United Company RUSAL
UC RUSAL, IPJSC
RUSAL is a leading company in the global aluminium industry, producing metal with a low carbon footprint.
ID: 515755333081-70
Lobbying Activity
Response to Carbon Border Adjustment Mechanism
12 Nov 2021
As a key EU aluminium industry player RUSAL maintains its position expressed within previous consultations on the CBAM as RUSAL still sees no rationale behind the decision to include primary aluminium (PA) into the scope of the CBAM. Applied to PA, the CBAM will not serve its principal objective as declared by the Commission – to prevent carbon leakage in the PA subsector - as around 1/3 of EU PA capacity has closed in the past 20 years due to purely economic reasons.
As per the current design for the aluminium industry the CBAM is unable to mitigate the climate change - another declared objective, but quite fit for whipping up costs through the whole value chain, making raw material less affordable to EU domestic aluminium transformers on top of the current import tariffs on PA, placing them in even more fierce competition from growing imports of often higher carbon footprint aluminium products at lower prices. This can drive them out of the domestic and export markets and trigger carbon leakage in the downstream aluminium subsector (DS).
Besides, there is no viable calculation methodology for real carbon footprint of PA production, as only direct emissions from smelters would be calculated. Aluminium smelting carbon footprint is a combination of CO2 emitted in the electrolysis process and production of electricity used in smelting (Scope 1+2), while emissions from electricity production can be 3-5 times higher than those of electrolysis. Relied only on direct emissions, the CBAM would create favourable conditions for trade in PA with higher carbon footprint produced at albeit modern, but fossil energy based smelters.
Thus, application of the CBAM to the PA industry in its current design can:
-favour high carbon PA by ignoring indirect emissions
-drive costs of the EU downstream aluminium industry undermining its competitiveness and provoking carbon leakage
-fail to avoid carbon leakage in the aluminium sector
-fail to support the already distressed EU PA production
-fail to help the EU achieve its climate targets
-stimulate an increase in imports of competing high-value-added and high carbon footprint downstream goods, not covered by the CBAM
-provoke trade disputes if not fully compatible with the WTO (very difficult to ensure)
-cause delays in deliveries of goods due to complexity and administrative burden
RUSAL’s proposals:
-In order to achieve full carbon neutrality by 2050, the CBAM should employ tailored approach to such essential products in deficit in the EU as PA
-In case PA is nevertheless covered by the CBAM, direct and indirect emissions need to be included in the scope of the CBAM calculation
-The CBAM should be designed to encourage incentives for research collaboration for decarbonisation and sustainability
-The CBAM should be applied in accordance with an internationally developed and recognised system of carbon footprint verification of a specific product and producer
-Already at this stage a thorough discussion with key trading partners is strongly required
We expect a further increase in annual extra costs of European downstream producers charged due to the existing EU tariff policy. According to the estimations by the European Roundtable on Climate Change and Sustainable Transition, their additional costs due to the CBAM will reach EUR1.5 bln per year.
We believe that decarbonisation in our industry can be supported by an immediate and quite simple measure – zeroing of the existing EU import duties for low carbon primary aluminium (LCA), currently ranging between 3-6%, and creation of a separate customs code for LCA. This will incentivise the use of LCA and contribute to the Green Deal and to the competitiveness of the EU DS and entire aluminium sector.
RUSAL welcomes a fair, transparent, and inclusive process and is pleased to share its expertise on the optimal ways of making the CBAM viable for the low-carbon future and ready for swift implementation.
Please refer to Annex for more details.
Read full responseResponse to Instrument to deter and counteract coercive actions by third countries
15 Mar 2021
We welcome the EU intention based on a political agreement and a joint declaration by the Parliament, Council and Commission to deploy an instrument to deter and counteract coercive actions by third countries.
Application of trade or investment restrictions and extra-territorial sanctions with the aim to discriminate or exercise unfair practices is incompatible with international trade rules. In addition, the coercive effect of the said measures may entail far-reaching economic implications affecting multiple sectors of the EU economy.
The aluminium industry can serve as an evident example of a vulnerable sector of the EU economy since 75% of 7.8 million tons of primary aluminium annually consumed in the EU is imported.
