BIR International Recycling Conference 2026, Gothenburg, Sweden: What is the impact of CBAM on the industry?
On the second day of the BIR International Recycling Conference 2026 held in Gothenburg, Sweden, the morning session featured sessions by the Stainless Steel, Special Alloy Committee, the non-ferrous sector, and in the afternoon, sessions by the General Assembly and EEEVB division.
At the Stainless Steel Special Alloy Committee session, Julia Ettinger from Recycling Europe (formerly EuRic) gave a presentation on the EU's Carbon Border Adjustment Mechanism (CBAM) for scrap. CBAM is a very complex system, and there is significant interest in the direction of the Japanese industry. Here, we report on the details.
Julia Ettinger, Executive Director of Recycling Europe, provided commentary on one of the most important legal frameworks in EU climate change policy, which has caused confusion even among related industries: the Carbon Border Adjustment Mechanism (CBAM).
Ettinger first addressed the audience by asking about their understanding of CBAM and its parent system, the EU Emissions Trading System (EU ETS), and asked for a raise of their awareness. This reflects a recognition of the reality that even among the industries directly affected, the mechanisms of this complex system are not fully understood.
The EU ETS is the core system of CBAM.
Before joining CBAM, Mr. Ettinger explained the EU's ETS system. This is the cap-and-trade system at the core of the EU's industrial decarbonization strategy. A cap is set on the total greenhouse gas emissions, and companies must hold allowances for every ton of CO2 emitted, which can be bought and traded on the market. To prevent the risk of companies moving production outside the EU (carbon leakage) to avoid costs, some industries have been granted free allowances (free allowance). However, this free allocation is now being phased out, and CBAM plays a role in filling that gap.
CBAM: Carbon Pricing at Borders
CBAM imposes a carbon price equivalent to that for carbon-intensive products imported into the EU, aiming to place producers outside the EU on the same level as EU competitors. Currently, the application covers six sectors: steel, aluminum, cement, fertilizer, hydrogen, and electricity. For steel, only direct emissions (emissions at the site) are subject to calculation.
The transition period is from October 2023 to the end of 2025, during which only reporting obligations are imposed and no financial burden is incurred. From January 1, 2026, the full implementation phase began, and only certified CBAM declarants can import eligible items. Importers must purchase CBAM certificates based on the emissions inherent in the imported goods. The price of the certificates is linked to the EU ETS emissions allowance auction price, with quarterly averages for 2026 and weekly averages for 2027. Purchasing certificates from member countries is expected to be possible starting in 2027.
Expanding Applications: Downstream Pressure
The European Commission has proposed expanding the scope of CBAM to include semi-finished and manufactured goods, and Ettinger pointed out that there is "strong pressure" among some stakeholders to shift compliance burdens further downstream in the supply chain. The European Parliament has also published its own report on the Commission's proposal, but none of these documents are subject to scrapping. According to Ettinger's outlook, the current revision is expected to be completed by 2027, and new items are likely to be applied starting in 2028. The congressional report also suggests the possibility of future scope expansion to include chemicals, polymers, and paper.
At this stage, scrapping is not eligible
Many BIR participants are directly affected by items related to scrap. Post-consumer scrap is not included in the scope of current or proposed CBAM applications, either as target items or as feedstock (precursors) for target items. The European Commission cites this by stating that including post-consumer scrap undermines recycling incentives and may run counter to the EU's circular economy goals.
On the other hand, pre-consumer scrap generated during the manufacturing process is treated differently. The committee's proposal positions these as inputs (precursors), and emissions may be attributed when used in the manufacture of CBAM-covered items. Here, Ettinger pointed out a major flaw that a methodology for calculating pre-consumer emissions has not yet been proposed and is left to future implementing legislation. "The industry cannot plan without numbers," he argues.
There are also unresolved issues regarding verification. There are no answers on how to distinguish and verify pre-sale and post-class in practice, or what happens if scrap is reclassified from precursors to target items.
During the Q&A, Ettinger candidly addressed several concerns. Regarding enforcement issues, he acknowledged that while CBAM's fundamental approach is valid, its mechanisms have become too complex and may not achieve its original goal of global decarbonization. There remain significant doubts about its actual operation.
He expressed a cautious stance regarding the relationship between strengthening recycling rates and the EU's climate change targets. Promoting recycling within the EU will contribute to enhancing resistance to supply chain disruptions. However, he stated that forcibly retaining all recycled materials within the EU under regulations would be counterproductive, citing the ban on the export of used plastic waste, imposed without an impact assessment by the European Commission, as a "cautionary tale."