Manufacture of Aluminium

Sector classification and activity

Macro-Sector C – Manufacturing

NACE Level 4

Code C24.4.2

Description Manufacture of aluminium Mitigation criteria

Principle The manufacturing of aluminium is a highly energy intensive process. The CO2 emissions related to the production of aluminium are primarily scope 2 emissions (i.e. from the generation of the electricity used). Aluminium manufacturing is eligible if relying on low carbon electricity and reduced direct emissions.

Furthermore, all aluminium recycling is eligible due to significantly lower emissions than primary production.

Mitigation measures are eligible provided they are incorporated into a single investment plan within a determined time frame (5 or 10 years) that outlines how each of the measures in combination with others will in combination enable the activity to meet the threshold defined below actions

Threshold Manufacture of primary aluminium is eligible if Criteria 1 (see below) is met in combination with either criteria 2 or 3 (see below):

1. Criteria 1: Direct emission for primary aluminium production is at or below the value of the related EU-ETS benchmark.

As of February 2020, the EU-ETS benchmarks values for aluminium manufacturing is 1.514 tCO2e/t.

Direct emissions are to be calculated according to the methodology used for EU-ETS benchmarks)

2. Criteria 2: Electricity consumption for electrolysis is at or below:

15.29 MWh/t (European average emission factor according to International Aluminium Institute, 2017, to be updated annually)²⁰⁴

3. Criteria 3: Average carbon intensity of the electricity that is used for primary aluminium production (electrolysis) is at or below:

100 g CO2e/kWh (Taxonomy threshold for electricity production, subject to periodical update).

204 http://www.world-aluminium.org/statistics/primary-aluminium-smelting-power-consumption/#data

• Manufacture of secondary aluminium (i.e. production of aluminium from recycled aluminium) is eligible. No additional mitigation criteria need to be met.

Rationale

- Emissions related to the manufacturing of aluminium are primarily related to the use of electricity.

- Electricity costs contribute to over 50% of the production costs. Consequently, there is a strong incentive for the aluminium industry to aim for improving energy efficiency.

- The key action for aluminium production to make a substantial contribution to climate change mitigation is to increase its share of use of low carbon electricity. It is acknowledged that on the short term the availability low carbon electricity may be a limiting factor, depending on the region.

This will change in on the medium term, when sufficient low carbon electricity will become available.

- The second action for aluminium production to make a substantial contribution to climate change mitigation is to decrease the process’s direct emissions and the emissions due to fuel use for on-site energy production

- It is acknowledged that aluminium production facilities can play an important role in stabilizing electricity grids by active management of electricity demand. This may result in substantial mitigation contributions, e.g. by limiting the need for electricity storage facilities. However, given the lack of available metrics to quantify these impacts, these benefits are not taken into account at this stage.

- It is acknowledged that aluminium will play a role in a low carbon economy, in particular enabling light weight products and electrification (including transmission wires). Such applications could also be considered eligible under the activity "Manufacture of other low carbon technologies" provided they can demonstrate substantial emissions reductions according to the criteria for that activity. Furthermore, compared to a number of other

construction materials, e.g. steel or plastics, the current process for aluminium manufacturing is easy to decarbonise, i.e. by use of low carbon electricity,

- All aluminium recycling is considered to make a substantial contribution to climate change mitigation because of its association with much lower emissions than primary production The emissions covered are:

- Scope 1: all direct emissions related to the production (the process’s direct emissions and the emissions due to fuel use for on-site energy production).

- Scope 2: Electricity consumption for electrolysis process and related emissions from the generation of the electricity used.

