Concerns of steel supply shortages from closing energy-intensive plants have led Chinas Customs Tariff Commission of the State Council to shift its trade policy, raising export tariffs and lowering import tariffs on steel. The U.S. aluminum industry, meanwhile, has made significant strides in reducing its carbon footprint. To incentivize firms to decarbonize aluminum, renewable energy must be both affordable and reliable. William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Emily Benson is an associate fellow with the CSIS Scholl Chair in International Business. Another is to zap it with a lot of electricity like in aluminium production. In the United States, the largest source of recyclable aluminum continues to be municipal solid waste streams. Steel accounts for 15 percent of Chinas carbon emissions, the most of any manufacturing sector in China, while aluminum accounts for nearly 4 percent. While it represents a step in the right direction for climate change policy, it remains to be seen whether such a bilateral deal would restrain the ability of the international trading system to combat climate change by encouraging countries to undertake their own border adjustment measures. Aluminium smelting is extremely intolerant to even short interruptions to the supply of electricity. Unlike bauxite mining and alumina production where Australia is a major player, our share of metal production is only roughly 3% of the global total. In the southern province of Guanxi, smelters were ordered to reduce run rates during a peak power demand period. Short of concluding a formally recognized international agreement to set a global standard for green steel and aluminum, the United States and European Union could use their recent deal to launch plurilateral talks within the WTO. Bauxite mines bauxite mines are open cut, surface mines meaning heavy, mobile equipment (trucks, shovels, draglines etc) is used to remove overburden, extract the bauxite and transport it for crushing and storage. In addition to helping reduce emissions, aluminum recycling can also play a role in minimizing trade frictions. Also in November, the House of Representatives passed the BBBA, which allocates $555 billion to fight climate change. The European Unions recently proposed Carbon Border Adjustment Mechanism (CBAM) seeks to limit carbon leakage and encourage a race to the top when it comes to environmental standards and emissions reductions. The motivation of refinery owners, dominated by Alcoa/Alumina, Rio Tinto and South 32, will be critical especially if there is a suggestion that building a new greenfield refinery (possibly outside Australia) could be cost effective compared with complex and expensive brownfield retrofits. The primary challenge is finding materials that have the right combination of electrical conductivity, high temperature resistance, low reactivity with molten aluminium and fluoride salts while being economically viable. The United States International Trade Commission also recently approved trade remedy duties pursuant to a determination that the U.S. aluminum industry is materially injured as a result of imports of aluminum foil from Armenia, Brazil, Oman, Russia, and Turkey. Cross-border transfers of electricity are enough to power 7 million households. Despite the projected increase in the supply of recycled metal, IAI estimates that up to 90 million tons of primary aluminum per year will be needed in 2050. Just like in automobiles, the low weight and high strength of aluminum makes it an attractive material for enhancing aerospace efficiency and sustainability. For its new 702MP satellite, Boeing used a novel recycled aluminum printing process to reduce its weight by 28 pounds prior to launch. "On a global basis, power accounted for close to 60% of greenhouse gas emissions relating to aluminum production in 2020," the report reads, pointing out that the primary aluminum industry. 2022 by the Center for Strategic and International Studies. Minimizing anode effects, for example by making changes to alumina feeding techniques or enhancing computer monitoring, has been proven to reduce PFC emissions. The path choices made by the protagonists of the aluminumindustry, says IAI, will depend on various factors, such as: unique energy supplies, availability of raw materials and scrap, regional policies, investment options and availability, speed and costs of development and implementation of the technology. Aluminium produced from hydro power has perhaps one third of the GHG emissions of that produced from a coal fired smelter if this results in lower import tariffs it could encourage a mitigation away from coal linked smelters. . One is to use hydrogen to react with the oxygen. For these thermal processes, electrification with low carbon sources offers a potential path towardsdecarbonisation. Determining a common threshold at which countries can designate aluminum as decarbonized is a necessary step and one that should accompany a more detailed effort to reach a global agreement