Aluminium

Countries making important notable progress in decarbonising aluminium production include the following:  

• China is expected to expand their new Emissions Trading System (ETS) in 2023 or 2024 to cover industry, including aluminium. If sufficiently stringent, this could incentivise significant emissions reductions, as China remains by far the largest producer of alumina and primary aluminium (almost60% of global production in 2022).
• Sites in Australia and Brazil have made encouraging progress on a range of low-carbon options for alumina refining, with successful results from commercial installation of electric boilers, demonstrations of electrically powered mechanical vapour recompression, and feasibility studies on using hydrogen.
• Industrial initiatives in a range of countries are developing inert anodes and carbon capture to decarbonise primary aluminium production, including Elysis in Canada, Norsk Hydro in Norway, and a collaboration between TRIMET and Arctus Aluminium in the European Union.
  

Total direct emissions from the global aluminium sector have been steadily rising over the past decade, driven by increasing production. This is even as the emissions intensity of aluminium production has been moderately declining, by about 1.7% per year on average, driven largely by a declining energy intensity of alumina production. The average rate of decline was highest from 2014 to 2019, and has slowed considerably since then. The sector was directly responsible for almost 270 Mt of CO₂ emissions in 2022 (a 1.7% increase on 2021), and if indirect emissions from electricity consumption are included, that number jumps to around 1 Gt of CO₂.  

The core primary production steps of alumina refining, anode production and aluminium smelting are responsible for almost 85% of aluminium’s direct CO₂ emissions, the rest being from recycled production and semi-finishing processes. Direct emissions can be reduced by deploying near zero-emission technologies, and by increasing the share of recycled production from post-consumer scrap to reduce reliance on primary production.  

In the NZE Scenario, total direct emissions decline by about 18% by 2030 relative to today, to around 220 Mt CO₂. As production continues to increase moderately, there will be a need to accelerate reductions in the emissions intensity of production to a rate of nearly 4% per year on average. Since much of the global potential for reductions in alumina energy intensity has already been exploited, other measures will be needed to achieve this reduction.

Although total energy used in the aluminium sector has increased with production, the sector’s total energy intensity has decreased by about 15% since 2010. Global energy efficiency improvements in primary aluminium smelting have been modest in recent years, as a substantial portion of global production already reached close to best available technology levels over a decade ago. More considerable reductions in energy intensity have been achieved since 2010 for alumina refining. 

Alumina refining and recycled production both currently rely on fossil fuels. Fuel switching to alternatives, such as bioenergy, hydrogen or near zero-emission electricity will be important to get on track with the NZE Scenario, especially given that much of the potential for energy efficiency improvements has already been exploited over the past two decades.

After a brief pause in 2019, growth in aluminium production continued to be strong in 2020-2022 despite the coronavirus (Covid-19) pandemic, with an average annual growth of more than 3%. While lower than the average annual growth of 6% from 2010-2018, growth in recent years was higher than for other key industrial materials such as steel and cement. Global aluminium demand is likely to continue growing in response to the increase in global population and GDP given that is is an important input to higher-value demand segments (e.g. vehicles and digital devices), and due to aluminium’s use in several technologies important to a net zero economy.

Adopting material efficiency measures, such as through reducing scrap generation during fabrication and manufacturing, direct reuse of scrap, and designing products with material efficiency and recycling in mind, can help curb demand growth. In the Net Zero Scenario, a strong push on material efficiency strategies result in aluminium demand growing at a considerably slower rate to 2030 compared to the past decade, despite increases in some demand segments related to low emission technology deployment.

Presently, nearly all aluminium primary smelting uses carbon anodes that release CO₂ as a part of the electrolysis process. These anodes can be replaced by inert anodes made from different materials that do not release CO₂ during electrolysis. Commercialisation and early deployment of this technology is critical in the next few years to get on track with the NZE Scenario, which sees inert anodes used for around 7% of primary production by 2030.  

