Aluminium, cement makers are under pressure to help China achieve carbon emission goals

Minghe Hu
·4-min read

China’s aluminium and cement industries are under mounting pressure to enhance their energy efficiency, switch to cleaner fuels, reduce output and boost recycling to help China realise its goal of reaching peak carbon emissions by 2030.

The latest pressure comes from the environment watchdog, which recently unveiled a plan to raise the bar for approval of new emission-intensive industrial projects.

Companies seeking the green light for projects involving coal-fired power, petrochemicals, coal-derived chemicals, steel, cement and non-ferrous metals will need to include carbon-emission reduction plans in their environmental impact assessment for the first time.

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That is according to an industry consultation paper issued by the Ministry of Ecology and Environment on April 15.

Together, the industries contribute over half the nation’s carbon dioxide emissions.

Carbon reduction measures based on the industry’s emissions-peak targets must be included, covering low-carbon fuel adoption, energy efficiency enhancements and waste heat and energy utilisation, it said.

For the aluminium smelting industry, one of the most energy-hungry industries, Beijing had already made it harder to get approval for new coal-fired power plants built and owned by smelters, besides ordering the shutdown of those without proper permits.

Electricity typically accounts for some 40 per cent of a smelter’s total operating costs.

Although it does not have a specific carbon-neutrality target, the China Nonferrous Metals Industry Association said this month it expects to see the sector’s carbon emissions peak before 2025, with a target to slash them by 40 per cent by 2040.

“The timeline for the aluminum smelting industry’s carbon neutrality goal will be in line with the national goal of 2060,” said Li Zhenzhong, senior engineer at Gansu province-based Dongxing Aluminium - the nation’s sixth largest aluminum smelter by capacity.

President Xi Jinping surprised the world in September by announcing that China is aiming for carbon dioxide emissions to peak before 2030. By 2060, carbon neutrality is targeted so that any residual emissions will be offset by capturing the same amount from the atmosphere directly.

It takes around 13,600 kilowatt-hours of electricity - enough to meet the annual needs of 3.3 Hong Kong households - to produce one ton of aluminum by smelting, Li noted. Some 86 per cent of the power used by the industry is fueled by coal, he added.

The government of the coal-rich northern Inner Mongolia autonomous region, where a seventh of the nation’s aluminium smelting capacity is located, said in March no more permits for new projects will be granted from this year onward.

In the face of tighter environmental regulations, aluminium smelters in eastern provinces have in recent years shifted some of their projects to the southwestern provinces of Yunnan and Guizhou, which have rich bauxite and hydropower resources.

Shandong-based Hongqiao Group, the world’s biggest private-sector producer of aluminium, is moving 2.03 million tons of its production capacity from Shandong to Yunnan. Yunnan is expected to host 60 per cent of the industry’s new capacity this year, according to a Huajin Securities report.

However, the sudden spike in electricity demand has caused shortages in Yunnan, especially during the dry season, said Xinyi Shen, a campaigner at Greenpeace East Asia.

As demand for aluminum – which is used in bigger quantities in electric cars than it is in petrol vehicles – will not fall in the near future, the country should create a recycling system to address sustainability concerns, industry watchers said.

The construction materials industry, another energy-intensive sector, is also mulling ways to put a cap on carbon emissions.

Last month, the China Building Materials Federation called for the industry to work towards a goal for carbon emission to peak before 2025, with the cement sector striving to do so before 2023.

“It is a challenging target and will depend on how seriously the government wants to achieve it,” said Morningstar senior equity analyst Lee Chok Wai. He said he is not aware of any formal target set by the government.

Carbon emissions in the non-metals construction materials sector grew 2.7 per cent to 1.48 billion tonnes last year, roughly a 10th of China’s total, according to the federation.

Cement production contributed 83 per cent of the emissions.

The potential for the use of cleaner fuels is huge, according to the federation, which pointed out that biomass and waste-to-energy projects only supplied 0.7 per cent of the construction materials industry’s energy use.

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