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By Aayushi Sharma
According to a recent study by the Council on Energy, Environment, and Water (CEEW), India’s aluminum industry requires an extra Rs 2.2 lakh crore ($29 billion) in capital expenditure (CAPEX) to attain net-zero carbon emissions.
Aluminum is a widely utilized metal, experiencing the fastest growth in production within the non-ferrous sector and ranking second only to steel in terms of volume due to its distinctive properties. India’s per capita consumption of aluminum remains low at 2.5 kg, contrasting with the global average of 11 kg. Estimates suggest that aluminum has an embodied energy of approximately 211 GJ per tonne, significantly higher than steel’s 22.7 GJ per tonne. Nonetheless, due to its lightweight nature compared to steel, aluminum yields energy savings nearly three times higher throughout its lifespan, particularly in sectors like transportation, where it can effectively replace steel.
Key Highlights of the study:
- The Indian aluminum industry emits an estimated 20.88 tonnes of CO2 per tonne of aluminum produced.
According to estimates, the baseline emissions in India’s aluminum production amount to 20.88 tonnes of CO2 (tCO2) per tonne of aluminum. This figure encompasses emissions from direct fuel usage, electricity consumption, and process-related emissions, also known as ‘process emissions’.
- Utilizing renewable energy is essential for reducing carbon emissions in the aluminum industry.
Research reveals that incorporating power from renewable sources can decrease emissions by 49%, equivalent to 38 million tonnes of CO2 from total industry emissions. Given the substantial electricity requirements of aluminum production, it’s improbable to fulfill the entire demand with renewable energy alone. Therefore, we propose that 30% of the demand continues to be met by captive power plants (CPP). Consequently, mitigating emissions from coal combustion through carbon management is necessary, contributing to 21% of the total emissions reduction.
Moreover, many alumina refineries are situated near natural gas (NG) pipelines, allowing a substantial portion of their thermal energy requirements to be fulfilled by NG. Emissions that result from Natural Gas combustion are mitigated through carbon capture, utilization, and storage (CCUS). As observed in the decarbonization paths of the cement and steel sectors (Elango et al., 2023; Nitturu et al., 2023), energy efficiency is anticipated to have a substantial impact, while fuel switching is expected to play a minor role in the decarbonization of the aluminum industry.
- Net-zero aluminum comes with a 61% higher cost.
Achieving net-zero aluminum entails a significant increase in costs, with carbon mitigation technologies necessitating additional capital expenditure (CAPEX) and operating expenditure (OPEX). In this scenario, the industry would require a CAPEX of INR 2,18,241 lakh crore (USD 29 billion), coupled with an annual OPEX increase of 26,049 crore (USD 3.5 billion). Consequently, the cost of net-zero aluminum rises by 61%.
How is Decarbonisation significantly impacting the cost of producing aluminum?
The adoption of carbon mitigation technologies directly affects the cost of producing aluminum due to the requirement of additional CAPEX and OPEX. This section highlights this increase considering a base price of INR 2,39,500 per tonne of aluminium. Thirty-four percent of the cost of aluminum per tonne (INR 81,430 per tonne) is from electricity consumption during the smelting process; 23 percent (INR 55,085 per tonne) is from the production of alumina; and 20 percent (INR 47,900 per tonne) consists of the cost of other raw materials.
The graph shows the price increase trajectory for net zero aluminum. Source:CEEW
Transitioning to net-zero aluminum incurs a nearly 61% higher cost compared to conventional aluminum. However, by implementing measures such as alumina energy efficiency (EE), aluminum energy efficiency, and electrolysis off-gas waste heat recovery (WHR), a 1.2% reduction in production costs can be attained.
Further emission intensity reductions to 16.13 tCO2 per tonne (23% reduction) are achievable through the use of alternative fuels like biomass in alumina refining and retrofitting with inert anodes in aluminum smelting, resulting in a cost increase of less than one percent. Further decarbonization efforts, such as adopting renewable energy (RE) power, would lead to an 18% cost increase.
References:
http://164.100.94.191/niti/writereaddata/files/document_publication/niti_aluminum_upload.pdf
https://nalcoindia.com/wp-content/uploads/2023/01/Ingot-18-01-2023.pdf
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