Not on track
Authors and contributors
IEA (2022), Aluminium, IEA, Paris https://www.iea.org/reports/aluminium, License: CC BY 4.0
About this report
Aluminium is both an important input to a number of technologies critical to the energy transition, and a significant source of CO2, responsible for about 3% of the world’s 9.4 Gt of direct industrial CO2 emissions in 2021. In the past few years, the average emissions intensity of aluminium production has seen only a slight downward trend. However, in the Net Zero Emissions by 2050 Scenario it declines by about 3% per year to 2030. In order to get on track, the aluminium sector needs to develop and deploy new technologies to reduce emissions from primary and recycled production, while the industry and its customers need to increase scrap collection, sorting and recycling.
Direct emissions from the global aluminium sector have been steadily rising over the past decade, driven by increasing production. 2019 saw emissions fall for the first time in a decade as a result of modest improvements in emissions-intensity alongside production levelling off, but this trend has since reversed. The sector was directly responsible for 275 Mt of CO2 emissions in 2021 (a 2% increase on the previous year) and if indirect emissions from electricity consumption are included, that number jumps to around 1.1 Gt of CO2. The overall average direct CO2 intensity of aluminium has seen only a slight decline over the past few years. In contrast, the Net Zero Scenario sees emissions intensity decline by about 3.5% annually to 2030. Aluminium emissions are therefore not on track.
Alumina refining and aluminium smelting are responsible for over 90% of aluminium production’s direct CO2 emissions, the rest being from recycled production, anode production and casting. Direct emissions can be reduced by deploying near zero-emission technologies for refining and smelting, and by increasing the share of recycled production from post-consumer scrap to reduce reliance on these processes.
Although total energy used in the aluminium sector has increased with production, the energy intensity of aluminium production since 2000 has declined significantly. China has largely driven this trend as it is responsible for around half of global production. It has been steadily deploying the best available aluminium production technology, going from one of the most energy-intensive aluminium producers to one of the least. With China’s potential for energy intensity improvements essentially fully exploited, global energy efficiency in primary production has been modest in recent years.
Alumina refining and recycled production are both processes that currently rely on fossil fuels. Fuel switching to alternatives, such as bioenergy and hydrogen for high-temperature processes, or near zero-emission electricity for lower-temperature heat processes, will be important to get on track with the Net Zero Scenario.
Global aluminium production grew at a sluggish pace in 2019 and 2020, in contrast to average annual growth of 6% in 2010-2018. 2021 saw production growth at a rate close to 4%, considerably higher than the previous two years when it was nearly flat. Global demand is likely to continue growing in response to increasing global population and GDP, and the increased use of aluminium as an input for several technologies important to the transition to a net zero economy.
Adopting material efficiency measures can help curb demand growth, however. Examples include reducing scrap generation during fabrication and manufacturing, direct reuse of scrap, and designing products with recycling in mind. Demand growth in the Net Zero Scenario slows to a rate of less than 1% per year to 2030.
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 that release oxygen as they decay. Commercialisation and early deployment of this technology is critical in the next few years to get on track with the Net Zero Scenario, which sees inert anodes used for just under 10% of primary production by 2030.
Emissions can be further reduced by increasing the proportion of recycled production, as this is much less energy-intensive than primary production. The share of secondary production has remained fairly constant at 31-33% (excluding internal scrap production) for most of the past two decades, but has recently seen modest increases – in 2021 the share was 34% (20% was from end-of-life scrap). Underlying this global trend is an increasing share of secondary production in many regions of the world, offset by China. There, primary production has surged and secondary production has lagged as the result of rapid growth, a high export rate leaving less material to be recycled, and slower development of the recycling industry.
Global collection rates for aluminium are currently over 95% for manufacturing scrap and just over 70% for end-of-life scrap. While these collection rates are quite high, there is potential to improve end-of-life scrap collection. This can be facilitated by improving recycling channels and sorting methods, by better connecting participants along supply chains to help ensure that end-of-life scrap is channelled back to aluminium producers, and through extended producer responsibility schemes to involve product manufacturers in post-sale life cycle management. Maximising the collection of end-of-life scrap is particularly important in the Net Zero Scenario, as material efficiency strategies reduce the generation of manufacturing scrap. Nevertheless, primary production will still remain important into the future, as more aluminium will be required than was produced in the past, so scrap availability will remain insufficient to meet demand purely with recycled production, even if collection rates are maximised.
In the Net Zero Scenario, secondary production expands to account for about 40% of production by 2030.
Addressing process emissions from aluminium production will require technological innovation, and the groundwork for necessary technologies needs to be laid 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.
Another method for reducing aluminium smelting emissions is through carbon capture and storage (CCS) technology, although this is much more difficult to accomplish for aluminium than other industrial processes because of its lower concentrations of CO2. Nevertheless, two firms – Alvance Aluminium Dunkerque, and Norwegian company Norsk Hydro – have recently announced that they are exploring options to use CCS for aluminium, with Norsk Hydro setting a goal of using CCS on a commercial scale by 2030.
On emissions from the alumina refining process, Rio Tinto has announced – with the support of Australia – a feasibility study for the use of hydrogen to generate the heat required for alumina refining at its Yarwun refinery. Alcoa also announced in 2021 and 2022 pilots to utilise electrically powered mechanical vapour recompression and electric calcination to displace fossil fuels in alumina refining.
