Introduction
FACE welcomes the document produced by the Commission, which highlights the characteristics, potential, and broad-ranging challenges of the aluminium system in Europe, such as energy , the circular economy, environmental issues and the possible selection of metal applications based on energy commitment balance.
We believe that it is useful to reaffirm that FACE has always been at the forefront of promoting the competitiveness and sustainability of the whole aluminium system in the EU, while striving to attract attention and to foster action on the challenges of independent aluminium transformer SMEs, who form the vast majority of the EU aluminium value-chain. The central issue and fundamental challenge of the manufacturing industry we represent is fierce global competition.
For 25 years, we have been fighting for the elimination of the import tariffs on raw aluminium, which are an outdated, economically absurd and a damaging reality. This was our first priority, and for decades we have drawn attention to this issue, which is a striking testimony of the competitive disadvantages suffered by the downstream aluminium industry in the EU.
The Commission’s Clean Industrial Deal addresses most of the points that we at FACE have repeatedly emphasised over the years, including access to raw materials and competitiveness. These, to us, are perfectly exemplified in the ask to zero import tariffs on raw aluminium, thus making it the mother of all objectives. Other than the tangible loss of competitiveness caused by tariffs in general, artificially increasing the cost of raw materials completely distorts the concept of competitiveness in our strategic industry specifically. It highlights a total lack of attention to the needs of SMEs and to where we have a potential for growth in our European aluminium industry.
Failing to zero import tariffs on raw aluminium also signals an unwillingness to dismantle the damaging legacies of a past built on the interests of the few. The past 20 years have clearly demonstrated that keeping import tariffs on raw materials was a huge mistake. The major unwrought aluminium producers, who pocketed billions by selling all quantities of raw light metal in the EU at a duty paid level, irrespective of the origin, and therefore lobbied to maintain this hidden subsidy, have shut down 65% of the EU’s primary aluminium production capacities. This while the entire downstream sector suffered from artificial extra costs for their material in the range of 24 billion euros during the same period, which killed many companies and prevented our industry to develop.
As a result, the continued growth of the lucrative European aluminium demand market has been offered on a silver plate to our foreign competitors. The tariff status quo on raw aluminium has destroyed our strategic autonomy in the aluminium industry, contributing to having today an 87%+ import dependency for primary aluminium.
The status quo on raw aluminium tariffs also went against the EU’s industrial policy by constantly eroding the competitiveness of the only segment of the value-chain that had a potential for growth, the downstream SMEs; it went against the EU’s competition policy by favouring oligopolistic and coordinated price increases and intra-EU distortions ; it went against the Green Deal by weakening low carbon EU manufacturing and facilitating EU market penetration of foreign higher carbon products; it went against the EU’s trade policy by allowing for big companies and factories outside the EU to cash billions of extra profits without any reciprocal framework, and it went against the EU’s digital and industry 4.0 policy because the 24+ billion euros that the EU aluminium downstream sector had to overpay in the past 25 years for its raw material as the effect of the 3-4-6% import tariff structure on unwrought aluminium were amounts of money that we could have been able to invest in innovation and in digitalisation, instead of unwillingly and unnecessarily giving them away.
Despite these challenges, the EU’s downstream aluminium industry has managed to grow modestly, preserving much of the technological knowledge accumulated in the second half of the last century, but the EU has been constantly losing ground in the global market.
Today more than ever, the sector needs incentives for growth rather than unjustified and unjustifiable obstacles.
This is why we oppose the irresponsibility of an incomprehensible tariff on a raw material that we no longer produce and must now import for over 87% of our needs.
The raw aluminium tariff is nothing more than a senseless policy that increases the cost of EU semi-finished and finished products compared to international competitors, among other harmful consequences.
The maintaining of the 3-4-6% import tariff structure directly contradicts the EU’s treaty-based special responsibility to avoid disproportionate damage, to support SMEs and to help secure sufficient and stable access to competitive supplies of raw materials, even more so since the Critical Raw Materials Act and the inclusion of aluminium in the list of strategic materials.
Another key point—one that has been a long-standing priority in FACE’s advocacy—is the need for our energy-intensive industry to secure raw materials with the lowest possible CO₂ footprint, first, because this is what clients, end users and consumers want, and we can get out of contracts and out of business if we don’t reach low carbon requirements; and secondly because supplies of primary aluminium with the lowest carbon footprint are essential for the key contribution of the aluminium industry to EU’s decarbonisation efforts and net zero objective.
From the very beginning, we have supported and encouraged the recovery and recycling of both new and old aluminium scrap. We have also historically selected as associate members some of the world’s most qualified producers of high-quality, low-carbon raw aluminium, steering downstream industry choices in this direction.
Building on these principles, we consider it essential, given the current unprecedented insufficient and low level of domestic primary aluminium production, to carefully select suppliers for the EU, prioritising and safeguarding those with the lowest carbon footprint and the best environmental performance, and they are not many worldwide.
Moreover, considering the expected global increase in demand for lightweight metal—including in Europe—we believe it is crucial to identify the most appropriate future energy sources to support a viable plan for rebuilding aluminium smelting capacity for primary production.
Overall, FACE and its members welcome the European Commission’s Clean Industrial Deal as a necessary and ambitious plan to support the competitiveness and resilience of European manufacturing while driving decarbonisation.
However, we believe key concerns must be addressed to ensure that the plan is both effective and equitable across sectors.
FACE’s comments presented in this paper reflect consolidated feedback from industry representatives.
