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1、IATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESNitya Aggarwal,Matthew Piotrowski,and George FramptonDecarbonizing the Aluminum Market:Challenges and OpportunitiesIIATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESThis report was written an

2、d published in accordance with the Atlantic Council policy on intellectual independence.The authors are solely responsible for its analysis and recommendations.The Atlantic Council and its donors do not determine,nor do they necessarily endorse or advocate for,any of this reports conclusions.ISBN-13

3、:978-1-61977-312-7January 2024 2024 The Atlantic Council of the United States.All rights reserved.No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Atlantic Council,except in the case of brief quotations in news articles,c

4、ritical articles,or reviews.Please direct inquiries to:Atlantic Council,1030 15th Street NW,12th Floor,Washington,DC 20005COVER:Molten metal is poured into carbon anodes at Century Aluminum Company at a Kentucky plant.May 2019.Source:REUTERS/Bryan WoolstonAcknowledgmentsThe Atlantic Council would li

5、ke to thank the ClimateWorks Foundation for supporting our work on this project.IIIATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESDecarbonizing the Aluminum Market:Challenges and OpportunitiesNitya Aggarwal,Matthew Piotrowski,and George FramptonIVATLANTIC COUNCILDECARB

6、ONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESTable of ContentsFOREWORD 1EXECUTIVE SUMMARY 2INTRODUCTION 3CURRENT PROCESSES FOR PRODUCING ALUMINUM 4POTENTIAL DECARBONIZATION PATHWAYS 5CLEAN ENERGY 5RECYCLING 5ELECTRODE TECHNOLOGY6GREEN HYDROGEN AND CARBON CAPTURE,UTILIZATION,AND STORAGE 7T

7、RADE OF LOW-EMISSIONS MATERIALS 8CARBON BORDER ADJUSTMENT MECHANISM8GLOBAL ARRANGEMENT ON SUSTAINABLE STEEL AND ALUMINUM(GASSA)9INTERNATIONAL PROGRESSAND OBSTACLESTOWARD GREEN ALUMINUM 11 UNITED ARAB EMIRATES(UAE)11CHINA 11CANADA 12RUSSIA 12INDIA 12UNITED STATES 13AUSTRALIA AND BRAZIL 13MULTILATERAL

8、 EFFORTS TO PROMOTE DECARBONIZATION 14DEVELOPING STANDARDS FOR MEASURING EMBEDDED CARBON EMISSIONS 15RECOMMENDATIONS 16CONCLUSION 18ABOUT THE AUTHORS 191ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESAs we head into a new phase of Paris Agreement im-plementation,indust

9、ry decarbonization has moved up the international policy agenda Heavy-industry sectorssteel,aluminum,cement,and chemicals currently account for 20 percent of global greenhouse gas emissions and have,to date,largely been on the backburner for policymakers,exempt from the most serious climate change e

10、fforts However,these industries are coming under increasing pressure to rapidly decarbonize and approach net-zero emis-sions by 2050 Meeting this goal requires overcoming the“trade-trapped”na-ture of these sectors Steel,cement,aluminum,and chemicals are traded across borders and face international p

11、rice com-petition This makes it harder for producers to pass through additional costs of investing in more expensive,cleaner tech-nologies without impacting competitiveness Policymakers have been wary of introducing policies that could affect the competitiveness of their domestic industrial sectors

12、and risk carbon leakage Trade policy and a complementary diplomacy strategy are,therefore,key to successfully decarbonizing these sectors There is a large body of academic literature pointing to the need for well-coordinated international efforts in this space,but few studies diving into the specifi

13、c case of aluminum This report fills this gap,describing the current efforts on this front and what actions will enable greater progress Several of the key industrial decarbonization policies being explored by countriessuch as public procurement targets,product requirements,green industrial subsidie

14、s,and carbon border measuresrun into challenging trade-law territory and risk provoking tensions if not carefully designed,coordinated,and justified Countries and industry groups should collaborate on research,development,and deployment to ensure the effective use of resources and prevent funding ga

15、ps This would help reduce technology costs and ensure technologies are globally accessible International alignment on standards and methodologies for low-carbon products and emissions intensity would facilitate knowledge sharing and data collection,ultimately decarbonizing international industrial s

16、upply chains While the potential for international coordination on industrial decarbonization has historically been underexploited,there has been a recent proliferation of platforms and initiatives pro-viding opportunities for cooperation in this space These initia-tives have focused on cooperation

17、on roadmaps for industrial decarbonization,procurement,innovation,and trade policy,among other things Thus,the upcoming year presents a pivotal opportunity to see accelerated momentum on industrial decarbonization internationally Foreword2ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES

18、AND OPPORTUNITIESAluminum is one of the most energy-intensive and greenhouse gas-emitting commodities in the world,accounting for approximately 3 percent of all global emissions Global demand for the metal is expected to increase,and aluminum is central to overall decarboniza-tion efforts in transpo

19、rtation,packaging,building,and the en-ergy transition While decarbonization pathways for steel and cement have received increased attention recently from pol-icymakers,nongovernmental organizations(NGOs),and indus-tryand are somewhat analogous to aluminum in that they also involve moving away from c

20、oal power and toward new emis-sions-reduction technologiespolicymakers have paid less at-tention to aluminum The aluminum industry has begun to take leading steps to decarbonize,but new policy measures will be needed to make significant progress in this hard-to-abate sec-tor National and internation

21、al bodies must partner on these measures as aluminum,like steel,is heavily traded Global pro-duction of primary aluminum almost tripled from 2000 to 2021,reaching 68 million metric tons1 Countries with greater climate ambition that are now beginning to produce higher-cost clean aluminum will inevita

22、bly seek to protect domestic competition and prevent carbon leakage,through trade measures if they perceive them as necessary Actions to decarbonize the indus-try must take this into account and stimulate international coop-eration rather than trade battles This report examines the reasons why the a

23、luminum sector is so difficult to decarbonize,various pathways to decarbonization,and current approaches undertaken by countries with market relevance The report also provides recommendations for fur-ther action by governments,international organizations,and industry to advance progress toward deep

24、decarbonization1“US Aluminum Manufacturing:Industry Trends and Sustainability,”Congressional Research Service,October 26,2022,https:/crsreportscongressgov/product/pdf/R/R47294Governments should take the following actions:Commit to decarbonization goals for heavy sectors,such as aluminum,that are in

25、line with the Paris Agreement Commit to,embrace,accelerate,and centralize current separate initiatives and coalitions working on decarbon-izing heavy industries,including aluminum Acknowledge the importance of climate-related trade instruments and utilize them to reduce emissions in heavy industries

26、,including aluminumGovernments and international organizations should work together on the following steps:Focus on the“emissions intensity”of facilities and products;Develop protocols for determining carbon intensity(embedded emissions,ie,those generated during the manufacturing and production of t

27、he metal)in aluminum production facilities and products Ensure that embedded-emissions measurement focuses on lifecycle emissions Consolidate ongoing separate initiatives that are working on setting standards for measuring embedded emissions in key commodities into a single venue and forumIndustry s

28、hould play a role in the key areas below:Increase collaboration with international forums on data and standard setting Partner with governments to increase the use of scrap aluminum and renewable energy for refining and smelting processesExecutive Summary 3ATLANTIC COUNCILDECARBONIZING THE ALUMINUM

29、MARKET:CHALLENGES AND OPPORTUNITIESThe aluminum sector is expected to become increas-ingly important to the global economy,with total global demand growing from 862 million tons(Mt)in 2020 to 1195 Mt in 20302 These demand pressures arise from the transportation,construction,packaging,and electri-cal

30、 sectors,and aluminum plays a crucial role in several tech-nologies needed for a sustainable energy transition,such as electric vehicles and energy-efficient materials3 Requirements for new electric vehicles alone are predicted to drive up more than a third of this increase in demand for aluminum,fr

31、om 199 Mt in 2020 to 317 Mt in 20304 Aluminum is similarly vital to the production of solar panels and copper cabling for power production Demand for environmentally friendly packaging in canned drinks is also expected to motivate increased demand for aluminum packaging Aluminum can be recycled inde

32、fi-nitely without loss of qualityapproximately 75 percent of all aluminum ever produced is still in usebut the size of the alu-minum market and the demand pressures it faces necessitate increased production The sheer size and expected continual growth of the aluminum industry complicate the challeng

33、e of decarbonizing the aluminum sector,which currently produces about 3 percent of all global emissionsCurrently,the production of aluminum is energy intensive and emits large quantities of greenhouse-gas(GHG)emissions Pure aluminum must be extracted from bauxite ore by crushing,2“Report Reveals Glo

