executive summaryThe aluminum industry stands at a crossroads. Demand continues to rise, driven by the global energy transition, as the imperative for decarbonization grows more urgent, evidenced by the proliferation of corporate climate commitments. In this context, aluminum producers must find ways to marry economic competitiveness with ambitious carbon reduction goals.
Persistent geopolitical volatility, supply chain disruption, and rapidly evolving trade and regulatory landscapes add further complexity. Industry leaders face a dual mandate: increase the production of low-carbon aluminum that enables decarbonization in downstream sectors while reducing their own carbon footprint. Despite impressive progress—such as the increased use of renewable energy and heightened industry collaboration—the sector's emissions trajectory remains inadequate, underscoring the indispensable role of breakthrough technology in achieving global climate goals.
Key aluminum-producing regions are charting different paths. Europe has the most mature carbon market instruments and advanced policy leadership, as shown by its Emissions Trading System (ETS) and Net-Zero Industry Act. Latin America and Australia have strong decarbonization momentum, fueled in large part by their adaptation of European initiatives and greater use of clean energy. In Africa, namely in Guinea, the world's second-largest bauxite producer, significant clean energy investment is critical to enhance limited electricity capacity and support ambitions to advance from mining to refining.
Asia and the Gulf region lag in low-carbon aluminum production. Major Asian producers such as China and India have relied heavily on coal for aluminum production. While China continues to expand its solar and wind capacity and further strengthens its hydropower capabilities, India has demonstrated minimal progress in developing a coordinated industrial decarbonization strategy. Gulf producers are poised to benefit from substantial government investments in clean energy, with several gigawatt-scale projects expected to come online before the end of the decade. However, green production initiatives have been largely reactive, as producers assess supply chain traceability obligations, often without the support of policy frameworks that promote sustainable production. Regional divergence creates both barriers and opportunities, especially in light of new policy initiatives such as the EU's Clean Industrial Deal and Carbon Border Adjustment Mechanism (CBAM), designed to reward low-emission producers.
Companies across the aluminum supply chain will proactively use this moment to get ahead with three key actions: ensure secondary aluminum is decarbonized in addition to primary aluminum to capitalize on momentum toward the low-carbon circular economy; deepen supply chain traceability through digital solutions; and turn global policy fragmentation into a market advantage. Treating competitiveness and carbon reduction as mutually exclusive priorities poses significant strategic risks. These three initiatives support both objectives while delivering on the rapidly changing needs of global aluminum supply and demand.
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