huihuang Metal: A Pioneer in Carbon Reduction for Recycled Aluminum Ingots
The EU's Carbon Footprint Journey for Recycled Aluminum Ingots
I. Background of the EU's Regulations on the Carbon Footprint of Recycled Aluminum Ingots
The EU has put forward the proposal for the Carbon Border Adjustment Mechanism (CBAM) against the backdrop of profound reasons in response to climate change. With the increasingly severe global climate change, governments and international organizations around the world have introduced policies and measures one after another to promote carbon emission reduction. The EU has included aluminum in the list of critical raw materials, which is at the strategic core of ensuring that its industries can compete with the United States and China in manufacturing clean technology products and obtaining necessary raw materials.
In 2023, the EU's "New Battery Regulation" officially came into effect, mandating that all battery enterprises entering the EU market adopt the Product Environmental Footprint (PEF) method under the Life Cycle Assessment (LCA) system to calculate the carbon footprint of their products, which also reflects the EU's emphasis on the management of product carbon footprint. The European Commission has proposed that by 2030, the EU's extraction of 16 "strategic raw materials", including lithium and copper, should be increased to 10% of the EU's annual consumption, the EU's recycling utilization rate should be increased to 20%, and the processing utilization rate should be increased to 50%. Materials from a single third country should not exceed 65%.
The EU has launched the "Critical Raw Materials Act", aiming to reduce supply chain risks and achieve climate and digital transformation goals. This act will promote the EU as a unified market force, strengthen cooperation with external countries and among EU member states, jointly monitor potential risks in the supply chain, coordinate the inventories of critical raw materials among member states, call for centralized procurement, and negotiate with global sellers as a unified market by aggregating the demands of buyers from various countries. Meanwhile, the EU will also increase the absorption and application of breakthrough technologies in the field of critical raw materials, simplify the approval process, and increase local supply.
Against this broad backdrop, regulating the carbon footprint of recycled aluminum ingots is an important measure for the EU to achieve its carbon emission reduction goals, improve the resource recycling utilization rate, and reduce its dependence on external raw materials.
II. Specific Requirements for the Carbon Footprint of Recycled Aluminum Ingots in the EU
(1) Certification and Reporting Obligations
The period from October 2023 to December 2025 is the transition period. During this period, enterprises only need to fulfill their reporting obligations, that is, they are required to submit the quantity of imported products and carbon emission data annually without having to pay fees for this. Enterprises need to submit CBAM reports for each quarter within one month after the end of the quarter. For importers who fail to fulfill their CBAM declaration obligations, a fine of 10 - 50 euros per ton of undeclared carbon emissions will be imposed. Starting from January 1, 2026, when it is officially implemented, enterprises will not only have to report the carbon emission data of imported products each year but also pay the corresponding carbon emission fees. Between 2026 and 2034, the CBAM will be gradually strengthened. During this period, the free quotas of the EU Emissions Trading System (EU-ETS) will be gradually phased out, and non-EU producers will only need to pay CBAM fees for the part of their emissions that is in the same proportion as the non-free quotas of EU producers.
(2) Response Measures and Approaches
Chinese enterprises can take various measures to respond to the EU's requirements on the carbon footprint of recycled aluminum ingots. Firstly, to reduce the carbon footprint of products, practical ways such as installing distributed photovoltaic systems, purchasing green electricity, upgrading equipment and processes, and increasing the addition amount of recycled aluminum can be adopted to reduce carbon emissions in the production process and in the supply chain. Secondly, in terms of data verification, CBAM declarants need to be aware of the quantity of imported goods, embedded emissions, total indirect emissions, and the carbon price already paid in the country of origin to fulfill their reporting and declaration obligations. Domestic exporters should regularly verify and prepare relevant data and check the reliability of the data. Thirdly, regarding the monitoring of legislative developments, there are still many uncertainties in the CBAM Act regarding the certification of declarations, embedded emissions, and the deduction of the number of CBAM certificates, which will be further specified by detailed rules to be issued in the future. It is very likely that the EU will issue a series of relevant detailed rules before the end of the transition period. Domestic exporters should closely follow the issuance of CBAM-related laws and regulations so as to make preparations in advance. Finally, in terms of process improvement, enterprises need to establish and enhance the corresponding personnel capabilities. With the accumulation of declaration experience, optimization of processes, and improvement of digital systems, a mature working process will be gradually formed, making CBAM management an integral part of the company's operating system.