Emissions can be further reduced by increasing the proportion of recycled production, which is much less emissions-intensive than primary production. After remaining fairly constant for many years at around 32-33%, the share of secondary production (excluding internal scrap production) has seen modest increases in the past few years, reaching about 36% in 2022 according to estimates from the International Aluminium Institute (IAI) (about 20% of production was from end-of-life scrap).  

Global collection rates for aluminium are currently over 95% for manufacturing scrap and around 75% for end-of-life scrap. While high, these can be increased by improving recycling and sorting methods, and through extended producer responsibility schemes. Maximising collection of end-of-life scrap is particularly important in the NZE Scenario, as material efficiency strategies reduce manufacturing scrap. Even if collection rates are maximised, scrap availability will remain insufficient to meet demand purely with recycled production. In the NZE Scenario, secondary production expands to account for over 40% of production by 2030.

Addressing process emissions from aluminium production requires technological innovation, and the groundwork needs to be laid well before 2030 to be ready for the next investment cycle. Encouragingly, two key initiatives have made considerable progress in the critical area of using inert anodes for aluminium smelting. RUSAL’s Krasnoyarsk plant in Russia produced primary aluminium at industrial scale using inert anodes for the first time in April 2021 (1 tonne of aluminium per day per cell), while Elysis, a joint venture between Alcoa and Rio Tinto in Quebec, succeeded in doing so in November 2021. TRIMET and Arctus Aluminium are also investigating this in Europe. 

Another method for reducing aluminium smelting emissions is through carbon capture and storage (CCS), although this is difficult to accomplish for aluminium because of its low concentrations of CO₂ (around 1%). Nevertheless, two firms – Aluminium Dunkerque, and Norsk Hydro – have recently announced that they are exploring options to use CCS for aluminium, with Norsk Hydro setting a goal of using CCS in an industrial-scale demonstration by 2030.  

For alumina refining, in Brazil, the Alunorte refinery installed a 60 MW electric boiler in 2022 to provide a portion of the plant’s steam demand, the first known use of an electric boiler for alumina globally, and is looking at installing another two, while a similar option is also being demonstrated in the Republic of Ireland. Alcoa is piloting electric calcination to displace fossil fuels in Australian alumina refining, and following a successful feasibility study is now constructing a facility using mechanical vapour recompression (a type of heat pump) for steam generation beginning operation in 2024. Additionally, in 2022 Rio Tinto published a feasibility study on the use of hydrogen to generate the heat required for alumina refining at its refinery in Yarwun, Australia. Electrical and thermal energy storage might also play a role, enabling the industry to use variable renewables as energy sources.  

In spite of these encouraging developments, more investment into R&D and commercialisation is required, as early deployment of  inert anodes and near zero-emission alumina refining before 2030 will be necessary to get on track with the NZE Scenario.

Increasing the proportion of aluminium production from low-emission electricity is a top priority, and represents the biggest source of potential emission reduction in the short term. If the indirect emissions from power generation are included, they accounted for about 70% of total (direct and indirect) aluminium production CO₂ emissions in 2022. Further, since about 55% of the power consumed by the industry globally is self-generated rather than purchased from the grid, many of these emissions are within the control of the industry itself. The share of self-generation is particularly high in Asia (about 65% in China and 95% in the rest of Asia). In contrast, in Europe, Africa and Oceania most power for aluminium production is purchased.  

Looking at the type of energy powering aluminium production, hydropower and coal are over-represented by about 15 and 20 percentage points respectively relative to the global average power grid. Since 2010, the share of coal has increased and the share of hydropower has decreased, largely due to China’s growing share of aluminium production, where coal supplies the electricity for over 80% of production. In Europe, North America and South America, hydropower supplies more than 80% of production.  

In the NZE Scenario, the emissions intensity of the total power mix declines by roughly 60% from today’s level by 2030. The aluminium industry should aim to reduce the intensity of its power supply by at least this much, including by reducing reliance on unabated coal-generated power.  

This will require a combination of investments in self-generated near zero-emission generation or procurement of low-emission electricity from the grid. Since aluminium producers are large electricity consumers, they can provide useful demand response services to electricity grids that are incorporating an increasing share of variable renewables. For example, a retrofit-ready technology – the EnPot system – has recently been developed that allows smelters to vary their energy usage by up to 30% to better match electricity supply and price fluctuations, taking advantage of variable renewable electricity, and supporting further renewable penetration in electricity grids.

