China is greening its aluminium, a trending statement for the past year. But while greening its onshore production, is it dumping its carbon footprint elsewhere?

China's primary aluminium production (exceeding 44 million tonnes in 2025, while some report the production volume has exceeded 45 million tonnes) heavily relies on coal-fired electricity, but is transitioning toward renewable energy, with estimates suggesting green energy (hydro, solar, wind) to account for roughly 15 to 20 per cent of the industry's power mix, concentrated in regions like Yunnan.

While some regions utilise hydropower, coal still accounts for 70-80 per cent of power generation for the primary aluminium production sector. The government aims to increase renewable energy usage to over 30 per cent for primary aluminium capacity by 2027.

As the country keeps making multiple efforts to decarbonise its heavy metal production industry, do the numbers align?

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China’s aluminium carbon intensity: scale versus trajectory

According to the International Aluminium Institute (IAI), the global average greenhouse-gas intensity of primary aluminium production stands at roughly 14.8 tonnes of CO₂ equivalent (tCO₂e) per tonne of aluminium, when combining direct (Scope 1) and electricity-related (Scope 2) emissions.

China’s intensity sits slightly above the global average (roughly around 15-17 tCO₂e per tonne of aluminium) because of its higher coal share in the power mix. The aluminium sector contributes roughly 5 per cent of China's total greenhouse gas (GHG) emissions. Electrolytic aluminium production is highly intensive, with emissions often exceeding 11 Al due to coal-based energy.

With annual output hovering around 44-45 million tonnes, this implies total annual emissions of roughly 730-790 million tonnes of CO₂e, making China’s aluminium industry alone comparable to the total emissions of a mid-sized industrialised economy. As mentioned earlier, the intensity gap is primarily power-driven, with coal-based smelting can exceed 20 tCO₂e per tonne, while hydro-powered operations can fall below 5 tCO₂e per tonne.

The market trajectory hinges on power reallocation and scrap substitution. The IAI estimates that secondary (recycled) aluminium emits only 0.5-1.0 tCO₂e per tonne, less than 5 per cent of primary metal’s footprint.

As China raises scrap utilisation rates and shifts incremental smelting to hydropower or renewable-linked grids, the weighted national intensity could trend toward 13-16 tCO₂e per tonne by 2030 under an accelerated transition scenario.

However, if captive coal capacity remains embedded, intensity could stagnate near current levels despite efficiency gains in electrolysis cells. For exporters, especially amid tightening carbon-border regimes, that 1-2 tCO₂e per tonne differential becomes commercially decisive — translating into measurable carbon-cost exposure per tonne of metal shipped.

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China’s relocation strategy — aimed at reducing coal dependency

Since the early 2010s, China initiated a large-scale geographic relocation of its aluminium smelting industry, primarily from coal-heavy northern and eastern provinces to energy-rich western and southwestern regions, driven by the need to meet ‘dual carbon’ targets (carbon peaking by 2030 and carbon neutrality by 2060) and to optimise production costs. This strategic shift aims to replace high-emission, coal-fired power with renewable energy, such as hydropower in Yunnan and Sichuan, or wind and solar in Inner Mongolia.

Key reasons for the relocation include:

• Decarbonisation and green energy transition: The primary driver is the need to reduce carbon emissions from the aluminium industry, which relies heavily on electricity. Relocating to the southwest (e.g., Yunnan) allows smelters to utilise cleaner hydropower, lowering their carbon footprint compared to coal-dominated provinces like Shandong.
• Environmental policy enforcement: The Chinese government has mandated the elimination of inefficient, high-emission, subcritical coal-fired power plants. Stricter anti-pollution campaigns and environmental inspections have forced companies to move from older, more polluting facilities to new, cleaner ones.
• Energy cost optimisation: While coal was once cheap, rising coal prices made captive coal-fired power less competitive compared to renewable, grid-based power in the southwest.
• Capacity ceiling compliance: The Chinese government has capped national aluminium production capacity at 45 million tonnes per year. The relocation policy forces companies to replace old, inefficient, or polluting capacity with new, more efficient capacity in preferred regions.
• Rising environmental costs: Stricter environmental regulations and the inclusion of the aluminium sector in China's national carbon emissions trading market have increased the costs of using coal power. 

