Energy Transition

3 steps the aluminium industry can take to accelerate the path to net zero

Conveyor with beer cans on the belt: The demand for aluminium is rising with net zero goals.

The demand for aluminium is rising with net zero goals. Image: Getty Images/iStockphoto

Charles Pacini
Manager, Transforming Industrial Ecosystems, Industry Clusters, World Economic Forum
Jason Martins
Associate, Mission Possible Partnership
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This article is part of: Centre for Energy and Materials
  • The aluminium industry can take three key pathways to reach net zero by 2050: low-carbon powered production, technologies addressing direct emissions, recycling and circularity processes.
  • With 30 low-carbon facilities to be built or retrofitted by the end of the decade, accelerating the final investment decision in the next 24 months is critical.
  • Reaching net zero will require an estimated $1 trillion investment in primary production, particularly in low-carbon power use and smelters.

The strong demand for aluminium continues, which is unsurprising given its importance in 21st-century life – from drink cans to smartphones. Its lightweight properties make it invaluable to the aviation and car production industries as well.

Traditional aluminium production is energy intensive and high in carbon emissions, contributing 2% to annual global greenhouse gas emissions. Now, the industry is grappling with how to meet its net zero targets by 2050.

According to the International Aluminium Institute’s decarbonization scenario, there are three key pathways to net zero:

  • Increasing low-carbon power in the production process.
  • Using pioneering technologies that address direct emissions from production.
  • Maximizing the use of recycled aluminium and other circularity measures.

Widespread collaboration in the context of industrial clusters will be essential for aluminium to achieve its targets.

The Mission Possible Partnership’s (MPP) Global Projects Tracker highlights the state of play and details industry leaders' and public stakeholders' progress towards this transition. It maps investment decisions and operations of net-zero-aligned projects globally throughout the aluminium sector, revealing a growing pipeline of projects.

The Mission Possible Partnership's Global Tracker.
The Mission Possible Partnership's Global Tracker. Image: Mission Possible Partnership

Out of the 70 low-carbon aluminium production facilities targeted by 2030 globally, 40 will need to be built or retrofitted in the next six years. Compared with the start of 2023, three times more projects have been announced (now totalling 13), and twice as many have reached final investment decisions – from two to five. However, accelerating strategies for unlocking investment and increasing development is essential.

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Step 1 – Recognizing what needs to change

The industry must increase the use of secondary (recycled) aluminium and either eliminate, capture and use or offset emissions from all steps of primary aluminium production – e.g. mining, refining and smelting – and electricity-related and all other emissions from transport, waste, raw materials etc., to reach net zero in aluminium production.

The first major step towards net zero is recognizing that the aluminium in production today has to reduce its emissions intensity to align with net zero goals. Aluminium producers currently market low carbon footprint primary aluminium of approximately 4 tonnes of carbon dioxide (CO2). It is unclear if all producers are reporting this value on a like-for-like basis and including all emissions from cradle-to-gate despite available industry guidance on how to tackle this.

Currently, the lowest possible carbon footprint for primary aluminium can be achieved by smelting using 100% of electricity from hydropower or another renewable or low-carbon energy source.

The second major step is to increase the levels of research and development (R&D). Industry experts and investors must collaborate and accelerate the piloting of new technologies tackling direct emissions, such as the development of carbon-free anodes or carbon capture, utilization and storage.

While many of these projects are still in the research phase, some have already reached final investment decisions and are on track to become commercially available and scalable by 2030. The speed at which industry players can roll out these projects will be critical to their success.

What is clear is that the path to net zero requires a holistic approach, focusing on both long-term strategies and short-term, immediate actions.

Step 2 – Identifying solutions

In 2022, total GHG emissions from aluminium production didn’t increase in line with rising production. This variance marked the first time there was no correlation and suggested that moves to reduce the intensity of emissions had an offsetting effect.

The measures that had the most profound effect were the transition to low-carbon power for smelting aluminium, with China adopting hydropower and Australia and the Middle East using other renewable energy sources. This impact underscores the importance of securing low-carbon electricity, which has contributed to reducing the sector’s overall emissions by more than one-third.

Increased recycling also played – and will continue to do so – a significant role.

Regions like North America and Scandinavia already benefit from existing renewable energy infrastructure. One hundred percent of their smelters are connected to hydropower, renewables or low-carbon grids or have power purchase agreements in place.

Others do not have the same natural resources available locally and are exploring different means to reduce their carbon footprint. Some countries are connecting to the grid to leverage and contribute to the growth of renewables. In the United Arab Emirates (UAE), Emirates Global Aluminium (EGA) is importing solar power from the grid to make the world’s first solar aluminium, which the company calls CelestiAL.

"CelestiAL accounts for a small proportion of EGA’s total metal production but there is considerable scope to increase this share. The massive but steady power demand from aluminium smelters facilitates the development of renewables on electricity grids, in alignment with UAE’s ambitions to triple renewable power generation capacity by 2030 and further develop nuclear generation," says Salman Abdulla, executive vice president of ESG & Sustainability at Emirates Global Aluminium.

Another strategy is to combine renewables with the energy mix, retrofit aluminium production plants to accommodate the increased use of electricity and introduce electric boilers for the alumina refineries to accommodate the increased use of electricity.

Hydro’s Alunorte alumina refinery in Barcarena, Brazil, highlights the steps that can be achieved in practice. "The company is investing in converting its equipment from oil and coal to a mix of natural gas, renewables and biomass. That will reduce the refinery’s annual CO2 emissions by 1.4 million tonnes, setting it on course to be fully decarbonized (except for the calcination process) by 2030," emphasises John Thuestad, executive vice president for Bauxite & Alumina, Norsk Hydro.

A second example is the Navarra plant in Spain, where Hydro used green hydrogen to produce the first batch of recycled aluminium – an essential contributor to the short-term pathways towards low-carbon aluminium by 2030.

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Step 3 – Generating a market

Current estimates indicate that the aluminium industry will need to invest $1 trillion to reach net zero, much of this in building capacity for low-carbon power use and smelters. Green premiums for low-carbon aluminium will play a significant role in amortizing this investment but there are a series of challenges ahead.

The global aluminium market is still working to find common ground on issues ranging from carbon border adjustment mechanisms to better quantification systems for low-carbon aluminium, taking into account all emissions. There is also the continued tension created by a dynamic in which customers demand greener materials but are unwilling to pay large premiums for them.

Existing premiums in the market for primary aluminium are deemed low and likely insufficient to incentivize some of the major upstream decarbonization investments that are needed. There are some aluminium production companies, however, making strategic decisions to invest in low-carbon offerings and technologies, anticipating that in the near future, demand and premiums will increase.

This trajectory underscores the vital importance of collaboration between supply and demand. In May 2022, the First Movers Coalition announced it is launching the Aluminium Sector to combine purchasing commitments from its members for low-carbon aluminium –specifically, aluminium produced with around a fifth of the GHG emissions intensity of the world average.

Additionally, the First Suppliers Hub provides a place where demand and supply of low-carbon products can meet to create the off-take agreements required to give impetus to the market.

This calls for a collaboration ecosystem across sectors and geographies to foster innovation, scale up existing technologies and pioneer new ones for a successful transition of the aluminium sector.

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