34、bal Aluminium Demand to Reach New Highs After Covid,”International Aluminum Association,March 23,2022,https:/international-aluminiumorg/report-reveals-global-aluminium-demand-to-reach-new-highs-after-covid/3 Pedro Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense,”McKinsey&Company,Ap

35、ril 20,2023,https:/wwwmckinseycom/industries/metals-and-mining/our-insights/aluminum-decarbonization-at-a-cost-that-makes-sense#/4“Report Reveals Global Aluminum Demand to Reach New Highs After Covid”5 William Alan Reinsch and Emily Benson,“Decarbonizing Aluminum:Rolling Out a More Sustainable Secto

36、r,”Center for Strategic and International Studies,February 25,2022,https:/wwwcsisorg/analysis/decarbonizing-aluminum-rolling-out-more-sustainable-sector6 Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense”7“Making Net-Zero Aluminum Possible,”Mission Possible Partnership,April 2023,htt

37、ps:/missionpossiblepartnershiporg/wp-content/uploads/2023/04/AluminiumTSExecutiveSummarypdf8 Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense”grinding,and then refining to produce“alumina”(aluminum ox-ide),which is then smeltedprocesses that necessitate a signifi-cant,constant energ

38、y load during both the refining and smelting stages5 Many countries rely on coal to generate the required electricity,with about 55 percent of the energy needed to smelt aluminum coming from coal-powered power plants6 Global reliance on aluminum makes it increasingly important to decarbonize its pro

39、duction processes so that the world can meet its long-term climate goals Currently,producing one metric ton of aluminum emits,on average,159 metric tons of carbon dioxide(CO2)7 To stay consistent with the 15-degrees Celsius target outlined in the Paris Agreement,the aluminum industry must lower its

40、carbon intensity to less than 05 metric tons of CO28 The challenge of doing so lies in decarbonizing the refining and smelting processes,due to their high energy intensity Successfully greening these production processes will require innovative solutions,combining renewable ener-gies with new techno

41、logies Understanding the difficulties and opportunities for decarbon-izing the aluminum sector requires first exploring how alumi-num production functions and what measures are currently in place to decarbonize the industry With these factors and existing remedies outlined,the path for deep decarbon

42、ization becomes clearIntroduction4ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESProducing aluminum requires significant amounts of en-ergy on a continuous basis,a demand currently met largely by carbon-intensive fossil fuels Additionally,carbon dioxide is emitted duri

43、ng the smelting process as a byproduct Decarbonization pathways must address the carbon intensity of both the energy demands of aluminum pro-duction and the release of carbon dioxide during the metals manufacturing The primary industrial process for aluminum smelting is the HallHroult process,in whi

44、ch alumina is dissolved in the min-eral cryolite9 Pure aluminum can then be extracted from the alumina through electrolytic reduction Electrolysis requires an anode and a cathode:in aluminum production,the anode is made of carbon Carbon is often used in electrolysis because it is an efficient conduc

45、tor and has free electrons,which are necessary in electrolysis10 In this reaction,positively charged aluminum ions gain electrons from the cathode,forming pure,molten aluminum11 Negatively charged oxide ions lose elec-9 Reinsch and Benson,“Decarbonizing Aluminum”10“Why Are Carbon Electrodes Used In

46、Electrolysis?”M Brashem,Inc,last visited November 12,2023,https:/wwwmbrashemcom/why-are-carbon-electrodes-used-in-electrolysis/11 Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense”12 Ibid13“Aluminum,”International Aluminum Association,last visited November 12,2023,https:/wwwieaorg/en

47、ergy-system/industry/aluminiumtrons at the anode,which generates oxygen Because the an-ode is carbon,when oxygen is generated at the anode,CO2 is produced The process is energy intensive,continuously re-quiring high amounts of powerAluminum production through electrolytic reduction with a carbon ano

48、de,therefore,presents two challenges for decar-bonization Using a carbon anode is currently the standard way to produce aluminum because of its conductivity and free electrons but,as a result,the smelting process itself emits sub-stantial amounts of CO2 In addition,electrolysis requires sig-nificant

49、 continuous energy,a demand that in most producing countries is met by using coal The smelting process as a whole is responsible for about 80 percent of the greenhouse gases emitted during aluminum production12 Of the emissions aris-ing from smelting,about 81 percent are from the coal-powered genera

50、tion of electricity for electrolysis Power generation ac-counts for 70 percent of total direct and indirect CO2 emissions from the entire aluminum production process13 Current Processes for Producing Aluminum5ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESDecarbonizing

51、 primary aluminum production from ore through smelting requires reconsidering various emis-sions-intensive aspects of the HallHroult process The sector can address the carbon intensity of the process by substituting greener energy for coal or by reducing the carbon production of electrolysis The for

52、mer is the clear-est pathway to address the energy intensity of the process,as renewable energy technologies are already well developed To cut carbon emissions from smelting,the industry could also substitute a newer technology metal or inert anode in place of the carbon anode Additionally,capturing

53、 and storing carbon and replacing fossil fuels with nuclear power or green hydro-gen both offer potential alternative long-range solutions,but not in the immediate future CLEAN ENERGYThe energy intensity of smelting could be largely addressed by using clean energy sources instead of coal Transitioni

54、ng to clean energy would mitigate up to two-thirds of the emissions caused by aluminum production14 Using solar or wind energy to power the production process has enormous potential to green the aluminum process However,because smelting re-quires a continuous,high-intensity energy source,the intermi

55、t-tency of these renewables renders them currently unable to reliably power smelting,barring significant battery-efficiency technologies or other improvements to energy storage15 Hydropower and nuclear energy are also clean options,but come with their own challenges:hydropower is geographically limi

56、ted and,therefore,not always available to new aluminum production,while nuclear energy has to contend with high costs,long lag times from approval to operation,and the need to maintain waste sites Directly sourcing clean energy to meet aluminum-plant energy demand can be challenging,but sleeved or v

57、irtual power-pur-chase agreements have the potential to address this hurdle16 These agreements ensure that substantial supplies of clean power would be sourced from the grid to meet most of a pro-ducers energy demands throughout the year However,in peri-ods when renewable energy is not available,pro

58、ducers would 14 Ramon Arratia and Nancy Gillis,“Purifying the Miracle Metal:How to Decarbonize Aluminum,”GreenBiz,February 3,2023,https:/wwwgreenbizcom/article/purifying-miracle-metal-how-decarbonize-aluminum15 Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense”16 Julia Attwood,“Green

59、 Aluminum is Competitive Today Its Time to Start Transforming,”BloombergNEF,June 16,2021,https:/aboutbnefcom/blog/green-aluminum-is-competitive-today-its-time-to-start-transforming/17 Ibid18“Aluminium for Climate,”World Economic Forum,November 2020,https:/www3weforumorg/docs/WEF_Aluminium_for_Climat

60、e_2020pdfstill be able to use fossil fuel-generated energy to fill the sup-ply gaps The reduced costs of renewable energy make this a relatively low-cost option for decarbonization It would also address the inconsistency of renewables,as producers could fund renewable energy while having fossil fuel

61、 generated en-ergy as a backup With power-purchase agreements in the United States providing electricity as cheaply as$15 per mega-watt hour,renewables are becoming cost competitive with coal power in most of the world While these agreements can move the industry toward renewables,they would not ent

62、irely remove reliance on fossil fuels from the production processBecause producing aluminum requires so much reliable,con-sistent electric power,many aluminum producers today own or control their own power sources This pattern suggests that in considering pathways to zero carbon for the industry,acq

63、uiring dedicated renewable power,conjoined with improved battery storage,would be an important strategy for producersRECYCLINGRecycling is another key option available for aluminum decar-bonization Aluminum has high recycling potential,as it can be recycled several times without losing quality or in

64、tegrity,un-like many other materials17 Recycling of scrap aluminum can reduce total facility emissions by up to 90 percent,because of the reduced power required to recycle the metal versus producing it anew and the absence of process emissions from the smelting conversion Thus,when available,the use

65、 of re-cycled material is extremely effective in emissions reduction However,today,recycling aluminum is associated with less than 5 percent of the carbon footprint of producing aluminum on an overall global basis Expanding aluminum recycling re-quires increased collection and recovery of scrap alum

66、inum,which could reduce the need for primary aluminum by up to 15 percent18 New“circular economy”planning for reuse of alu-minum products and improved sorting technology could both contribute to increased use of scrap While recycling of industrial equipment(vehicles,machine parts,building material)i

67、s significant,at rates higher than 90 Potential Decarbonization Pathways6ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESpercent,consumer recycling also presents a significant oppor-tunity to reduce the need for primary aluminum19 Consumer aluminum recycling rates vary

