US turns to scrap to decarbonize aluminium industry

Lacking power generated from renewable sources, US manufacturers have been focusing on secondary capacity while the US government has been making attempts to incentivize low-carbon primary capacity, for which the US depends heavily on imports from Canada.

• Aluminium is critical for the energy transition
• Most decarbonization efforts in the US aluminium industry are focused on scrap recycling as the country has limited renewable power generation to lower the industry’s Scope 2 emissions
• The US imports most of its primary aluminium from Canada, which benefits from hydroelectric power to produce aluminium at or below 4tCO2/tAl
• New anode technologies are being developed to eliminate direct emissions from use of carbon anodes during smelting
• Funding by the Department of Commerce for a new green smelter in the US seen as a possible game-changer by industry stakeholders

The US aluminium industry has been seeking to lower its carbon footprint, with consumers in the automotive, packaging, energy and consumer products segments acquiring sustainably produced materials as they look to lower their own carbon footprints. With the cost of electricity for the energy-intensive smelting process increasing, the US has become increasingly dependent on its trade partner Canada for the primary aluminium, which is produced with a low-carbon footprint thanks to the availability of hydropower in the country.

Meanwhile, the US industry has turned to recycling, with multiple new recycling facilities announced within the past year and the US government announcing funding for a new green smelter project.

Lightweight, strong, durable and infinitely recyclable, aluminium is an important input to several technologies critical to the energy transition and, at the same time, is one of the hard-to-abate industries responsible for a significant part of the global carbon footprint. Aluminium production is among the top eight hard-to-abate industries in the world, according to the World Economic Forum report released in November 2023.

Aluminium is used in lightweighting electric cars and trucks, in solar panels, wind turbines, batteries and power transmission lines as well as in packaging, aerospace, building and consumer products. There is strong interest in low-carbon aluminium, with the automotive, packaging, wire and cable and consumer products manufacturers looking to decrease their carbon footprint.

The US government aims to reduce US greenhouse gas emissions by 50-52% below 2005 levels in 2030, with the ultimate goal of reaching net-zero emissions no later than 2050.

The country’s aluminium industry is also trying to lower its greenhouse gas (GHG) emissions, mainly through innovations in recycling. With access to renewable energy, the industry in US’s majority primary aluminium provider Canada is looking to decrease its Scope 1 emissions from its primary aluminium production through innovative anode technology.

The US aluminium industry produced 2,462,053 tonnes of carbon dioxide in 2022, according to the United States Environmental Protection Agency (EPA) website.

The primary aluminium industry in the US is the fourth largest emitting aluminium industry in the world, behind India, China and Australia, according to a 2022 report by the Washington, DC-based non-profit organization BlueGreen Alliance.

“Our results show that India, China and Australia have the highest and Iceland, Norway and Canada have the lowest energy-related CO2 emissions intensities among the countries/region studied. Among several reasons, this is primarily because of the emissions factors of electricity used to produce aluminium in these countries (mainly in the electrolysis process),” according to the report.

“The US aluminium industry is getting greener not from prime production but from extending its scrap recycling,” said Fastmarkets principle consultant Kirstine Veitch. “That is [US’s] route to greening aluminium production in the country,” Veitch added.

Scope 1 – new anodes

Traditionally, aluminium smelting produces carbon dioxide due to the chemical process to derive aluminium from the intermediate product, aluminium oxide, which is also known as alumina.

Carbon anodes are used as electrolytes inserted into molten cryolite containing dissolved alumina, which releases aluminium while oxygen bonds with carbon to produce carbon dioxide.

The biggest technological breakthrough in decarbonizing aluminium production came from the aluminium producer Alcoa, which has been developing a new inert anode technology, ELYSIS, in a joint venture with the miner Rio Tinto.

The company plans to complete the technology demonstration at 450 kA between 2024 and 2025. Following this milestone, ELYSIS will move to the phase of making its technology commercially available for deployment.

The technology can be retrofitted to existing smelters and could potentially eliminate 6.5 million tonnes of GHG emissions per year in Canada alone, according to the company.

ELYSIS helps eliminate all direct GHG emissions from the aluminium smelting process and is the first technology ever that emits oxygen as its by-product, according to the ELYSIS website.

Scope 2 – energy

The majority of the aluminium industry’s carbon dioxide emissions come from electricity use during the smelting process. According to data from the International Aluminium Institute, 9.3tCO2e/t out of the total 15.1tCO2e/t global emissions result from electricity use, making up the industry’s 61.59% of GHG emissions.

With limited access to renewable energy and heavily reliant on fossil fuels for its power source, the US aluminium industry’s Scope 2 emissions remain high, making the country’s aluminium industry among the world’s highest emitting producers in the world, according to a 2022 report by the US-based Global Efficiency Intelligence.

The energy-intensive aluminium industry has also been idling or curtailing its smelters due to the surging energy costs, with the curtailing of the Missouri-based Magnitude 7 smelter leaving only four primary aluminium smelters in the country.

