Aluminum has been described as a "miracle metal." While it’s the most abundant metal in the earth’s crust, the complexities involved with refining it made aluminum more precious than silver or gold during the 19th century. Napoleon III so valued it that he would serve his most honored guests their food on aluminum plates. It remains a high-value material today, prized for its lightweight versatility, military-grade strength, resistance to corrosion and because it is infinitely recyclable.
So, what’s not to like? Well, the energy-intensive series of processes that turn raw bauxite ore into a pure metal emit on average 16 metric tons of CO2 for every metric ton of primary aluminum produced. The sector as a whole generates around 1.1 billion metric tons of CO2 each year, accounting for 2 percent of global man-made emissions. More than 60 percent of these emissions come from producing the electricity consumed during the smelting process.
What’s more, demand for the miracle metal — driven by industries such as transportation, construction, packaging and the electrical sector — is predicted to increase by almost 40 percent by 2030. Two-thirds of this growth is expected from China and Asia, a concern given China’s smelting process is heavily reliant on captive coal-fired power plants. Without advances in recycling and decarbonization, the sector’s emissions could careen towards nearly 2 billion metric tons by 2050.
Tough target from First Movers Coalition
A handful of new technologies hold the potential to clean up aluminum, but only the most ambitious meet the tough target of the World Economic Forum’s First Movers Coalition (FMC), a global initiative to harness the purchasing power of companies to decarbonize the planet’s heaviest-emitting industries. Members of the FMC have committed to a goal that at least 10 percent of the primary aluminum they procure annually by 2030 will be produced via near-zero emissions processes. The definition of "near zero" is the tough bit: emitting less than three metric tons of CO2 per metric ton of primary aluminum. That represents a huge reduction in current emissions of 85 percent or more.
To understand how to achieve such deep decarbonization, we need a speedy tour of the aluminum manufacturing process. Bauxite is the raw material — it’s mined from the ground and refined into aluminum oxide, or "alumina," through a multi-phase process that includes heating it to around 1,000 degrees Celsius. To achieve this heat, many refineries burn fossil fuels onsite, which emit large amounts of CO2 in the process. The second process, known as smelting, turns the alumina into pure aluminum metal through electrolysis, which uses a lot of electricity and carbon anodes that also emit large amounts of CO2.
Existing forms of renewable energy — such as hydro or solar — will get us about two-thirds of the way to zero-emissions aluminum.
The good news is that existing forms of renewable energy — such as hydro or solar — will get us about two-thirds of the way to zero-emissions aluminum. We can use clean energy for the new electrified boilers and calciners involved in refining bauxite ore into alumina — and also for the electricity-intense smelting process. But this can be expensive in the short term. It means moving the plants to locations with access to renewable power and retrofitting the refineries to install the new equipment.
Some emerging new technologies — which can be implemented at existing aluminum plants — can help narrow the gap towards zero-emissions aluminum. The smelting process can be fully decarbonized by replacing those carbon anodes with inert anodes that emit oxygen instead of CO2. A process known as "mechanical vapor recompression" enables the thermal energy needed for refining to be recycled rather than released. And for the remaining emissions, there are technologies such as carbon capture, use and storage (CCUS) to intercept emissions from both the refining and smelting processes. When a few of these breakthrough technologies are used in conjunction, they can get the whole aluminum production process below the threshold of 3 metric tons of CO2 per metric ton of primary aluminum.
Unlike most other sectors in the FMC, recycling can play a large part in the journey towards decarbonizing the aluminum sector, especially as the metal is considered infinitely recyclable. Recycling takes around 5 percent of the energy needed to make new aluminum, so it makes commercial as well as environmental sense. Aluminum remelting is widespread at scale today with more than 30 million metric tons of recycled aluminum flowing back to new products annually. It can also contribute towards a just transition, as collection, sorting and recycling offer the potential to create new jobs while reducing the natural resource extraction required to support primary aluminum production.
Consequently, the FMC has set an additional target for its members to ensure that at least 50 percent of the aluminum they use annually by 2030 is recycled. However, recycling alone won’t be enough to slake the growing global thirst for the metal — in fact, it will supply just half the expected demand by 2050, according to the 1.5 degrees C-aligned transition strategy published by the Mission Possible Partnership. So getting primary aluminum production as near to zero emissions as possible remains a top priority.