68、significantly from country to country:while Germany recycles 99 percent of its aluminum cans,Brazil 97 percent,and the European Union(EU)about 75 percent,the United States recycles less than half20 In the United States,the problem is twofold:a lack of consumer awareness,and inadequate recycling infr

69、astructure and tech-nology Outdated sorting technology,for example,mistakenly categorizes aluminum cans as plastics,sending them to land-fills This outdated technology is becoming increasingly limiting as more aluminum alloys are developed for industry-specific purposes21 Technology that can differe

70、ntiate alloys would en-able recyclers to process recycled aluminum more accurately and specifically,further closing the loop of aluminum produc-tion While technology that can pinpoint the differences in cer-tain alloys exists,it is significantly more expensive As demand for aluminum and its alloys i

71、ncreases,governments must pro-mote and fund updated recycling technologies Thus,to more effectively implement recycling as a decarbonization tool by increasing consumer recycling rates,investments in infrastruc-ture and education are required ELECTRODE TECHNOLOGYThe secondary aspect of the decarboni

72、zation challenge in pri-mary aluminum production is CO2 emissions caused by using a carbon anode during electrolysis Successfully decarbonizing this process would address another 2530 percent of emis-sions caused by aluminum production22 The main alternative to using a carbon anode,as used by the Ha

73、llHroult process,is an inert anode23 Inert anodes are constructed of non-con-sumable materials like metal or ceramic Like carbon,they are 19“Infinitely Recyclable,”Aluminum Association,last visited November 12,2023,https:/wwwaluminumorg/Recycling20 Janice Lee,et al,“Whats Holding Back Aluminum Recyc

74、ling in the US?”Boston Consulting Group,May 10,2022,https:/wwwbcgcom/publications/2022/whats-holding-back-aluminum-recycling-in-the-us21 Brian Taylor,“Sorting Technology Can Turn Aluminum Green,”Recycling Today,September 14,2021,https:/wwwrecyclingtodaycom/news/steinert-hoffmann-aluminum-sorting-tec

75、hnology-recycling/22“Aluminium for Climate”23 Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense”24 Ibid25 Ibid26“Aluminium for Climate”27 Assuno,et al,“Aluminum Decarbonization at a Cost that Makes Sense”conductive and carry free electrons During the electrolysis of aluminum oxide,ox

76、ygen attaches to the anode;with a carbon anode,this results in the production and release of carbon di-oxide When using an inert anode,pure oxygen,rather than carbon dioxide,is released as a byproduct This provides a well-established alternative to carbon anodes that could pre-vent the release of CO

77、2 during electrolysis Developments in inert-anode technology have increased the efficiency of electrolysis One promising approach is the use of wetted cathodes,which are cathodes treated with titanium di-boride24 This renders the cathode inert,which allows produc-ers to reduce the distance between t

78、he anode and the cathode during electrolysis Because the electrons have less distance to traverse,the voltage can be lower,reducing the energy de-mands of electrolysis Combining wetted cathodes with inert anodes would eliminate CO2 emissions arising from electroly-sis,while simultaneously increasing

79、 energy efficiency Inert-anode technology is considered the aluminum-decarbon-ization pathway most likely to become commercially viable in the short term25 Elysis,a joint project from Alcoa,Apple,Rio Tinto,and the Canadian government,is currently running a pilot project in Canada with inert-anode te

80、chnology to verify its performance and determine when it can be adopted on an industrial scale Elysis is expected to host a demonstration of its technology and develop a commercial package in the next few years The World Economic Forum projects the capital costs of inert anodes to be 1030 percent le

81、ss than carbon-based anodes26 However,ini-tial research shows that electrolysis with an inert anode could be more energy intensive than with a carbon-based anode,reiterat-ing the importance of renewable energy pathways Government grants or incentives can help encourage the use of this technol-ogy on

82、ce it is commercially available27 7ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESGREEN HYDROGEN AND CARBON CAPTURE,UTILIZATION,AND STORAGEThe need for a consistent energy source throughout alumi-num production complicates a transition to renewable en-ergy,making hydro

83、gen-based production a possible option Hydrogen and hydrogen-based fuels are increasingly seen as crucial to the decarbonization of heavy industry sec-tors28 Hydrogen produced using renewable energy,known as green hydrogen,is a clean,low-carbon energy source,re-leasing only water when burned as fuel

84、 For hydrogen to be-come a truly viable decarbonization solution,innovation and action are needed to reduce the cost of its production and to increase demand for it Moreover,green hydrogen will likely be in short supply for some time given its high current cost,and there may be much more efficient u

85、ses for it elsewhere in industrial decarbonization of steel,for aviation and mari-time fuel,and for fuel cells Nonetheless,aluminum compa-nies are already exploring green hydrogen as an option for decarbonization Norsk Hydro,a Norwegian aluminum and re-newable energy company,recently produced the wo

86、rlds first aluminum made using green hydrogen29 This fall,Hydro will release a report on its efforts to demonstrate the potential of hydrogen in aluminum production As progress toward reducing the cost of green hydrogen at scale continues,carbon capture,utilization,and storage(CCUS)technologies coul

87、d fill some gaps by capturing emissions aris-28 Abhinav Chugh and Emanuele Taibi,“What Is Green Hydrogen and Why Do We Need It?An Expert Explains,”World Economic Forum,December 21,2021,https:/wwwweforumorg/agenda/2021/12/what-is-green-hydrogen-expert-explains-benefits/29 Jonas Cho Walsgard and Mark

88、Burton,“Norway Firm Produces Worlds First Aluminum Using Green Hydrogen,”Bloomberg,June 15,2023,https:/wwwbloombergcom/news/articles/2023-06-15/hydro-produces-world-s-first-aluminum-using-green-hydrogen30“Carbon Capture,Utilisation and Storage,”International Energy Agency,last visited November 12,20

89、23,https:/wwwieaorg/energy-system/carbon-capture-utilisation-and-storage31“Developing Carbon Capture and Storage Technology for Aluminium Smelters,”Hydro,January 19,2022,https:/wwwhydrocom/en-US/media/on-the-agenda/hydros-roadmap-to-zero-emission-aluminium-production/developing-carbon-capture-and-st

90、orage-technology-for-aluminium-smelters/32“Hydro Invests in Carbon Capture to Eliminate Emissions from Aluminum Production,”Light Metal Edge,March 21,2022,https:/wwwlightmetalagecom/news/industry-news/smelting/hydro-invests-in-carbon-capture-to-eliminate-emissions-from-aluminum-production/ing from t

91、he current aluminum production process CCUS en-tails capturing carbon,either for use in the production process or for storage in deep geological formations30 It is often sug-gested as a solution in hard-to-abate sectors,such as steel However,for aluminum,the off-gas,or the byproduct emitted by alumi

92、num smelters,has a low concentration of CO2 relative to other industries,at about 1 percent CO231 By comparison,carbon capture technologies have previously worked with off-gas at a concentration of CO2 above 4 percent or much higher,as is the case with ethanol refineries Moreover,aluminum pro-ductio

93、n also releases perfluorochemicals(PFCs),which are not captured by existing carbon capture technologies PFCs are greenhouse gases that,although they are released in small amounts,have a far higher Global Warming Potential than CO2,and remain in the atmosphere for thousands of years To overcome these

94、 challenges,Oslo-based Hydro is currently working to develop capture technology that could be retrofit-ted to its existing aluminum plants32 Early results show that off-gas capture could remove most of the CO2 released during aluminum smelting,while direct air capture technology could remove other e

95、missionsEach of the solutions mentioned above provides significant po-tential to help decarbonize the aluminum market Moving for-ward,a combination of them allrenewable energy,recycling,inert-anode technologies,and,eventually,perhaps nuclear,CCUS,and hydrogenwill likely be key to mitigating emission

96、s in the aluminum production process 8ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESWhile there are promising pathways for aluminum decarbonization,trade policies play a significant role in determining whether the industry pursues those paths Emerging agreements in th

97、e EU and the United States have shown potential to capitalize on this op-portunity and encourage decarbonizationCARBON BORDER ADJUSTMENT MECHANISMThe EUs Carbon Border Adjustment Mechanism(CBAM)is a policy measure responding to the concern that EU industries attempting to decarbonize emissions-inten

98、sive products,like aluminum,could be priced out of the market33 Higher costs created by the EUs carbon prices and industry standards could make EU products less competitive,allowing for carbon leak-age,in which greener products are priced out of the market by cheaper carbon-intensive alternatives,or

99、 producers respond to climate policies by relocating to countries with less ambi-tious green standards The CBAM responds to carbon leakage by implementing a fee on carbon for carbon-intensive goods entering EU borders34 This is intended to create a level playing field among domestic and foreign good