In spite of these encouraging developments, more investment into R&D is required, as inert anodes and near zero-emission alumina refining before 2030 will be necessary to get on track with the Net Zero Scenario.
Increasing the proportion of aluminium production from low-emission electricity should be 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 70% of total (direct and indirect) aluminium production emissions in 2021. 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 over 95% in the rest of Asia). In contrast, most power for aluminium production is purchased in Europe, Africa and Oceania.
Composition of electricity used in aluminium production compared with total electricity consumption, 2010 and 2020Open
Looking at the type of energy powering aluminium production, hydropower is overrepresented by 15 percentage points relative to the global average power grid. However, it used to be even more prominent, accounting for 40% of production in 2010 compared with 30% in 2021. The shift is largely due to expanding aluminium production in China, where coal supplies the electricity for 80% of production, although this is notably down from 90% in 2010 – the reduction from a roughly equal increase in hydro and other renewables. In Europe, North America and South America, hydro still supplies more than 75% of production.
In the Net Zero Scenario, the emissions intensity of the total power mix declines by roughly 65% 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 low-emission variable renewable electricity, and supporting further renewable penetration in electricity grids through demand response.
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 – responsible for producing around half of the world’s aluminium in 2021 – has announced that it will be putting a price on aluminium emissions, possibly as soon as 2023. It further announced that, as a 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 is in the process of developing a carbon border adjustment mechanism that will include aluminium, while the United States has stated that it is considering such a mechanism. These policies would 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 has announced its industrial decarbonisation roadmap to 2030, which includes a plan to invest EUR 5.6 billion on decarbonisation initiatives for domestic industries, as well as a decarbonisation roadmap for mining and metallurgy containing specific provisions for aluminium.
Policy makers are increasingly coordinating to address the challenges facing the decarbonisation of the aluminium industry, especially the threat posed by carbon leakage. In the past year, the United States has 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.
Producers are engaging with multi-stakeholder initiatives across the value chain and focusing on:
- Establishing the sector baseline and potential technology pathways; using industry data, analysis and modelling, the International Aluminium Institute 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 and supply chains to decarbonise industry, launch its initiative for decarbonising aluminium, with a number of major producers and consumers, including Apple, Ball Corporation, Ford Motor Company, Novelis, Volvo Group and Trafigura. The latter has set aside USD 500 million for clean aluminium financing.
- Identifying policy and financial levers; the Mission Possible Partnership has launched an Aluminium Initiative and is working in collaboration with the International Aluminium Institute to develop a sector transition strategy 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.
Recommendations for policy makers
As with the rest of industry, decarbonisation in aluminium will require multiple measures:
- Adopting mandatory CO2 policies covering industry and expanding international co-operation – domestically this might include carbon prices or CO2 performance regulations, while carbon border adjustments or international sectoral agreements might be considered to limit carbon leakage.
- Managing existing assets and near-term investment in order to create a smooth energy transition, such as encouraging – and perhaps providing public support for in some instances – refurbishment to near zero-emission technology to avoid stranded assets.
- Maximising energy productivity by accelerating progress in energy efficiency, recycling and material efficiency – policy makers can incentivise these actions.
- Increasing investment in R&D and deployment for low-carbon technologies essential to decarbonising process emissions from industry, including through direct support and mechanisms to mobilise private sector finance.
- Improving data collection, tracking and classification systems – this includes aspects such as developing clear and common definitions for low- and near zero-emission production. Industry participation and government co‑ordination are both important.
Recommendations for the private sector and policy makers
A number of initiatives have emerged in recent years to create a market for near zero-emission industrial goods. In the case of aluminium, it is also important that the market be created for primary production, as scrap availability will be insufficient for recycled production to meet all aluminium demand in the coming decades, given projections for economic growth in emerging markets. Several initiatives are pursuing the creation of such a market for steel and cement, yet presently only the First Movers Coalition and the Aluminium Stewardship Initiative are taking the same action on aluminium. These could be enhanced through broader participation. Further action must be taken to create a zero-emission aluminium market, as action today will help to develop the required technologies, build out production plants and build up supply chains for primary aluminium production.
Given the high electricity requirements of aluminium production, efforts to decarbonise electricity generation will be necessary to reduce the subsector’s indirect emissions. In addition to decarbonising electric grids, much of the electricity for aluminium is generated on site, meaning that the industry must also take measures to either switch away from fossil fuels, or reduce its emissions through technology such as CCS.
The aluminium subsector can in turn assist with grid decarbonisation, providing flexibility services by modulating demand, which will help integrate a higher portion of variable renewables. Electricity producers can help by offering electricity pricing incentives or contractual purchasing arrangements to aluminium producers using demand management systems – these are already employed by some grids for emergencies, and extending their use to broader grid management could help with grid decarbonisation.
A 2020 report from the World Economic Forum going into detail on some of the technological and policy strategies for decarbonising global aluminium production.
A scenario modelled by the International Aluminium Association showing how the industry can achieve emissions reductions that meet the Paris Agreement's goal.
- Chris Bayliss, Aluminium Stewardship Initiative, Reviewer
- Marlen Bertram, Pernelle Nunez and Linlin Wu, International Aluminium Institute, Reviewers
- Ray Chatfield and Karin Dahlman, Aloca, Reviewers
- Nick Depree, EnPot Ltd., Reviewer