<article><p class="lead">Sentiment in the aluminium market is coalescing in support of making low-carbon aluminium a separately traded product as manufacturers increasingly push their green credentials.</p><p>But there is little prospect of this unless there is more external pressure from consumers, which is most likely to materialise in the form of government regulation. </p><p>There has been a growing trend in recent years of aluminium manufacturers announcing their own investments in low-carbon aluminium, be it developing new alloys or signing partnerships with power suppliers and downstream manufacturers to improve supply-chain transparency and promote the consumption of low-carbon aluminium. </p><p>There have also been calls for industry trading platforms to embrace the growing desire to separate low-carbon aluminium from standard contract material, as companies that have made investments in low-carbon capacity or just enjoy the benefit of emission-free renewable energy supply seek to codify that advantage in market practice. </p><p>The London Metal Exchange (LME) announced initial plans to launch a platform to trade low-carbon aluminium in June last year, following calls from the industry for the exchange to provide greater disclosure of environmental, social and governance (ESG) data for metal traded on its platform. Chief executive Matt Chamberlain said at the time that environmental concerns were the next great emerging challenge of ESG in metals. </p><p>But the LME concluded late last year that the market was not yet in a position to be able to adequately support a second contract, and shelved plans for a separate low-carbon aluminium product. </p><p>The exchange instead announced the launch of the new LMEpassport, a digital register for physical metals data that aims to provide a centralised database of different sustainability credentials for warranted metal. </p><p>"Our role is being ready for where the industry wants to go. Some people believe the LME should dictate how the industry looks, but we don't feel that we have that position or authority," Chamberlain said. "We're still at the early stage of the discussion about supply chain tracking, and the best way for the LME to help is through transparency and data sharing," he added. "If we can help people get the right data through LMEpassport, then maybe that can lead to the next stage."</p><p>Some industry pricing publications have launched products attempting to separate low-carbon aluminium from standard metal, but the difficulty is that there is no real consensus as to what low-carbon aluminium is, and no one in the industry has the authority to define it. </p><p>What has become apparent is that the industry is reaching a limit of what it can achieve alone. Aluminium manufacturers pushed the benefits of light-weighting vehicles through the increasing use of aluminium for years. But the automotive industry only started to significantly ramp up the usage of aluminium in high-volume automobile manufacturing when government vehicle efficiency regulations began to necessitate it, eventually leading to the adoption in 2015 of aluminium in the body of the Ford F-150 pickup truck — the US' biggest selling vehicle. </p><p>Such regulation is the result of changing public opinion regarding environmental issues. And the industry must take heed of this to successfully create a market for aluminium metal that can claim strong environmental credentials through its entire value chain. It is not the industry's role to define the parameters of its part in society's move towards greater energy efficiency in manufacturing but to be ready to assist those to whom that role will fall.</p><p>"I don't know whether there will be any government regulation, but you could possibly envisage, for example, lower tariffs on low-carbon aluminium," Chamberlain said. And if that happens, LMEpassport must be able to help produce the data the industry would need to make that work."</p><p class="bylines">Jethro Wookey</p></article>