100、s as EU industries work toward decarbonization The CBAM,part of the EUs overall Fit for Fifty-Five green deal,considers aluminumalongside cement,iron and steel,fertiliz-ers,electricity,and hydrogento be one of the carbon-inten-sive sectors most subject to competitive disadvantage from increasing car

101、bon prices imposed by the EU Emissions Trading System,and at risk of carbon leakage from companies offshor-ing to lower-cost countries35 As such,when the EU CBAM en-tered into force in October 2023,it began a transition process requiring filing of reports on the embedded carbon emissions contained i

102、n a series of designated imported aluminum prod-33“Carbon Border Adjustment Mechanism(CBAM)Starts to Apply in Its Transitional Phase,”European Commission,September 29,2023,https:/eceuropaeu/commission/presscorner/detail/en/ip_23_468534“Carbon Border Adjustment Mechanism,”European Commission,last vis

103、ited November 12,2023,https:/taxation-customseceuropaeu/carbon-border-adjustment-mechanism_en35 Ibid.36 Silvia Weko,“The Future for Global Trade in a Changing Climate,”Chatham House,December 5,2022,https:/wwwchathamhouseorg/2022/12/future-global-trade-changing-climate37 Bart Le Blanc,“Potential Conf

104、licts between the European CBAM and the WTO Rules,”Norton Rose Fulbright,February 2023,https:/wwwnortonrosefulbrightcom/en/knowledge/publications/9c5d9ec6/potential-conflicts-between-the-european-cbam-and-the-wto-rules38“Japanese Industry Groups Resist EU Carbon Border Rules,”Argus Media,August 1,20

105、23,https:/wwwargusmediacom/en/news/2474953-japanese-industry-groups-resist-eu-carbon-border-rules39 Yuka Obayashi and Katya Golubkova,“Explainer:Japans Carbon Pricing Scheme being Launched in April,”Reuters,March 30,2023,https:/wwwreuterscom/markets/carbon/japans-carbon-pricing-scheme-being-launched

106、-april-2023-03-30/40 John Milko,“How a Carbon Border Adjustment Mechanism Can Strengthen US Competitiveness,Workers,and Climate Efforts,”Third Way,February 2,2023,https:/wwwthirdwayorg/memo/how-a-carbon-border-adjustment-mechanism-can-strengthen-us-competitiveness-workers-and-climate-effortsucts,lea

107、ding in 2026 to phasing in of fees on each import keyed to its reported emissions This is intended to protect EU producers working toward sustainability versus imports from competitors that produce goods that are high in carbon,while incentivizing global producers to similarly prioritize decarbon-iz

108、ation These intentions are panning out among some EU trade partners,such as Turkey and Bosnia and Herzegovina,which have indicated their willingness to fast track their decarboniza-tion efforts in response to CBAM36 However,India and China,as well as many other countries from the Global South,argue

109、that CBAM is an unfair violation of the World Trade Organization(WTO)rules on free trade,particularly the most favored nation(MFN)rule,which prohibits discriminating among similar prod-ucts from different trading partners37 For example,developing countries have fewer resources to counteract emission

110、s inten-sity,leading to higher carbon prices at the EU border and dis-advantaging them EU officials,however,argue that the CBAM will follow all WTO rules on international trade In light of the EU CBAM,the United States and the United Kingdom(UK)have also begun to consider similar policies,as have Ca

111、nada(consultations completed),Australia(consulta-tions announced),and Taiwan(Climate Change Response Act enacted)Japan appears to oppose the EU CBAM over con-cerns that its disclosure requirements could violate the confi-dentiality of price and cost data38 In partial response,Japan is planning to la

112、unch its own domestic carbon levy and trad-ing system39 In the United States,legislators from both po-litical parties have publicly expressed support for some kind of charges taxing imports of steel and aluminum more emis-sions-intensive than US-average products,although support for any carbon charg

113、e on domestic production of the same product for which the import charges would compensate is much less wide-spread40 Similarly the UK launched consulta-tions on the possibility of enacting a CBAM to support domes-Trade of Low-Emissions Materials9ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHA

114、LLENGES AND OPPORTUNITIEStic decarbonization efforts41 Together,the EU,Canada,the United States,and the UK represent a significant share of the aluminum market If all four enact and harmonize CBAM-like policies,they could have a widespread impact on embedded emissions in traded aluminum products,pro

115、mpting a global race to the top in all heavy industries GLOBAL ARRANGEMENT ON SUSTAINABLE STEEL AND ALUMINUM(GASSA)In the fall of 2021,in recognition of this opportunity in sev-eral heavy-emitting sectors,the United States and the EU an-nounced their intention to work together on an arrangement that

116、 would incentivize countries and industry actors toward reducing the carbon intensity of their traded goods,including aluminum The initiative,the Global Arrangement on Sustainable Steel and Aluminum(GASSA),aims to bring states together to limit market access for carbon-intensive steel and aluminum42

117、 This proposal was negotiated as part of a temporary US-EU trade“time out,”in which the United States suspended tariffs imposed during the Donald Trump administration on steel and aluminum imported from the EU and agreed to seek a long-term solution that com-bined a new trade approach with increased

118、 cooperation to pro-mote decarbonization of these industries43 The time out was later extended to Japan and the UK In return,the EU suspended its retaliatory tariffs on US products The proposed arrangement also created a technical working group with the goal of combin-ing innovative trade approaches

119、 and decarbonization efforts An essential proposed component of the arrangement is the development of a methodology to measure embedded carbon emissions in traded steel and aluminum imports into the EU to guide trade instruments that would advantage trade in cleaner,41“UK Government Launches Consult

120、ation on a Carbon Border Adjustment Mechanism and Other Measures,”EY Global,March 30,2023,https:/wwweycom/en_gl/tax-alerts/uk-government-launches-consultation-on-a-carbon-border-adjustmen42 Ana Swanson,“US Proposes Green Steel Club that Would Levy Tariffs on Outliers,”New York Times,December 7,2022,

121、https:/wwwnytimescom/2022/12/07/business/economy/steel-tariffs-climate-changehtml43 Timothy Meyer and Todd N Tucker,“How the US and EU Can Rewrite Trade Rules to Fight the Climate Crisis,”Roosevelt Institute,March 15,2023,https:/rooseveltinstituteorg/2023/03/15/how-the-us-and-eu-can-rewrite-trade-ru

122、les-to-fight-the-climate-crisis/44“G7 Establishes Climate Club,”BMWK,December 12,2022,https:/wwwbmwkde/Redaktion/EN/Pressemitteilungen/2022/12/20221212-g7-establishes-climate-clubhtml45 Swanson,“US Proposes Green Steel Club that Would Levy Tariffs on Outliers”lower-emissions products Measuring carbo

123、n emissions inten-sity will be important for countries and companies to determine progress in their efforts to reduce carbon emissions and develop markets for climate-friendly goods and services Improvements in the quality and transparency of data to measure carbon emis-sions can help increase coord

124、ination among major economies and develop trade policies that reduce emissions The GASSA initiative runs parallel to the Group of Seven(G7)Climate Club,an inclusive alliance with the goal of uniting ambitious countries toward the trade of low-carbon commodities44 The Joe Biden administration announc

125、ed a proposal in December 2022 that outlined its version of what a trade agree-ment under GASSA could look like45 This proposal detailed an international consortium of ambitious states encouraging trade in low-carbon steel and aluminum To join the coalition,countries would have to meet emissions sta

126、ndards and com-mit to avoiding overproduction of steel or aluminum At the same time,member states would enforce tariffs on countries with high emissions intensities that did not join,such as China Member countries would have more favorable trade terms among themselves Finalization of this arrangemen

127、t was origi-nally promised for October 2023However,the US proposal was fundamentally inconsistent with the EU CBAM which,by the fall of 2023,had been finally ap-proved as EU law and in October 2023 went into effect With the parties of the US-proposed consortium so far apart,they announced at the EU-

128、US Leaders Summit in October that while some progress had been made,discussions would continue with a new deadline of Earth Day 2024 There is some expecta-tion that no agreement other than continued suspension of the tariffs will eventually emerge from these discussions While the 10ATLANTIC COUNCILD

129、ECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESUnited States and the European Union are under some pressure to harmonize their trade approaches for steel and aluminum to both address global overcapacity and encourage decarbon-ization,the EUs CBAM and the Biden administrations position

130、differ fundamentally because of their divergent climate strate-gies The EUs CBAM is predicated on progressive increases in the price of carbon,which are intended to make emissions unprofitable By contrast,the United States uses government expenditures to incentivize decarbonization,rather than using

