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Understanding and Addressing the Barriers for Aluminum

Companies to Set Science-Based Targets

Summary of Findings and Recommendations

January 2020

This project aimed to establish a foundation for the development of tools and guidance to enable

aluminum companies to set science-based targets (SBTs). In this project, WRI engaged aluminum sector

experts to identify challenges to setting SBTs using existing methods and recommend options for

pursuing revised methods, as well as new guidance and other resources.

Table of Contents

Understanding and Addressing the Barriers for Aluminum Companies to Set Science-Based Targets ....... 1

Table of Contents .......................................................................................................................................... 2

Context .......................................................................................................................................................... 3

Project Scope ................................................................................................................................................ 3

Project Activities ........................................................................................................................................... 4

Existing SBT Options for the Aluminum Sector ............................................................................................. 5

Scope 3 Emissions ......................................................................................................................................... 6

The Sectoral Decarbonization Approach (SDA) .................................................................................... 7

Limitations of the current SDA for the aluminum sector ..................................................................... 8

A homogenous sector? ......................................................................................................................... 8

The weight of electricity ....................................................................................................................... 9

Cradle to gate ........................................................................................................................................ 9

Key Challenges Identified for the Aluminum Sector’s Adoption of SBTs .................................................... 10

Emissions-intensive growth ................................................................................................................ 10

Recycling uncertainty .......................................................................................................................... 10

IEA modelling outputs versus reported industry data ........................................................................ 11

Regional differences ........................................................................................................................... 12

Process emissions ............................................................................................................................... 12

Organizational boundaries .................................................................................................................. 12

2020 edition of IEA’s Energy Technologies Perspectives (ETP) publication ....................................... 13

Key Recommendations and Priorities ......................................................................................................... 13

Revise the current SDA to include missing scope 1 and 2 emissions ................................................. 14

Utilize alternative SDA sector approaches .......................................................................................... 15

Develop strategic SBT ‘roadmaps’ ...................................................................................................... 16

Create multipliers and discount factors to the SDA............................................................................ 16

Summary and Prioritization of Recommendations ..................................................................................... 17

Appendix A: Key Themes from San Antonio Workshop ............................................................................. 19

Appendix B: Greenhouse Gas Working Group In-Person Meeting Minutes .............................................. 22

Context

In December 2015, nearly 200 countries adopted the Paris Agreement, the first-ever universal climate

agreement that seeks to “strengthen the global response to the threat of climate change by keeping a

global temperature rise this century well below 2°Celsius above pre-industrial levels and to pursue

efforts to limit the temperature increase even further to 1.5° Celsius.” In 2018, the Intergovernmental

Panel on Climate Change (IPCC) released the special report Global Warming of 1.5°C (SR1.5), which

provides strong evidence that limiting warming below 1.5°C will significantly lower climate impacts and

humanitarian crises linked to drought, sea level rise, flooding, extreme heat, and ecosystem collapse. To

limit warming to 1.5°C, the IPCC asserts that global greenhouse gas (GHG) emissions must be cut by 45%

from 2010 levels by 2030 and reach net-zero emissions around 2050 (IPCC 2018).

To support corporate efforts to move to more sustainable growth patterns and to stay within the

scientific temperature guardrails set by the IPCC, the Science Based Targets initiative (SBTi) was

launched in June 2015. The SBTi defines and promotes best practice in SBT setting, offers resources and

guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets.

For example, it has created the Sectoral Decarbonization Approach (SDA), a method for developing SBTs

in the aluminum and other GHG-intensive industries. The SBTi’s overall aim is that by the end of 2020,

setting SBTs will be standard business practice and corporations will play a major role in driving down

global GHG emissions.

According to the International Aluminium Institute (IAI), the aluminum sector contributes more than 1

gigatonne of carbon dioxide equivalent (Gt CO

e) to annual global GHG emissions, roughly 2% of total

anthropogenic emissions globally. The International Energy Agency (IEA) ranks the aluminum subsector

as the fourth-largest industrial energy consumer and CO

emitter, representing 4% (6.2 exajoules) of

final industrial energy demand and 3% of total direct CO

emissions from industrial sources in 2014

(261

million metric tonnes of carbon dioxide equivalent, or MtCO

e/year).

Aluminum production is particularly associated with high electricity demand, which is responsible for

approximately 70% of total GHG emissions from the sector. In fact, the sector accounts for 4.7% of

global electricity consumption (IEA 2017) while total energy use, on average, accounts for more than

40% of aluminum production costs.

The GHG predominantly emitted in the production of primary

aluminum is CO

, although other GHGs with high global warming potentials (GWP) are also emitted.

Project Scope

Although the aluminum industry is a large producer and end-user of energy, the material properties of

aluminum—lightweight, durable and highly recyclable—mean the aluminum industry has an important

role to play in the transition to a low-carbon economy. However, of the 789 companies that have either

approved SBTs or have committed to set SBTs (as of January 2020), only three are part of the aluminum

industry: Ball Corporation (a downstream consumer of rolled products), EN+ Group (an energy producer

