Aluminum is a strong and lightweight commodity, contributing billions of dollars to the global economy and supporting countless supply chains worldwide. But like all manufactured products today, aluminum is facing increased scrutiny due to its energy-intensive production and alumina refining processes that are said to contribute significantly to global carbon emissions. According to the 2023 Aluminum Paradox report by the Environmental Integrity Project, global aluminum production resulted in 1.2 billion tons of global greenhouse gases in 2021.
In response to being put under the climate microscope, primary aluminum producers worldwide are adopting new environmentally friendly production processes, including shifting towards the use of renewable energy, and investing in new green aluminum smelting technologies (like inert carbon anode) or even studying carbon capture and storage solutions to accelerate their decarbonization efforts.
However, across the entire aluminum industry, investing in recycling has currently become the preferred initiative to reduce carbon emissions in the production process.
Green primary aluminum is in increasing demand, and, as a result, aluminum products branded as “low-carbon” or “green” are starting to charge a premium price. Green alumina refers to aluminum produced using processes and technologies that leave a minimal environmental footprint. This sustainable and environmentally friendly metal is preferred for use in numerous industries, including manufacturing, building, construction, infrastructure and transportation.
The global aluminum market was valued at $243.89 billion in 2024 and is expected to reach $393.70 billion by 2032 at a CAGR of 6.2% during the eight-year forecast period. The growth is attributed to ongoing demand increases in several key markets, including auto, beverage, construction and electrical. Aluminum can production is expected to increase thanks to a growing trend of canned wine and spirits, cold-brew coffees, natural sweetener sodas and other popular beverages.
With an increase in aluminum production expected, there’s growing concern over the CO2 emissions that will result in larger carbon footprints. Aluminum and metal production, in general, has traditionally been a contributor to global pollution, with coal as its leading power source.
Consumers and investors alike are placing increasing pressure on a range of industries declared to be energy-intensive. Manufacturers are now being encouraged, if not obligated, to source their materials responsibly or shift their processes to more sustainable ones.
Aluminum production is no exception, with green aluminum being the industry’s response to these concerns. The Net Zero Emissions by 2050 (NZE) Scenario urges aluminum manufacturers to aim for a 4% yearly decline in the average direct emissions in the years leading up to 2030.
Environmentally friendly aluminum is considered “green,” “super-green” or “ultra-green” primarily due to its production power source or proportion of recycled content. When aluminum producers rely primarily on a renewable energy source to produce the metal, it can be considered green aluminum.
Much of North America’s aluminum is produced using hydroelectricity. Also known as “hydropower,” hydroelectricity is produced by converting the kinetic energy from rushing water into mechanical energy, which is then converted into electricity.
Using hydropower to produce green aluminum reduced the percentage of carbon emissions generated during smelting, with more than 80% of these emissions associated with electricity used for electrolysis. According to the International Energy Agency, the global average CO2 emissions have decreased moderately at approximately 2% yearly for the past decade.
Other than hydropower, some aluminum manufacturers also prefer obtaining smelting energy from their own solar or wind power generation plants. Nuclear energy is also an upcoming technology that promises an energy-efficient and environmentally friendly alternative to traditional aluminum power generation sources, like coal and electricity-powered smelting plants.
Experts consider other factors when determining the sustainability of aluminum. First, it’s a highly recyclable material, with almost 75% of all aluminum produced in the United States still being used today. Recycling aluminum is an effective decarbonization technique that requires around 5% of the energy used for primary aluminum production and produces significantly lower greenhouse gas (GHG) emissions. Furnaces used for smelting scrap aluminum run on natural gas and other clean fuels, such as biofuels, renewable electricity and hydrogen.
Another factor that makes aluminum production greener is its extremely lightweight nature compared to other metals. This makes it more efficient to transport, and vehicles made of aluminum consume less fuel.