131、 carbon pricing to disincentivize emissions The United States is unlikely to implement a carbon pricing scheme in the near future,complicating the potential for a homogenized strategy going forward Alongside GASSAs plans,major industry actors are partnering to set decarbonization goals,creating coal

132、itions,such as Carbon Offsetting and Reduction Scheme for International Aviation(CORSIA),Global Cement and Construction Association,and Decarbonizing Transport Initiative46 These coalitions have 46“Aluminium for Climate”set ambitious decarbonization targets for their respective in-dustries For examp

133、le,the Global Cement and Construction Associations objective is to achieve carbon-neutral concrete by 2050,and CORSIA aims to make all new growth in interna-tional flights carbon neutral Since its inception,many discussions about GASSA have fo-cused primarily on steel,but the trade policy and geopol

134、itical implications for aluminum are similar For both commodities,China produces roughly half of global output,while India is second and increasing production rapidly In the case of steel,India has the highest emissions intensity of any major country from production of primary steel;China is seventh

135、 For alumi-num,China has the highest average emissions intensity of any country;India is second With respect to both commodities,while it appears that the EU and US positions may be signifi-cantly at odds due to the EUs newly adopted regulations to implement its CBAM,discussed below,either approach

136、will heavily disadvantage imports from China and India11ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESBeyond efforts through GASSA and the EU CBAM to in-centivize the decarbonization of aluminum,states are in-dividually taking significant actions to achieve the same g

137、oal Key aluminum producers are instituting pathways to reduce carbon in the production and trade of aluminum UNITED ARAB EMIRATES(UAE)As both the fifth-largest producer of aluminum,with 34 per-cent of the global market,and the next host of the United Nations(UN)Climate Change Conference(known as COP

138、),the UAEs actions and priorities on green aluminum could have sub-stantial influence on global action toward decarbonization The UAEs largest aluminum producer,Emirates Global Aluminum(EGA),is the countrys biggest industrial conglomerate outside the oil and gas sectors47 EGA recently announced plan

139、s to de-carbonize,developing its own technologies to do so,in order to access the market for green aluminum EGA has already begun taking steps to achieving decarbonization through expanding its use of renewable energies For instance,in 2021,EGA be-came the first company to produce commercial aluminu

140、m using solar power,and has now announced plans to shift completely to nuclear and solar energy to produce aluminum48 EGA has also helped launch the UAEs Aluminum Recycling Coalition to promote aluminum recycling among consumers49 This coalition plans to finance a study by the International Aluminum

141、 Institute on recycling rates and behaviors among consumers in the UAE,in order to assess the type of interven-tion needed to motivate more recycling Following this study,47 Fareed Rahman,“EGA Aims to Decarbonise Its Operations as Demand for Green Aluminum Spikes,”National News,November 25,2021,http

142、s:/wwwthenationalnewscom/business/economy/2021/11/25/ega-aims-to-decarbonise-its-operations-as-demand-for-green-aluminium-spikes/48 Aarti Nagraj,“EGA Plans Shift to Nuclear and Solar for Aluminum Production as Demand Soars,”National News,April 14,2022,https:/wwwthenationalnewscom/business/energy/202

143、2/04/15/ega-plans-shift-to-nuclear-and-solar-for-aluminium-production-as-demand-soars/49 Liz Nastu,“United Arab Emirates Launches Aluminum Recycling Coalition,”Environment and Energy Leader,January 16,2023,https:/wwwenvironmentalleadercom/2023/01/united-arab-emirates-launches-aluminum-recycling-coal

144、ition/50 Attwood,“Green Aluminum is Competitive Today”51 Phil McKenna and Lili Pike,“Why Chinese Aluminum Producers Emit So Much of Some of the Worlds Most Damaging Greenhouse Gases,”Inside Climate News,December 23,2022,https:/insideclimatenewsorg/news/23122022/china-aluminum-immortals/52“How China

145、Is Decarbonizing the Electricity Supply for Aluminium,”World Economic Forum,April 21,2022,https:/wwwweforumorg/agenda/2022/04/how-china-is-decarbonizing-the-electricity-supply-for-aluminium/53“Rusal Sees Chinas Recycled Aluminium Output Almost Tripling by 2030,”Reuters,June 16,2021,https:/wwwreuters

146、com/article/us-metals-aluminium-rusal-china/rusal-sees-chinas-recycled-aluminium-output-almost-tripling-by-2030-idUSKCN2DS0ZB54 Brian Taylor,“ISRI2023:China Opens Door Wider for Nonferrous Scrap,”Recycling Today,April 25,2023,https:/wwwrecyclingtodaycom/news/china-aluminum-copper-scrap-recycling-202

147、3-isri-cmra-alter/55“Rusal Sees Chinas Recycled Aluminium Output Almost Tripling by 2030”the coalition intends to support the government in using the results to develop aluminum recycling regulations and infra-structure The UAEs simultaneous reliance on fossil fuels and deepening decarbonization pri

148、orities suggest that it could in-centivize similar action from other fossil fuel-reliant countries through its upcoming COP leadership CHINAAs the worlds largest producer of aluminum,responsible for more than 55 percent of global aluminum production and de-mand,Chinas aluminum industry holds signifi

149、cant potential for decarbonization50 However,it is also the worlds highest-emit-ting aluminum industry due to its reliance on coal-powered electricity,and also accounts for 81 percent of the global indus-trys PFC emissions51 In recognition of this emissions intensity,the Chinese govern-ment has begu

150、n exploring pathways to decarbonization by ex-panding the production of recycled aluminum and increasing access to renewable energy to lower aluminum emissions52 China has announced several recycling projects,bolstered by significant regulatory support53 Currently,China uses alumi-num scrap to make

151、about 21 percent of its aluminum54 If its recycling efforts materialize,its production of secondary alu-minum could nearly triple,from 76 million tons in 2020 to 20 million tons by 203055 The viability of expanding new aluminum production to areas where renewable energy is produced in China is compl

152、icated International Progressand ObstaclesToward Green Aluminum12ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESby geographic constraints,intermittency in available renew-ables,and the high cost of grid power56 In provinces rich with hydropower capacity,aluminum produc

153、tion has become less carbon intensive In the southern province of Yunnan,the regions 70 percent mix of hydroelectric power and cheap energy rates drewmillions of tonsof new aluminum production over the past few years,though a drought then led to an un-precedented hydropower shortage,forcing provinci

154、al authorities to order a30 percentreduction in aluminum production until the end of 2021 The fragility of the situ-ation in Yunnan has led the central governments NDRC to issue adirectiveto aluminum companies to diversify future plants away from hydroelectric power and toward wind and solar,which c

155、ould complicate Chinas attempts to reach peak aluminum emissions by 202557 Chinas carbon emissions trading system is expected to ex-pand to industry,including aluminum,by 2025,which could help incentivize transition from high-to lower-emitting produc-tion58 Moreover,the government has plans to creat

156、e a carbon price to raise coal prices as well as the cost of coal-fired power by 2025,increasing the carbon-price incentives process59CANADACanada stands in contrast to China,which has a long way to go to cut aluminum emissions Also one of the top five alumi-num producers globally,Canada is home to

157、what is sometimes called the worlds“most sustainable aluminum industry”be-cause of its use of hydropower and high percentage of scrap60 Quebec produces 90 percent of Canadian aluminum;its geo-graphic position and existing capacity enable production to be powered almost entirely by hydroelectricity I

158、n response,global leaders in the aluminum sector are launching projects in Canada Rio Tinto recently announced new plans to invest in 56“How China Is Decarbonizing the Electricity Supply for Aluminium”57 Reinsch and Benson,“Decarbonizing Aluminum”58 Ivy Yin,“Chinas Compliance Emission Trading System

159、 to Accelerate Coverage of CBAM-Eligible Sectors,”S&P Global,May 9,2023,https:/wwwspglobalcom/commodityinsights/en/market-insights/latest-news/energy-transition/050923-chinas-compliance-emission-trading-system-to-accelerate-coverage-of-cbam-eligible-sectors59“How China Is Decarbonizing the Electrici

160、ty Supply for Aluminium”60 Attwood,“Green Aluminum is Competitive Today”61“Rio Tinto to Expand Aluminum Smelter with$14B Investment Using Greener Technology,”Global News,June 12,2023,https:/globalnewsca/news/9763017/rio-tinto-quebec-aluminum-smelter-green-technology/62“Rio Tinto and Alcoa announce w

161、orlds first carbon-free aluminum smelting process,”Rio Tinto,press release,May 10,2018,https:/wwwriotintocom/fr-CA/can/news/releases/First-carbon-free-aluminium-smelting63 Jael Holzman and Corbin Hiar,“War Threatens Supply of Green Aluminum for Cars,Beer Cans,”E&E News,March 3,2022,https:/wwweenewsn

