Power is key Suppliers stressed that electricity not only determines their carbon footprint but also accounts for a major portion of operating cash costs. IEA underscores that decarbonizing power is a “key complement” to reducing aluminium’s indirect emissions; it is also the swing factor in siting decisions for both primary smelters and low-carbon smelters. Decarbonization levers Commercially deployed levers today include energy efficiency (e.g. line losses, anode/cathode improvements), renewable power purchase agreements (PPAs) for smelters and casthouses, and high post-consumer scrap remelting with improved sorting. Stepping-up tier includes electrified or hybrid calciners for alumina refining, biomass/co-firing for anode baking and fuel-switching to gas or hydrogen where infrastructure exists. Breakthrough level technology includes inert- anode smelting (e.g. ELYSIS) that eliminates direct process CO2 by producing oxygen at the anode; and point-source CO2 capture on alumina calciners that can push intensities down towards 2.0 tCO2e/t or below, when paired with clean power. Multiple recent announcements confirm industrial-scale demonstrations of inert anodes, with producers and governments financing pilots now.125 Ambition ladder Interviewees proposed an ambition ladder to target 3.0 tCO2e/t or less: –“3.0 by 2030” is achievable with current technology, such as upgrading boilers and calciners. –To achieve 2.0 tCO2e/t, carbon capture on refining and pre-bake steps is needed. –Below 2.0 tCO2e/t requires CCUS and/or zero-emissions smelting (with inert anodes) for new lines. Supplier perspectives: key themes and insights Market dynamics and pricing gaps Suppliers report that low-carbon primary aluminium does not yet command a consistent market premium outside Europe, limiting their ability to justify new investment. They note that a carbon price or equivalent signal roughly aligned with the European Union’s Emission Trading System (ETS) range would be necessary to close the cost gap between conventional and decarbonized products. Despite early traction in the automotive and packaging sectors, demand remains largely voluntary. Suppliers stress that until buyers integrate carbon costs into procurement, decarbonization will depend on first-mover partnerships and niche offtake agreements. Policy and regulatory misalignment Many suppliers are welcoming new border adjustment and trading mechanisms but emphasize that incomplete carbon accounting distorts competitiveness. They highlight that the EU’s current Carbon Border Adjustment Mechanism (CBAM) excludes emissions from scope 2 (electricity) and alumina refining – an omission that disadvantages suppliers utilizing renewable power. It’s impossible to produce aluminium without power and alumina… [if you exclude them from emissions accounting] you won’t reduce emissions. Leandro Faria, Sustainability General Manager, Companhia Brasileira de Alumínio (CBA) Suppliers advocate for harmonized global methodologies to comprehensively measure emissions under the IAI and for integrating all relevant scopes into carbon border frameworks to ensure that policies can reward true abatement. The European Commission’s public guidance confirms that, during CBAM’s transitional phase, indirect emissions are not yet included for several CBAM product groups, leaving treatment for aluminium unsettled today – a cause of considerable concern for suppliers.126Technology and investment constraints Suppliers agreed that decarbonization technologies are becoming increasingly available but remain economically out of reach without stable policy support. Near-term efficiency upgrades are self- financing, but breakthrough investments require shared risk through public-private mechanisms. One supplier noted that they had already implemented all profitable improvements. The next stage of investments requires that the market start paying for the greener aluminium. Rafael Fuertes, Vice President & Head of Hydro Strategic Partnerships, Hydro Aluminium Turning Challenge into Opportunity: Supplier Voices from Heavy-Emitting Sectors 40

Turning Challenge into Opportunity 2025