Indian aluminium players need to focus on sustainable investment to meet net-zero target, says ICRA

On Monday, the Investment Information and Credit Rating Agency of India Limited (ICRA) stated that to accomplish the ambitious goal of a 25 per cent reduction in carbon emissions in the next five to seven years and attain net-zero status by 2050, domestic aluminium players will need to significantly enhance their renewable energy or low carbon-intensive power sources.

Depending on the mix of renewable energy (RE) utilised, this might need sizeable capital investments of up to USD 5 billion by 2030 and USD 20 billion by 2050, according to an ICRA paper on the primary aluminium business.

"Domestic aluminium manufacturers have the highest carbon intensity of nearly 17-20t CO2e/tonne of aluminium, owing to the significant use of coal in generating captive power," said ICRA.

Organisations may opt to establish power purchase agreements to ensure RE electricity rather than incurring an upfront expenditure. Yet, their cost of metal production is anticipated to increase dramatically.

"To decarbonise the primary aluminium industry, significant usage of RE power in the entire value chain would be a prerequisite," Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said.

Due to rising coal use, Chinese aluminium makers continue to have high carbon intensity. Yet, compared to their Asian counterparts, aluminium companies operating in western nations have steadily shifted to hydropower with a nearly 60 per cent lower carbon intensity.