162、et/articles/war-threatens-supply-of-green-aluminum-for-cars-beer-cans/64 Ibid65“Russian Aluminium Stocks at LME Grow,Boosting Demand for Indian Alternative,”Reuters,June 12,2023,https:/wwwreuterscom/markets/commodities/share-russian-aluminium-london-metal-exchange-warehouses-jumps-2023-06-12/low-car

163、bon smelting technology in Quebec61 Moreover,Alcoa and Rio Tinto have announced a joint project based in Canada to develop the worlds first carbon-free aluminum-smelting fa-cility62 The companies say that this project,called Elysis,will revolutionize the process of making aluminum by using anodes ma

164、de of nonreactive materials instead of carbon,thus produc-ing oxygen in place of greenhouse gas emissions The compa-nies plan to expand and commercialize their process and begin selling the technology in 2024 Quebecs case demonstrates the green potential of producing aluminum in locations with ac-ce

165、ss to consistent,reliable renewable energies RUSSIAA Russian aluminum producer,En+Group IPJSC,was one of the worlds largest producers of low-carbon aluminum,through its extensive use of available hydropower63 The countrys green aluminum efforts have been derailed,however,by the international respons

166、e to its invasion of Ukraine Due to trade restrictions,Russian aluminum companies have faced diffi-culty in acquiring the alumina needed to produce aluminum Additionally,tariffs on Russian products following Russias inva-sion of Ukraine have caused demand for its low-carbon alumi-num to drop signifi

167、cantly as companies turn to other producers,including those with higher emissions intensities For example,prior to the war,Budweiser had announced plans to partner with En+to produce low-carbon cans as part of the companys net-zero goals These plans are now on hold64 As demand for Russian aluminum h

168、as fallen,Indian aluminum,which produces more GHG emissions,has taken its place65 INDIAIndia,the worlds second-largest producer of aluminum,has seen increasing demand following Russias invasion of Ukraine and subsequent trade restrictions,but the country is expected 13ATLANTIC COUNCILDECARBONIZING T

169、HE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESto soon face significant trade repercussions from the EUs CBAM66 Indias aluminum industry has a higher emissions intensity than average,meaning that the EU CBAM will likely impose tariffs on Indian aluminum when fees enter into force in 2026 The Global

170、Trade Research Initiative in Delhi predicts that the effects of the EUs CBAM on the Indian aluminum in-dustry will be significant,with a projected 6 percent tariff India has challenged the EU on the legality of its CBAM,on the basis that it poses the type of trade barrier banned by the WTO67 The cou

171、ntry is seeking exemptions for its small and medium-sized manufacturers,arguing that that they need more time and re-sources to meet the guidelines laid out by the EU68 Although much of Indias growing demand for more aluminum is domes-tic,it also has a significant export flow of fabricated aluminum

172、products Reports conflict on whether India will raise this as an official complaint at the WTOs next meeting or continue dis-cussing this privately with EU officials Regardless,the passage of CBAM likely motivated the Indian government to develop its own national carbon market,which may lead domesti

173、c carbon pricing to similarly incentivize de-carbonization Leaders in Indias aluminum industry have al-ready begun to respond to these incentives In 2022,Vedanta Aluminum,Indias largest aluminum producer,launched“Restora,”Indias first low-carbon aluminum69 UNITED STATES The US aluminum industry has

174、made significant strides toward decarbonization by increasing its recycling efficiency70 Since 1991,the sector has reduced its carbon intensity by 43 percent President Bidens administration has demonstrated ambition in supporting global decarbonization and additional national efforts to lower emissi

175、ons At COP26,Biden,in collaboration with the World Economic Forum,launched the First Movers 66 Peter Jarka-Sellers and Shayak Sengupta,“Canceling Carbon:The Global Context of Indias New National Carbon Market,”Observer Research Foundation America,July 18,2023,https:/orfamericaorg/newresearch/cancell

176、ing-carbon-global-india67 Manoj Kumar and Neha Arora,“India Plans to Challenge EU Carbon Tax at WTO,”Reuters,May 16,2023,https:/wwwreuterscom/world/india/india-plans-challenge-eu-carbon-tax-wto-sources-2023-05-16/68 Adrija Chatterjee,Vrishti Beniwal,and Swansy Afonso,“India Prefers Negotiating With

177、EU on Carbon Tax to WTO Complaint,”Bloomberg,June 5,2023,https:/wwwbloombergcom/news/articles/2023-06-06/india-prefers-negotiating-with-eu-on-carbon-tax-to-wto-complaint#xj4y7vzkg69“Vedanta Aluminium Launches Restora,Indias First Low-Carbon Aluminium,”Economic Times,February 25,2022,https:/energyeco

178、nomictimesindiatimescom/news/renewable/vedanta-aluminium-launches-restora-indias-first-low-carbon-green-aluminium/8982968170 Attwood,“Green Aluminum is Competitive Today”71“First Movers Coalition:Sectors,”World Economic Forum,last visited November 12,2023,https:/wwwweforumorg/first-movers-coalition/

179、sectors72“Carbon Removal in the Bipartisan Infrastructure Law and Inflation Reduction Act,”World Resources Institute,December 22,2022,https:/wwwwriorg/update/carbon-removal-BIL-IRA 73 Alan Krupnick and Aaron Bergman,“Incentives for Clean Hydrogen Production in the Inflation Reduction Act,”Resources

180、for the Future,November 9,2022,https:/wwwrfforg/publications/reports/incentives-for-clean-hydrogen-production-in-the-inflation-reduction-act/74“Aluminum,”International Energy Agency,last visited November 12,2023,wwwieaorg/energy-system/industry/aluminium#tracking75 Elena Brito Pantoja,“Alunorte Alum

181、ina Plant Fires Up First Electric Boiler,”Hydro,March 10,2022,https:/wwwhydrocom/en/media/news/2022/alunorte-alumina-plant-fires-up-first-electric-boiler/76“Mechanical Vapour Recompression for Low Carbon Alumina Refining,”ARENA,September 15,2023,https:/arenagovau/projects/mechanical-vapour-recompres

182、sion-for-low-carbon-alumina-refining/Coalition71 This initiative seeks to bring together companies using their purchasing power to create early markets for clean technology through corporate pledges to use low-embedded carbon commodities Aluminum is one of its key sectors,mean-ing that members must

183、invest in low-intensity aluminum This program has the potential to be an important leadership ini-tiative stimulating the financial capital necessary to drive both production and demand for sustainable aluminum Domestic policies such as the Infrastructure Investment and Jobs Act(IIJA)and the Inflati

184、on Reduction Act(IRA)have fa-cilitated financial opportunities for investment and innovation in CCUS and green hydrogen The IIJA contains$12 billion in funding for carbon capture investments and infrastructure72 It also created$95 billion in funding for hydrogen,with$8 billion dedicated to“hydrogen

185、hubs”supporting research and devel-opment73 The IRA built upon these funding opportunities,cre-ating two tax credits:one for carbon capture technologies and one wherein the value of the credit is dependent on lifecycle emissions These policies support the development of decar-bonization technologies

186、 applicable not only to aluminum,but also to other hard-to-abate industries AUSTRALIA AND BRAZIL Australia and Brazil are both tackling emissions in the refining stage of aluminum production74 For example,a Norsk Hydro facility in Brazil implemented electric boilers at one of its refin-eries,replaci

187、ng its previous coal-fired machinery75 In Australia,the Australia Renewable Energy Agency is exploring the poten-tial of mechanical vapor recompression,which would similarly electrify the production of steam76 Both countries are also con-ducting feasibility studies on hydrogen as an alternate power

188、source,demonstrating their commitment to exploring varied pathways toward decarbonization 14ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESAdvancing a sector-wide transition toward decarbon-ization requires insights and participation from all lev-els of stakeholders an

189、d investors Toward this goal,a global alliance of climate leaders,including the We Mean Business Coalition and the World Economic Forum,created the Mission Possible Partnership(MPP),focused on supporting and unlocking decarbonization across several in-dustries77 The MPP has released sectoral transit

190、ion strategies for seven of the worlds most energy-intensive,hard-to-abate industries,including aluminum The MPPs strategy for aluminum describes power decar-bonization and recycling as the biggest pieces in this puzzle The strategy would require multiple elements:government investment in renewable

191、energy,particularly as it relates to access and reliability;policies that incentivize companies to invest in renewables;and expanded electric grids with ca-pacity for more renewables,improvements in storage,and 77“Making Net-Zero Aluminum Possible”78“First Movers Coalition”allowances for cross-borde

