Coal-heavy Australian aluminium vs renewables-led New Zealand: How Oceania is balancing decarbonisation

Oceania’s primary aluminium industry is facing a fragmented energy transition. While Australia, the leading aluminium producer of the continent, has abundant renewable resources and a well-established aluminium value chain, its smelters remain significantly more dependent on fossil-fuel-based electricity than the broader Oceania region.

New Zealand, another major aluminium producer in the region, tells a different tale. The International Aluminium Institute (IAI) classifies Australia and New Zealand together as Oceania, but their smelting power profiles are markedly different. In the Australia dataset for 2023, coal accounted for 58 per cent of primary aluminium smelting electricity, compared with 36.4 per cent from hydropower and 5.2 per cent from other renewables. The 2024 Oceania dataset, meanwhile, shows a much more renewable-heavy mix with 49.1 per cent hydro, 6.2 per cent other renewables and 30.7 per cent coal, with oil and natural gas making up most of the balance.

The figures are based on IAI's primary aluminium smelting power-consumption methodology, which covers electricity used in Hall-Héroult electrolysis and normal smelter auxiliaries up to the point where liquid aluminium is tapped, but excludes casting and carbon plants.

Australia’s coal-heavy power problem

Australia produced 1.55 million tonnes in 2023, 1.58 million tonnes in 2025, and 1.57 million tonnes of primary aluminium in 2025, up 2.3 per cent year-on-year, with production expected to remain around 1.6 Mt annually in 2026.

Using the Australian power-mix dataset, in 2025 the blanket electricity mix was of 39.5 per cent renewables and 60.5 per cent fossil fuel. Among the traditional energy sources, coal contributed close to 40 per cent of the energy mix.

Simultaneously, earlier datasets mention that smelters consumed about 14.6 TWh of electricity in 2023. Of this, approximately 8.47 TWh came from coal, compared with 5.30 TWh from hydro and 0.75 TWh from other renewable sources. That means coal alone supplied more electricity to Australian primary aluminium smelting than all renewable sources combined.

Why does it matter? Because Geoscience Australia estimates that producing one tonne of aluminium requires around 14,000-16,000 kWh of electricity, making cheap and reliable power central to the industry's competitiveness.

For Australia, therefore, decarbonising primary aluminium is not simply about installing more renewable generation. It is about replacing large, continuous fossil-fuel-dependent electricity supplies without compromising the reliability required by an industry that operates around the clock.

The Australian Government estimates that Scope 2 emissions account for around 85 per cent of emissions from aluminium smelting, which explains why electricity is at the centre of its green-aluminium strategy.

The Oceania comparison: New Zealand shows a different pathway

New Zealand’s sole aluminium smelter, New Zealand Aluminium Smelters (NZAS) at Tiwai Point, is powered predominantly by renewable hydroelectricity and is described by Rio Tinto as having one of the world's lowest carbon footprints for an aluminium smelter.

New Zealand's wider electricity system is also structurally different. More than 80 per cent of national electricity generation is renewable in most years, while Tiwai Point is the country's largest single electricity user, accounting for roughly 12 per cent of national annual electricity consumption on average over the past decade.

The Tiwai model was reinforced in 2024. NZAS signed 20-year electricity arrangements with Meridian Energy, Contact Energy and Mercury covering an aggregate 572 MW, securing the smelter's electricity supply through at least 2044.

The distinction between the two countries is therefore important when discussing "Oceania’s aluminium industry". New Zealand demonstrates that a major smelter can operate within a predominantly renewable power system, whereas Australia's challenge is to transform an existing smelting fleet whose largest electricity-consuming assets remain exposed to coal-heavy grids.

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Tomago: from coal exposure to a 100% renewable pathway

The most important recent development is at Tomago Aluminium in New South Wales, Australia's largest smelter.

Tomago consumes around 950 MW continuously and uses about 12 per cent of NSW electricity demand. The smelter currently aims for more than 50 per cent renewable electricity by 2030, with an ambition to reach 100 per cent renewable electricity by 2035.

Tomago, the Australian Government and the NSW Government agreed on a long-term power solution extending operations beyond the expiry of its current electricity contract at the end of 2028. Under the new arrangement, a 10-year power purchase agreement will supply the smelter through 2038, with 100 per cent renewable electricity scheduled from 2033. Tomago will also invest at least AUD 1.1 billion, including AUD 100 million for decarbonisation initiatives.

The package is designed to underpin nearly 3 GW of new renewable generation and firming capacity. Tomago is also being positioned as a flexible industrial load. Its demand-response capability will allow electricity consumption to be reduced during periods of grid stress, improving system reliability while enabling more renewable generation to be integrated.

Boyne: the biggest renewable repowering effort

Queensland presents an even larger challenge because Boyne Smelters in Gladstone has historically depended on a fossil-fuel-intensive power system.