1. Lower Energy Costs
Affordable energy is central to maintaining European industry’s competitiveness. Industry players unanimously stress the importance of urgent and effective policies to reduce energy and gas costs, as high prices continue to hinder industrial productivity:
- “Without serious policies on energy and gas costs, little can be achieved”. The competitiveness gap with developing countries continues to widen.
- “Harmonization of the tax treatment of energy sources should also be included.” Currently, distortions arise from different national policies. Structural incentives should be put in place to promote energy sources with low CO₂ emissions, such as solar and new-generation nuclear power. Additionally, as the electrolytic process is highly energy consuming and is only possible in those countries where electricity is available at low cost and therefore generally in non-EU countries, this question is closely linked with the access to raw materials.
- “Considering the expected global increase in demand for lightweight metal—including in Europe—we believe it is crucial to identify the most appropriate future energy sources to support a viable plan for rebuilding aluminium smelting capacity for primary production”
2. Boosting Demand for Clean Products
The proposed aims to increase demand for EU-made clean products are welcome. Industry stakeholders recognize the importance of demand stimulation but raise concerns about implementation.
- The introduction of sustainability, resilience, and European preference criteria in public procurement could lead to higher costs if EU-made green products are more expensive than alternatives, potentially impacting the competitiveness of European industries. Furthermore, FACE highlights the competitive disadvantage faced by EU producers due to import tariffs on raw aluminium. If the focus on EU-made products exacerbates this cost disadvantage, it could hinder rather than help the competitiveness of downstream SMEs.
- The aluminium sector has long advocated for policies to support its competitiveness. Import tariffs on raw aluminium are a direct obstacle to growth, artificially inflating production costs and distorting competition. Eliminating these tariffs would provide immediate relief and support intra EU demand for clean aluminium products.
- New sustainability and resilience criteria in procurement, along with the potential need for carbon intensity labelling, could create additional administrative complexities and costs that SMEs may struggle to meet, potentially excluding them from these demand-boosting measures.
- The proposed simplification and harmonisation of carbon accounting methodologies is welcome.
3. Financing the Clean Transition
The Clean Industrial Deal proposes mobilizing over €100 billion to support clean manufacturing, including state aid and financing instruments. Industry players highlight challenges in accessing funding and the need for more effective support mechanisms.
- A policy of incentives for the technological renewal of production plants should be integrated into the Clean Industrial Deal. Many European manufacturers still operate with outdated machinery, increasing costs and reducing competitiveness. These targeted incentives for plant and machinery upgrades would improve energy efficiency and reduce emissions.
- The incentives under ‘Industry 4.0’ were beneficial but insufficient, while ‘Industry 5.0’ measures are difficult to interpret and apply. The lack of financing options for start-ups is a major issue—there are no subsidized rates for new industrial initiatives investing in low-carbon production. Facilitating the access to affordable financing for industrial start-ups that focus on energy-efficient and low-carbon technologies would be an important step forward.
4. Circularity and Access to Materials
Ensuring access to critical raw materials is vital for industrial resilience and sustainability. Industry players stress the need for policies that support recycling and reduce dependence on unreliable suppliers. We delve further into this in contribution 5 of the annex.
- The European aluminium industry must secure raw materials with the lowest possible CO₂ Recycling and secondary aluminium production should be prioritized. At the same time, suppliers should be carefully selected to prioritize those with strong environmental performance.
- Foundries face high energy costs and intense competition from countries with cheap electricity. Bureaucratic and spatial constraints in Europe make it difficult to modernize facilities and build new, efficient plants. Incentives should be long-term and focused on fostering a true circular economy.
- It is our view that Europe should prioritise partnerships and trade agreements with suppliers offering the most environmentally friendly raw materials. We propose a realistic assessment of trade measures, to ensure access and diversification.
5. Acting on a Global Scale
The Clean Industrial Deal emphasizes strengthening trade and investment partnerships while protecting European industries from unfair competition. Stakeholders express concerns about global competitiveness and market distortions.
- The EU’s aluminium industry has survived despite outdated policies like import tariffs on unwrought metal. However, the sector now requires strong incentives rather than artificial obstacles. Trade policies must be aligned with industrial growth strategies.
- The regulations on electric vehicles, as currently designed, risk handing a massive advantage to China. We must rethink these policies to avoid jeopardizing the European automotive industry.
- “The CBAM system, as currently designed, is absolutely counterproductive”. Instead of protecting European industries, it places additional burdens that further increase costs. Several stakeholders mentioned how The Carbon Border Adjustment Mechanism (CBAM) requires urgent revision, as its current design risks undermining European industry rather than protecting it.
6. Ensuring Access to a Skilled Workforce
The transformation of industry requires skilled talent. Industry actors recognize the importance of workforce investment but highlight labour cost concerns.
- High labour costs due to tax burdens (the so-called ‘tax wedge’) significantly impact industrial competitiveness. The cost to employers is nearly double the net salary for employees. Reducing these costs should be part of any long-term industrial strategy.
- Several stakeholders think the Clean Industrial Deal should ensure that training and upskilling efforts are aligned with industry needs, focusing on the skills required to operate advanced manufacturing technologies and low-carbon production methods.
Conclusion
The industry players surveyed support the Clean Industrial Deal’s objectives. They see it as a necessary step towards a more sustainable and competitive European industry.
However, they stress that to succeed, it must address energy costs, support industrial modernisation, remove regulatory and trade barriers, and ensure that European manufacturers remain competitive in global markets. Without these adjustments, there is a risk that the burden of decarbonisation will be passed on to businesses and consumers in an unsustainable way, ultimately weakening Europe’s industrial base.
We hope policymakers will consider these perspectives to make the Clean Industrial Deal a truly effective instrument for European industry and prosperity.
Download the PDF, which includes the Annex, here.