border Adjustment Mechanism charges importers of steel, aluminium and other goods for the carbon embedded in them. Scrap-based production has low embedded carbon, which changes the value of scrap and has started a debate about keeping European scrap in Europe.
CBAM is the EU’s system for putting a carbon price on imported goods equivalent to the price EU producers pay under the EU Emissions Trading System. It covers iron and steel, aluminium, cement, fertilisers, electricity and hydrogen in its first phase. Importers report the embedded emissions of the goods they bring in and, once the financial phase applies, buy CBAM certificates to cover them. The mechanism began with a reporting-only transition period before certificates become payable.
Scrap itself is not charged under CBAM in the way finished steel is — the mechanism targets the products made from scrap, not the raw material — but the rules on how recycled content is counted shape the whole picture.
Steel made in an electric-arc furnace from scrap has a fraction of the embedded emissions of steel made from ore in a blast furnace, and recycled aluminium has a small fraction of the emissions of primary aluminium. Under CBAM an exporter to the EU of scrap-based steel or aluminium faces a much smaller charge than an exporter of ore-based product. That makes scrap more valuable to steelmakers who sell into Europe — including Turkey, which exports rebar and other long products to the EU from scrap-based mills — and it has led European steel producers to argue that Europe should restrict scrap exports to secure its own low-carbon feedstock.
European mills and some policymakers have proposed treating scrap as a “critical” or “strategic” raw material and limiting its export; European recyclers and exporters, through the BIR and the EU recycling associations, argue that free trade in scrap serves recycling best and that restrictions would depress collection. The waste-shipment rules on non-OECD exports are one outcome of this debate. Anyone trading European scrap to Turkey, India or Asia should follow it on the association and Commission pages linked from our standards page.