Rio Tinto has been pursuing renewable repowering for several years, and the scale of the solution illustrates why replacing coal-fired electricity at an aluminium smelter is difficult. Boyne requires close to 1 GW of power, meaning the renewable generation needed to supply it must be considerably larger than the smelter's instantaneous electricity demand once intermittency and firming are taken into account.

Rio Tinto has now secured 2.7 GW of future renewable energy capacity in Queensland, comprising the 1.1 GW Upper Calliope solar project, 1.1 GW Bungaban wind project, and the company's agreements around the 600 MW Smoky Creek solar farm and 2,400 MWh battery system.

Besides, Rio Tinto estimates that the four contracted projects could cover about 80 per cent of Boyne's annual average electricity demand and reduce the smelter's Scope 1 and Scope 2 emissions by around 70 per cent, or 5.6 million tonnes of CO₂-equivalent annually. The battery component alone is expected to provide around 30 per cent of the firming required for renewable repowering.

In March 2026, Rio Tinto, Queensland and the Commonwealth also agreed on an AUD 2 billion government support package through 2040 for Boyne. The arrangement builds on renewable PPAs expected to underpin AUD 7.5 billion of new renewable energy and storage investment in Queensland.

The message from Boyne is clear: renewable electricity is becoming the long-term destination, but the transition requires a combination of generation, storage, transmission, long-term contracts and policy support.

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Portland is already partly renewable

At Portland Aluminium Smelter in Victoria, around 40 per cent of consumed electricity already comes from renewable sources, including electricity generated by the nearby Portland wind farm.

Alcoa has also secured electricity agreements covering 287 MW from July 2026, in addition to a 300 MW contract signed in 2023. Together, the contracts cover approximately 95 per cent of the electricity needed to operate the 358,000-tonne-per-year smelter at nameplate capacity. The company has indicated that it is continuing to pursue additional renewable sources, including potential projects in Victoria's renewable energy zones.

Portland therefore illustrates another stage of the transition: the smelter already has a meaningful renewable component, but moving the remaining electricity demand to a consistently low-carbon supply is still a work in progress.

Bell Bay highlights Australia's renewable advantage, and its limits

Bell Bay Aluminium in Tasmania is a different case altogether. The smelter is already powered by Tasmania's hydro-based electricity system and has been described by the Tasmanian Government as Australia's only aluminium smelter powered by renewable energy.

But having low-carbon electricity does not automatically solve the economics of aluminium production.

Bell Bay's electricity contract expired at the end of 2025 and was extended for 12 months while the company and governments worked on a longer-term arrangement. The smelter is a major electricity consumer, drawing around 335 MW continuously and accounting for more than 25 per cent of Tasmanian grid demand.

That makes Bell Bay an important lesson for the rest of the Australian industry: renewable power must be both low-carbon and internationally competitive. Australia's smelters compete in a global aluminium market where electricity prices can determine whether domestic capacity remains viable.

Australia's federal policy response reflects that reality. In January 2025, the government announced a AUD 2 billion Green Aluminium Production Credit to support smelters switching to renewable electricity. The programme is scheduled to become available from 2028-29, with emissions-linked support available for qualifying facilities that achieve significant decarbonisation before 2036.

The policy is effectively an attempt to bridge the gap between two objectives that have often been difficult to reconcile: keeping Australia's smelters globally competitive while replacing fossil-fuel-based electricity with more expensive or more complex firmed renewable supplies.

The government has also established the Guarantee of Origin framework to measure, track and verify emissions associated with green-metal production.

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The real transition is from cheap fossil power to firmed renewables

Australia's aluminium decarbonisation story is therefore no longer about whether the industry intends to move away from coal. The direction is increasingly clear.

The numbers show why that is difficult. Tomago alone uses around 950 MW continuously. Boyne needs close to 1 GW, while Bell Bay draws around 335 MW. Replacing this scale of baseload industrial demand requires much more than a few renewable projects: it requires combinations of wind and solar generation, batteries and other firming capacity, grid infrastructure, long-term PPAs and, increasingly, industrial demand response.

At the same time, the industry's recent commitments suggest that the transition is accelerating. Tomago now has a pathway to 100 per cent renewable electricity from 2033. Boyne has secured renewable projects capable of covering around 80 per cent of its average demand. Portland already sources about 40 per cent of its electricity from renewables; and Bell Bay demonstrates that renewable-powered primary aluminium is already technically achievable in Australia.

The contrast with New Zealand makes the broader Oceania picture even more revealing. New Zealand entered the green-aluminium race with a structural advantage because Tiwai Point was built around a predominantly renewable electricity system. Australia, by comparison, has to decarbonise existing, electricity-hungry smelters embedded in coal-heavy grids.

Note: This is exclusive coverage by AL Circle and may not be reproduced, republished or shared without prior permission.