Federation of Aluminium Consumers in Europe
FACE
The Federation of Aluminium Consumers in Europe (FACE) is the voice of Europe’s aluminium consumers.
ID: 112124332458-45
Lobbying Activity
Response to Carbon Border Adjustment Mechanism
16 Nov 2021
FACE's initial position that inclusion of unwrought primary aluminium (PA) into the scope of the CBAM would be contrary to the European Green Deal and CBAM goals is now even stronger. With regard the EU downstream aluminium subsector, the CBAM might be acceptable, provided that it applies to downstream semi-finished or finished products in full compliance with WTO rules. However, FACE emphasises that there is a much better, simpler and faster way to decarbonise and protect the EU aluminium industry from carbon and other leakage: immediate suspension of the EU import duties on PA.
The proposed CBAM still ignores the crucial fact that our industry consists of two main and distinct subsectors: (1) primary and recycled aluminium producers/smelters and (2) downstream aluminium transformers. Recycled smelting has the lowest GHG footprint. To be suitable for use, recycled aluminium must integrate around 30% of PA, so as to maintain physical and chemical specifications. The EU industry aims at outreaching the target of about 50% of recycled metal in its total use by 2050, which mechanically implies the continued growth of demand for PA.
The proposed CBAM also fails to take into account that PA production is one of most electricity intensive amongst all industries (about half of cost of production).
The two subsectors have been developing over the last 30 years in a different way. Due to growing energy and labour costs, EU smelters relocated PA production to 3rd countries and today the EU meets only c. 25 % of its demand, making all independent EU transformers completely dependent on imports. The PA subsector has already “leaked” from the EU.
The EU downstream is able to fill the growing demand. However, the EU still maintains the economically absurd 3-4-6 % import tariff structure on PA which does not help the PA subsector but drives out of business the SMEs in downstream that employ over 90% of the EU’s aluminium industry workforce.
The CBAM will not contribute to the competitiveness and decarbonisation of the PA subsector, but will further damage the downstream subsector with extra-costs that we estimate at more than EUR 5 billion per year, in fact up to EUR 7 billion when we add at the minimum 1 billion extra-cost generated by the import tariffs on unwrought aluminium. This will put the survival of the value chain at grave risk.
Moreover, the current CBAM version envisages a carbon levy only on direct emissions. This means that major emissions relating to electricity used for smelting are not counted at all. Hence, such CBAM will miss out actual GHG footprint of aluminium products and stimulate trade in higher GHG footprint goods, often at unfairly low prices.
The current setup of the CBAM with regard to PA is opposite to CBAM's own objectives, while hurting downstream subsector and leading to other risks. It would not be a genuine environmental measure. Such qualification makes the measure automatically WTO incompatible and can trigger retaliation which would negatively affect the downstream subsector further and ultimately lead to its leakage following the PA subsector. Not only such CBAM will contradict the Green Deal objectives, but also the ones of the EU’s industrial policy, and in particular competitiveness, jobs growth, technology investments and support to SMEs.
With regard to the downstream subsector, a CBAM might be appropriate, but only if it is fully WTO compliant. That requirement includes coverage of only those downstream products which are subject to actual ETS costs and coverage of indirect emissions, i.e. catching actual GHG footprint. However, FACE maintains that immediate permanent suspension of EU import duties on PA and free allocation of allowances and indirect energy cost compensations would be a much better environmental and competitiveness measure.
Read full responseMeeting with Andrea Beltramello (Cabinet of Executive Vice-President Valdis Dombrovskis) and United Company RUSAL
4 Dec 2020 · Trade and climate
Response to Sustainable Products Initiative
11 Nov 2020
FACE supports the EU Green Deal and warmly welcomes the Sustainable Products initiative. This proposal aligns with FACE green ambition by incentivizing businesses and industries to place more sustainable products on the EU market.
Sustainability and the green transition have always been at the core of FACE’s advocacy. As such, FACE has long called for the creation of a “green” label within the primary aluminium industry.
Our industry is ambitiously stepping-up all efforts in this direction:
In July 2020, EN+ Group announced its ‘Green Aluminium Vision’ (GAV), which sat out the Group’ proposals for a low carbon economy and for a new asset class of ‘Green Aluminium’. And later on, in October 2020, Hydro introduced its “Hydro EcoDesign”, which mirrors the EU Ecodesign and Energy Labelling, aimed at helping customers to develop more sustainable and circular aluminium products.
The aluminium industry is energy-intensive, and FACE prompts EU companies to increase their commitments, innovation, drive and investments to make the light metal a major contributor to the transition towards the green economy.
