The Indian aluminium industry emits 20.88 tonnes of CO2 per tonne of aluminium

As per our estimates, the total baseline emissions in the production of aluminium in India is 20.88 tonnes of CO2 (tCO2 ) per tonne of aluminium. This includes the emissions due to direct fuel use, emissions associated with the electricity consumed in the process, and the emissions generated due to the nature of the process itself, also termed ‘process emissions’. The industry emitted nearly 77 million tonnes of CO2 (MtCO2 ) in the year 2019–20, and electricity consumption accounted for 80 per cent of the total, while process emissions and fuel consumption accounted for the rest. Our study considers only scope 1 and 2 emissions, and all interventions analysed are limited to the plant boundary.

Renewable energy is critical for decarbonising the aluminium industry

Our study shows that the use of power sourced from renewable energy (RE) abates 49 per cent of emissions, corresponding to 38 MtCO2 of total emissions from the industry. Since aluminium production requires large amounts of reliable supply of electricity, it is unlikely that the entire electricity demand can be met through RE, and we, therefore, consider that 30 per cent of the demand would still be supplied by the captive power plant (CPP). Consequently, the emissions due to coal combustion need to be mitigated through carbon management, which would contribute to 21 per cent of the total emissions abatement. In addition, a large number of alumina refineries lie in close proximity to natural gas (NG) pipelines, and therefore, a large proportion of their thermal energy needs are met by NG. The emissions from NG combustion are also abated through carbon capture, utilisation, and storage (CCUS). Similar to the decarbonisation trajectory of the cement and steel industries (Elango et al. 2023; Nitturu et al. 2023), energy efficiency expected to play a significant role, while fuel switching will play a limited role in aluminium decarbonisation. This is summarised in Figure ES1.

The marginal abatement cost curve for the aluminium industry is shown in Figure ES2. It can be seen that energy efficiency in alumina refining and aluminium smelting and waste heat recovery (WHR) through electrolysis off-gas are the most impactful, with negative marginal abatement costs (MACs). However, these technologies represent only 8 per cent of the total emission that needs to be abated. All the remaining carbon abatement measures have a positive MAC, meaning that there is a net cost incurred for facilities deploying these measures. The shift from coal-based CPPs to renewable power has the highest potential for carbon mitigation – at 38 MtCO2 – but also involves substantial costs.

Net-zero aluminium is 61% more expensive

The adoption of carbon mitigation technologies directly affects the cost of producing aluminium due to the requirement of additional capital expenditure (CAPEX) and operating expenditure (OPEX). In a net zero scenario, the industry would require a CAPEX of INR 2,18,241 lakh crore (USD 29 billion), and there would be a yearly increase in OPEX by 26,049 crore (USD 3.5 billion). Consequently, net-zero aluminium is 61 per cent more expensive. Figure ES3 shows the price increase trajectory for net-zero aluminium. According to our analysis, net-zero aluminium is nearly 61 per cent more expensive than conventional aluminium. However, a 1.2 per cent decrease in production costs can be achieved by adopting alumina EE, aluminium EE and electrolysis off-gas WHR. An emission intensity of 16.13 tCO2 per tonne (23 per cent reduction) can be achieved by further using alternative fuels like biomass in alumina refining and retrofitting with inert anodes in aluminium smelting resulting in a cost increase of less than one per cent. However, for further decarbonisation, adopting RE power would result in a cost increase of 18 per cent and net zero aluminium would cost 61 per cent more than the base price. Alternatively, in a scenario where the switch to RE power does not happen and CCS is available at USD 50 per tCO2 , then net-zero aluminium would cost 21 per cent higher than the base price (represented as a dotted line).