Net Zero Industry Tracker 2024 Aluminium

Demand ALUMINIUM In 2021, approximately 30% of the total primary aluminium produced emitted less than 5 tCO2e/t of aluminium.434 The main final uses for aluminium are for cost-sensitive industries such as aircraft, cars, construction and electric cables. This strains the ability of the ecosystem to absorb the B2B green premium for aluminium, which is estimated at 40%, with current technologies.435 However, offtake agreements provide early signals for low- emissions aluminium demand growth. Additionally, major companies in consumer electronics, including Apple or Ball Corporation, already use low-carbon aluminium. It is important to note that a 40% B2B green premium translates to a 1% increase for end consumers of cars, which shows that the cost of decarbonization is primarily borne by aluminium producers and is not trickling down to end consumers. For the industry to align with net-zero targets and strengthen demand signals, adherence to globally accepted definitions of low-emission and net-zero aluminium are necessary. Standards for carbon content remain opaque, regional and voluntary. Beginning in 2023, the China Green Metal Certification Centre began issuing certifications for green-power aluminium to qualifying smelters nationwide. This is a notable milestone, considering that China currently dominates aluminium production, with over 50% of the market share.436 These certifications allow for clear differentiation between aluminium produced with green power and that made with thermal power, addressing the needs of downstream producers who require environmentally friendly raw materials. Further commitment is evident as industry leaders ramp up their efforts to accelerate low-carbon product transparency and demand with a suite of new initiatives. Rio Tinto’s “START” programme437 intends to inform consumer choices, and the London Metal Exchange (LME) launched digital passports to store certificates of analysis and sustainability for listed metals.438 Additionally, leading aluminium industry lenders (Citi, ING and Societe Generale) are working with the RMI, (formerly Rocky Mountain Institute) to develop a climate-aligned financing framework. For comparability reasons, the unified use of sector-specific carbon footprint methodology with cradle-to-gate boundaries that are inclusive of Scope 1, 2 and 3 upstream emissions would add to transparency and market creation. Expanding the range of industrial customers beyond traditional uses is essential. Aluminium plays a crucial role in technologies that are anticipated to underpin a net-zero future, including EVs, wind turbines, photovoltaics and energy storage systems. Consequently, regions like China, which are projected to see increased demand for these technologies, will require more low-emission aluminium compared to other areas. Top countries/regions in aluminium production and demand FIGURE 57 Source: Nasdaq and Statista.Percentage of overall production 1 China 59% 2 India 6% 3 Russia 5% 4 Canada 4% 5 United Arab Emirates 4%Percentage of overall demand (2022) 1 China 57.5% 2 Europe 14.2% 3 Asia (excluding China) 11.4% 4 North America 9.9% 5 Middle East 2.5% Net-Zero Industry Tracker: 2024 Edition 9