Climate Action

How transparency and value chain collaboration will drive aluminium decarbonization

Aluminium profiles in warehouse: Several initiatives are encouraging aluminium decarbonization, supplier and buyer side

Several initiatives are encouraging aluminium decarbonization, supplier and buyer side Image: Getty Images/iStockphoto

Miles Prosser
Secretary General, International Aluminium Institute
Jelena Aleksić
Industry Decarbonization, Metals Lead (Steel and Aluminium), FMC, World Economic Forum
This article is part of: Centre for Nature and Climate
  • The Aluminium Industry Greenhouse Gas Initiative promotes ambition and reporting commitments to track aluminium decarbonization progress.
  • Buyers committed to purchasing specific low-carbon aluminium volumes by 2030 also support the consistent use of emissions measurement methodologies and reporting.
  • Understanding and measuring different categories and sources of emissions reliably and transparently helps the aluminium sector engage the entire value chain more effectively.

The International Aluminium Institute (IAI), the longest-standing global association of aluminium producers, launched the Aluminium Industry Greenhouse Gas Initiative at 2023's UN Climate Conference (COP28) in Dubai.

As part of the initiative, the IAI commits to reporting global greenhouse gas emissions for the aluminium industry annually to track decarbonization.

The progress is assessed on a full life cycle of (cradle-to-gate) greenhouse gas emissions, including emissions generated directly by the company, emissions related to electricity generation and other indirect sources.

Long-term and interim emissions reduction targets and annual progress are reported for all IAI member companies based on publicly available information across China, Europe, India, Japan, the Middle East, North America, Russia, South America and Southeast Asia.

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Progress and commitments in aluminium decarbonization

Corporate reporting and disclosure are evaluated based on whether a company reports three types of emissions:

  • Scope 1: Emissions directly produced by the company.
  • Scope 2: Emissions from the electricity the company uses.
  • Scope 3: Emissions from other indirect sources, such as suppliers or customer activities.

This helps gauge how detailed and transparent the company’s reporting is.

About 80% of IAI members, primarily aluminium producers, have set long-term emission reduction targets for 2050 or 2060, with two-thirds establishing interim targets for 2024–2035. Meanwhile, 52% of aluminium producers have explicitly committed to the “net zero by 2050” goal, aligning with the global sector’s 1.5-degree decarbonization trajectory.

While industry leaders have made progress, further decarbonization is essential for aluminium to become a sustainable solution for growing upstream industries like transport, construction and consumer packaging, which are driving demand through 2050.

On the buyers’ end of the value chain, some of the most proactive players have joined the First Movers Coalition (FMC) and are building the largest global private sector demand signal for low-carbon aluminium.

First movers in decarbonizing aluminium

Members of the FMC Aluminium sector seek to purchase primary aluminium produced with less than 3 tonnes of CO2 equivalent per tonne by 2030 in mass volumes, representing at least 10% of their overall annual aluminium purchases.

Voluntary purchasing commitments made by FMC members are subject to the availability of technology, which may come at a premium cost. One way to energize the entire aluminium value chain to participate in cost sharing is to reinforce transparency in documenting decarbonization results.

The expected emission intensity to meet FMC commitments will be calculated using the sector-specific IAI’s Carbon Footprint Methodology, which considers all emissions cradle to gate. It includes emissions from metal production, upstream activities such as bauxite mining, alumina refining, anode production and ancillary materials and fuels.

The most ambitious technological pathways must be deployed for virgin metal to be produced with less than 3 tonnes of CO2 equivalent per tonne of aluminium, as measured by the carbon footprint methodology.

Leading analysis indicates that such ambitious decarbonization thresholds are most likely to be achieved with clean technologies for direct emission reductions, such as inert anodes, carbon capture and carbo-chlorination, among others, paired with low-carbon power for electrified/hydrogen-ready processes.

Committing to catalyze aluminium decarbonization

The new FMC commitment, publicly available and recently updated for clarity through an FMC-led biennial commitment review, reaffirmed FMC buyers’ commitment to deep sector decarbonization.

At the same time, however, the review process enabled FMC members to reflect on the evolving industrial ecosystem and to identify the alternative chain of custody models as likely interim measures necessary to support global decarbonization efforts.

FMC members showed their support for suppliers working to reduce emissions by agreeing to use controlled blending and site-level mass balance chain-of-custody models. These models ensure a clear physical connection to decarbonized production efforts and provide reliable system traceability.

Apart from allowing the use of controlled blending and site-level mass balance to meet the FMC aluminium commitment, other chain of custody models have not been considered appropriate and will not apply to the FMC commitments-related purchases due to insufficient credibility in making associated green claims and lack of traceability assurances.

The only exception is the use of the book-and-claim model for carbon accounting, which allows purchasing renewable electricity certificates and virtual power purchase agreements, following the Greenhouse Gas Protocol Scope 2 Guidance.

Moreover, FMC members confirmed they will not use carbon credits to offset emissions and will prioritize real change on the ground.

Bringing the entire value chain along

These developments make a case for the entire aluminium value chain and the sector’s broader ecosystem stakeholders, such as public regulators and financiers, among others, to support emerging suppliers’ decarbonization efforts worldwide.

Accurately measuring and promoting the green attributes of decarbonized aluminium products, backed by documented investments in significant emission reductions, is essential for attracting private and public investments. This underscores the critical role of suppliers’ Aluminium Greenhouse Gas and buyers’ FMC initiatives.

Rob van Riet, Interim Programme Head, Climate Action and First Movers Coalition, World Economic Forum, also contributed to this article.

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