Net Zero Industry Tracker 2024 Aluminium

CapitalALUMINIUM Investments required by the sector and enabled by the ecosystem FIGURE 58 Enabled by the ecosystem (around 75% of total investments)Investments by the sector (around 25% of investments)$543 billion required in investment by 2050 Clean power for smelting Secondary production Low-emissions refining and smeltingUpgrade smelters for electrification Purchase power agreements Build more capacity for secondary production Inert anodes for low-emission smelting CCUS Electric boilers and mechanical vapour compression Hydrogen calciners and electrified calciners Provide low-carbon power/renewable grid Develop nuclear-powered small modular reactors Collect post-consumer scrap Enhance scrap quality Supply low-carbon hydrogenThe aluminium industry will need substantial capital investment to advance low-emission smelting and refining technologies beyond merely decarbonizing power sources, with an estimated requirement of $543 billion.439 The majority of this investment must be invested by the ecosystem, and not only by aluminium companies, to build the enabling infrastructure. Aluminium decarbonization requires a scale-up of low- carbon power, hydrogen and CCUS. The aluminium sector must invest in retrofitting smelting and refining to enable electrification and reduce emissions. It is projected that out of the total additional investment required, about 42% is expected to go towards electricity infrastructure (grid/PPAs), 24% towards captive power generation, 3% towards green hydrogen electrolyser capacity, less than 1% towards CCS infrastructure, 5% towards refineries and 27% towards smelters.440 Overall, 32% of the total additional investment is expected to come from the sector companies, while the remaining 68% is expected to come from the ecosystem. With the aluminium industry’s ROIC at 11%441 and its WACC at 9.6%,442 the industry’s profits are just slightly higher than its costs of financing. This narrow margin means that without additional support from external factors (such as technological advancements, policy incentives and industry collaboration) the industry may struggle to afford and implement the significant changes needed for effective decarbonization. Nevertheless, the recent progress of the industry to reduce emissions intensity is promising and should encourage the ecosystem to help the sector progress. Source: Accenture analysis based on data from MPP . Net-Zero Industry Tracker: 2024 Edition 10