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Offshore power as the new energy backbone for China’s aluminium ambitions

Coastal provinces such as Guangdong, Jiangsu and Shandong are accelerating offshore wind deployment, and so China is on track to build the world’s largest installed offshore wind base. Developers led by state-backed utilities and turbine manufacturers such as China Three Gorges Corporation and Mingyang Smart Energy are scaling projects into deeper waters, driving down costs and stabilising coastal power supply.

For an aluminium industry operating under strict domestic capacity caps and rising decarbonisation pressure, clean coastal electricity is strategically valuable.

Aluminium smelting remains one of the most power-intensive industrial processes, and China’s smelters have historically relied on coal-heavy grids in northern provinces. Offshore wind, feeding into eastern load centres, offers a pathway to rebalance that mix.

Hydro-based smelting generally carries electricity emissions closer to 0.3 to 1.5 tonnes of CO2 per tonne of aluminium, depending on dry-season fossil backup. Even holding anode emissions constant, relocating 13 million tonnes of output from coal-subjugated grids can lessen emissions by roughly 8 to 11 tonnes of CO2 per tonne of aluminium. That infers annual savings on the order of 100 to 140 million tonnes of CO2, comparable to the total emissions of a mid-sized industrial economy.

While hydropower in Yunnan has already enabled a partial “green shift” for smelters, offshore wind provides an additional decarbonised supply option closer to downstream fabrication hubs along the coast. That alignment between marine renewables and metals manufacturing strengthens China’s positioning in low-carbon aluminium exports — particularly as carbon border measures tighten in Western markets.

Parallel to its offshore buildout at home, Chinese firms are internationalising both power and aluminium investments. Resource-backed expansions in bauxite-rich regions such as Guinea, alongside refining and smelting projects in Southeast Asia and Central Asia, are increasingly structured around integrated energy solutions.

Though all these seem appealing, China is also one of the largest captive coal power investors for countries like Indonesia.

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China’s captive coal-powered plant investment in Indonesia

The biggest investors in Indonesian coal-powered industrial parks, by far, are from China — either building or financing at least 70 per cent of Indonesia’s captive coal capacity — mainly in support of joint-venture projects between Chinese and Indonesian companies.

For example, the Morowali Industrial Park in Sulawesi, a massive 3,000-hectare park with its own airport, seaport, and at least 10 different factories and smelters, is powered by captive coal plants. The operation in central Sulawesi is run by Indonesia’s Bintang Delapan Minerals and China’s Tsingshan Group.

“By continuing to support coal projects overseas, Chinese companies are locking in years of preventable disease and premature death,” said Jamie Kelly, who leads the health impact assessment team at the Centre for Research on Energy and Clean Air. “Every tonne of coal burned abroad undercuts not only global climate goals but also peopleʼs right to breathe clean air.”

Technologies and policy levers shaping a low-carbon outcome by 2030

China’s aluminium sector enters the mid-decade with emissions intensity around 15–18 tCO₂e per tonne, shaped largely by coal-heavy grids. Pressure is mounting from two directions: tightening oversight under the national ETS administered by the Ministry of Ecology and Environment of China, and export exposure to the European Commission’s Carbon Border Adjustment Mechanism (CBAM). These mechanisms are shifting carbon from a compliance metric to a commercial cost variable.

Between 2025 and 2027, the decisive levers are power reallocation and scrap expansion. Major producers such as Aluminum Corporation of China Limited and China Hongqiao Group are moving capacity toward hydropower hubs like Yunnan and expanding renewable PPAs, while higher scrap utilisation — at roughly 0.5–1.0 tCO₂e per tonne for recycled metal — lowers the sector’s weighted intensity. Every incremental rise in scrap share pulls the national average downward, potentially toward ~16 tCO₂e per tonne by 2027 under an accelerated pathway.

From 2026 onward, process emissions become the next frontier. Pilot projects in inert-anode electrolysis and tighter PFC controls offer incremental reductions of 0.5–1.0 tCO₂e per tonne, though large-scale deployment remains uncertain. By 2030, outcomes diverge: continued coal lock-in would stall progress, while faster renewable grid integration and recycling growth could push average intensity toward 14–15 tCO₂e per tonne.

Ultimately, power mix (even more than smelter efficiency alone) will determine whether China’s aluminium sector achieves a meaningful carbon shift this decade.