The tech solution is there. Now to make it happen
While the technologies to decarbonize aluminum production may exist in prototype forms, like all new technologies that have yet to reach scale, they are expensive. Commercializing them is challenging — and it’s not just the cost; aluminum’s value chain is complicated and extended.
Take a beer can, for example, which is typically made of more than 50 percent recycled aluminum but still requires primary aluminum. First you mine the bauxite, then you refine it into alumina. It often goes somewhere else to be smelted into pure aluminum. The metal is then processed into discs or coils, bought by companies that punch them into cans, sold to beverage businesses and bottlers, distributed to retailers and only then reaches the consumer. This long supply chain is compounded by the size of the buyers. Whereas steel and concrete have big "anchor buyers," such as auto manufacturers or state procurement agencies, aluminum is bought in small amounts by lots of players. And all the players involved — from the mine company to the beverage retailer — must be aligned to share the goal and the cost of decarbonization.
Ball Corporation, a major manufacturer of aluminum packaging and a member of the FMC, has made a first move towards aligning with its value chain partners. The company has teamed up with aluminum suppliers and fellow FMC members Novelis and Rio Tinto to create Canada’s first specially-marked, low-carbon beverage can for Corona beer. The can is made partly from recycled aluminum along with near-zero emission primary aluminum refined with hydropower and smelted using a greenhouse gas-free inert anode technology called Elysis. This breakthrough has been made possible by an unprecedented collaboration between two competing aluminum industry giants — Alcoa and Rio Tinto — along with $13 million (CAD) of investment and technical support from Apple, plus additional investment of $80 million (CAD) each from the Canadian and Quebec governments. Elysis is still at the prototype stage, but the team is aiming to make the technology commercially available by 2024.
Aligning the value chain, through coalitions such as the FMC, is critical to decarbonization efforts. Without an aligned value chain, demand signals to producers may not lead to any change. These kinds of coalitions also lead to better conversations with governments around a range of subjects, from tightening policies on recycling to co-investing in R&D.
When a breakthrough technologies are used in conjunction, they can get the whole aluminum production process below the threshold of 3 metric tons of CO2 per metric ton of primary aluminum.
Governments have a key role to play in encouraging the decarbonization of primary aluminum refining and smelting. The Middle East has an opportunity to contribute, using its plentiful solar power potential. China is showing movement in the right direction, shutting some coal-powered refining operations and opening new plants in regions abundant with hydropower. But governments may also need to provide direct financial support to the sector. The new technologies needed to decarbonize aluminum — including additional renewable power, CCUS and redesigning the smelting process around inert anodes — will cost around $1 trillion up to 2050, so it is likely that states will have to step in with incentives, investment and market-based measures. The production of materials such as lithium or copper — vital to the low-carbon transition — already attract government subsidies. So, too, must aluminum, given its role in helping decarbonize other sectors such as transportation and battery technology.
In Europe, the European Union’s proposed carbon border adjustment mechanism (CBAM) is a wake-up call to aluminum suppliers looking to export into the single market. By 2030, the CBAM could levy a tax of 100 euros per metric ton of CO2 contained in imported products and materials, mimicking the cost of the E.U.’s emissions trading scheme (ETS) for local producers. For a metric ton of aluminum with a 16 metric ton CO2 footprint, that could add 60 percent to the cost of the metal. While such a mechanism may help decarbonized aluminum compete on an ongoing basis once commercialized, the model of direct government investment in breakthrough technology may be necessary to crowd in corporate finance and derisk the decarbonization pathway.
The sector is in a race against time to scale-up its nascent near-zero emissions production to deliver the supply required. Companies need to take a clear leadership position, to support the deployment of the deep decarbonization technologies that are needed to align the sector along a pathway to net zero by 2050. There will be additional costs, but coalitions such as the FMC will help create the transparency and collaboration required to address those costs. The technology is there to make it happen — and that’s worth raising if not a glass, then certainly a low-carbon beer can.
This article was co-authored by Jonathan Walter, and BCG’s Andrew Alcorta and Henry Mumford.