In 2018 the aluminium supply chain experienced a tectonic imbalance when the largest aluminium supplier - RUSAL - was placed under the U.S. sanctions, thus not being able to serve its clients including in the EU. Designation of RUSAL had nothing to do with any wrongdoing on its part, but was a result of the sanctions imposed on its main shareholder. In 2017 RUSAL supplied around 20% of the EU’s aggregated primary aluminium demand, while the EU aluminium downstream consumed 1.5 million tonnes of RUSAL’s aluminium. Sanctions imposed on RUSAL and potential threat of’ imposition of secondary sanctions on EU producers caused a significant negative impact on the EU market leading to a reshape of the supply chain and a price surge, making the situation very challenging for the EU alumimium industry and in particular for its downstream segment with 200 thousand employees.
The above highlights the need for the EU to strengthen its defense capability to repel unilateral coercive actions by third countries to prevent possible breaches in supply chains embracing raw materials/goods that are critical and essential for the EU industry, especially when it comes to the sectors with high import dependency. In this regard, interests of the European companies interacting with companies from third countries should be protected from onerous abidance by “secondary sanctions” and other coercive measures.
Read full responseResponse to Climate change mitigation and adaptation taxonomy
17 Dec 2020
Enclosed is RUSAL’s input to the Public Consultation on Sustainable finance – EU classification system for green investments
Read full responseMeeting with Andrea Beltramello (Cabinet of Executive Vice-President Valdis Dombrovskis) and Federation of Aluminium Consumers in Europe
4 Dec 2020 · Trade and climate
Meeting with Antoine Colombani (Cabinet of Executive Vice-President Frans Timmermans) and FTI Consulting Belgium and Federation of Aluminium Consumers in Europe
18 Sept 2020 · Green Deal and low-carbon aluminium
Response to Environmental claims based on environmental footprint methods
31 Aug 2020
RUSAL’s input to the European Commission’s public consultation
Environmental performance of products & businesses – substantiating claims
1. Expression of support to the EC’s work on the societal ambition to address climate urgency: A common approach to declaring environmental performance of actors in the European market is key to facilitate the removal of barriers to net-zero ambition.
RUSAL warmly welcomes the initiative to substantiate claims about the environmental footprint of products/services by using standard methods for quantifying them. A common approach to declaring environmental performance of actors in the European market is key to facilitate the removal of barriers to net-zero ambition.
The most effective way to implement this initiative is through Option 3. It is essential to clarify Product Environmental Footprint Category Rules (PEFCRs) for each sector.
In 2017, RUSAL (SEHK: 486; Moscow Exchange: RUAL) introduced internal carbon price. It is designed to support decision-making related to the Company’s investment projects to drive greenhouse gas emissions reduction.
2. RUSAL’s environmental performance claims are aligned with the International Aluminium Institute (IAI)’s Technical Guidance Document (http://www.world-aluminium.org/media/filer_public/2018/02/15/carbon_footprint_technical_support_document_v1_published.pdf), which is the basis of RUSAL’s carbon footprint reporting.
Further relevant sources in this regard:
- The Carbon Trust study (https://carbontrust.com/resources/the-case-for-low-carbon-primary-aluminium-labelling, a white paper that explores potential benchmark for carbon footprint disclosures of primary aluminium), the on-going LME project to disclose environmental and climate information of the metal traded (https://www.ft.com/content/e11cdc46-fda3-445d-a323-69e4f9c6012b),
- ASI Performance Standard, which includes two smelter-specific criteria (‘smelters starting production after 2020 must achieve a level of Scope 1 and 2 GHG emissions below 8 tonnes CO2-eq per metric tonne of aluminium produced. Existing aluminium smelters that were in production before 2020 must achieve the 8 tonnes CO2-eq per metric tonne level by 2030. To put this in perspective, the current global average for aluminium ingot production is estimated to be 12 CO2-eq per metric tonne’).
3. RUSAL’s higher level ambition is stipulated in the Green Aluminium Vision (https://enplusgroup.com/en/media/news/in-focus/en-group-launches-green-aluminium-vision/). There are two action tracks related to ‘green’ labelling: 2. Low-carbon aluminium branding, 3. Carbon footprint transparency, and 4. Sustainability labelling
4. Bottlenecks ‘Environmental performance of products & businesses – substantiating claims’ can help address:
(i) lack of aluminium industry-wide coordination to adopt common standards to cut emissions,
(ii) lack of coordinated pathways to decarbonise with clear industry-wide benchmarks,
(iii) lack of carbon footprint transparency;
(iv) lack of business case for investing in decarbonisation (there is regulatory push, customer pull, but the only ones paying are producers).
