Carbon pricing needed to reach Al CO2 goals: Rain

  • Market: Metals, Petroleum coke
  • 22/09/23

Primary aluminium smelters cannot reach their emissions goals without costly technological measures to deal with emissions from carbon anodes, putting the onus on governments to incentivize such investments by putting a price on carbon, petroleum coke calciner Rain Carbon says.

Carbon supply chain and carbon-related process emissions made up more than half of total emissions from a low-carbon aluminium smelter, according to a case study Rain presented last week at the Argus Global Coke and Carbon Conference in Seattle, Washington.

"Achieving net zero for primary aluminium will not be possible without either inert anodes or carbon capture across the supply chain," Rain Carbon technical services director Maia Hunt said in a presentation detailing Rain's analysis to calculate a smelter's full lifecycle emissions. Rain produced the study using details from the Alouette aluminium smelter in Quebec, Canada, and assuming anode raw materials from Rain's Lake Charles, Louisiana, calciner in order to show an end-to-end emissions analysis of a low-carbon aluminium smelting process.

While a smelter like Alouette operating with renewable power can achieve a target of less than 4t of carbon dioxide equivalent (CO2e) per tonne of aluminium — a standard used by smelters to label certain aluminium products as low-carbon — this only considers direct and indirect emissions, also known as scope 1 and scope 2 emissions, respectively, Rain said. But when considering scope 3 emissions, which are related to supply chains, and thus include coke calcining, meeting this benchmark is much more challenging, according to the calciner.

Rain found that over half of the smelter's "cradle-to-gate" emissions were not related to operating the smelter itself — carbon supply chain and carbon-related process emissions comprised 64pc of total emissions. And anode production, including raw materials calcined petroleum coke (CPC) and coal tar pitch (CTP) and the anode baking, contributed to 21pc of the smelter's overall carbon footprint.

Total carbon raw materials production and transportation amounted to 609kg/t of aluminium, with CPC making up 85pc. This is even when considering that Rain's Lake Charles calciner's carbon emission rate is lower than some other calcination plants, as the plant recovers its waste heat energy, allowing for a 16pc reduction in CPC-related emissions.

But eliminating coke from the aluminium smelting process is a tall order. Carbon anodes that are consumed in the smelting process are an essential feedstock in traditional smelting, but they emit CO2. Inert anodes, which instead emit oxygen, still have a long road ahead before becoming viable at scale in the industry. Existing smelters cannot be retrofitted to use the technology, meaning new smelters would need to be built, requiring significant capital investment, Rain has said.

Calciners need incentives for CCUS

In order to eliminate carbon dioxide emissions while still using carbon anodes, carbon capture, utilization and storage (CCUS) would have to be installed across the supply chain. But this technology is currently prohibitively expensive and the costs would prevent calciners and smelters from competing with global competitors that do not make such investments in emissions reduction.

Rain in 2021 conducted a feasibility study on CCUS to reduce greenhouse gas emissions at its calcination plants and determined that "immediate implementation is not realistic as the technology is cost prohibitive". Capital costs to add CCUS technology at the Lake Charles calciner are estimated to exceed $160mn, although the project would be applicable for some tax credits, Rain said.

But if tax credits for CCUS increase substantially, or if an "aggressive carbon pricing policy is adopted by the US government," the technology may become more economically feasible, Rain said in the study. More efficient CCUS technologies could possibly incentivize installation at calciners, as well, the calciner said.

But one additional concern with this approach is whether carbon policies are implemented evenly across the global market.

China is already an "elephant" in the industry, producing about 58pc of the world's aluminium, up from only around 3pc about 20 years ago, Robert Dickie, an independent carbon market analyst, said at the conference. The country is aiming for 45mn t of aluminium production capacity by 2025.

China is on track to increase its share of global aluminium production, in part because Chinese producers face less stringent environmental standards, Dickie said. Chinese producers can cut costs compared with smelters in North America or Europe by using lower-quality CPC with more impurities because of looser environmental standards, making it tougher for western smelters to compete.

The EU, which has already implemented an emissions trading system to put a price on carbon, is now looking to begin a carbon border adjustment mechanism that would add costs for industries importing heavy emissions products like aluminium from countries without carbon emissions limitations, in order to create a level playing field.