on methodologies for carbon content of goods. Electricity costs can account for 40 percent of primary aluminum production operating costs and have led firms to relocate production facilities to countries with cheaper electricity, namely Canada and Iceland. This bottleneck led to a two-yearmoratoriumon new wind and solar projects, ultimately devaluinglocally produced renewable energy. Aluminum production processes have changed very little since the 1800s, and many countries continue to rely on coal to produce the electricity required for aluminum production. Known as Elysis, the Montreal-based venture plans to remove all direct GHG emissions from aluminum smelting. Carbon capture and storage remains a possible remedy for some emission categories that cant be eliminated by other means. Financial obligations under the CBAM will also go into effect for the aluminum sector in 2026. Can China decarbonise its electricity grid? Australia is the leading global bauxite producer by volume. As noted above, smelting is estimated to be responsible for 862 million tonnes of GHG emissions out of the industrys total of 1068 billion tonnes with 671 million tonnes coming from emissions associated with electricity supplied to the smelting process. A legally compliant border adjustment also must not violate GATT Article I, which prohibits discrimination among trading partners. To ensure that producers are not disadvantaged during the decarbonization transition, governments should adopt targeted policies that help reduce the financial impact on firms. The data below shows that 60% of smelter capacity is linked to coal fired generation and 93% of the 671 million tonnes of GHG emissions associated with electricity supply. The Bauxite dissolution process requires millions of litres of caustic solution to be continuously heated to temperatures in the range 150 250C and the final product calcination step requires temperatures in excess of 1000C. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); We could not be more excited to announce that today Phlox WordPress theme hits over 1000 installs on, https://reneweconomy.com.au/rio-tinto-to-investigate-use-of-renewable-hydrogen-in-alumina-processing/, https://www.smh.com.au/politics/federal/rio-tinto-push-for-green-aluminium-gets-600-000-government-boost-20210615-p5818c.html, https://www.world-aluminium.org/media/filer_public/2021/04/01/iai_ghg_pathways_position_paper.pdf, https://www.world-aluminium.org/statistics/primary-aluminium-smelting-power-consumption/#data, Electricity Australia compared with the ROW, A Direct Air Capture plant starts up in Iceland, Why are Swedish GHG emissions so much lower than Australias. The owners will also be aware that alumina refineries are not pretty places with waste streams that create genuine, localised environmental challenges. Ultimately, sectoral and cross-sectoral partnerships will be needed to address this large-scale emission reduction challenge while meeting the growing demand for aluminum. The entire aluminium industry needs a decarbonisation strategy that is both broad and deep. The estimated cost of decarbonizing the aluminum sector ranges from $500 billion to $1.5 trillion. Once this is done we can look at what work is needed to reduce and eliminate these emissions. Green Steel: Decarbonising with Hydrogen-Fueled Production As the fight against climate change ramps up worldwide, the need for industries and economies to respond is immediate. But according to IAI estimates, optimising efforts to capture the remaining end-of-life scrap could reduce the need for primary aluminium by 15% and save an estimated 250m tonnes of CO 2 each year. Losing power for more than an hour risks catastrophic damage to the smelting furnaces (pots) and even a partial decrease in current will cause major process disruptions and loss of efficiency. In North America, the U.S. government should avoid temptation to include local content requirements in electricity production, which not only contravenes WTO rules, but would ultimately slow the transition to a decarbonized economy. To decarbonise, primary aluminum will have to innovate to modify the process, for example through an inert anode, or will have to study technologies such as carbon capture and sequestration. Climate advocates will make the point that a national plan for getting to net zero is a good place to start when addressing these challenges. Despite the government-mandated maximum price on energy, recent surges in market-driven coal prices have led to blackouts in half of Chinese provinces. To date, these tariffs have not motivated aluminum manufacturers to participate in reshoring efforts, although supply chain disruptions could potentially encourage firms to engage in that. The basic chemistry of the smelting process is the reduction of aluminium oxide in the presence of carbon anodes to produce aluminium metal and carbon dioxide (CO2). In the joint statement, the parties also agree to form a technical working group that will confer on methodologies for