Based on HARBOR’s green aluminum research reports, we can confirm that the low-carbon or green aluminum market is indeed taking off. According to a recent report by business intelligence analysts, global aluminum demand is expected to grow by more than 50% by 2030, from 5 million tons in 2022 to 12 million. The growing demand for green aluminum and the recent investment in green technology is driving the possible creation of an entirely separate premium trading market for green aluminum alone.
The pressure on aluminum manufacturers to meet climate protection goals and move toward net-zero carbon (or carbon neutral) is so significant that it is causing commodity trading markets to respond. Producers of green aluminum and sustainable metals know that an increase in demand drives a premium price.
That’s why many producers have begun rebranding their low-carbon products to demonstrate the value their green aluminum offers. Launching green aluminum brands is gaining momentum, as it increases brand awareness and leadership perception and seems necessary to get a potential green upcharge.
Examples of green/low-carbon aluminum brands out in the market include:
Super-green aluminum brands (metal with high recycled content — mainly post-consumer) include Norsk Hydro’s CIRCAL, among others. While neither manufacturer will state exactly how much of a premium its environmentally friendly aluminum commands, executives from both companies say that their low-carbon products are subject to supply and demand like any other good.
Green aluminum is necessary, and buyers will undoubtedly pay extra for its increased value. In fact, wire rod currently commands the highest premiums due to their use in power wiring linked to the global green energy transition.
The demand for green primary aluminum is only in its infancy. Manufacturers continue to set environmental responsibility goals targeting their supply chain. In industries that rely heavily on aluminum supply, aluminum products branded as green or low-carbon will become increasingly appealing.
Industries like consumer electronics, auto manufacturing, roof window manufacturing and consumer packaged goods are looking for ways to keep their products low-carbon to meet government regulations and the standards their consumers and investors set. Global industries like these that rely on aluminum are putting pressure on the producers to shift toward a more sustainable production process.
The automotive industry began its “Drive Sustainability” campaign that would see major automotive makers join to commit to greener production processes. Sourcing green aluminum has been a key strategy in meeting these objectives.
Recently, BMW Group made a significant step toward sustainability. It resolved to start using cast aluminum wheels produced using 100% green power for BMW and MINI brands starting in 2024. BMW Group is actively involved in numerous international initiatives, including the Aluminum Stewardship Initiative (ASI) certification. The green aluminum wheels contribute significantly to the company’s goal to reduce CO2 emissions throughout its supply chain by at least 20% between 2019 and 2030.
Other automotive companies embracing green aluminum include Mercedes-Benz, which partnered with Hydro to create a low-carbon technology for use between 2023 and 2030. Ford Motor Company signed an MOU with Rio Tinto to jointly develop a battery using low-carbon materials.
Apple is in a similar position. The company has spent $4.7 billion in Green Bonds since 2016 to support the development of low-carbon manufacturing and recycling technologies, accelerating the company’s goal to become carbon-neutral by 2030. ELYSIS is among the first beneficiaries of Apple’s Green Bonds and supplied the company with the world’s first batch of commercial-purity, low-carbon aluminum for the iPhone SE. In 2023, Apple announced its first-ever carbon-neutral products that drive dramatic GHG reductions — its new Apple Watch lineup.
With the growing demand for aluminum worldwide and the increased need to meet environmental benchmarks, green aluminum is becoming a viable investment, commanding a premium price.
To help facilitate the demand for green aluminum, HARBOR Aluminum Intelligence has launched the world’s first green aluminum premium assessments:
Contact HARBOR Aluminum today to find the latest market developments on green aluminum product supply, demand, investments, expansions, initiatives, trade, carbon pricing and public policies. You can also request accurate green aluminum reports and a sample of the green aluminum premium.
The aluminum industry is our focus. From bauxite to primary aluminum to aluminum semis to scrap. In the Americas, Europe, Middle East and Asia. This is why we serve all major aluminum players up and down the supply chain. For more information or enquires, contact our team today.
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