Global aluminum needs up to $1.5 trillion investment to decarbonize energy supplies: IAI

London — Investments of between $500 billion and $1.5 trillion may be needed to decarbonize energy supplies to the electro-intensive global aluminum industry if the sector is to meet its decarbonization targets by 2050, according to executives of the International Aluminium Institute, a producers' association.

Much of this cost will be concentrated in China, which has grown over the past 20 years to account for around 55% of the world's aluminum production and demand, and which currently uses predominantly coal-based energy for aluminum production.

"However, we already see the movement there [in China]", said IAI Deputy Secretary General Chris Bayliss in a call with reporters to mark the March 16 launch of the institute's Aluminium Sector Greenhouse Gas Pathways to 2050 report. "The move back to growth of hydropower [to fuel the aluminum industry] is happening there."

Supportive government and industrial policies worldwide, including in recycling and the circular economy, are also needed to enable the investments and decarbonization required, he said.

Primary demand growing

Currently electricity accounts for around 60% of the aluminum sector's carbon footprint, Bayliss said. Aluminum is a "hard-to-abate" sector, accounting for around 2% of global carbon emissions, a similar level to global aviation or shipping, he said.

The electro-intensive global aluminum industry needs to slash its emissions 80% by 2050 to keep in line with the International Energy Agency's Beyond 2 Degree Scenario, while demand for primary aluminum is expected to grow by up to 40% during the same period, according to the IAI, highlighting the decarbonization challenges facing the sector.

In 2018, global demand for aluminum was 95 million mt; two thirds (64 million mt) of which was met by primary aluminum (produced from ore) and one third (31 million mt) from recycled aluminum. Rapid population and economic growth over the coming decades means global demand for aluminum will increase by up to 80% by 2050, including both recycled and primary metal, according to IAI.

Despite increased projected recycled metal supply, IAI estimates that up to 90 million mt of primary aluminum will be required per annum in 2050.

Aluminum demand will grow partly because it is an enabler of energy transition: it is used to lightweight in electric vehicles, green building and cabling, Bayliss said.

"Emissions reduction is a challenge for every sector," said Miles Prosser, IAI secretary general. "It is, however, a challenge that the aluminium sector is poised to address". The institute, its members and regional associations have been intensively working on planning out the necessary pathways to achieve the goals for the past 18 months, he said.

The research has shown that simultaneously reducing emissions while meeting increasing demand will require huge investment in production technologies, along with commitment from all along the value chain, IAI said.

Three pathways

There are three credible and realistic approaches to emissions reductions for the aluminum industry, in line with the International Energy Agency's Beyond 2 Degree Scenario, IAI said in its new report.

The routes are electricity decarbonization, cutting direct emissions and boosting recycling and resource efficiency, it said.

Electricity decarbonization

More than 60% of the aluminum sector's 1.1 billion mt of CO2 equivalent emissions in 2018 were from the production of electricity consumed during the smelting process, according to the report. Of the total emissions, 752 million mt were from installations in China. Decarbonized power generation and the deployment of carbon capture utilization and storage (CCUS) therefore offer the most significant opportunity to reduce emissions to near zero by 2050, it said.

Under a Beyond 2 Degree Scenario, the industry would need to reduce its total emissions to 250 million mt CO2e, said IAI.

Continuing business as usual (BAU), adding new smelter capacity without decarbonizing, could boost carbon emissions to 1.6 billion mt annually by 2050, according to Bayliss.

Fuel combustion makes up 15% of the industry's emissions, according to the report. Here, electrification, fuel switching to green hydrogen and CCUS offer the most credible pathways. Process emissions make up a further 15% and require new technologies, such the Elysis inert anodes technology, developed by Alcoa and Rio Tinto with support from Apple, which will require significant investments to install in smelters, according to IAI. These emissions and those in transport and raw materials will need to be reduced by 50%-60% from a BAU baseline scenario by 2050, the report said.

Recycling and resource efficiency

Currently the sector recycles around 30 million mt/year of aluminum, with a 95% or higher recycling rate having been achieved in some end-user sectors. "Increasing collection rates to near 100% as well as other resource efficiency progress by 2050 would reduce the need for primary aluminium by 20% compared to BAU, which in turn will cut the sector's emissions by an additional 300 million tonnes of CO2e per year - a figure second in magnitude only to the first pathway, electricity decarbonization," IAI said.

"We have the opportunity to recycle more, maybe a further 17 million mt by 2050.... the issue is however the quality of this material," Bayliss said on the call, stressing that the use of aluminum in complex products such as vehicles needs to be addressed with greater emphasis on design for recycling in various sectors moving forwards.