The Net-Zero shift starts With Low Carbon Aluminium

The Net-Zero shift starts With Low Carbon Aluminium

2020 was supposed to be “year of climate action”, with the Glasgow COP26 acting as a major milestone for both businesses and policymakers to accelerate decarbonization efforts. However, with COVID-19 disrupting lives and economies in an unprecedented manner, countries across the globe are grappling with the immediate need to protect lives and livelihoods, challenging the urgency of the climate agenda.

In the seminal 1962 book The Structure of Scientific RevolutionsAmerican philosopher Thomas Kuhn cut to the heart of how scientific change happens: not incrementally, through piecemeal tweaks to existing structures and modes of thinking, but in one fell swoop, through what he famously called “paradigm shifts”. When dominant assumptions are no longer fit for purpose, research kicks into overdrive, ushering scientific revolutions that topple the status quo.

The world economy is now standing on the cusp of such a paradigm shift. Amidst a growing realization that the coronavirus pandemic is a “once-in-a-lifetime opportunity” to build a truly sustainable, resilient global infrastructure, thousands of companies around the globe are now focusing on net-zero goals. So far in June, BP announced it will cut $17.5 billion from its assets by adjusting the carbon price estimate, Unilever urged the Australian government to target net-zero emissions from all products by 2039 (a full 11 years ahead of the Paris Agreement deadline), two hundred UK firms and investors called on the government to deliver a Covid-19 recovery plan that prioritises the environment; and software giant SAP launched a new tool to help firms track emissions across the entire supply chain. These developments will have ripple effects across multiple industries and are nothing short of an ominous sign for companies that have not taken steps to dramatically slash their CO2 footprints.

 

Set against this backdrop of systemic change, hard-to-abate industries are expected to double down on their efforts to adapt to the green economy. Take the aluminium industry for example, which is responsible for up to 4 % of global CO2 emissions. Now, after years of technological breakthroughs seeking to reduce the CO2 footprint of aluminium products – but with little commercial viability due to excess supply and lax regulations – 2020 could to be the year where demand for low-carbon aluminium goes mainstream.

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At the same time, the global aluminium industry is facing a widening schism between producers who are putting sustainability at the core of

their business, and carbon-spewing smelters, mostly in China, with little plans to move towards more sustainable alternatives. Given that climate-friendly innovations will be ever more favoured by investors and consumers in the era of coronavirus recovery, those who fail to rethink production will soon perish – a valuable incentive animating the industry’s leading producers today.

Indeed, such innovations are already in progress, both in terms of production processes and the way the industry seeks to establish checks on itself. For example, EN+ last year called on the London Metal Exchange (LME) to introduce new disclosure rules on emissions, according to which each company must be transparent about its carbon footprint. Then, in June this year, the LME announced a spot-trading platform for low-carbon aluminium, which it expects will commence trading next year.

The idea at the heart of these developments is transparency in production and supply-chains, the need for which was recognized well-before the pandemic. However, it has gained much more urgency in the wake of it. At the CRU Group’s Aluminium Matters virtual event in early June, executive chairman of the EN+ board of directors Lord Barker of Battle stressed that the industry’s carbon emission must be put under control, which means speaking clearly about the distinction between low-carbon and higher carbon aluminium, itself a representation of the disparity between producers.

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