CBAM introduces Emission Costs

At least if you’re outside the European Union and export aluminium products into the EU, it starts to cost money. The EU is introducing the Carbon Border Adjustment Mechanism (CBAM) policy. Its main purpose is to price carbon emissions for certain imported goods, such as metal castings made from iron, steel, or aluminium.

Right now, if you produce castings outside the EU and ship them in, you don’t necessarily pay for the carbon involved in making them. Under CBAM, that changes. Starting in 2026 (on the 28th of February 2025 the date was postponed to 02/2027), companies will have to pay the CBAM costs in the form of “carbon certificates” if their castings come from areas where they haven’t already paid the carbon fee.

CBAM impact on Purchasing

This might sound technical, but the idea is simple: The EU wants to avoid “carbon leakage,” which occurs when businesses move their production to countries with looser climate laws. By forcing importers to pay for carbon, the EU hopes to keep the playing field even and encourage greener production methods. This will be especially challenging for Tier 1s, which buy many castings worldwide.

Suppose a foundry making those castings uses a lot of coal or other dirty energy sources. In that case, the added taxes are substantial. Costs can stack up quickly if they’re produced in a carbon-heavy way. Since the EU carbon price can sometimes jump around (it has been anywhere from about 60 to 100 euros per tonne of CO₂). This could mean big and unpredictable jumps in costs per tonne of cast metal. Passing these costs to the OEMs and, therefore, to the consumer will not be feasible. So what should we do with that situation, as 2026 is tomorrow in the automotive industry?

The best strategy is to produce the same parts in the EU at a lower price than production, shipping, and CBAM costs. With this cost structure, grabbing castings and filling your pipeline is easy. However, it might not be as profitable as there has been a reason for the production in a low-cost country.

How do we compete on pricing?

The key is innovation. Competing on the level of these foundries far away on pricing is nearly impossible. Rheocasting has a solution for the buyers as well. In Rheocasting, up to 100% post-consumer scrap can be used to produce these castings without compromising on quality. In addition, the high solid fraction helps reduce the machine size or add more cavities to the same machine size. Also, the tool lifetime is increased by 50 to 100% compared to HPDC.

Overall, you can offer these purchasing organisations more sustainable castings with lower total costs of ownership. In addition, you have the soft facts, like response and delivery times, on your side.

So, start your marketing campaign today and collect as many castings as you want! Use the Rheocasting Expert on Demand to turbocharge your business development efforts. Follow the link for more information or directly schedule a Free Consultation Call down below.