This report published by NITI Aayog summarises that the aluminium industry stands at a pivotal crossroads in its decarbonisation journey. As a key contributor to India’s economy and industrial growth, the sector needs to adapt emerging global sustainability trends and ambitious emissions reduction targets. Aluminium production accounted for approximately 2.8% of India’s GHG emissions or 83 MTCO2e in 2023, and without intervention, emissions could rise to 376 MTCO2e by 2070. With a national average emission intensity of 20 – 21 tCO2/t of aluminium, significantly higher than the global average of 15 tCO2/t, the sector clearly needs transformation.
The aluminium sector is hard-to-abate, owing to its high electricity consumption, met by coal-based electricity. Hence, reducing its carbon footprint is vital, not only to support India’s net-zero goals but also mitigate export risks from emerging trade regulations, i.e. the EU’s CBAM. As other nations develop low-carbon technologies & create trade measures based on embedded emissions, India’s aluminium industry is presented with an opportunity to lower its emission intensity to be a global leader in sustainable metal manufacturing. This will also drive India’s clean energy transition in the longer run.
The global trends clearly indicate the increasing demand for low-carbon aluminium, induced by regulations and consumer choices across the automobile, packaging, and construction sectors. However, aluminium faces competition from other materials like steel and plastics, currently with a better carbon footprint. Thus, merely if the Indian aluminium industry wants to be on par with global market requirements, the shift has to be toward cleaner production routes while keeping costs under check.
Accordingly, the Working Group constituted by NITI Aayog on decarbonisation of aluminium assessed 30 proposed solutions under the decarbonisation roadmap. Low-impact options were de-prioritised, while the high-impact solutions were categorised into three main approaches. All three of these approaches focus on reducing emissions from electricity, which remains the largest source of emissions in this sector. In-depth technical and economic analysis was performed for each of the selected solutions, including detailed cost estimates, as well as additional support measures that would enable successful implementation.
A value chain analysis carried out on aluminium production-from the mining of its raw materials to the production of finished metal-revealed that most of the emissions take place at the smelting stage, where alumina is being turned into metallic aluminium. Moreover, most of the emissions are related to the energy required for this process. Hence, most of the potential for decarbonisation and resulting solutions are related to a reduction of emissions linked with power generation. This is critical since the sector maintains a fleet of captive coal-power generators to ensure a continuous power supply.
While RE-RTC presents a viable short-term solution, it poses operational challenges for aluminium smelters, which require continuous and uninterrupted power supply, placing high demands on the reliability of RTC mechanisms. Nuclear power provides a stable and low-emission source for the medium term but at a high upfront capital cost and with challenging regulatory, permitting, and public perception issues. CCUS is critical to long-term decarbonisation but faces high costs, infrastructure, and uncertainty regarding carbon transport and storage.
Access the report here