192、r electricity flows The MPP strat-egy has been endorsed by the leading global trade associa-tion,the International Aluminum Institute The G7s Industrial Decarbonization Agenda also covers aluminum The First Movers Coalition(FMC)similarly commits to action on industrial decarbonization The FMC,starte

193、d by the United States at COP26 and now supported by the World Economic Forum,is a coalition of thirteen government partners and doz-ens of leading companies,including Ford,GM,Volvo,Apple,and PepsiCo78 This coalition commits to leverage its purchas-ing power to create and support markets for green t

194、echnology in eight high-intensity sectors These sectors collectively ac-count for 30 percent of global emissions and are projected to contribute to more than 50 percent of emissions in the com-ing years The coalitions initial launch at COP26 committed to action on aviation,shipping,steel,and truckin

195、g In 2022,the collation further committed to aluminum and carbon removal Multilateral Efforts to Promote Decarbonization15ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESDeveloping commonly accepted measurement pro-tocols for determining embedded GHG emissions in alumin

196、um production facilities and products is a key threshold objective and a prerequisite not only to fashioning effective trade instruments to incentivize trade of cleaner aluminum,but for design of other policies such as public purchase programs,subsidies,mandates,and con-sumer labelling In the cases

197、of steel and cement,meaningful progress has been made over the past three years on standard setting for embedded carbon and greenhouse gases by several partner-ships and multilateral coalitions working in parallel These in-clude the Industrial Deep Decarbonization Initiative(IDDI),a project of the C

198、lean Energy Ministerial hosted by the United Nations Industrial Development Organization(UNIDO)but lo-cated at the International Energy Institute(IEA)in Paris work-ing with the Steel Committee of the Organization for Economic Development(OECD),the SteelZero/Responsible Steel part-nership,and the MPP

199、,FMC,and others mentioned above79 Urgency to coordinate and centralize these initiatives for offi-cial governmental endorsement and adoption,however,has been lacking A decision by leading governments to select a single venue to coordinate the development of measurement methodology,and to help organi

200、ze a data facility for steel and cement facilities that would allow credible application of these standards to be applied in a transparent manner,is probably essential to further progress in those sectors A similar initiative 79 The Clean Energy Ministerial Industrial Deep Decarbonization Initiative

201、(IDDI)is a coalition of public and private organizations that aims to grow demand forlow-carbon industrial materials Working with national governments,IDDI is working to establish ambitious public and private-sector procurement targets,incentivize investment inlow-carbonproduct development,and desig

202、n industry guidelinesand selection of a venue and responsible parties with a mission to do the same for aluminum could part a significant part of the decision-making process for steel and cement Similar to,and in parallel with,the current direction of work on steel and cement methodologies,measureme

203、nt standards for embedded emissions in aluminum should also focus on lifecy-cle emissions,including appropriate upstream emissions This goal may be somewhat complicated by the EU CBAM entering its two-year transition phase this year As the only official oper-ating“compliance”system for trade purpose

204、s for measurement of embedded emissions in aluminum,the CBAM methodology is not a“lifecycle”measurement but instead designed to mir-ror only direct emissions(scope one)from aluminum produc-tion,since it is only those emissions that European aluminum companies report and are covered by the EU ETS Whi

205、le the transition phase of the CBAM will also require reporting by importers of aluminum products of the amount of electricity used and corresponding emissions,these indirect emissions will not be included in the tariffs that will go into effect in 2026 according to current guidance Moreover,during

206、the transition reporting period,default use of the importing(producing)coun-trys overall average grid emissions intensity is permitted This approach may well result in inaccurate reporting of actual life-cycle embedded emissions in many aluminum products As the CBAM program develops in parallel with

207、 efforts to set lifecy-cle measurement standards for steel,cement,aluminum,and other such products,resolving anomalies in measurement of emissions will require focused attentionDeveloping Standards for Measuring Embedded Carbon Emissions16ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES

208、AND OPPORTUNITIESThe decarbonization of heavy industries like aluminum will be vital to reaching long-term climate goals With aluminum both a major commodity in global trade and an important input into green goods that are essential for a cleaner economy,it is urgent for policymakers and compa-nies

209、to accelerate the sectors decarbonization Governments should elevate the need to decarbonize the industry at both the domestic and international levels,and work together with the private sector to continue making progress in solutions for reducing emissions in both the production and trade of alumi-

210、num Because the aluminum market is tightly linked to interna-tional trade,data quality,data transparency,and trade policies that are aligned with climate goals are necessary for deep de-carbonization and a quicker transition This section provides recommendations on decarbonizing aluminum and similar

211、 in-dustries,building on those already put forth by the Consortium for Climate-Aligned Trade(CCAT)and the IEA To advance decarbonization of aluminum and similar indus-tries,we recommend the followingRECOMMENDATION 1:Governments should commit to decarbonization goals for heavy sectors,such as aluminu

212、m,that are in line with the Paris Agreement.The G7 and major producing countries of the most emissions-in-tensive industrial commodities should commit to specific de-carbonization goals on a sector-by-sector basis,beginning with steel,aluminum,and cement,then moving to fertilizer and chemicals These

213、 goals should be compatible with the Paris Agreement RECOMMENDATION 2:Governments should acknowledge the importance of climate-related trade instruments and utilize them to reduce emissions in heavy industries like aluminum.Both producing and consuming country governments should acknowledge that cli

214、mate-related trade instruments tied to emissions intensity of traded products are appropriate mea-sures to use in the overall effort to incentivize mutual and global efforts to advance industrial decarbonization in sectors such as aluminum Climate-aligned trade rules are needed to promote innovation

215、,reduce costs,and stimulate demand for cleaner goods Smart climate and trade policies are also needed to minimize carbon leakage and increase overall climate ambition RECOMMENDATION 3:Governments and international organizations should craft policies that target the“emissions intensity”of facilities

216、and products.In these hard-to-abate sectors,embedded GHG emissions,or“emissions intensity,”of the facilities and products should be the primary focus of overall efforts,including market-creation policies(public purchase,subsidies,corporate customer vol-untary commitments),mandates,consumer commitmen

217、ts,and trade instrumentsRECOMMENDATION 4:Governments and international organizations should develop protocols for determining carbon intensity in aluminum production facilities and products,as they are doing for steel and cement.Developing commonly accepted measurement protocols for determining embe

218、dded GHG emissions in aluminum produc-tion facilities and products is a key threshold objective and a prerequisite to moving forward with any and all policies,including trade instruments Meaningful progress has been made over the past three years on standard setting for steel and cement by several d

219、ifferent partnerships and coalitions working in parallel,but urgency to combine and coordinate these initiatives for official governmental adoption has been lacking A similar initiative,more centralized,should be under-taken for aluminumRECOMMENDATION 5:Major producer countries should work with inte

220、rnational organizations to consolidate and centralize ongoing separate initiatives and partnerships currently working on setting standards for measuring embedded emissions in key commoditiesincluding aluminuminto a single venue and forum.Given the plethora of coalitions and entities now working on s

221、etting standards for measuring embedded carbon in steel and cement,consolidating this effort within the OECD/IEAtogether with the IDDI,a project of the Clean Energy Recommendations17ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESMinisterial hosted by the UNIDO but loca

222、ted at the IEA in Pariswould provide a productive venue to develop a com-mon standard for lifecycle embedded GHG emissions in the aluminum industry,as well as the steel and cement industries An aluminum forum at this same venue could be a part of the Climate Club or separate from it,but should be an

223、 official fo-rum open to all producing and consuming countries to join as members,and would be charged with structuring a global data facility adding aluminum data to steel and cement data Key aluminum producers to recruit to any new initiative are the United States,China,India,Canada,the UAE,Bahrai

224、n,Norway,Iceland,and Australia RECOMMENDATION 6:Industry associations and international forums should increase collaboration on data and standard setting.The Organisation for Economic Co-opeartion and Development(OECD)team on aluminum standards should also work with major aluminum trade associations

225、includ-ing the International Aluminum Institute,the Aluminum Association(United States),the Aluminum Association of Canada(AAC),Norsk Hydro,and Emirates Global Aluminumas well as representatives from industry in China and India The G7 and aluminum-producing countries also should com-mit to working t

226、ogether,directly and via international institu-tions,to improve data transparency,availability,and quality Creating a global data facility for aluminumjust as will be necessary for the steel sectorwould initially rely on existing industry databases Thus,they must create an open venue where steel-pro

227、ducing member countries join to construct such a data facility for steel,and could also serve as the venue for a similar facility for data on aluminum manufacture to verify measurements of emissions attributable to aluminum manufacturing plants and their products RECOMMENDATION 7:Governments and int