"The western companies will have to figure out how to how to participate in that market to make some money," Dickie said.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
12/04/24

Gunvor set for buying spree after windfall: CEO

Gunvor set for buying spree after windfall: CEO

London, 12 April (Argus) — Trading firm Gunvor plans to use part of a massive earnings windfall over the past two years to build out its asset base, its chief executive Torbjörn Törnqvist told Argus . "Today, we are under-invested in assets so we will change that," Törnqvist said, adding that investments would be broad based and to some extent opportunistic. "We will employ quite a lot of capital in investments." Independent commodity trading companies are sitting on unprecedented piles of cash after two years of bumper earnings arising from supply chain disruptions and market volatility. While Geneva-based Gunvor is smaller than its peers Vitol, Trafigura and Mercuria, it is still a huge company by most metrics. It reported revenues of $127bn in 2023 and a profit of $1.25bn, following a record $2.36bn in 2022. It has kept most of its earnings in house and had an equity position of almost $6.16bn by the end of 2023 — its highest ever. Törnqvist is eyeing further growth. "We will definitely be a much bigger company, that I can say," he replied when asked where he saw Gunvor in 10 years' time. "I think we will grow in tune with the [energy] transition." Trading firms are looking for ways to keep their competitive advantage, particularly given the uncertainties associated with the energy transition. One emerging trend is an appetite for infrastructure. Vitol is in the process of buying a controlling stake in Italian refiner Saras, which operates the 300,000 b/d Sarroch refinery in Sardinia. Trafigura said this week that it is in talks to buy ExxonMobil's 133,000 b/d Fos refinery on the French Mediterranean coast. Part of the rationale behind these moves is to increase optionality and take advantage of the loss of Russian products to the European market, as well the closure of large chunks of local refining capacity. Gunvor owns the landlocked 100,000 b/d Ingolstadt refinery in Germany and a 75,000 b/d refinery in Rotterdam, where it plans to shift away from fossil fuel use. "Many oil refineries have been up for sale and still are," Törnqvist said. Asked if Gunvor was looking for something similar, he said the company is interested in the "right opportunity" whether in upstream, downstream, midstream or shipping. "It all feeds into what we are doing and all supports our underlying trading," he said. But Törnqvist suspects a lot of Gunvor's growth will come from gas and power — areas where trading companies are already seeing rising profits. The company made its first investment in a power generation asset late in 2023, when it agreed to buy BP's 75pc stake in the 785MW Bahia de Bizkaia combined-cycle gas turbine plant in Bilbao, Spain. It has signed a slew of LNG offtake agreements in the past year and continues to grow its LNG tanker fleet . "We're building logistical capabilities in LNG," Törnqvist said. "Oil is here to stay" Törnqvist said Gunvor is well placed to navigate the energy transition, and is stepping up investments in renewables and biofuels and expanding into carbon and metals trading. "There will be disruptions, there will be different paths to the transition in different parts of the world which go at different paces and have different priorities and ways to deal with it," he said. "This will create opportunities." But Törnqvist is clear that oil and gas will remain an integral part of Gunvor's business. "We feel that oil is here to stay," he said. "And it will grow for several years." By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

Japan’s Daihatsu to reopen Kyushu, Osaka car plants


12/04/24
News
12/04/24

Japan’s Daihatsu to reopen Kyushu, Osaka car plants

Tokyo, 12 April (Argus) — Japanese car manufacturer Daihatsu will resume operations at its Kyushu and Osaka plants from 6 and 7 May respectively, which will mark a full reopening of its domestic facilities. Production volumes at these plants were undisclosed. Daihatsu suspended all of its operations in December 2023 after it was accused of tampering with safety test results. It resumed partially in February but most of its production facilities, including its major plant in Osaka, remained closed. Daihatsu produced nothing in January and 6,692 units in February, less than one-tenth of its production a year earlier. This led to year-on-year declines in Japan's total car output in January and February . By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

India’s ISPL plans 10GW solar PV capacity by Nov 2026


11/04/24
News
11/04/24

India’s ISPL plans 10GW solar PV capacity by Nov 2026

Mumbai, 11 April (Argus) — Indian manufacturer Indosol Solar (ISPL) is aiming to achieve 10GW of fully integrated solar photovoltaic (PC) capacity by November 2026, as it expects the Indian government's push towards greener energy will boost demand for solar products in the coming years. ISPL plans to increase its production capacity for upstream and downstream solar products, which include a 30GW plant for metallurgical silicon and polysilicon and a 20GW plant for solar ingot, wafer, cell and module capacity. It is also aiming to add 1,200 t/yr of solar glass to its portfolio, a source from ISPL told Argus. The firm has already started commercial production at its 500MW solar module plant in Nellore, Andhra Pradesh state on 31 March. It is expected to add 500MW of solar ingot, wafer, cell and module capacity by the end of this year. This will increase ISPL's integrated solar PV manufacturing capacity to 500MW by the end of December, 5GW by 2025 and 10GW by November 2026. India's product-linked incentive (PLI) scheme for solar modules manufacturing and its plan to use approved list of models and manufacturers in government-backed solar projects will increase demand for domestic solar products in the country, the ISPL source added. ISPL was among the three firms selected to establish a solar PV manufacturing plant under the PLI scheme for solar modules manufacturing, which provides incentives for five years post-commissioning of the solar manufacturing plants on the sales of high-efficiency solar PV modules and for domestic value additions. India is targeting to establish 450GW of renewable energy capacity by 2030, including 300GW of solar capacity. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Motiva moves coke to Deepwater


