4 targeted initiatives ramping up decarbonization of aluminium

As the world descended on Dubai for COP28, a strong aluminium industry contingent gathered to take part in the launch of a number of key initiatives. With the roadmaps and pathways to decarbonization for the sector set and technology needs made clear, COP28 provided the ideal backdrop for the aluminium sector to lay the foundations for the crucial years ahead.

Aluminium is an essential material for the energy transition and modern life; it is used in a wide range of applications from electrical infrastructure and low-carbon energy technologies to everyday packaging, transport, and machinery solutions.

Aluminium demand is expected to grow strongly over the coming decades with increased electrification, automation, and urbanisation. Consequently, the industry will have to grapple with the ongoing challenge of decoupling growing production from greenhouse gas (GHG) emissions. The sector currently emits about 1 billion tonnes CO2e per year.

The aluminium industry has seen major shifts over the past couple of years and is moving from ambition-setting to increasing implementation and action. There has been activity across all major producing regions aligned with the sector’s three key decarbonization pathways, with increasing integration of low-carbon electricity, developments to eliminate direct and thermal emissions, and through increased recycling and resource efficiency innovations.

To continue to progress and roll out new technological and structural changes, cross-sector collaboration, increasing demand for low-carbon aluminium, mobilisation of significant capital, and enabling policy environments are critical to success. The need to move ahead on each of these fronts, as well as coordinate action across them, was a recurrent theme for the sector at COP28.

To overcome barriers to the sector’s decarbonization ambitions, four key initiatives were launched at COP28.

The ITA focuses on global cross-sector decarbonization efforts across industry, transport, and energy sectors. The International Aluminium Institute (IAI) sits on the ITA Leadership Council and will lead the efforts for the aluminium sector. ITA has four global priorities: advancing technological solutions, promoting green demand, articulating policy enablers, and engaging green finance. The ITA will endeavour to support existing initiatives such as the First Movers Coalition (FMC) which is collating a demand signal for low-carbon industrial products. Launched at the COP26 and co-chaired by the US Government and the World Economic Forum, the FMC is making a strong impact with a cumulative demand signal of over $16 billion in annual demand by 2030 made by its nearly 100 members through more than 120 offtake commitments. As such, the coalition advances the most critical, emerging climate technologies required to decarbonize the world’s heavy-emitting sectors, including in the aluminium sector.

Echoing the ongoing need to better engage the finance community in industrial transition efforts, the launch of RMI’s Sustainable Aluminium Finance Framework (SAFF), delivers a much-needed tool for financial institutions to assess the emissions of their aluminium loan books. The framework was developed in collaboration with Citi, ING, Société Générale, and Standard Chartered, and in consultation with leading aluminium producers and organizations. An estimated $1 trillion is needed to align the sector’s emissions with the Paris climate trajectories over the next 25 years. As a result, for the aluminium industry to make progress, it is essential financial institutions can assess climate-alignment of proposed projects.

In addition to the multistakeholder efforts outlined above, two aluminium industry-led initiatives were launched at COP28:

This global call to action brings together actors across the aluminium can value chain from primary aluminium producers to can producers and fillers. It challenges key actors including policy-makers to push for ambitious can recycling targets and decisive action. Near 100% can recycling rates would bring a potential saving of over 60 million tonnes of CO2e emissions per year, which is a good example of relatively “low-hanging fruit” for the sector in its bid to decarbonize. Recent IAI findings show that despite global can recycling rates of over 70%, there is much more work to be done at a local level to replicate that success globally. Leading examples from jurisdictions like Brazil, which recently achieved 100% aluminium can recycling rates, are already paving the way.

Launched by the IAI and backed by major aluminium producers accounting for over 200 million tonnes of CO2e emissions, the Aluminium Industry GHG Initiative aims to bring much needed transparency and consistency to GHG disclosures with a commitment to tracking GHG ambitions, plans and progress over the medium and long term. These are essential insights for key stakeholders to make informed decisions about the sector’s progress and identify opportunities for future collaboration.

COP28 highlighted the role new, joint initiatives across the hard-to-abate sectors, including in the aluminium sector, could play in accelerating action. Momentum is building across the sector and many aluminium producers are already enacting their GHG reduction plans and are focused on implementing these major changes. The new initiatives should support industry players consolidate existing efforts and enhance broader value-chain, sector-wide impact.

The effectiveness of these initiatives will depend on value chain participation and stakeholder accountability. Given many of the solutions to reduce the aluminium sector’s emissions are already known, and many are already in the process of being integrated, working with the right partners to accelerate and amplify efforts could keep alignment with global climate goals within reach.