228、ernational organizations should ensure that embedded emissions measurement focus on lifecycle emissions.Standards for measurement of embedded emissions in alu-minum should also focus on lifecycle emissions,including appropriate upstream emissions Resolving differences in measurement of emissions ado

229、pted in the CBAM program as it develops in parallel with separate efforts to set lifecycle mea-surement standards for steel,cement,and aluminum for other policy purposes will require increased attentionRECOMMENDATION 8:As their highest priorities in aluminum decarbonization,governments and industry

230、should adopt increased use of scrap aluminum and renewable energy for the refining and smelting processes involved in primary production.Policymakers and industry should aim for the greater use of scrap aluminum,and for increased renewable energy for the refining and smelting processes used in prima

231、ry productionThe use of scrap can cut 9095 percent of the power used to produce aluminum and reduce other unhealthy emissions;it also eliminates emissions from mining and transportation of ore and is less expensive Scrap will not,however,be available in equal measures across producing countries Curr

232、ent esti-mates are that,by 2050,a substantial amount of aluminum will still need to be produced by primary processes The use of renewable energy rather than coal-based power in the primary refining/smelting process could reduce emissions by as much as 70 percent While progress has been made in many

233、countries on recycling of aluminum cans(though,in the United States,the percentage has fallen),policies to implement a more circular economy that captures other post-use alumi-num can be important The possibility of international coop-eration to encourage construction of new primary aluminum smelter

234、s could be explored in countries where nearly 100 per-cent renewable energy is used 18ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESWith aluminum as one of the most energy-intensive and greenhouse gas-emitting commodities in the world,and demand expected to continue t

235、o grow sharply in the coming decades,decarbonization of the aluminum sector,along with all heavy industries,will be vi-tal to reaching global long-term climate goals Policymakers,in-dustry officials,and NGOs have the opportunity to collaborate to grow the green aluminum market,keeping up momentum se

236、en in recent yearsThe pathways to decarbonization of aluminum production are relatively clear and straightforward,if challenging:increase use of recycled scrap material(because relatively pure aluminum can be recycled indefinitely,cutting emissions by close to 90 percent,as well as reducing mining a

237、nd transportation);supply-ing more clean renewable energy to new production facilities;increasing efficiency through new technology,primarily the use of non-carbon anodes In the long run,nuclear power may provide another important pathway,while hydrogen and CCUS are less likely to do so Moving along

238、 these pathways will re-quire mandates and commitments including further regulations and carbon pricing,financing incentives,and market creation through required public and private purchase commitments and labelling/public education Trade policies are another important tool to decarbonize the alu-mi

239、num market Trade policies initiated among the dozen largest producing and importing/customer nations can enhance and incentivize these steps,but may leave trade competitiveness as a possible drag on international cooperation Currently,the EU and United States have taken the lead in beginning to reso

240、lve these issues,which will require not only greater G7 approval but outreach to China and India as the largest producers and major future markets It is vital that major economies put aside trade differences and increase coordination,including collabo-ration on decarbonizing key industries such as a

241、luminum Conclusion19ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESMatt Piotrowski is senior director of policy and research at Climate Advisers,focusing on indus-trial decarbonization,trade policy,US climate policy,financial regulations,carbon markets,and climate dipl

242、omacy Before joining Climate Advisers,Piotrowski worked as senior editor of Securing Americas Future Energy(SAFE)news service,where he focused on financialmarkets,clean transportation,and state and federal energy policy Before SAFE,Piotrowski worked at Energy Intelligence,where he edited multiple pu

243、blications and served as Washington bureau chiefGeorge Frampton is a distinguished senior fellow and the director of the Transatlantic Climate Policy Project at the Atlantic Council Global Energy Center He was a former chair of the White House Council on Environmental Quality(CEQ)and is the co-found

244、er and chief executive officer of the Partnership for Responsible Growth He has also served as assistant secretary of the interior for fish,wildlife,and parks,and the president of The Wilderness Society He has been senior of counsel at Covington&Burling LLP,working in the firms climate and clean ene

245、rgy practice,and a partner at Boies,Schiller&Flexner LP He served as deputy director and chief of staff for the Nuclear Regulatory Commissions investigation into the Three Mile Island nuclear accident From 1973 to 1975,Frampton served as an assistant special prosecutor with the US Department of Just

246、ice on the Watergate Special Prosecution Force where he worked on the grand jury investigation and trial of President Nixons top aides in the Watergate cover-upNitya Aggarwal is a policy associate at Climate Advisers where she works closely with both the policy&research and communications teams Agga

247、rwal recently graduated from American University pursuing a double major in interna-tional studies and environmental science She brings previous research and policy experience in food sys-tems and environmental healthAbout the Authors20ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND

248、 OPPORTUNITIESCHAIRMAN*John FW RogersEXECUTIVE CHAIRMAN EMERITUS*James L JonesPRESIDENT AND CEO*Frederick KempeEXECUTIVE VICE CHAIRS*Adrienne Arsht*Stephen J HadleyVICE CHAIRS*Robert J Abernethy*Alexander V MirtchevTREASURER*George LundDIRECTORSStephen AchillesElliot Ackerman*Gina F AdamsTimothy D A

249、dams*Michael AnderssonAlain BejjaniColleen BellSarah E BesharStephen BiegunLinden P BlueBrad BondiJohn BonsellPhilip M BreedloveDavid L CaplanSamantha A Carl-Yoder*Teresa Carlson*James E CartwrightJohn E ChapotonAhmed CharaiMelanie ChenMichael Chertoff*George ChopivskyWesley K Clark*Helima CroftAnki

250、t N DesaiDario DesteLawrence Di Rita*Paula J DobrianskyJoseph F Dunford,JrRichard EdelmanStuart E EizenstatMark T EsperChristopher WK Fetzer*Michael FischAlan H FleischmannJendayi E Frazer*Meg GentleThomas H GlocerJohn B GoodmanSherri W GoodmanMarcel GrisnigtJarosaw GrzesiakMurathan GnalMichael V Ha

251、ydenTim Holt*Karl V HopkinsKay Bailey HutchisonIan IhnatowyczMark IsakowitzWolfgang F IschingerDeborah Lee James*Joia M Johnson*Safi KaloAndre KellenersBrian L KellyJohn E Klein*C Jeffrey KnittelJoseph KonzelmannKeith J KrachFranklin D KramerLaura LaneAlmar LatourYann Le PallecJan M LodalDouglas Lut

252、eJane Holl LuteWilliam J LynnMark MachinMarco MargheriMichael MargolisChris MarlinWilliam MarronGerardo MatoErin McGrainJohn M McHugh*Judith A MillerDariusz Mioduski*Richard MorningstarGeorgette MosbacherMajida MouradVirginia A MulbergerMary Claire MurphyJulia NesheiwatEdward J NewberryFranco Nusche

253、seJoseph S Nye*Ahmet M renAna I Palacio*Kostas PantazopoulosAlan PellegriniDavid H Petraeus*Lisa PollinaDaniel B Poneman*Dina H Powell McCormickMichael PunkeAshraf QaziThomas J RidgeGary RieschelCharles O RossottiHarry SachinisC Michael ScaparrottiIvan A SchlagerRajiv ShahWendy R ShermanGregg Sherri

254、llJeff ShockeyAli Jehangir SiddiquiKris SinghVarun SivaramWalter SlocombeChristopher SmithClifford M SobelMichael S SteeleRichard JA SteeleMary Streett Nader Tavakoli*Gil Tenzer*Frances F TownsendClyde C TuggleFrancesco G ValenteMelanne VerveerTyson VoelkelMichael F WalshRonald Weiser*Al WilliamsBen

255、 WilsonMaciej WituckiNeal S WolinTod D Wolters*Jenny WoodGuang YangMary C YatesDov S ZakheimHONORARY DIRECTORSJames A Baker,IIIRobert M GatesJames N MattisMichael G MullenLeon E PanettaWilliam J PerryCondoleezza RiceHorst TeltschikWilliam H Webster*Executive Committee MembersList as of January 1,202

256、4Board of Directors21ATLANTIC COUNCILDECARBONIZING THE ALUMINUM MARKET:CHALLENGES AND OPPORTUNITIESThe Atlantic Council is a nonpartisan organization that promotes constructive US leadership and engagement in international affairs based on the central role of the Atlantic community in meeting todays

257、 global challenges 2024 The Atlantic Council of the United States All rights reserved No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Atlantic Council,except in the case of brief quotations in news articles,critical articles,or reviews Please direct inquiries to:Atlantic Council 1030 15th Street,NW,12th Floor Washington,DC 20005(202)463-7226,wwwAtlanticCouncilorg