China's aluminium industry spearheads green transition for a cleaner tomorrow

The ongoing trend in China is aligned with the global industry-wide push for carbon reduction. It signifies the Chinese aluminium industry's commitment to meeting the country's carbon reduction mandates for high-energy-consuming sectors. Renewable energy-sourced aluminium encompasses liquid and ingot forms produced using environmentally friendly sources. While thermal power has traditionally been the primary energy source for the aluminium industry in China, there has been a rapid increase in the utilisation of green power, particularly hydroelectric power, as reported by AL Circle's latest industry-focused report, "Global Aluminium Industry Outlook 2024".

During 2014-2015, approximately 87-90 per cent of the energy utilised by Chinese aluminium smelters was derived from thermal power, with hydropower contributing about 10-13 per cent. In the current scenario, the reliance on thermal power has diminished to around 73-76 per cent, while the share of hydropower has risen to approximately 18-21 per cent. Additionally, the industry has initiated integrating solar power and wind power into its energy sources, according to sources "Global Aluminium Industry Outlook 2024".

Reducing carbon emissions by utilising green power

Reducing indirect emissions from power consumption is a critical priority for Chinese aluminium smelters aiming to decrease overall carbon emissions. In China, the aluminium industry emphasises addressing scope 2 carbon emissions. Calculating the direct carbon emissions generated during the metal production process, known as scope 1 emissions, proves challenging.

Scope 2 carbon emissions pertain to the indirect emissions resulting from the generation of purchased energy. Aluminium smelters in Yunnan exhibit a scope 2 carbon emission rate of approximately 0.7 tonnes per tonne of aluminium produced. In contrast, smelters in northern provinces such as Shanxi, Shandong, and Inner Mongolia report significantly higher scope 2 carbon emissions, exceeding 11 tonnes of CO₂ per tonne of aluminium.

Harnessing the abundant hydroelectric power in Yunnan and other southern provinces has become a prevalent strategy among aluminium smelters to mitigate their carbon emissions. These initiatives align with China's ambitious targets of achieving a carbon peak by 2030 and carbon neutrality by 2060, as announced in September 2020.

Analysts in the market project a maximum capacity of 45 million tonnes per year, considering the aluminium capacity termination and relocation plans outlined by Chinese government authorities in 2018.

The recognition of renewable energy-sourced aluminium

China has been manufacturing low-carbon aluminium for some years, particularly in the southwestern region, where smelters predominantly rely on hydroelectric power for production. However, distinguishing such materials from those produced using thermal power has posed challenges for market participants. Starting in 2023, the China Green-metal Certification Centre initiated the issuance of certifications for green-power aluminium to eligible smelters across the country. These certificates enable the clear differentiation of green-power aluminium from those utilising thermal power, catering to the needs of downstream producers with specific requirements for environmentally friendly raw materials.