As the Biden administration considers a ban on imports of aluminum from Russia to counter the illegal war of aggression in Ukraine, there’s a big clean energy opportunity to be seized.
Aluminum is a critical component for the nation’s carmakers, one that will only become more important as we shift to electric vehicles. EV bodies are increasingly being built with aluminum instead of heavier steel to offset the weight of ever-larger batteries, and EV batteries themselves also contain aluminum. So as we reduce our dependence on oil, our reliance on aluminum will increase.
But the U.S. aluminum industry is still reliant on coal and oil, making it vulnerable to volatile and rising fossil fuel prices — a threat to companies’ bottom lines. This dependence on fossil fuels also undermines the climate credibility of the electric vehicles we produce.
The Biden administration should not just punish Russia by blocking its aluminum imports; it should use this opportunity to support and clean up the U.S. aluminum sector. This in turn would help our burgeoning electric vehicle industry compete in an increasingly crowded global EV market.
Dirty coal-fired aluminum, dirty electric cars
While you’ve probably never thought about how aluminum is produced or where it comes from, the truth is that it’s a serious climate problem.
While the U.S. gets up to 10% of its supply from Russia, the global aluminum industry is largely dominated by Chinese companies that are heavily reliant on coal. That’s why, as a sector, it is responsible for 2% of global greenhouse gas emissions and generates more than a billion tons of CO2 equivalent every year. In fact, if it were a country, the global aluminum industry would be one of the top 10 emitters in the world. It may not be the climate challenge that is front of mind for most, but it matters a lot.
More than three-quarters of the industry’s emissions are the result of the enormous amounts of electricity needed to smelt minerals into the aluminum metal we use in everything from soda cans to cars. The problem is that in most parts of the world, the electricity powering those smelters comes largely from “captive” coal plants, which are not connected to the central grid and don’t have to compete with the waves of clean energy coming online. The rest of the industry’s emissions arise from an on-site chemical process that is reliant on oil and releases carbon directly into the atmosphere. So anytime you’re buying or using new aluminum, it comes with an enormous amount of embedded coal and oil, whether you like it or not.
While that’s a problem for any climate-conscious consumer of aluminum, it is most acute for global automakers transitioning to electric vehicles. Automakers and other transportation companies are already among the top consumers of aluminum in the world, and as the market shifts to electric cars, that consumption is set to rise, according to the industry’s own research.
As the shift to EVs ramps up, the emissions profile of automakers will flip — instead of the bulk of the industry’s emissions resulting from the burning of oil as we drive our cars, most emissions will come from the supply chains that feed auto manufacturing. How we build our electric cars matters as much as whether we build them in the first place. No Tesla customer is interested in buying embedded coal.
Clean U.S. aluminum, clean EVs, competitive edge
But the aluminum we use to build our shiny new electric vehicles doesn’t have to be powered by coal and oil, nor does it have to come from belligerent foreign countries.
Leading aluminum producers, including Alcoa in the U.S., last month backed a vision for decarbonizing the industry. It involves transitioning to low-carbon power, maximizing recycling and efficiency, and deploying new technologies that can cut direct emissions from the smelting process. If Alcoa and other U.S. aluminum companies started quickly putting that vision into action, they could begin to replace Russian (and Chinese) aluminum with clean, American-made supply.
Instead, what we have is skyrocketing fossil fuel and electricity prices (also driven in part by Russia’s war) putting the squeeze on U.S. aluminum manufacturers with tight margins, in at least one case causing a plant to shut down.
That’s why the Biden administration needs to complement a ban on Russian aluminum imports with a support package for domestic aluminum producers that helps them adopt cleaner processes and cut costs by shifting to the use of dirt-cheap clean energy. That could involve helping them lock in new power-purchase agreements, or providing a financial support package leveraging the billions in loan guarantees and direct finance authority at the Department of Energy made possible by the Inflation Reduction Act. If we can get our domestic aluminum producers out from under the crushing burden of sky-high fossil fuel costs and enable shuttered smelters to reopen their doors, we can calm a market that’s jittery about tightening aluminum supplies.
To be clear, this shouldn’t just be a corporate bailout. In 2008, the Obama administration saved GM and Chrysler with financial support — but it made that support contingent on the companies complying with stronger fuel-economy standards. Those standards are saving American families billions of dollars because they resulted in American-made cars and trucks getting better gas mileage. The federal government could help the aluminum industry in the same way, predicating assistance on the industry moving away from coal and oil.
The positive impacts would extend beyond aluminum companies. A clean and revitalized aluminum industry could provide U.S. automakers with cheaper, lower-carbon supplies of a key material. Automakers are already looking to compete with the likes of Tesla for climate-conscious consumers by touting their cleaner supply chains. Scrutiny is likely to build over the embedded coal in everything from steel to batteries to aluminum. GM and Ford will be better positioned to compete in the global market if they’re making EVs with clean materials.
The Biden administration is right in moving to cut off Russian aluminum. But it would be a half measure unless the administration also steps in to help struggling aluminum producers, and the automakers that rely on them, to transition to clean energy. It would be a savvy and strategic way to move toward producing clean, green aluminum and ensuring our EVs are truly free of coal and oil.
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