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The London Metal Exchange (LME) today announced the launch of its consultation on the proposed integration of the EU Carbon Border Adjustment Mechanism (CBAM) requirements into the LME rules in order to support the aluminium market and value chain on implementing this pivotal environmental policy. In addition, the LME has issued a discussion paper, which seeks to further develop the LME’s existing sustainability agenda, seeking views on proposals to drive forward initiatives that underpin the global transition to a sustainable economy. 

Georgina Hallett, LME Chief Sustainability Officer, said: “Sustainability is increasingly at the forefront of our industry’s agenda, with the significance and role that it plays growing substantially over the last five years. With the EU’s policy change coming into effect, our proposal is designed to support the market with CBAM compliance – providing enhanced access and procedural efficiencies for the whole value chain – and pave the way for the integration of further regional policy changes that are expected to follow. 

“Our discussion paper, which seeks feedback on a range of topics related to the broader sustainability landscape, builds on the foundations put in place following the implementation of our 2020 discussion paper initiatives. The LME is proud of the steps it has taken to progress responsible sourcing standards within its market, and is committed to maintaining its leadership in this evolving landscape by supporting the development of new trends in our industry and continuing to build transparency around and access to sustainable metal.”

CBAM consultation 
The LME proposes to introduce new requirements from March 2025 for producers of all LME-listed aluminium brands (including primary aluminium, aluminium alloy and NASAAC) to upload verified emissions data to the LME’s digital credentials register, LMEpassport, which will assist them in complying with the CBAM regulation. This will mean that metal owners taking delivery of any LME-listed aluminium brand through the settlement process will be increasingly confident that, regardless of where it has been produced, they will have or will be able to easily source the necessary information to import that metal into the EU should they so wish. 

Embedding CBAM-relevant aluminium emissions reporting into LMEpassport will help lessen the administrative burden for producers, support the flow of information across the value chain, and help reduce friction at the EU border for LME-listed aluminium. It will equip all market participants, including traders and investors, with essential data to make informed decisions, supporting the integrity of the metals trading ecosystem.

Sustainability discussion paper
The LME’s sustainability discussion paper explores areas of development such as sustainability-related pricing, particularly in relation to low carbon aluminium, and potential further services to assist with the CBAM regulation, including hedging tools to manage carbon pricing. The paper also explores the potential expansion of LMEpassport, the advancement of supply chain traceability, opportunities related to Environmental Product Declarations (EPDs) and the enhancement of processes, standards and measurements in the circular economy. 

All of these potential development areas build on the LME’s progress to date, first outlined in its 2020 Sustainability Discussion Paper, which includes:

  • Implementation of responsible sourcing requirements for all LME-listed brands, with close to 400 producer brands now adhering to international standards for human rights, governance, occupational health and safety and environmental management.
  • Introduction of additional scrap contracts, demonstrating strong growth and market response.
  • Launch and rapid growth of LMEpassport, showcasing producers’ sustainability credentials and certifications.

The CBAM consultation and sustainability discussion paper feedback periods are both open for comments until 14 June 2024, 17.00 (BST), and the LME encourages feedback from all stakeholders from the industry, market and civil society. 

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Notes to editors

  • The consultation and discussion papers can be accessed here
  • The LME’s 2020 sustainability discussion paper and related resources can be found here
  • The Carbon Border Adjustment Mechanism (CBAM) is an EU policy, introduced as part of its “European Green Deal” in 2020, which aims to mitigate carbon leakage by imposing a carbon-related cost on certain carbon-intensive goods imported into the EU (including aluminium, cement, iron and steel, fertilisers, hydrogen, and electricity). The CBAM regulation is designed to ensure that imported goods pay a price for their carbon emissions that is comparable to the price paid by EU domestic producers under the EU’s Emission Trading System (ETS), thereby discouraging the relocation of production to countries with less stringent environmental policies.
 
 

Contact us

For further information or to speak to an LME spokesperson, please contact:

Miriam Heywood
miriam.heywood@lme.com

Andrea Blumire
andrea.blumire@lme.com