London — The rate of change needed for the global aluminum industry to meet existing net-zero carbon emissions targets is "challenging" and is it unclear at present whether these targets will be reached, according to Miles Prosser, secretary general of International Aluminum Institute (IAI).
Depending on the region, the targets require companies to achieve net-zero carbon emissions between 2050 and 2070 in line with Paris Agreement principles. However, the aluminum sector sources nearly half its electricity supplies from countries' grids and energy infrastructure, which first need to be decarbonized, Prosser said in an interview with S&P Global Platts.
The very high temperatures needed for the electrolytic reduction of aluminum oxide, or alumina, into high-purity aluminum metal make the sector one of the most energy-intensive there is.
"Aluminum is a significant emitter now and to get to zero is a big task, whether by 2050 or 2070," Prosser said. "Genuinely new technology is needed and once this is available this will represent a significant investment across the industry. It may take 30-40 years to implement new technologies right across the industry, and we really haven't got the 30-40 years here."
IAI members account for more than 60% of global aluminum production, including some major Chinese producers. Eyes are increasingly on not only what the industry produces but how this is produced, as the concept of low-carbon aluminum comes to the fore, according to Prosser.
It is the marketplace — and not the producers — that will decide how to define or whether to move forward with a low-carbon market for aluminum, around which the London Metal Exchange is currently testing interest among both suppliers and buyers, he said. The LME is eyeing launching a low-carbon aluminum trading platform as early as 2021 and also plans to launch an aluminum scrap contract.
Three areas of investment
To reduce the sector's carbon footprint, Prosser said, investments are needed in three areas: in changes to the energy infrastructure – electricity generation accounts for the bulk of the sector's emissions; in making alumina refining technology less energy-intensive and cleaner in terms of pollutants; and in boosting recycling rates.
Hydroelectric power is a low-carbon option on which to base primary aluminum production in countries including Canada, Russia and Brazil, but not in countries including Australia where there are scarcer water resources; nuclear power is considered "well-suited" to aluminum production due to its reliability and low-carbon nature, but its availability depends on national policies, Prosser said.
"Over time the industry will see a trend to more grid connection, which should give more flexible supplies than in-house supplies," he said. Currently, 55% of the primary aluminum sector's energy is self-generated, according to IAI data, much of it using thermal coal.
Significant production in China — the world's biggest producer — is also carbon-based. It is likely that hydrogen will need to be the base for decarbonized aluminum production in future, although this is currently very expensive, Prosser said.
Aluminum producers including Rio Tinto, Alcoa, Rusal and Hydro are all developing inert anode technology. Such insoluble anodes are designed to replace the carbon anodes currently used and eventually consumed in the smelting process, but which also provide some of its heat requirement. The new technology is now "only a matter of years off" and could allow for more efficient electricity use at smelters, will reduce one series of emissions to zero and won't necessarily lead to higher metal production costs, Prosser said.
Rio Tinto and Alcoa have each invested an initial $55 million — with other investments from technology company Apple and the governments of Canada and Quebec — in their ELYSIS anode technology, which may be ready for commercialization by 2024.
Secondary or recycled aluminum has a lower carbon footprint than primary aluminum and its production is far less energy-intensive.
"Aluminum came earlier than many other industries to recycling and has high recycling levels driven by commercial reasons ... it is infinitely recyclable," Prosser said.
While there will continue to be strong demand for primary aluminum, due to its high purity and because there may not always be sufficient scrap availability — it may take decades for primary metal used in buildings or vehicles to become scrap — recycled or secondary material will become a more important part of the supply chain in future, according to Prosser.
However, higher recycling rates will also require investment in recycling infrastructure, better sorting of scrap and the design of aluminum products that are more suited to recycling, which requires cooperation with customers. "That's a big part of the challenge ahead of us," he said.
IAI scenarios show that by 2040, recycling will supply 45% of global aluminum demand compared with 35% currently. However, it's unlikely to reach as much as 50% of the entire market, Prosser said.
More recycled material will nonetheless help meet global demand growth for aluminum overall, which is expected to rise between 2% and 4% per year over the medium to long term, typically higher than average global economic growth. While the secondary sector has grown for commercial reasons, it will also help lower the sector's carbon footprint overall.
Still, "the recycling story may change a bit," the IAI executive said. "The quality of recycling is important: to separate out different alloys that can bring technical challenges; and to ensure that aluminum for one particular use gets recycled back into that particular use – soft drink can aluminum back into soft drink cans and automotive aluminum back into autos."