Carbon emissions in metal manufacturing productivity: A global analysis of aluminium smelting

Abstract

The aluminium industry generates over a billion tonnes of carbon dioxide (CO₂) annually, contributing to global emissions significantly. To become a part of the sustainable economy, this carbon-intensive industry needs improved productivity to reduce its carbon footprint. Given the ubiquity of aluminium usage in a wide array of consumer and industrial products and its high production energy requirements, assessing the carbon component of productivity can have significant climate mitigation impacts. This paper examines the cost efficiency of carbon emissions embedded in the aluminium smelting sector. It refers to the point at which a smelter minimizes its cost for a given output level by optimally using input resources. Specifically, it investigates the energy-specific technology gaps that affect aluminium sector productivity, utilizing unique global smelter-level data from 2004 to 2020. This is the first study comparing smelters' cost efficiency using different energy sources and technologies. It estimates the Meta-Technology-Ratio (MTR), which measures how close a smelter is to the frontier, representing the use of the best available technology while being environmentally efficient. The analysis underscores the potential for reducing the technology gap in coal- and gas-powered smelters through modernization and efficiency improvements while highlighting renewables and nuclear power as leading options for aligning with the most efficient, cutting-edge technologies in aluminium smelting.