Of the currently operational four smelters, only one, Alcoa’s Massena smelter in upstate New York is powered by renewable hydropower.

Primary aluminium industry stakeholders in the country have been calling for clean, affordable energy to be made available to the industry.

Realizing the need to support the country’s primary aluminium production and its path to decarbonization, the Department of Energy announced in March 2024 that a green aluminium smelter project by Century Aluminum was selected to enter negotiations for $500 million in funding.

When fully operational, the smelter by Century Aluminum is expected to double the current US primary aluminium capacity.

Scope 2 emissions are significantly lower for the Canadian aluminium industry, where the US gets most of its primary aluminium from.

By using hydro-powered electricity and innovative technologies, Canadian aluminium producers have the lowest carbon footprint in the world when compared to other larger producers, according to Government of Canada.

More than 97% of all the energy produced in Quebec is renewable and almost entirely hydroelectric, making the aluminium produced there one of the greenest in the world, according to the website of Investissement Quebec International. Rio Tinto’s Kitimat smelter in British Columbia is the only Canadian primary aluminium smelter outside of Quebec. However, Kitimat also uses electricity from hydropower produced by the nearby Kemano Power station.

There are 10 primary aluminium smelters in Canada. With the exception of Rio Tinto’s Kitimat smelter, all others are located in Quebec. The smelter in Kitimat British Columbia also uses electricity from hydropower that is produced by the nearby Kemano Power station.

Canada produced an estimated 3 million tonnes of primary aluminium in 2022, making the country the fourth largest aluminium producer in the world following China, India, and Russia, according to data from the Government of Canada.

The United States was the largest recipient of Canada’s aluminum products exports in 2022, buying nearly 92% of the total value of the country’s aluminum exports, according to the Government of Canada.

The US imported 1,667,274,902 kilograms, or 74.25% of its total unwrought, unalloyed aluminium imports from Canada in 2023, according to data from the United States International Trade Commission.

This was 74.25% of the total aluminium imports of 2,245,411,729 kg into the US in 2023.

Scope 3 – scrap

Scrap aluminium is the biggest downstream product in the aluminium value-chain.

With the US primary aluminium industry lacking renewable-powered electricity sources, it has turned to scrap sources to decarbonize its aluminium production.

Besides electing a green primary smelter, the US Department of Energy (DOE) has also elected three aluminium projects that focus on decarbonizing and making more efficient aluminium scrap recycling to enter negotiations for funding.

However, definition of what is considered scrap is essential in decarbonization and the lack of standardization in this area hinders the industry’s decarbonization efforts, according to Veitch.

This need to differentiate between runaround plant manufacturing scrap, pre-consumer scrap and end-of-life scrap was a concern voiced by many industry participants that Fastmarkest spoke to, who also emphasized the need to use more end-of-life scrap to truly decarbonize the industry.

North America uses the cut-off method for all aluminium scrap, including both pre-consumer and post-consumer scrap, where scrap is assumed to carry zero carbon burden.

In contrast, Europe uses the co-product approach, which follows the material throughout its life cycle, with the carbon footprint burden shared between every output on its way, from primary material to scrap.

“If a producer is using inefficient manufacturing processes and their smelter is inefficient and they remelt pre-consumer scrap, for example from purchasing new extrusion scrap from their client, that is closed loop, so it comes back into the system,” Veitch said.

“But if a new party buys this scrap, it is still process scrap and has the same carbon dioxide footprint as originally manufactured product,” she added.

In contrast, if this has gone into a product, “for example was made into a beverage can, which has a relatively quick turnaround to become scrap, it has reached end of life, so it can be carbon- zero,” she said.

End-of-life aluminium scrap offers one of the biggest opportunities in advancing the industry’s decarbonization, according to Peter von Czarnowski, director of casting technology expansion at the Colorado-based aluminium sheet producer Golden Aluminum.

The Oslo, Norway-based aluminium producer Hydro focuses on recycling post-consumer scrap and has been a strong advocate of the co-product method, and the cut-off method has some drawbacks, Jerrod Hoeft, Hydro Extrusions’ vice president, transportation and sustainability, told Fastmarkets.

“If you counted all scrap as being equal, you could set up an extrusion press and sell it as low-carbon scrap. But if you take billet made in China that was made using coal-powered energy, which has a large carbon footprint, export it to the US, and run it through extrusion press as scrap, then you could sell it as low-carbon scrap,” he said.

To truly reduce the carbon footprint of aluminium scrap recycling, industry participants agree careful sorting and reporting is necessary to ensure both safety and transparency.

To successfully mine and recover end-of-life scrap, a disruptive approach is needed at the scrap yards level, as well as investments on sorting equipment that will allow use of more post-consumer scrap, according to industry participants.

The post US turns to scrap to decarbonize aluminium industry appeared first on Fastmarkets.