5. Concrete proposals/call to action:
(i) Differentiation of aluminium in the EU market by carbon content with clear industry-wide benchmarks, building on the IAI technical guidance, ASI standards, Carbon Trust white paper, LME proposals for carbon footprint disclosures, and the evolving EU Taxonomy;
(ii) A separate customs code for low carbon unwrought aluminium and import tariff removal to facilitate decarbonisation of the aluminium sector;
(iii) Constrain imports of carbon-heavy materials to the EU;
(iv) Exemptions for low-carbon aluminium from the future EU carbon-border adjustment mechanism.
Read full responseResponse to Carbon Border Adjustment Mechanism
1 Apr 2020
UC Rusal is the 3rd largest global primary aluminium (PA) producer. Rusal meets 20 % of the EU growing PA demand 75 % of which is imported. Rusal’s PA and PA alloys are subject to the EU import duties of 3-6 %.
Aluminium sector with 1.1 Gt CO₂ e accounts for 2 % of global anthropogenic emissions. Rusal measures carbon footprint of its operations and supports industry-wide decarbonisation. Sourcing more than 90 % of electricity supply from renewable hydro energy, Rusal is one of the leading low-carbon aluminium (LCA) producers.
Rusal is a largest supplier of PA to EU processors of aluminium — a downstream sector dominated by SMEs — and is concerned that:
- options for the EU unilateral and sector-specific Carbon Border Adjustment Mechanism (CBAM) could undermine competitiveness of its customers in case the CBAM is not fully WTO-compliant;
- CBAM could fail to support the already distressed PA production in the EU and not cope with efficiently reducing the so-called ‘carbon leakage’ caused by energy costs in the EU, i.e. by the EU ETS;
- none of the discussed CBAM options appears to be in full compliance with the WTO rules, which may lead to severe and time-consuming trade disputes.
Even a WTO-compatible CBAM does not offer appropriate environmental and trade policy measures for at least those carbon-intensive sectors, which have long moved capacities outside the EU due to the lack of raw materials, high energy and labour costs. The PA sector is a case in point of that.
Since 2000, the EU PA smelting capacity shrunk by ca. 30 %, while the EU consumption of PA grew by approximately the same percentage. Today, the EU meets ca. 75 % of its PA needs through imports, that is expected to continue.
In this regard, there is little carbon leakage in the EU PA sector, as:
1) no new smelters were commissioned in the EU for at least 30 years as a result of high costs, primarily in electricity and labour;
2) reductions in the specific CO2 emissions of the existing EU smelters can only be achieved in external electricity supply, which accounts for 30-40 % of smelters’ costs.
The inclusion of PA in the scope of CBAM will inevitably drive up the price of imported and domestic PA in the EU. For downstream companies who employ more than 90 % of the industry’s workforce the cost of PA can constitutes 40 to 80 % of the total. Any unilateral increase of those costs may trigger further “drain” of production from the EU.
In order to deliver on the European Green Deal and to achieve full carbon neutrality by 2050, CBAM should employ tailored approach to such essential products as PA.
The European Commission (EC) may wish to consider permanent unilateral import tariff suspension vis-à-vis products with low carbon content, such as LCA. Rusal has been proactive in industry-wide efforts to define LCA benchmark reflecting average performance and would be pleased to share the available knowledge.
The tariff exemptions for LCA are achievable through a separate CN code and a reliable system of CO2 footprint certification. Such approach could apply only to selected products that are currently subject to substantial WTO-bound import tariffs of >2 % in the EU. It would be fully compliant with the WTO rules, would support the EU in its climate agenda and level playing field for the EU downstream.
Additionally, CBAM could encourage industry-wide incentives for research collaboration for decarbonization and sustainability. This could cover inert anode and other breakthrough technologies for emissions/cost reductions, x-ray/sensor-based/laser detection technologies for recycling, among others.
Rusal welcomes the guidelines on CBAM and a fair, transparent, and inclusive process and would be pleased to share its expertise on the optimal ways of making the EU CBAM truly viable for the low-carbon future, and ready for swift implementation.
Read full response