Europe needs to shield and encourage a Greener, Circular and Innovative Aluminium value chain

The European Commission released the long-awaited Green Deal last December, which is presented as the EU’s new growth strategy for a climate-neutral, competitive, circular and socially just economy by mid-century. The aluminium industry is prepared to contribute to the intense transformation which Europe will have to experience to achieve these ambitions.

In Europe aluminium is made, transformed and recycled. It is considered as the world’s most used non-ferrous metal due to its distinctive properties and functionality and it’s circular by nature.

The demand for aluminium is expected to grow in Europe as it is becoming the material of choice for clean technology producers in applications like renewable energy, batteries, electricity systems, energy-efficient buildings, and sustainable mobility.

Now, 7% of global primary aluminium is produced in Europe and this percentage has been continually been shrinking over the past 20 years. As an outcome of it, the EU must import approximately 50% of its primary aluminium needs.

The intensity of carbon for primary aluminium production in Europe is much lower than the global average: approximately 7kg CO22 per kg of aluminium produced compared to a global average of 18 kg CO2 and a Chinese average of 20kg CO22 per kg of aluminium.

Seeking towards the guarantee of a secure and stable supply of low carbon aluminium to strategic sectors like transport, defence and energy efficiency technologies, we must reduce our dependence on imports with a higher carbon footprint.

This is the reason, the Green Deal, the upcoming industrial strategy, and the new Circular Economy Action Plan will have to lay the foundations to safeguard strategic value chains and preserve their competitiveness. Carbon and investment leakage are already happening: The EU has lost more than 30% of its primary production capacity since 2008 and an enormous amount of aluminium scrap is exported to non-European countries and recycled under less stringent environmental, health and safety standards.

Today, only 16 smelters remain in the EU, which means that Europe depends on imports from third countries to meet their demand for primary aluminium. This is because Europe has higher electricity prices compared to its main competitors, and electricity costs represent up to 40% of the cost of producing primary aluminium.

Aluminium smelters outside Europe are not exposed to the same carbon costs that European smelters face in their electricity prices, and some players are also heavily subsidised, even in violation of WTO rules.

Primarily, incentivising the production of recycled aluminium; via investments e.g. in innovative technologies and collecting systems, rather than relying on high-carbon aluminium imports from third countries is a must.

The report says that 75% of all aluminium ever produced is still in use, and estimated to meet at best 50% of demand with post-consumer aluminium by 2050. That is why both primary and recycled aluminium will be needed to meet the growing demand.

The member states should also protect aluminium smelters against unfair competition from third country producers with a higher carbon footprint, cheaper access to electricity and energy subsidies provided under non-market economy conditions.

 The crucial importance of electricity costs for aluminium smelters, national compensation schemes are vital for preserving the full value chain in Europe and ensuring a level playing field on the global level.

The existing and new EU funding instruments, both public and private, must be simplified, promoted and allocate more resources to support breakthrough technologies which can decarbonise the industry and increase circularity.

Finally, EU policymakers are looking into carbon border adjustment measures to ensure that the pricing of imported materials also reflects.