calculating steel and aluminum carbon-intensity and share relevant data.. The European Union and United States have long contended with two interrelated problems: Chinese dumping of steel and aluminum, and Chinese carbon emissions that have continued to grow despite the urgent need to decarbonize. Where electrification is not feasible, green hydrogen, concentrated solar thermal energy and the use and storage of carbon dioxide (CCUS) are the best options. This means that 1 kg of these gases is equivalent to 6.5 or 9.2 tonnes of CO2. Currently, the EU CBAM seeks to impose tariffs on carbon-intensive power. In certain parts of the United States, aluminum smelters can obtain power at as low as $15/MWh. If aluminum production can become carbon neutral, it will play an even greater role in the transition to a less carbon-intensive economy. Aluminium production is highly energy-intensive, with electricity making up a large share of the energy consumed. Ultimately the aim is for financial institutions to adopt the framework in early 2023 and set global practices on climate for aluminium finance. As other countries develop low carbon electricity will they see aluminium smelting as an attractive industry? To address these risks and to reduce smelter GHG emissions, research is underway to replace consumable carbon anodes with non consumable, inert anodes. At current rates, the cost of hydropower is already 40 percent cheaper than fossil fuel energy, Furthermore, other renewables, such as wind and solar, are expected to drop below the cost of hydropower, making them even more price competitive in the coming years. It leaves lenders with a conundrum how to greenify and support the growth of the full value chain, including those companies with a relatively large footprint (which could increase the carbon footprint of the lenders own portfolio). food, pharmaceutical and chemical production) or high temperatures approaching 1000C (e.g. Power producers being forced to reduce their carbon footprint will need to assess whether they can continue to agree to the supply guarantees that smelters require. Together with involvement and input from the private sector, there are established, proven policies governments should pursue to accelerate decarbonization within the sector. This highlights the difficulty of decarbonizing a major Chinese growth industry in the face of sustained global demand for steel. More than 60% of the 1.1 billion tons of CO2 emissions of the aluminum sector in 2018 come from the production of electricity consumed during the smelting process. Your email address will not be published. Decarbonising primary production is therefore vital, but so is the role of aluminium in #decarbonising other end-use sectors. With that funding, Alcoa is exploring using mechanical vapor recompression that could help convert waste vapor into steam, ultimately reducing one refinerys carbon footprint by 70 percent. Since aluminum and alloy content will continue to evolve, it is important that the government continually promotes new recycling technologies so that it meets not only the sustainability needs of today but also those of tomorrow. Two-thirds of the sector's electricity needs are met by power plants owned and operated by aluminum producers. To meet Beijings new decarbonization demands, provinces have begun to power down production. Tesla continues to bet on aluminum to drive future growth, with a recent patent on a new aluminum alloy and investments in new aluminum casting machines in its Berlin and Shanghai plants. The prevalence of aluminum-lithium (Al-Li) composites is growing, with Alcoa investing $90 million in the worlds largest Al-Li production facility in Indiana. In the southern province of Yunnan, the regions 70 percent mix of hydroelectric power and cheap energy rates drew millions of tons of new aluminum production over the past few years. The estimated cost of decarbonizing the aluminum sector ranges from $500 billion to $1.5 trillion. That same year, coal-fired electricity used in aluminum electrolysis produced 636 million tons of C02 emissions, or 58 percent of the sectors carbon footprint. Primary production today has a greenhouse gas emissions profile on average 25 times higher than the recovery of recycled metal. Robust government investment in a reliable, renewable power gridwhere companies could transition to more sustainable production processescould significantly accelerate emissions reductions. All paths would involve a mix of technologies, including existing ones, some new solutions in development, and others yet to be developed. France produces 0.9 Mt of aluminum per year, 55% of which comes from recycling. Abdulnasser bin Kalban, the CEO of EGA, said, "Aluminium's use plays a key role in decarbonising other industries economy-wide, which makes decarbonising aluminium production even more of an. Demonstrating how difficult it is to achieve that price point, hydropower in the United States averages a levelized cost of $55.26, and that is after tax credits.