To accomplish their ambitious goals of a 25% reduction in carbon emissions in the next five to seven
years and achieve net-zero status by 2050, domestic aluminium players will need to significantly
enhance their renewable energy or low carbon-intensive power sources, ICRA said on Monday.
Due to the large usage of coal in generating captive electricity, domestic aluminium makers have the
highest carbon intensity at close to 17–20t CO2e/tonne of aluminium, according to ICRA.
Depending on the mix of renewable energy (RE) used, this could require 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.
Yet, organisations may decide to establish power purchase agreements to obtain RE power rather
than performing an upfront expenditure. Yet, it is anticipated that their cost of producing metal will
increase dramatically.
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 economies have
gradually shifted to hydropower with a nearly 60% lower carbon intensity.
“Significant consumption of RE electricity in the entire value chain would be a necessity to
decarbonizing the primary aluminium business,” said Jayanta Roy, Senior Vice-President and Group
Head, Corporate Sector Ratings, ICRA.