Commentary: China’s Aluminum Industry Should Accelerate Decarbonization to Counter Trump Tariffs

China's aluminum industry is the largest in the world, producing 60% of the global primary aluminum. The industry’s influence is significant, with 15% of aluminum products being exported to the United States. However, recent U.S. tariff increases on Chinese aluminum are presenting challenges for the sector. [para. 1] China's reliance on imported bauxite, necessary for aluminum production, adds vulnerability to the industry, as past bans from suppliers like Malaysia and Indonesia have already led China to depend on Guinea and Australia. Any disruption in bauxite supply could severely impact aluminum production and related industries. [para. 2]

Despite geopolitical tensions, there are opportunities as well. The aluminum industry contributes to about 5% of China's total greenhouse gas emissions, but it has yet to develop a formal decarbonization plan. Predictions indicate that the industry's emissions might peak in 2025. Decarbonizing could aid China's environmental goals and benefit the reduction of the carbon footprint in sectors reliant on aluminum, like renewable energy infrastructure. [para. 3] In response to U.S. trade barriers, China might find opportunities for industry decarbonization by targeting markets with strong climate policies, such as Australia and the UK, which are considering the implementation of Carbon Border Adjustment Mechanisms (CBAM) that encourage reduced emissions and promote exported goods with lower carbon footprints. [para. 4]

A shift toward a circular production model that uses recycled aluminum can dramatically cut emissions and lessen the need for imported bauxite, with secondary production offering up to a 95% reduction in carbon emissions compared to traditional processes. Yet, the recycling capacity is currently inadequate, and recycled aluminum forms less than 30% of industry input despite a growing supply of recyclable resources. [para. 5][para. 6] Additionally, to reduce its reliance on coal, which accounts for 7% of electrical consumption in aluminum smelting (70% from coal), there is a need to transition to cleaner energy sources. [para. 7] Many Chinese smelters utilize captive coal power plants, which account for a significant portion of China's coal power capacity and are often inefficient and lacking in emission controls. Transitioning these power plants to renewable energy or backup sources could significantly lower emissions. [para. 8][para. 9]

Many smelters have relocated to regions like Yunnan to exploit cheaper and cleaner hydropower, but climate change has affected the reliability of hydropower as a long-term energy solution [para. 10]. Moving forward, clear policy directives are expected to hasten the green transformation of the aluminum industry, as minimum renewable energy use ratios have been set for the coming years. Increasingly strict environmental regulations are driving smelters toward cleaner energy options. [para. 11][para. 12] The inclusion of aluminum smelting in China's carbon emissions trading system means rising carbon costs for inefficient smelters. Effective transformation will require enhanced incentives for low-carbon facilities and stricter benchmarks for high-carbon ones. [para. 13]

China's abundant green resources and the evolving green tech landscape present significant opportunities for industry decarbonization amid international trade shifts. The authors of the original opinion piece stress taking advantage of this transformative period. [para. 14][para. 15][para. 16]