III. Impact of the EU's Carbon Footprint Requirements on Chinese Recycled Aluminum Enterprises
(1) Opportunities and Challenges
The EU's carbon footprint requirements have brought both opportunities and challenges to Chinese recycled aluminum enterprises. In terms of opportunities, the trial implementation of the EU's carbon tariff has urged enterprises to attach greater importance to carbon emission reduction and improve the green competitiveness of their products. Taking Mingtai Aluminum as an example, more than ten products have completed the SGS carbon footprint certification, and the carbon emissions per ton of products can be saved by about 10 tons compared with electrolytic aluminum products, which makes it more advantageous in the international market, improves the export competitiveness of its products, and enables it to enjoy more green premiums. Meanwhile, with the increase in the EU's demand for recycled aluminum, a broader market space has been opened up for Chinese recycled aluminum enterprises.
However, the challenges cannot be ignored. Enterprises need to invest a large amount of capital and energy in technological upgrading and equipment renovation to reduce the carbon footprint of their products. For example, installing distributed photovoltaic systems, purchasing green electricity, upgrading equipment and processes all require huge capital investment. In addition, enterprises also need to strengthen data management and declaration work to ensure the accurate submission of the quantity of imported products and carbon emission data; otherwise, they will face the risk of fines.
(2) Responses and Development of Enterprises
Chinese recycled aluminum enterprises like Mingtai Aluminum have actively taken a series of response measures after receiving the carbon footprint certification requirements. On the one hand, they have increased investment in technological R&D to improve the production processes and technological levels of recycled aluminum and further reduce the carbon emissions of their products. For example, by optimizing the production process and increasing the addition amount of recycled aluminum, carbon emissions in the production process and in the supply chain can be reduced. On the other hand, they have strengthened cooperation with international certification institutions and actively promoted carbon footprint certification work. Currently, the recycled aluminum carbon footprint certification of Mingtai Aluminum has entered the second stage and is expected to be completed in the near future.
In terms of development planning, enterprises will actively explore carbon footprint screening work in multiple aspects such as more alloy grades and recycling systems according to product and customer needs, fully highlighting the advantages of the company's recycled aluminum. Meanwhile, enterprises will further expand the international market, strengthen cooperation with customers in regions such as the EU, and increase the export share of their products. In addition, enterprises will also pay attention to domestic policy developments and actively participate in the national carbon emissions trading market, laying a solid foundation for the sustainable development of the enterprises.
IV. Future Prospects of Recycled Aluminum Ingots under the EU's Carbon Footprint Requirements
Under the continuous impetus of the EU's carbon footprint requirements, Chinese recycled aluminum enterprises are facing significant changes and opportunities. In terms of the development direction, enterprises will pay more attention to green production and sustainable development. On the one hand, they will continuously increase investment in energy-saving and emission-reduction technologies, such as continuously promoting the installation of distributed photovoltaic systems, increasing the proportion of green electricity purchases, and accelerating the upgrading of equipment and processes, so as to effectively reduce carbon emissions in the production process. On the other hand, they will strengthen the management and optimization of the supply chain, increase the addition amount of recycled aluminum, and achieve the reduction of the carbon footprint throughout the entire chain from the source to the terminal.
The future prospects are full of potential. With the continuous increase in global attention to environmental protection and sustainable development, the market demand for recycled aluminum, as a low-carbon and environmentally friendly material, will continue to grow. As one of the important markets, the EU's demand for recycled aluminum ingots will provide broad development space for Chinese recycled aluminum enterprises. According to statistics, currently, nearly 70% of beverage cans worldwide are recycled, making beverage cans the beverage containers with the highest recycling rate in the world. And China, as the world's largest producer and consumer of recycled aluminum, has huge potential in the field of recycled aluminum.
Meanwhile, the EU's carbon footprint requirements will also prompt Chinese recycled aluminum enterprises to continuously improve their competitiveness. Through technological innovation and management optimization, enterprises can produce low-carbon recycled aluminum products that better meet international standards and occupy a larger share in the international market. For example, some enterprises have begun to explore grade-preserving reduction and utilization technologies. By scientifically analyzing alloy materials and making precise "blending", high-quality recycled aluminum can be produced to meet the strict requirements of downstream customers.
In conclusion, under the EU's carbon footprint requirements, Chinese recycled aluminum enterprises have a clear development direction and broad future prospects. Enterprises should actively respond to challenges, seize opportunities, and continuously promote the green development of the recycled aluminum industry, contributing to the achievement of global sustainable development goals. Its importance lies not only in meeting the needs of the EU market but also in promoting the transformation and upgrading of China's recycled aluminum industry and enhancing China's position and influence in the global recycled aluminum field.