Information sources:

- ASI Performance standard, version 2, December 2017, https://aluminium-stewardship.org/asi-standards/asi-performance-standard/

- CO2 benchmark as defined for free allocation of Emission allowances under the ETS: 1.514 allowances/ton Al

- International Aluminium institute: http://www.world-aluminium.org/statistics/primary-aluminium-smelting-energy-intensity/

Do no significant harm assessment

The main potential significant harm to other environmental objectives from the manufacture of aluminium is associated with:

• the potential for significant air emission impacts: perfluorocarbons, fluoride gases, polycyclic aromatic hydrocarbons (PAHs), and particulate matter (e.g. unused cryolite). Hydrogen fluorides can be toxic to vegetation;

• the toxic, corrosive and reactive nature of waste generated by the used linings (cathodes) from the electrolytic cells (known as spent pot lining (SPL)). Dissolved fluorides and cyanides from the SPL material can create significant environmental impacts including groundwater

contamination and pollution of local watercourses;

• the ability (or lacking thereof) of aluminium manufacturing plants to incorporate aluminium scrap (including scrap from their own manufacturing processes) in the production process; and the potential to impact ecosystems as a result of the land footprint of the site and from polluting emissions.

(2) Adaptation Refer to the screening criteria for DNSH to climate change adaptation.

(3) Water • Identify and manage risks related to water quality and/or water

consumption at the appropriate level. Ensure that water use/conservation management plans, developed in consultation with relevant

stakeholders, have been developed and implemented.

• In the EU, fulfil the requirements of EU water legislation.

(4) Circular Economy Measures are in place to minimise and manage waste (including hazardous waste) and material use in accordance with the BREF for the Non-Ferrous Metals Industries.

In order to avoid risks to circular economy, aluminium manufacturing plants need to be able to process aluminium scrap. In order to avoid unnecessary resource and energy consumption, the aluminium scrap collection and sorting activities should be optimised for separation on an alloy specific basis. If scrap alloys are mixed, the functionality of the recycled material is restricted, and valuable alloying elements may be lost.

(5) Pollution Emissions to air (e.g. sulphur dioxide - SO2, nitrogen oxide - NOx, particulate matter, Total Organic Carbon (TOC), dioxins, , mercury (Hg), hydrogen chloride (HCL), hydrogen fluoride (HF), Total Fluoride, and (PFCs)

polyfluorinated hydrocarbons (PFCs)) are within the BAT-AEL ranges set in the BREF for the Non-Ferrous Metals Industries. ²⁰⁵

A stringent level of BAT-AEL is required if an activity materially contributes to local air pollution levels, exceeding air quality standards

205 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2016.174.01.0032.01.ENG

A minimum requirement is the implementation and adherence to a recognised environmental management system (ISO 14001, EMAS, or equivalent).

(6) Ecosystems Ensure an Environmental Impact Assessment (EIA) has been completed in accordance with the EU Directives on Environmental Impact Assessment (2014/52/EU) and Strategic Environmental Assessment (2001/42/EC) (or other equivalent national provisions or international standards (e.g. IFC Performance Standard 1: Assessment and Management of Environmental and Social Risks) – whichever is stricter - in the case of sites/operations in non-EU countries) for the site/operation (including ancillary services, e.g.

transport infrastructure and operations, waste disposal facilities, etc.) and any required mitigation measures for protecting biodiversity/eco-systems, in particular UNESCO Word Heritage and Key Biodiversity Areas (KBAs), have been implemented.

For sites/operations located in or near to biodiversity-sensitive areas (including the Natura 2000 network of protected areas as well as other protected areas), ensure that an appropriate assessment has been

conducted in compliance with the provisions of the EU Biodiversity Strategy (COM (2011) 244), the Birds (2009/147/EC) and Habitats (92/43/EEC) Directives (or other equivalent national provisions or international standards (e.g. IFC Performance Standard 6) – whichever is stricter - in case of sites/operations in non-EU countries) based on the conservation objectives of the protected area. For such sites/operations, ensure that:

• a site-level biodiversity management plan exists and is implemented in alignment with the IFC Performance Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources (2018);

• all necessary mitigation measures are in place to reduce the impacts on species and habitats; and

a robust, appropriately designed and long-term biodiversity monitoring and evaluation programme exists and is implemented.