Aluminium has a tremendous potential for becoming the material of a carbon-neutral world. Its lightness and infinite recyclability contribute to reducing the carbon footprint of entire value chains, and to scaling up the circular economy model.
However, most of the Aluminium CO2 emission happens during the early stages of production: mining of bauxites ore, refining of alumina, and smelting of primary aluminium. Consequently, the aluminium industry generates two per cent of our planet’s CO2 emissions.
As social demand and NGO’s are on the rise for climate action and more environmentally friendly products, governments and businesses must profoundly and vigorously change their behaviors.
Thus, it is now vital for the aluminium industry to strive towards the decarbonization of aluminium production, from sustainable mining to ‘low-carbon’ and carbon-free smelting, and to the lowest total carbon footprint for product manufacturing.
Read full responseMeeting with Antoine Colombani (Cabinet of Executive Vice-President Frans Timmermans) and FTI Consulting Belgium and United Company RUSAL
18 Sept 2020 · Green Deal and low-carbon aluminium
Response to Carbon Border Adjustment Mechanism
31 Mar 2020
The Federation of Aluminium Consumers in Europe (FACE) represents interests of EU aluminium downstream (DS) transformers and users.
The goals of FACE and the proposed EU CBAM coincide: levelling the playing field for EU industries on the domestic and export markets and preventing escape of EU industrial production to third countries with lower or no CO2 emission costs.
But FACE is concerned that if the proposed CBAM does not take into account particularities of the EU aluminium sector, it may become a useless, if not counter-productive, trade policy measure.
The EU aluminium sector consists of two main subsectors:
Primary aluminium (PA), producers of unwrought metal (smelters, which transform alumina into PA; refiners and re-melters, which produce secondary recycled aluminium from scrap);
DS, downstream aluminium transformers (extruders, rollers, foundry casters; manufactures of aluminium parts and components).
The global aluminium demand should increase by over 150% by 2050, supplied by primary and by recycled metal sources, with a trend that sees the primary/secondary ratio going from actual 3/1 to 5/3 in the next 20 years, primary remaining the key point for the aluminium growth in the next decades.
FACE considers that the two subsectors have been developing over the last 30 years in different way and should be treated separately when considering an EU CBAM.
Due to growing energy and labour costs, aluminium smelters, the main reference for the raw material, started relocating EU production to third countries long time ago. Today, the EU PA segment may cover only about 25 % of EU demand the rest being imported.
During the same period of time, the EU DS aluminium segment has been growing to meet EU demand and compete on third markets. Thus, the EU DS segment is completely import dependent of unwrought PA metal which surprisingly remains subject to EU import duties varying between 3 % - 6 %.
This on-going EU trade policy severely increases EU market prices of unwrought PA and negatively affects competitiveness of the whole EU DS segment which today represents approximately 90 % of the turnover and jobs in the EU aluminium sector. Most EU DS producers are SMEs.
CBAM as to the DS segment. As DS aluminium producers are paying growing ECT costs and are competing with unfairly priced imports, FACE supports the introduction of a CBAM for all imported aluminium semis and finished products in EU.
FACE would like to stress that the future CBAM must be WTO compliant and cover all products of all sectors with similar carbon footprint (and not only steel, cement and some other sectors as currently contemplated by the Commission), except for areas which could be excluded on the basis of objective and transparent criteria, such as lack or non-existence of EU domestic production, like in case of the PA segment.
CBAM as to the PA segment. CBAM is not an appropriate measure for the PA segment from the point of view of the two pillars of carbon leakage. It would only increase costs of the DS segment further and lead to massive closures and/or leakage of that important sector of the EU economy abroad, and would become another EU trade policy measure, along with the current EU import tariffs on PA.
Instead of including the PA segment into the CBAM, the Commission is invited to consider immediately a PA import tariff suspension repeatedly requested by FACE and DS SME’s. Such suspension would serve the EU Green Deal and what the EU wants to achieve with the CBAM if the EU suspended the current import tariffs on low carbon PA faster (within the next few months) and deeper (zero tariff). Such full tariff suspension would be a perfect example of a timely measure taken in harmony with several important EU policies, such as environmental, industrial and trade. Moreover, such measure would constitute an urgently needed economic stimulus for the EU aluminium industry in the COVID-19 context.
Contact: r.bertozzi@face-aluminium.com
Read full responseMeeting with Maria Asenius (Cabinet of Vice-President Cecilia Malmström), Pedro Velasco Martins (Cabinet of Vice-President Cecilia Malmström) and Forward Global
16 Jul 2019 · Import tariffs on aluminium