There is a concerted effort to get aluminium on the critical raw materials list of the EU, to give it better access to finance and other advantages. This measure is designed to increase the EU’s self-sufficiency in production of the raw materials necessary for the transition to net zero. While the key role of aluminium in electric vehicles, wind turbines, and solar panels is clear, including aluminium and its precursors bauxite and alumina, on the critical raw materials list is not universally accepted. Pushing for only the most environmentally friendly aluminium to be included on the list would benefit the climate and could win over opponents.
There are several factors which suggest that the supply of aluminium is not a high geopolitical risk, and that it should not be on the critical raw materials list. Bauxite, the raw material is abundant. Primary aluminium is internationally traded, and it is produced in several regions of the world. In fact, aluminium is sufficiently ubiquitous to be used for cans and other packaging. Energy availability is probably the biggest risk, as the smelting process to produce primary aluminium is highly energy intensive. So, the availability of renewable electricity will be key to aluminium’s future.
A German economist has recently said that it may not be advantageous for energy intensive industries to remain in the country, if renewable energy has to be subsidised to achieve net zero. The Mission Possible Partnership came to a similar conclusion last year. In Europe, Scandinavia is already a source of low carbon aluminium smelted with hydropower. But other areas will have to invest in renewable energy to retain significant aluminium smelting in Europe. Investors hold the future of aluminium in their hands, but they need the right regulatory signals to put their investment in Europe. An important step would therefore be to include only low carbon aluminium on the critical raw materials list. Aluminium that is made from electricity generated with coal, and so has a high carbon footprint, could be explicitly excluded from the list.
The importance of sustainability is recognised in the Commission’s proposal for the Critical new Raw Materials Act (CRMA). Certification of projects by a recognised sustainability scheme is proposed and there are measures to recognise such sustainability schemes. This is a good start, but the detail, in particular the key issue of using carbon footprint as a deciding factor, is left for later. The Council of the EU has proposed the addition of bauxite, alumina and aluminium to the list of critical materials in its mandate for upcoming negotiations on the CRMA. However, the carbon footprint requirements have been left largely unchanged.
The issue that countries must face up to is that incentives, access to finance, tax breaks and the like should only be offered to materials which are compatible with net zero. And although aluminium is a key enabling material for the transition, only low carbon and recycled metal have a place in a net zero economy. The European Commission is busy tightening the ETS (Emissions Trading Scheme) and introducing a CBAM (Carbon Border Adjustment Mechanism) to discourage high greenhouse gas emitters here and abroad; it would be counterproductive to then hand incentives to those same high emitters via another regulation. So, let’s accelerate the use of carbon footprint metrics to decide what is a critical raw material. Anything else is just kicking the can down the road.
Published: 22 August 23