10/04/24
News
10/04/24

Motiva moves coke to Deepwater

Houston, 10 April (Argus) — US refiner Motiva has begun moving petroleum coke supply from its damaged Pabtex terminal in Port Arthur, Texas, to Houston's Deepwater terminal for loading, according to a number of market participants. The refiner has been unable to load its production from the Pabtex terminal since mid-March, when a vessel collided with and damaged a shiploader there . But Motiva has finalised an agreement allowing it to rail its trapped coke to Houston's Deepwater terminal. Motiva on Tuesday began railing 10,000t/day to Deepwater, market participants said. Pabtex serves Motiva's 626,000 b/d refinery in Port Arthur, Texas, which has the capacity to produce about 3mn t/yr of petroleum coke, mainly high-sulphur fuel grade. It is unclear how long the refiner will be railing its volumes into Deepwater. But the damage at the Pabtex shiploader seems unlikely to be resolved soon. Cargoes of coal and other commodities that were blocked by a bridge collapse in Baltimore, Maryland, on 26 March have also begun moving to other terminals. Eastern railroad Norfolk Southern said on 3 April that it had "successfully transported" the first cargo from a Baltimore vessel diverted to its Lamberts Point terminal in Norfolk, Virginia. By Delaney Ramirez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Liberty’s relationship with Czech government worsens


10/04/24
News
10/04/24

Liberty’s relationship with Czech government worsens

London, 10 April (Argus) — The relationship between Liberty Steel — which owns the Ostrava plant — and the Czech government is breaking down. Senior Czech politicians and GFG Alliance chairman Sanjeev Gupta held a meeting in Prague today to discuss the plant. GFG Alliance is a loose-knit collection of entities including Liberty Steel. "I can say that the outcome of the negotiations was very disappointing," Czech Republic Minister of Industry and Trade Jozef Sikela said. "There may be more questions after today's meetings than there were before." Finance minister Zbynek Stanjura also attended the meeting, which the politicians said was at the behest of Liberty. "Today's meeting with the ministers and their subsequent comments were very disappointing," a Liberty Steel spokesman told Argus . "The ministers showed very little understanding nor the willingness to understand the complex situation. We are afraid that the chances of positive dialogue going forward are bleak. It is important to highlight that we have always abided by all the laws of the country and are doing our utmost to protect the business, its creditors and its employees despite very difficult conditions." The government has requested Liberty repay more than 8.2bn koruna ($346.1mn) owed to Ostrava from other group entities, including Liberty Finance Management. Liberty's latest restructuring plan for Ostrava envisages repayment of about half that amount, and no repayment to its major creditor Tameh Czech, which is owed more than Kc2bn. Tameh Czech's joint owners, ArcelorMittal and Tauron Energy, are trying to sell the business, which was reliant on Ostrava as its only customer. The government is also uneasy about Ostrava's reliance on sales of carbon emissions allowances to generate income. Ostrava plans to sell another €44mn worth of emissions rights in May, after selling almost €360mn worth between August 2022 and October 2023, while buying just €183mn worth over the same period, leaving it with a clear deficit. Liberty faces a reduction in the level of allowances provided to Ostrava because of reduced production in recent years — the company idled the last operational furnace at Ostrava in October and it has not restarted since. Ostrava's restructuring plan envisages an average selling price of €950/t and above in July, more than €300/t above Argus' current benchmark northwest EU hot-rolled coil (HRC) index. The restructuring plan also focuses on production of flat steel, including HRC, cold-rolled coil and hot-dip galvanised. Market participants have questioned whether prices can rise to such an extent given the difficult macroeconomic backdrop. It has been rolling imported slab at Ostrava and its Hungarian asset, Liberty Dunaujvaros, formerly known as Dunaferr. However, the Hungarian hot-rolling mill has stopped operating as 5,000t of slab at the site has not been paid for, so has not been released by creditors. Swiss and Italian traders have been helping finance some of Liberty's European purchases, according to multiple sources. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more