EC energy measures are welcome but inadequate to save the aluminium industry survive winter: European Aluminium

The voice of the aluminium industry in Europe, European Aluminium, appraises the emergency measures proposed by the European Commission on the 14th of September and welcomes the first step to address the extremely high energy prices.

However, the aluminium industry association signifies that these measures are insufficient and will not bail out the energy-intensive aluminium industry from further production cuts, job losses, and possibly a complete breakdown.

These short-term measures aim to reduce electricity demand and redistribute financial resources to exposed consumers, such as energy-intensive industries like aluminium. European Aluminium stresses that while the proposed measures may provide some much-needed immediate relief, they do very little to reduce the excessive energy costs (and gas prices in particular).

Paul Voss, the European Aluminium’s Director General, said, “We’re glad to see the Commission listened to our calls for the need to safeguard hedging possibilities and introduce further incentives for signing renewable power purchase agreements. However, as one of Europe’s most exposed industries, we need much more relief from the exorbitant gas prices to keep our factories open. We’re extremely concerned about the survival of the aluminium industry in Europe. We are worried that these proposals do not reflect the urgent need to support a critical industry like aluminium.”

"We urge Energy Ministers to take additional measures during the next Council meeting on 30 September. Without further action, we risk becoming dependent on imports for a material that is key to Europe's green transition."

“Primary aluminium production requires a high and constant supply of electricity to keep the metal in smelting pots liquid. As a result, energy costs account for 40% of total primary production costs under normal conditions. The sky-high energy prices have resulted in massive production cuts across Europe. By the end of the year, European Aluminium expects a staggering loss of 50% (1.1 million tonnes) in primary aluminium production capacity. These losses can be replaced by the increased production in China, with a carbon footprint almost three times higher than in Europe."

In the short to medium term, the high energy prices and looming gas shortages threaten the viability of aluminium's downstream industry, which relies on gas. Aluminium semi-fabrication (extrusion and rolling) processes require gas at a constant supply level. Gas is equally critical for aluminium recycling because remelting aluminium scrap with gas is the only way to produce secondary raw materials. The recycling of aluminium uses only 5% of the energy of primary aluminium production, so recycling operations also play an essential role in reducing Europe's energy dependency.

"Even before the crisis, European aluminium producers faced much higher energy prices than their competitors because of the regulatory costs associated with the EU's unique energy market design. But right now, our competitiveness is at stake; the European aluminium industry is facing eradication. The proposed measures need to be swiftly amended by EU policymakers. For instance, the proceeds from the temporary solidarity contribution should finance schemes under the EU Temporary State Aid Framework to support critical industries in these times of crisis. It should also be clear that national governments must use them to alleviate high electricity and gas prices," said Voss.