Many countries have introduced policies addressing industrial emissions as a whole – these are discussed at further length on the IEA's tracking page for industry. Relevant policies specifically for aluminium include the following:  

• China has announced that it will be including industrial facilities in its ETS from 2023 or 2024. Further, as part of its Pollution Reduction and Carbon Reduction Synergies Implementation Plan, the output of recycled aluminium will reach 11.5 Mt by 2025, and the proportion of renewable energy used in electrolytic aluminium will increase to more than 30% in 2030.  
• The European Union, in addition to its ETS, has agreed a carbon border adjustment mechanism that will include aluminium, with the permanent system involving certificate purchases beginning in January 2026 (transitional phase involving emissions reporting only begins in October 2023). These policies will apply tariffs to imported emissions-intensive goods from jurisdictions with weak or no emissions policy, in an effort to limit carbon leakage (loss of competitiveness from emissions policy due to cheaper, emissions-intensive imports) and incentivise stronger emissions measures in other countries. 
• France announced in 2022 its industrial decarbonisation roadmap to 2030, which includes a plan to invest EUR 5.6 billion in decarbonisation initiatives for domestic industries, and released in 2021 a decarbonisation roadmap for mining and metallurgy, containing specific provisions for aluminium.  
• In North America, Canada’s carbon pricing system and innovation funding for inert anode technology through Elysis continue to push industry towards decarbonisation. In the United States, grant funding for industrial decarbonisation and tax credit opportunities are available for aluminium producers through the Inflation Reduction Act and Bipartisan Infrastructure Law. 
  

Policy makers are increasingly coordinating to address the challenges facing the decarbonisation of the aluminium industry, such as carbon leakage. In 2021 and 2022, the United States made three separate statements on steel and aluminium with the European Union, the United Kingdom, and Japan. Not all the details of these agreements have been publicly disclosed, but the announcements make reference to taking action to reduce the carbon content of steel and aluminium, hinting at possible policy convergence in these sectors. Further progress on the Global Arrangement on Sustainable Steel and Aluminium between the United States and the European Union is anticipated by October 2023. 

The G7 Climate Club, a forum for international collaboration on industrial decarbonisation, was also announced in 2022, and efforts are underway towards its establishment.

Producers are engaging with multi-stakeholder initiatives across the value chain and focusing on:  

• Establishing the sector baseline and potential technology pathways: in 2021, using industry data, analysis and modelling, the International Aluminium Institute (IAI) established different pathways aligned with the goals of the Paris Agreement.  
• Developing demand for low-carbon products and investment: 2022 saw the US-led First Movers Coalition, a platform for businesses and governments to leverage their purchasing power to decarbonise industry, launch its initiative for decarbonising aluminium. This looks to commit major consumers or producers, including Apple, Ford, Novelis, Volvo Group and Trafigura, to produce/procure low-carbon aluminium. The latter launched a financing platform of up to USD 500 million for clean aluminium financing.  
• Identifying policy and financial levers: the Mission Possible Partnership has launched an Aluminium Initiative and has developed a sector transition strategy in collaboration with the IAI to demonstrate the feasibility of a net zero aluminium sector, unlocking investment and other support. 
• Aligning corporate performance with net zero: the Science Based Targets initiative launched a project for aluminium. Currently in its first phase, Assessing low-Carbon Transition has produced a methodology for low-carbon aluminium, and the Aluminium Stewardship Initiative has released its latest performance standard to track performance against a 1.5 °C aligned scenario. 
  

• Marlen Bertram, International Aluminium Institute, Reviewer 
• Sandro Starita, European Aluminium, Reviewer 
• Paul Voss, European Aluminium, Reviewer 
• Charles Johnson, The Aluminium Association, Reviewer 
• Jean Simard, The Aluminium Association of Canada, Reviewer 
• Yasushi Noto, Japan Aluminium Association, Reviewer 
• Karin Dahlman, Alcoa, Reviewer