2025 Budget implications for UK aluminium

The UK’s 2025 Autumn Budget has delivered a mix of opportunities and challenges for the UK metals industry. For the aluminium manufacturing and processing community, several announcements could have a significant impact, the Aluminium Federation (ALFED) has warned.

Below is a summary of the most relevant developments, and what ALFED encourages anyone in the industry to think about next.

What’s new (and what to watch)

• CBAM indirect emissions deferred: The government confirmed that indirect emissions (eg, electricity usage) will not be included under the UK’s Carbon Border Adjustment Mechanism (CBAM) when it comes into force in 2027. Instead, these will be considered from 2029 at the earliest. This delay reflects the need for continued support for energy-intensive industries, and offers important breathing space for those heavily reliant on electricity.

• Technical revisions to CBAM framework: Several crucial changes were made to CBAM’s structure. These include sector-average emissions-based free-allowance calculations, recognition of carbon costs already paid under other CBAM regimes, and exemptions for UK-produced precursor goods in complex imports to avoid double carbon pricing. For businesses that refine, treat or process aluminium, this reduces risks of overburdening and double-charging under CBAM.

• Energy & competitiveness signals – But help is still two years away: The Budget confirms the Government’s plan to introduce the British Industrial Competitiveness Scheme (BICS), which aims to cut electricity costs for manufacturers. However, support under BICS is not scheduled to begin until 2027, leaving many firms facing uncompetitive energy costs in the near term. This has already raised concern within the manufacturing community. More details to be shared soon – anyone part of the Supercharger scheme will not be eligible for BICS as well.
• Wider business environment still challenging: Despite some supportive measures, the overall context remains difficult. The 2025 Budget has generated fresh warning from industry bodies such as Make UK, which argues that ongoing cost pressures, including rising energy and labour costs, risk further deindustrialisation if not addressed urgently.

Nadine Blossom, ALFED CEO, commented: “The Budget acknowledges many of the pressures facing the aluminium and metals sectors, but support such as BICS needs to come sooner, not in 2027 – some businesses will not have that long to wait. We must now work together to ensure the relief arrives in time to protect UK capacity, investment and jobs.”

ALFED is already engaging with Government and industry partners on the following:

• Coordinating a sector-wide response to the BICS consultation, backed by members.
• Through the UK Aluminium Alliance, ALFED is building a robust evidence base to support energy, scrap, and downstream processing as critical to the UK’s industrial strategy.
• ALFED will continue to monitor CBAM implementation closely and ensure that aluminium sector interests are represented in both legislation and compliance guidance.

ALFED has encouraged all its members to:

• Review their energy use and cost forecasts in light of delayed BICS relief.
• Prepare for CBAM compliance, but note the changes reduce some of the initial burden (e.g., on imports, precursor goods, free allowances).
• Share data with ALFED where possible, particularly on energy usage and scrap flows, to support our policy work and consultation responses.