Energy Technology Perspectives 2017, IEA

IPCC AR5 TWG3

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1UnderstandingandAddressingtheBarriersforAluminumCompaniestoSetScience-BasedTargetsSummaryofFindingsandRecommendationsJanuary2020Thisprojectaimedtoestablishafoundationforthedevelopmentoftoolsandguidancetoenablealuminumcompaniestosetscience-basedtargets(SBTs).Inthisproject,WRIengagedaluminumsectorexpertstoidentifychallengestosettingSBTsusingexistingmethodsandrecommendoptionsforpursuingrevisedmethods,aswellasnewguidanceandotherresources.2TableofContentsUnderstandingandAddressingtheBarriersforAluminumCompaniestoSetScience-BasedTargets.......1TableofContents..........................................................................................................................................2Context..........................................................................................................................................................3ProjectScope................................................................................................................................................3ProjectActivities...........................................................................................................................................4ExistingSBTOptionsfortheAluminumSector.............................................................................................5Scope3Emissions.........................................................................................................................................6TheSectoralDecarbonizationApproach(SDA)....................................................................................7LimitationsofthecurrentSDAforthealuminumsector.....................................................................8Ahomogenoussector?.........................................................................................................................8Theweightofelectricity.......................................................................................................................9Cradletogate........................................................................................................................................9KeyChallengesIdentifiedfortheAluminumSector’sAdoptionofSBTs....................................................10Emissions-intensivegrowth................................................................................................................10Recyclinguncertainty..........................................................................................................................10IEAmodellingoutputsversusreportedindustrydata........................................................................11Regionaldifferences...........................................................................................................................12Processemissions...............................................................................................................................12Organizationalboundaries..................................................................................................................122020editionofIEA’sEnergyTechnologiesPerspectives(ETP)publication.......................................13KeyRecommendationsandPriorities.........................................................................................................13RevisethecurrentSDAtoincludemissingscope1and2emissions.................................................14UtilizealternativeSDAsectorapproaches..........................................................................................15DevelopstrategicSBT‘roadmaps’......................................................................................................16CreatemultipliersanddiscountfactorstotheSDA............................................................................16SummaryandPrioritizationofRecommendations.....................................................................................17AppendixA:KeyThemesfromSanAntonioWorkshop.............................................................................19AppendixB:GreenhouseGasWorkingGroupIn-PersonMeetingMinutes..............................................223ContextInDecember2015,nearly200countriesadoptedtheParisAgreement,thefirst-everuniversalclimateagreementthatseeksto“strengthentheglobalresponsetothethreatofclimatechangebykeepingaglobaltemperaturerisethiscenturywellbelow2°Celsiusabovepre-industriallevelsandtopursueeffortstolimitthetemperatureincreaseevenfurtherto1.5°Celsius.”In2018,theIntergovernmentalPanelonClimateChange(IPCC)releasedthespecialreportGlobalWarmingof1.5°C(SR1.5),whichprovidesstrongevidencethatlimitingwarmingbelow1.5°Cwillsignificantlylowerclimateimpactsandhumanitariancriseslinkedtodrought,sealevelrise,flooding,extremeheat,andecosystemcollapse.Tolimitwarmingto1.5°C,theIPCCassertsthatglobalgreenhousegas(GHG)emissionsmustbecutby45%from2010levelsby2030andreachnet-zeroemissionsaround2050(IPCC2018).TosupportcorporateeffortstomovetomoresustainablegrowthpatternsandtostaywithinthescientifictemperatureguardrailssetbytheIPCC,theScienceBasedTargetsinitiative(SBTi)waslaunchedinJune2015.TheSBTidefinesandpromotesbestpracticeinSBTsetting,offersresourcesandguidancetoreducebarrierstoadoption,andindependentlyassessesandapprovescompanies’targets.Forexample,ithascreatedtheSectoralDecarbonizationApproach(SDA),amethodfordevelopingSBTsinthealuminumandotherGHG-intensiveindustries.TheSBTi’soverallaimisthatbytheendof2020,settingSBTswillbestandardbusinesspracticeandcorporationswillplayamajorroleindrivingdownglobalGHGemissions.AccordingtotheInternationalAluminiumInstitute(IAI),thealuminumsectorcontributesmorethan1gigatonneofcarbondioxideequivalent(GtCO2e)toannualglobalGHGemissions,roughly2%oftotalanthropogenicemissionsglobally.TheInternationalEnergyAgency(IEA)ranksthealuminumsubsectorasthefourth-largestindustrialenergyconsumerandCO2emitter,representing4%(6.2exajoules)offinalindustrialenergydemandand3%oftotaldirectCO2emissionsfromindustrialsourcesin20141(261millionmetrictonnesofcarbondioxideequivalent,orMtCO2e/year).Aluminumproductionisparticularlyassociatedwithhighelectricitydemand,whichisresponsibleforapproximately70%oftotalGHGemissionsfromthesector.Infact,thesectoraccountsfor4.7%ofglobalelectricityconsumption(IEA2017)whiletotalenergyuse,onaverage,accountsformorethan40%ofaluminumproductioncosts.2TheGHGpredominantlyemittedintheproductionofprimaryaluminumisCO2,althoughotherGHGswithhighglobalwarmingpotentials(GWP)arealsoemitted.ProjectScopeAlthoughthealuminumindustryisalargeproducerandend-userofenergy,thematerialpropertiesofaluminum—lightweight,durableandhighlyrecyclable—meanthealuminumindustryhasanimportantroletoplayinthetransitiontoalow-carboneconomy.However,ofthe789companiesthathaveeitherapprovedSBTsorhavecommittedtosetSBTs(asofJanuary2020),onlythreearepartofthealuminumindustry:BallCorporation(adownstreamconsumerofrolledproducts),EN+Group(anenergyproducer1EnergyTechnologyPerspectives2017,IEA2IPCCAR5TWG34withpredominantlyhydro-poweredprimaryaluminumassetsinitsportfolio),andHulamin(aproducerofrolledproducts).3Torespondtothisreality,thisprojectwasconceivedtoidentifyexistingandperceivedbarriersforthealuminumsector,leadingtogreaterunderstandingofoptionsforsettingSBTsbyaluminumcompanies.Thekeyexpectedoutcomesfortheprojectinclude:1.GreaterawarenessofthepracticalchallengesfacedbytheglobalaluminumindustryinlimitingGHGemissionsfromthesector;2.GreaterunderstandingofthefeasibilityofsectoralSBTpathwaysthatinclude(anddon’tinclude)theemissionsreductionpotentialfromalongthevaluechain;3.RecommendedoptionsforfactoringthesechallengesintorevisedmethodsornewtoolsandguidanceforsettingSBTsintheindustry.ProjectActivitiesTobuildsupportfortheproject’sfindingsandbuildmomentumforthedevelopmentoffuturetools,WRIengagednumerousindustrystakeholdersdrawnfromcompanies,industryassociations,NGOs,researchorganizations,andinter-governmentalorganizations(includingtheIEA).4WRIcollaboratedcloselywiththeIAIinparticular,asoneoftheorganization’scoreactivitiesistocollect,analyze,disseminateandmaintainthebestavailabledatafortheglobalaluminumsector.Infact,theIEAusestheIAI’sdatatomodelandproducethealuminumsectoroutputsforitsEnergyTechnologyPerspectives(ETP)publication(animportantdetailtonoteforthepurposesandoutcomesofthisproject).WRIheldthreestakeholderengagementeventsduringthisproject.ThefirstwasakickoffwebinarheldonJanuary9,2019tointroducetheproject.Aninitiallistof288potentialstakeholderswasidentifiedandprovidedbyIAI,andthekickoffwebinarrecorded228registeredparticipants.FollowingthewebinarWRIconvenedathree-hour,in-personworkshoponMarch13,2019inSanAntonio,Texas.Overtenrepresentativesfromthealuminumsectorattendedandprovidedcriticalinputontheproject.AppendixAsummarizeskeythemesfromtheworkshopdiscussion,whichwereguidedbythefollowingobjectives:1.Alignonaluminumsector-specificinputsandassumptionsforrefreshingthesectoraldecarbonization(SDA)pathway;2.ShareopportunitiesandchallengesforsettingSBTsandreducingemissions;3.Discusswhattools,guidanceandsupportaluminumcompaniesneedtosetSBTs.WRIconvenedathirdstakeholdereventonSeptember27,2019inCambridge,UKincollaborationwiththeAluminiumStewardshipInitiative’s(ASI)annualStandardsCommitteemeeting.Nearlytwodozenparticipantsattendedtheworkshop,whereWRIsharedpreliminaryresearchresultsincludingarevisedwell-below2°C(WB2C)5climatestabilizationpathwayforthealuminumsector.Participantsatboth3https://sciencebasedtargets.org/companies-taking-action/4AddAppendixwithStakeholderlist5Although“well-below2˚C”isnotstrictlydefinedintheParisAgreement,itiscommonlyunderstoodtobeanalogoustotheIPCC’s‘likelychance’terminology,whichisequivalenttoa66%probabilityofkeepingtemperaturerisebelowacertainlimit(inthiscase2˚C).5workshopsprovidedusefulinputthatultimatelyhelpedinformthisdocument.Ingeneral,themeetingcoveredbrainstorminganddiscussionofSBToptions,aswellastargetedQ&AfromWRItohelpexpandonpreviouslydiscussedideasandtosolicitfeedbackonnewideas.MinutesfromthemeetingwithASIareprovidedinAppendixB.ExistingSBTOptionsfortheAluminumSectorAsdefinedintheGHGProtocolCorporateAccountingandReportingStandard,scope1emissionsaredirectemissionsfromownedorcontrolledsources,whereasscope2emissionsareindirectemissionsfromthegenerationofpurchasedenergy(WRIandWBCSD2004).ThecurrentSBTicriteriaandrecommendations(Version4.0,publishedinApril2019)requirescorporatescope1and2targetstobeconsistentwithatleastaWB2Cpathway,withgreatereffortsencouragedtowardlimitingwarmingto1.5°C.Companiesfromthealuminumsectorcurrentlyhavethreemethodsforsettingscope1and2targetswithintheSBTi:Absolutecontraction:Reduceabsoluteemissionsbyaminimumof2.5%annuallytokeepglobaltemperatureincreasewithinwell-below2°C,orbyaminimumof4.2%annuallyfora1.5°Cglobaltemperaturelimit;Activity-basedintensity:Reduceemissionsintensityperphysicalproductionoutputwithaunitthat’srepresentativeofacompany’sportfolio(e.g.,peraluminumcanshipped),which,whentranslatedtoabsoluteemissionsreductionterms,isinlinewiththeminimumabsolutecontractionapproach;Sector-based:Theglobalcarbonbudgetisdividedbysectorandemissionreductionsareallocatedtoindividualcompaniesbasedonthesector’sbudget.Tofacilitatethisapproach,theSBTidevelopedtheSectoralDecarbonizationApproach(SDA).Forscope3targets,therearefourmethodsavailableforcompanies.6Absolutecontraction:Reduceabsoluteemissionsbyaminimumof2.5%annuallytokeepglobaltemperatureincreasewithinwell-below2°C,orbyaminimumof4.2%annuallyfora1.5°Cglobaltemperaturelimit;Economicintensity:Reduceemissionsintensitypervalueaddedbyatleastanaverageof7%yearonyear;Physicalintensity:IntensityreductionsalignedwiththealuminumsectorSDA;ortargetsthatdonotresultinabsoluteemissionsgrowthandleadtolinearannualintensityimprovementsequivalentto2%,ataminimum;Supplierengagement:Committohavingaspecificpercentageofsuppliers(asapercentageofspendorGHGemissions)withtheirownSBTswithinfiveyearsfromthedatethecompany’stargetissubmittedtotheSBTiforvalidation.62°Cistheminimumlevelofambitionforscope3targets;however,companiesareencouragedtopursuegreaterefforttowardawell-below2°C(minimum2.5%annuallinearreduction)ora1.5°Ctrajectory(minimum4.2%annuallinearreduction).6Scope3EmissionsValuechain(scope3)emissionscanbesignificantforbothupstreamanddownstreamaluminumcompanies.For“pureplay”aluminumproducers,forexample,downstreamscope3emissionsfromCategory10–ProcessingofSoldProducts7(e.g.transformationofonetonneofaluminumintocomponentsfortheaviationsector)areoftenasignificantsourceofemissions.Forallfabricatorsofaluminumend-useproducts,theupstreamscope3emissionsfromCategory1–PurchasedGoodsandServices8(transformationofminedbauxiteintoonetonneofaluminum)areoftentimesmoresignificantthanthecombinedscope1and2emissionsfromtheirownoperations.Figure1describesthe15scope3categoriesasdefinedbytheGHGProtocolCorporateValueChain(Scope3)AccountingandReportingStandard.Figure1:GHGProtocolScope3EmissionsCategoriesWhilecompaniesofallstripesfacenumerousbarrierstoaccountingforandaddressingscope3emissions(e.g.collectingdatafromsuppliers),theseemissionsalsopresentcompanieswithpotentialmitigationopportunitieswhensettingSBTs(e.g.increasedpurchasingfromcarbon-friendlysuppliers).Forallcompanies,thecurrentSBTicriteriaandrecommendations(Version4.0,publishedinApril2019)requirethesubmissionofascope3targetwhenacompany’srelevantscope3emissionsare40%ormoreoftotalscope1,2and3emissions.Oncethis40%thresholdhasbeenreached,companiesmustsetoneormoreemissionreductiontargetsand/orsupplierorcustomerengagementtargetsthatcollectivelycoveratleasttwo-thirdsoftotalscope3emissionsinconformancewiththeGHGProtocolScope3Standard.7https://ghgprotocol.org/standards/scope-3-standard8Ibid7TheSectoralDecarbonizationApproach(SDA)TheSDAisascientifically-informedmethodforcompaniestosetGHGreductiontargets.Themethodologyisintendedtohelpcompaniesinhomogenous,energy-intensivesectorswithwell-definedactivityandphysicalintensitydatatoaligntheiremissionsreductiontargetswithaglobalWB2Cpathway.9ThecurrentSDAmethodprovidesthebasisfortheonlyexisting,sector-specificmethodforsettingSBTsinthealuminumsector.TheSDA’sWB2Cscenarioisbasedonamodeled“Beyond2°C”(B2DS)scenariofromthe2017ETP,10wheretechnologyimprovementsanddeploymentarepushedtotheirmaximumpracticablelimitsacrosstheenergysysteminordertoachievenet-zeroemissionsby2060andtostaynetzeroorbelowthereafter,withoutrequiringunforeseentechnologybreakthroughsorlimitingeconomicgrowth.This“technologypush”approachresultsincumulativeemissionsfromtheenergysectorofaround750GtCO2between2015and2100,whichisconsistentwitha50%chanceoflimitingaveragefuturetemperatureincreasesto1.75°C.1112Thealuminumsector’scumulativecarbonbudgetoverthissametimeframehasbeenestimatedtobeapproximately11GtCO2(scope1only),orroughly1%oftheglobalcarbonbudget.TheIEA’sB2DSscenariolaysoutanenergysystempathwayandaCO2emissionstrajectoryconsistentwithatleasta66%probabilityofkeepingtemperaturerisebelow2˚Cby2100.Underthispathway,theenergyintensityofaluminumproduction(assuminga2010gridmix)mustfallby7%between2010and2025,13andsteeperreductionsarerequiredoverthelongterm.Ultimately,thepathwayimpliestheneedforlargereductionsinemissionsintensitybetween2010and2050,specifically:direct(scope1)emissionsintensitymustfall88%,whilescope2emissionsintensitymustfall96%.14Figure2showsthesector’sSDApathwayoutputs(2014–2060)forprimaryaluminum(secondaryexcluded)basedonIEA’sB2DCscenarioandindexedtoproduction.9TheSBTicurrentlyisintheearlyphasesofdevelopinga1.5°CalignedpathwayforincorporationintotheSDA.10https://www.iea.org/reports/energy-technology-perspectives-201711Incontrast,theIEA’s20172°Cscenarioestimatesanoverallcarbonbudgetof1,170GtCO2from2015-2100.12https://sciencebasedtargets.org/wp-content/uploads/2019/04/foundations-of-SBT-setting.pdf13http://www.iea.org/etp/etp2016/14http://sciencebasedtargets.org/wp-content/uploads/2015/05/Sectoral-Decarbonization-Approach-Report.pdf8Figure2:IndexedSDApathwayoutputsforprimaryaluminum(2014-2060)-0.20.00.20.40.60.81.01.21.41.620142024203420442054Indexedsector-specificdata(2014baseyear)SectoractivitySectorpowerconsumptionSectorscope2emissionsintensitySectorscope1emissionsintensitySectoraldata(ETP2017B2DS)TheSDAmethodtakessectoraldifferencesandabatementpotentialsintoaccount,whichareconsideredinthemakingofthedifferentsectorscope1scenarios.TheSDAmodelalsoincludesscope2scenariosbasedonasharedpowergenerationpathwayforeachscenariooutcome(e.g.1.5˚C).Thesescenarioscanalsobeusedtosetvalidscope3targets,totheextentthatcertainactivitypathwayscorrespondtoscope3categoriesortheemissionssourcesofacompany’sscope3inventory.Forexample,wherecertainscope3categoriesconsistmainlyofpurchasedelectricityemissions,therelevantSDApowergenerationpathwaycanbeusedtomodelreductiontargets.Forhomogeneoussectors,theSDAmethodalsoaccommodatesdifferentiatedlevelsofhistoricalaction,asitrequiresGHGemissions-intensivecompaniestoreducetheiremissionsfasterthanthesectoralaverage;conversely,companieswithrelativelylowinitialemissionsintensitiesmayreducetheiremissionsmoreslowly.15LimitationsofthecurrentSDAforthealuminumsectorCompaniesfromthealuminumsectorhaveexpressedincreasinginterestinusingtheSDAoranothersector-specificintensity-basedapproachtosetSBTsanddemonstratetheircommitmenttotransitiontoalow-carbonfuture.However,companieshavealsoidentifiedandexpressedconcernsaboutthemodelingassumptionsusedtoproducetheSDA’sbenchmarkpathway.Ahomogenoussector?Ingeneral,aphysicalindicatorthatrepresentsasector’sprimaryoutput(e.g.onetonneofaluminum)isahelpfulwaytocomparetheemissionsintensityofsimilarcompanieswithinthesamehomogenoussector,andthustheindividuallevelofeffortneededtoconvergetoanoptimallevelofemissionsperunitofproduct.Toproduceausefulmetric,however,theunderlyingdatausedtomeasureacompany’semissionsimpactideallyshouldbealignedwiththedatausedtomodelthesector’semissionsimpact(e.g.totalconsumptionofelectricity).Onecleartakeawayfromstakeholdersinvolvedduringthisprojectisthatwhilstthesectorisgenerallydefinedashomogenous,manycompaniesinthealuminumindustryproduceawidearrayofproductsthatoftentimescannotbecapturedinasinglephysicalindicator.Similarly—butnotuniquetothe15https://sciencebasedtargets.org/wp-content/uploads/2019/04/foundations-of-SBT-setting.pdf9aluminumsectorperse—theorganizationalboundariesthatdefineacompany’sGHGemissionsprofilecanoftendiffer,furthercomplicatingperceptionsofanunlevelplayingfieldbysome.Althoughthisisnotthecaseforeverystakeholder,thediversitythatexistsacrossthealuminumsector’svaluechainhasnonethelesspresentedcomplicationsforbothupstreamanddownstreamactorsinterestedinusingtheSDAtohelpdefinetheirSBT.TheweightofelectricityElectricityisasignificantinputtothealuminumproductionprocess,andvariationsintheelectricitymixofglobalaluminumproducersistheprimary(butnotonly)distinctionamongtheGHGemissionsintensity(tCO2e/tAl)ofanaluminumproducer’sfinalsoldproducts.Accordingtoa2011studybytheCarbonTrustthismetriccanvaryconsiderably,fromaslittleas1tCO2e/tAlofrecycledaluminum,to3tCO2e/tAlforbestavailabletechnology(BAT)smelterspoweredbyrenewableelectricity,andupto20tCO2e/tAlforlessmoderntechnologypoweredbycoal-basedelectricity.16Furthermore,duetothealuminumsector’sconsiderableutilizationofcaptiveordirectlydeliveredpowersupplies,thesourceofelectricityactuallyused(andthecorrespondingemissionfactors)cansignificantlydifferfromthenationalorregionalgridmixesusedintheIEA’sETPmodelling.17Andbecausemanyproducersofaluminumgeneratetheirownelectricity,theprofileoftheirscope1and2emissionsmaydifferconsiderablyfromthoseoftheirpeers,potentiallylimitingtheusefulnessofthealuminumpathwayresultsfromtheSDAmodel.CradletogateTheupstreamsegmentofthealuminummarketconsistsoftheproductionofprimaryaluminum(andalloys),includingtheentirerawmaterialsupplychainandprocessesthatprecedeitsproduction.Thedownstreamsectorismadeupofthousandsofproducersofsemi-finishedandfinishedaluminumproducts,aswellasproducersofrecycledaluminumfromprocessedmaterial.OfconcernformanydownstreamaluminumstakeholdersistheSDA’scoverageofsectoremissionsandactivities,whichiscurrentlylimitedtothe“cradle-to-gate”upstreamenergyemissionsfromtransformingbauxiteintoalumina,anodeproduction,aluminumsmelting(electrolysis)andingotcasting.ThecurrentIEAmodelincludesbothproductionofprimaryaluminumfromaluminaandsecondaryaluminumproduction(fromrecycledmaterials)andofaluminumalloys.Admittedlytheseactivitiesrepresentthelion’sshareofemissionsfromthesector,buttheabsenceofarelevantpathwayforthedownstreamsegment—beyondtheirupstreamscope3emissions—ostensiblyclosesthedoorforasignificantnumberofpotentialSBTsettersfromtheindustry.18Onarelatednote,thescope2emissionspathwayresultsfordifferentactorsalongthevaluechainisnotaccountedforinthecurrentSDA.Forexample,thescope2emissionsofadownstreamfabricatorofaluminumproductsarelikelytobevastlydifferentthanthoseofapure-playproducerofaluminum,and16https://www.carbontrust.com/media/38366/ctc790-international-carbon-flows_-aluminium.pdf17http://www.world-aluminium.org/media/filer_public/2018/02/19/lca_report_2015_final_26_june_2017.pdf18Onaverage72%ofGHGemissionsfromprimaryproductionofaluminumarefromelectricitywiththeremainderfromthermalcombustionoffossilfuelsandprocessemissions.https://www.carbontrust.com/media/38366/ctc790-international-carbon-flows_-aluminium.pdf10thustheSDA’sassumptionofintensityconvergencewouldbeparticularlyinappropriateforthefabricator.KeyChallengesIdentifiedfortheAluminumSector’sAdoptionofSBTsBasedondiscussionswithstakeholdersduringthewebinars,workshopsandindividualconversations,therearearangeofchallengesastowhythealuminumsectorhasbeenslowtocommittosettingSBTs.Someofthesechallengesarenotuniquetothealuminumsectoranditscompanies(e.g.organicgrowth),butseveralchallengesdodemonstrateaneedtomovebeyondaone-size-fits-allapproachforthesector.Mirroringtheoperationaldiversitythatcharacterizesthealuminumindustry,thereisawiderangeofperceivedobstaclesforparticipationamongindividualstakeholders,including:Emissions-intensivegrowthLedbytheeconomicgrowthofemergingeconomies,thesectorestimatesthatby2030itwillproduce90milliontonnesofprimaryaluminum(MTAl),comparedto60MTAltoday.19Givenabusiness-as-usualscenariobasedoncurrentmacroeconomictrends,thesectorprojectstheproductionoftheadditional30MTAltobesuppliedmostlybyChinaandSouthEastAsia(bothpoweredmostlybycoal-basedelectricity)andtheMiddleEast(poweredbynaturalgas),withtheresultthatfossilfuelscouldpoweranevenhigherpercentageofglobalsmelterproduction(currentlyabout60%).20Intheabsenceofsupportforlow-carbonaluminumfromthepublicandprivatesectors,thisrealityisaparticularlyvexingproblemwithrespecttothesector’scontributiontoclimatechange.RecyclinguncertaintyGreaterrecyclingbytheindustrytoproducemoresecondaryaluminumisoftencitedasoneoftheprimarywaystoreduceGHGemissionsfromthealuminumsector.Indeedthisistrue,butsectorexperts(e.g.IAI,etal)haveindicatedthereislimitedavailabilityofend-of-lifescrapmetalforcollection(afunctionoflongproductlifetimes,growingdemand,andashiftfromcasttowroughtapplications,particularlyintheautomotivesector)andincreasingcompetitionforhighquality,well-sortedandvaluablenewscrap(again,particularlyfromtheautosector).21Figure3illustratestheannualdemandamongdifferentsectorsforsemi-fabricatedaluminumproducts(e.g.extrudedaluminum).In2018,forexample,54%oftotaldemandforaluminumwasdominatedbytwosectorsthatproduceproductswithlonglifetimes:Transport(28.4MtAl)andBuilding&Construction(24.8MtAl).19InternationalAluminumInstitute,http://www.world-aluminium.org/20InternationalAluminumInstitute,http://www.world-aluminium.org/21EnergyTechnologyPerspectives2017,IEA11Figure3:Sectordemandforsemi-fabricatedproductsSource:IAIIEAmodellingoutputsversusreportedindustrydataTheIEA’sETPscenariosareproducedusingmodelsthataccountforindustrialenergyconsumptionseparatelyfromtheproductionofelectricity.However,becausealuminumsmeltersareoftenco-locatedwithaluminumindustry-operatedpowergenerationfacilities,electricityproductionandconsumptionareintertwinedforasubstantialportionofthesector.Despiteaconsiderableamountofdesktopresearchandcollaborationwithindustryexperts(mostnotablyIAI),thediscrepancybetweentheIEA’selectricityconsumptionfiguresforthesectorandthoseoftheIAI’sremainsunclear.Predictably,thecorrespondingdifferencesinscope2emissionsestimatesfromIEAandIAIforelectricityusebythesectorareconsiderable(35%).Table1showsthediscrepanciesinscope1emissionsestimatesbetweentheIEAandtheIAI(47%)andthetotalpercentagedifferenceforallGHGemissions(39%).OfequalconcernisthedifferencebetweenIEA’stotalreportedproductionofprimaryandsecondaryaluminum(126MTAlin2014)versusthoseoftheIAI(80MTin2014).ThedifferencebetweenthesenumbersisnotfullyaccountedforbytheIEA,sowingconfusionabouttheresultsofitsanalysisforthesectoranditsappropriatenessformodellingcorporatetargetsusingtheSDA.020406080100120140160180200020052010201520202025203020352040MilliontonnesOtherConsumerDurablesMachinery&EquipmentElectricalPackagingBuilding&ConstructionTransport12Table1:ModellingImplicationsofDifferingDataEstimatesRegionaldifferencesThecurrentversionoftheSDAmethodintrinsicallyaccountsforregionaldifferencesregardinglevelofactivityandcarbonintensity,butnotexplicitlyinrelationtoregionalresources.Strongregionalvariationsexistforthepowersectorglobally,however,underboththeB2DSand1.5Cscenariostheglobalcarbonintensityofelectricityproductionmustconvergeto0MtCO2e/KWh.Thereisnowaytosugarcoattheimplicationforaluminumcompaniesthatpurchasedpowerinregionsreliantonfossil-basedelectricity:thehigheracompany’scarbonintensity,thesteeperthereductionpathway.ProcessemissionsForallsectors,IEA’sscenariomodellingissolelyfocusedonenergyproductionandconsumptionanddoesnotaccountfordirectprocessemissionssuchasPFCemissionsduringtheelectrolysisprocess(whileSDApathwaysaccountforallKyotoGHGs).22GlobalPFCemissionshavebeenreducedconsiderablybytheindustryandarenowrelativelysmallincomparisontotheoverallCO2emissionsfromenergygenerationandconsumptionfromthesector(approximately5%);however,theyareapotentgreenhousegaswithaGWPofbetween9,200–11,100forC2F6(SARandAR5,respectively)and6,500-6,630forCF4(SARandAR5,respectively)andremainasourceofmitigationpotentialfortheindustry.OrganizationalboundariesAnotherchallengecommunicatedbyaluminumstakeholdershasbeentherecognitionthatnoteverycompanyinthesectorisaccountingforthesamethingsintheirGHGinventory,creatingtheperceptionofanunevenplayingfield.23SomecompaniesfromthealuminumsectormaybehesitanttosetSBTsduetotheprospectofoutsidestakeholdersmakingapples-to-applescomparisonsbetweenthetargets22TheIEA’sETP2017estimates37%ofdirectCO2emissionsfromaluminumwereprocess-relatedemissions.23“AluminiumandGHGemissions:Arealltopproducersplayingthesamegame?”,AluWatch(Cyclope),2015.SOURCESCOPE1EMISSIONS(2018)SCOPE2EMISSIONS(2018)TOTAL2018EMISSIONS(SCOPE1AND2)IEAETP2017273MTCO2e500MTCO2e773MTCO2eIAI2018401MTCO2e676MTCO2e1,077MTCO2eDifferencebetweenestimations(%)47%35%39%13ofcompanieswithdifferentorganizationalboundaries.Thisisanotherchallengethatisnotuniquetothealuminumsectorbutisunderstandablyproblematicfromanexternalcommunicationsperspective.KeyRecommendationsandPrioritiesInkeepingwithametaphorthathaslongbeenusedindiscussionsaboutclimatechangemitigation,thereisnosilverbulletsolutiontotheproblem,weinsteadneedtobeusingsilverbuckshot.Companiesfromthealuminumsectormustdeployasmanytechnologicallyandfinanciallyfeasiblemitigationoptionsaspossibleoverthenext30yearsiftheyaretodotheirpartincombatingclimatechange.SettingcredibleSBTscanhelpguidethisprocess.AsHollyEmersonfromIngersollRandexplained,“Wedon’tknowwhattechnologywillexistintenyearstohelpusmeetourtarget.Butnowwehavetheincentivetofindout.”2020editionofIEA’sEnergyTechnologiesPerspectives(ETP)publicationSincetheSBTi’sinceptionin2015,theInternationalEnergyAgency’s(IEA)EnergyTechnologyPerspectives(ETP)reporthasunderpinnedtheSBTi’sSectoralDecarbonizationApproach(SDA)methodforcompaniessettingSBTs.TheETPoutlinessector-specificpathwaysforGHG-intensivesectors,includingaluminum,ironandsteel,powerandcement.IEA’sscenariosarebasedonleast-costreductionmeasureswithinandacrosssectors.ThecurrentversionoftheETP(2017)providesseveraltemperature-alignedclimatescenarios,twoofwhichareutilizedbythelatestversionoftheSBTi’sSDA(V8.1)toassesscorporateSBTs:a2°Cscenario(2DS)(onlyapplicableforscope3targets)anda“below”2°Cdecarbonizationscenario(B2DS).OverthepastdecadetheIEAhasupdateditsETPpublicationonabi-annualbasisandhasrecentlyannouncedplanstorevampthepublicationandreleaseaneweditioninJune2020.Accordingtopreliminaryplans,theIEAwillbemovingawayfromtemperature-alignedscenariosandfocusinsteadontwoscenarios:areference/BAUscenarioanda‘netzeroby2070’scenario,whichtrackscloselytothecurrentB2DSscenario.However,inApril2019theSBTiintegratedthelatestclimatesciencefindingsfromtheIPCCtopursuegreatereffortstowardsa1.5°Ctrajectory—withaneventualgoaltoreachnetzeroby2050—intoexistingtoolsandresources.GiventherecentannouncementofIEA’sfocusonanetzeroby2070scenarioitisunclearifanyfutureETPwillreflecta1.5°Cscenario.Meanwhile,theSBTihascommittedtoupdatingtheSDAtoincludea1.5°CpathwayandiscurrentlyintheearlystagesofdevelopingapowersectorscenarioforincorporationintotheSDA—thisisanessentialpiecetoarevisedSDAandisparticularlyrelevantforsettingSBTsinthealuminumsector.TheSBTiexpectstoreleasea1.5°C-alignedtoolandaccompanyingtechnicalguidanceinSpring2020,therebyenablingcompaniestousetheSDAtosubmit1.5°C-alignedtargetsforassessmentbytheSBTi.Itisimportanttonote,however,thatanenhancedSDAtoolisnotarequirementforsetting1.5°Calignedtargets;infactmanySBTicompanieshavealreadysetsuchtargetsbyusinganabsoluteemissionslinearreductionthresholdof4.2%toreceiveapprovalfortheirSBTitargets.14AsthisdocumentisintendedtoprovideafoundationforthedevelopmentofadditionaltoolsandguidancetoenablealuminumsectorcompaniestoSBTs,thissectionprovidesrecommendedoptionsforpursuingrevisedmethodsandguidance.RevisethecurrentSDAtoincludemissingscope1and2emissionsManystakeholdershaveexpressedconcernsaboutusingtheSDAasaone-size-fits-allbenchmarkfortheindustryforavarietyofreasons.Table1capturesinstarktermstheconsiderabledifferenceinGHGemissiondataestimatesforthesectorandtheneedtoresolvetheseinfutureSBTmodels.Fortunately,dataavailabilityforthesectorisverygoodwhencomparedtomanyothersectors.Thispresentsseveralopportunities,includingtheindustry’spotentialtocreateitsownscience-basedbenchmarkingapproach.Indeed,theIEA’sETPmaycompelstakeholdersinthesectortoforgeanaluminumSBTpathwaythatismorerepresentativeandgranulargiventhesector’soperationaldiversity.UsingtheexistingSDAB2DCpathway,Figure3demonstratesthesignificantdifferencesbetweenusingtheIEA’sETPassumptionsandreporteddatafromIAI.Forexample,thescope1and2emissionsforthesectorreportedbyIEAfor2014measureapproximately766MtCO2e,whereasIAI’s2014scope1and2sectoremissionsarenearer897MtCO2e—a15%difference.IntheSDApathwayusingIAIdata,GHGemissionsforthesectorpeakin2025(1,129.8MtCO2e)andby2060reach136.1MtCO2e,whileIEA’sB2DCscenariosuggestthesector’semissionspeakedin2014.Figure4:Differentdatawillproducedifferentresults.Whichisthecorrectpathway?Figure5showsSDAoutputsusingthesameGHGestimationdataandproductionestimatesforthesectorfromIAItoderiveGHGemissionintensitytargetsfortheentiresector(scopes1and2)by2040.-2004006008001,0001,200201420252030203520402045205020552060AbsoluteEmissions(MtCO2e)DifferenceinIEAandIAIGHGemissions(scopes1&2)usingtheAluminumSDA'sbelow2°CpathwayIEA-B2DCIEA-2CIAI-SDAB2DC15Figure5:Emissionsintensitybenchmarksto2040Emissionsintensitytargets,ETPB2DS(MtCO2e/tAl)UtilizealternativeSDAsectorapproachesAllSBTicompaniesmayuserelevantSDApathwaysforenergy-intensiveactivitiesacrossscopestoinformtheunderlyingtargetambitionofabsoluteorintensitytargets.Forexample,ifthemajorityofadownstreamaluminumcompany’semissionsarefrompurchasedelectricity,acompanymayusetheSDApathwayforpowergenerationtomodeltargetsforitsscope2emissions.24ThisparticularoptionwasnotdiscussedatgreatlengthduringthestakeholdermeetingsandthusitislikelymanycompaniesareunawareofthisasapotentialSBTapproach.Inaddition,thecurrentSDAtoolincludesanoptionfor“OtherIndustry”whichcouldpotentiallybeusedbyaluminumsectorcompaniesthatarenotwellrepresentedbythealuminumSDAapproach.Thisisyetanotheralternativethatwasnotincludedduringdiscussionswithstakeholdersbutshouldreceivemoreattentionforfutureresearch.Furthersector-specificguidanceand/oradjustmentoftheexistingSDA24Note:IEAscenariosforboththewellbelow2and1.5pathwaysrequirethepowersectortoreachnetzerolevelsby2050.Scope1targetfor2040=2.0MtCO2e/tAlScope2targetfor2040=0.65MtCO2e/tAl-1.00.01.02.03.04.05.06.07.08.020142024203420442054CompanyScope1emissionsintensity(tCO2/t)CompanyScope2emissionsintensity(tCO2/t)SectorScope1emissionsintensitySectorScope2emissionsintensity16toolforaluminumcompaniescouldmaketheprocessmoreuser-friendlywhilealsoprovidingmoreclarityaboutavailabletarget-settingoptions.DevelopstrategicSBT‘roadmaps’Theestablishmentofahandfulofstrategic‘roadmaps’forcertainsegmentsofthevaluechainmightprovideausefulacceleratorforaluminumcompaniessettingSBTs.Forallsectors,themitigationoptionsavailabletoupstreamversusdownstreamcompaniesacrossscopescanbequitedifferent.Foradownstreamfabricatorofaluminumproducts,forexample,targetingscope2reductions(perhapsthroughlong-termpowerpurchaseagreements(PPAs)withlocalorco-locatedrenewableenergygenerators,orvirtualPPAsinfavorablemarkets)presentsmid-to-longtermopportunitiestocommitto100%productionorconsumptionofrenewableenergy.Foranupstreamaluminumproducerthatgeneratesitsowncaptivepowerusingrenewableenergy,however,itwillbenecessarytolooktowardsinvestmentsinfossil-freeassetsthattransitionthecompanytolower-carbonproduction.Furthermore,thesestrategicroadmapsshouldalsoincludespecializedguidanceforscope3emissions.Thereisaconsiderableamountofworktobedonewithrespecttothesector’streatmentofscope3emissions.BuildingstrategicroadmapsthatentwinethevariousoptionsforsettingandmeetingSBTsacrossallscopes,togetherwithtargetedconsiderationofcurrentandemergingmitigationoptionscouldperhapshelptoremoveasizeableportionofdoubtforcompanieslookingtosetSBTs.CreatemultipliersanddiscountfactorstotheSDATohelpcreateaclearermeasureofequityamongtargetsestablishedusingthecurrentSDA,theideaofincorporatingtransparentmultipliersordiscountfactorstoaccountformajoroperationaldifferencesamongcompanieshasbeendiscussed.Forexample,forcompaniesthatdonotrefinealuminathemselvesandpurchaseitinstead,amultipliercouldbeappliedtonormalizetheoutputsoftheSDAtohelpaccountfortheabsenceofthisactivityforscope1.Figure6providesanapproximationoftheGHGcontributionofeachprocessstep,bypercentage,intheproductionofonetonneAl.2525ThesefiguresarebasedonIAIestimatesandcouldbefurtherrefinedforSBTapplicationviaindustryengagement.17Figure6:PercentageofGHGemissionsbyeachprocessstepTherewasconsiderableinterestamongstakeholdersduringtheprojecttobreakdownthealuminumproductionprocessbyeachstep’sGHGcontribution,whichiswhateachofthepercentagefiguresinFigure5represent.Likemanyoftherecommendationsmadeinthisdocument,thisideawouldrequireadditionalexpertstakeholderinputandconsensusand,consequently,moredetailedGHGinventorydisclosurefromcompaniesduringtheSBT-settingprocess.Althoughthisapproachisusefulinprovidingmoregranularityaboutwhichprocessescontributetocompanies’GHGimpact,itshouldavoidbeingusedfor‘cherrypicking’whichsourcestoincludeorexcludeinacompany’sGHGreportingboundary.TheSBTiistechnologyneutralwithrespecttothemitigationoptionscompanieschoosetomeettheirSBTcommitments,butexplicitlydiscourages(anddisallows)companiesfromsettingSBTsthatdonotaccountforacompany’sentirescope1andscope2GHGinventory.26SummaryandPrioritizationofRecommendationsClosethedatagapsforeachsegmentofthevaluechain,includingdownstream:WRIrecommendstheindustrydeliberateandreachconsensusforeachstepofthevaluechainwherelargediscrepanciesexistbetweendataproducedbyIAIandIEA.Thestakeholderprocessrevealedthatanyexistingornewtarget-settingmethodsneedtohavetheconfidenceofcompanies,whichislikelyunattainablewithoutaccurateandcompletedata.ThesenewdatacouldalsohelptoinformarevisedandenhancedversionofIAI’s2018AluminiumCarbonFootprintTechnicalSupportDocument.ContinuedcollaborationwithboththeIEAandSBTitohelpimprovetheSDA:WehaveidentifiedvariouswaysthecurrentSDAtoolforthealuminumsectorcanbealteredorimprovedtodevelopmoremeaningfulandconsistentSBTsfortheindustry.WRIrecommendstheindustrycommittohelpingbothIEAandtheSBTitodevelopmorenuancedSBTscenariopathwaysthatarebasedonthemostup-to-dateactivitydata,markettrends,geographicalpeculiaritiesandtechnologicalinnovations.26SBTicompaniesdohavetheoptiontoexcludecertaindeminimussourcesfromtheirGHGinventoryupto5%.0.2%20.3%3.0%0.6%13.1%53.8%9.0%GHGcontributionperproductionstep(%)BauxiteAluminaAnodeproductionCastingSmeltingdirectSmeltingelectricitySmeltingotherindirect18Developrelevantsector-specificSBT‘roadmaps’:WRIrecommendsthedevelopmentofindustry-informedroadmapsthathelplayouttheoptionsforspecificcompanygroupingsforsettingandachievingSBTsinordertohelpdemystifytheprocessandspurscience-basedcommitments.TheseroadmapsshouldincludetechnologicalandeconomicanalysesofmitigationandmaterialefficiencyoptionsthatareincludedinthemodelsusedtoproducerelevantSBTpathways,especiallyoptionsthatcompaniescanrealisticallydeployduringthetimeframeoftheirSBT.Initiateacomprehensivevaluechainassessmentofthepotentialscope3emissionsrepresentedbycompanieswithinthesector:ThemoreoptionsaluminumsectorcompanieshavetoreducetheirGHGemissionsimpact,themorelikelytheywillsetSBTs.AlthoughthesectorhascarriedoutusefulLCAanalysesoftheirprimaryproduct(1MtAl),corporateGHGinventoriesarefundamentallydifferentintheirapproachwithrespecttotheirallocationof“ownership”ofemissions.Acomprehensiveassessmentofthescope3emissionsthatcompaniesshouldconsider—andthepotentialhotspotsandopportunitiesforlow-carboninvestments—couldhaveaprofound,positiveeffectoncompanies’interestandabilitytosetSBTs.19AppendixA:KeyThemesfromSanAntonioWorkshopOverviewOnMarch13inSanAntonio,WRIconvenedathree-hourworkshopwithrepresentativesofthealuminumsectortosolicitinputonthealuminumsectorprojectoftheScienceBasedTargetsinitiative.Thesessionobjectiveswerethree-fold:1.Alignonaluminumsector-specificinputsandassumptionsforrefreshingthesectoraldecarbonizationpathway2.Shareopportunitiesandchallengesforsettingscience-basedclimatechangetargets(SBTs)andreducingemissions3.Discusstools,guidance,andsupportthataluminumcompaniesneedtosetSBTsThisdocumentincludesasummaryofthekeythemesfromthediscussion,withreferencestoslidesthatWRIsharedduringthesession.Also,itshouldbenotedthatthediscussionfocusedprimarilyonmid-streamactivities(i.e.aluminarefining,aluminumsmelting),thoughthereisarolefordownstreamactorstoplay.SummaryoffeedbackThefollowingthemesemergedfromtheworkshop:ItwouldbehelpfulfortheSBTi(oranotherorganizationsuchastheInternationalEnergyAgency)toclearlyarticulatetherequiredglobalreductionsofgreenhousegasemissionsgloballyunderdifferentscenarios(i.e.1.5ºC,2ºC),andhowthesereductionstranslateforthealuminumsector(i.e.whatisthesector’sshare?).Thus,aluminumcompanieswouldunderstandthescientificbasisfortherequiredreductionsandthecontributiontheymustmaketoit.Severalparticipantsopinedthattheslideonthedecarbonizationofthepowersector(#23)washelpfulinshowingtherequiredambitionlevelforasectorthat,likealuminum,facesconsiderablechallengestodecarbonize.ThegroupsuggestedanumberofrevisionstothealuminumsectorpathwaythatisincludedintheIEA’sEnergyTechnologyPerspectives2017report.Forreference,thereportindicates261milliontonnesofCO2emissionsin2014,droppingto125milliontonnesin2060underthebelow2ºCscenario.Thesuggestions:oIncludedirect(scope1)andelectricity-relatedindirect(scope2–scope1forself-generatedpower)emissionsinthebaselineandprojections.Thiswouldtakethebaselineafairamounthigher–toover1billiontonnesin2017.oFurtherexplainhowtheIEAarrivedattheslopeoftheemissionscurveoutto2060(seeslide24),andthevariousassumptionsinherenttothiscurve(e.g.adoptionofinertanodetechnology,percentageofrecycledvs.primaryaluminum,gridandon-siteelectricityemissionsintensity).20oClarifyhowtheIEAistreatinginternal(run-around)scrap(i.e.scrapcollectedfromthesmeltingprocessandputbackinatthefrontend).Indiscussingthebreakdownofsectoremissionsbyunitprocess(aluminarefining,smelting,casting,etc.–seeslide30),participantssuggestedthatWRIconsidercreatingpathwaysforeachphasetoacknowledgedifferentprocessesandinputs.Thiscouldmakeiteasierforacompaniesinthattheycouldthenfocusspecificallyontheirpieceofthevaluechain.Forexample,ifacompanyisinvolvedonlyinaluminumsmelting(andnotaluminarefining),itcouldfocusitstargetsettingandreductionsthere.Related,thegroupsuggestedthatwealsoconsiderdifferentpathwaysforprimaryvs.recycledproduction.ACTION:IAItodevelopillustrativecurvesrepresentingunitprocesspathways(Q22019)SeveralparticipantsraisedquestionsaboutwhethercompaniesthathavealreadyachievednotableGHGemissionsfaceadisadvantageinsettingSBTs(astheyhavefewerreductionopportunitiesaheadofthem).Insuchcases,theintensityreductionapproachintheSDAmaybehelpfulbecausecompanieswithlowGHGintensities(relativetothesectoraverage)havetoreducetheiremissionintensitylessthanmoreemissionintensivecompanies.ACTION:IAItodevelopillustrativecurvesrepresentingcompanyreductionpathways(Q22019)Aparticipantsuggestedthatitwouldbehelpfultoidentifykeycustomers(orusers)ofaluminumacrosssectors–automotive,aviation,buildings,electronics,etc.–tounderstandhowtheyareapproachingaluminumfromanSBTperspective(e.g.isaluminumbeingaddressedinscope3targets?).Thiswouldalsohelpaluminumcompaniesascertaincurrentandfutureinterestinlowcarbonaluminum,whichwouldhelpmakethecaseforaluminumcompaniestosetandworktowardsSBTs.WhileWRIhasbeenclearthatavoidedemissions(e.g.reductionsdownstreamvialightweightingwithaluminum)arenotafocusofthisproject,thetopiccameupanumberoftimesandweexpectitwillcontinuetodoso.Itisthusworthconsideringhowtoaddressavoidedemissionsinthisprojectorelsewhere.Theinclusionofelectricityrelatedemissionsinthealuminumsectorbaselineandpathwayopensthedoortothismulti-sectoralapproach.Lastly,whilethefocusofthisprojectishelpingaluminumcompaniessetSBTs,aluminumcompaniesneedsolutionstocertainGHGhotspots(seeslides27and30):Aluminarefining:currentlycoal,oilorgasbasedforprocessheat&steam)–thisisnoteasilychanged(seelink).Electrolysiselectricity:Whilehydrowillcontinuetoplayarole,nearly60%ofaluminumisproducedbyChina,90%ofwhichiswithcoal-basedelectricity(seelink).Directsforelectrolysis(anodeconsumption,PFCs):Technologiessuchasinertanodeswilltaketimetodevelopandscaleanddonotaddresstheenergy-intensityoftheprocess.Nextsteps21WRIwillsharethisnoteandtheslideswithworkshopparticipantsandotherstakeholdersthathaveexpressedinterestinthiswork.Wearealsodiscussinghowtorefinetheprojectscopeandapproachbasedonthefeedback.22AppendixB:GreenhouseGasWorkingGroupIn-PersonMeetingMinutesDate/Time:Friday,September27,2019,8:45a.m.–12:30p.m.Location:TheDavidAttenboroughBuilding,PembrokeSt,CambridgeCB23QZAntitrustStatementAttendeesarekindlyremindedthatASIiscommittedtocomplyingwithallrelevantantitrustandcompetitionlawsandregulationsand,tothatend,hasadoptedanAntitrustPolicy,compliancewithwhichisaconditionofcontinuedASIparticipation.FailuretoabidebytheselawscanhaveextremelyseriousconsequencesforASIanditsparticipants,includingheavyfinesand,insomejurisdictions,imprisonmentforindividuals.YouarethereforeaskedtohavedueregardtothisPolicytodayandinrespectofallotherASIactivities.ParticipantsASIStandardsCommitteeMembers:CatherineAthenes(Constellium),StevenBater(EGA),ChristopheBoussemart(Nespresso),AnnemarieGoedmakers(ChimboFoundation),JosteinSoreide(NorskHydro),AlexeySpirin(UCRusal)OtherASIMembers:AndyDoran(Novelis),MilesProsser(AustralianAluminiumCouncil),OlivierNeel(Constellium)Non-Members:ChrisBayliss(IAI),PernelleNunez(IAI),ShaunWalden(DNVGL).ASISecretariat:KristaWest,MariekevanderMijnApologies:MohammadAlJawi(EGA),NicholasBarla(OdishaIndigenousPeoplesForum,India),SamBrumale(ASI),GiuliaCarbone(IUCN),MarkCooksey(CSIRO),TaylorDimsdale(E3G),AlexanderFarsan(WWF),LawrenceHambling(Heineken),WiekeHofsteenge(Ecofys),JustusKammueller(WWF),TobiasKind(WWF),AlexanderLiedke(WWF),JérômeLucaes(Rusal),MarcusMoreno(ABAL),EwoudNieuwenhuis(Heineken),FredericPicard(RTA),HugoRainey(WCS),JessicaSanderson(Novelis),JeroenScheepmaker(Ecofys),FionaSolomon(ASI),SandroStarita(EuropeanAluminium),LindaWright(EnergiaPotiorLimited)Alternates:TheresiaOttforCatherineMunger(RioTinto),AnthonyTufourforMarcelvanderVelden(Arconic),CarlosGagoRodríguezforRosaGarciaPiñeiro(Alcoa).Invited:MichaelSadowski(WorldResourcesInstitute),JonSottong(WorldResourcesInstitute)Documentscirculated1.Meetingagenda2.Previousminutes(11February2018)3.SBTiprojectrevisedGHGreductionpathwayforthealuminiumsector(WRI)23MeetingobjectivesReviewanddiscusstheSBTiprojectrevisedGHGreductionpathwayforthealuminiumsector,preparedbyWorldResourcesInstitute(WRI).ItemsdiscussedPreliminaries1.Welcomeandroundtableintroductions2.Meetingobjectionsandapproach3.Previousminutesandactions(noneopen)Nocommentswerereceivedaboutthepreviousmeetingminutes.KeyWGdiscussionpoints:NoneGHGreductionpathway4.ReviewanddiscussrevisedpotentialGHGreductionpathwayforthealuminiumsectorwithScienceBasedTargets(SBT):Inclusiveofscopes1and2(and3,wheretheseemissionsmakeupmorethan40%ofcorporatecombinedscope1,2and3),asperSBTiPotentialtoprovideabreakdownbyunitprocess(i.e.forprimaryaluminium:bauxitemining,aluminarefining,anodeproduction,electrolysis)ItwasnotedthatoneaimoftheSBTinitiativeprojectwastodeveloparevisedsectorpathwayfortheindustry,basedonthebestavailabledatafromassociationslikeIAIandfromindustry,andwithascopethatincludesdirectemissions,indirectemissionsandnon-CO2greenhousegases.ThiswouldcomplementtheInternationalEnergyAgency(IEA)sectorpathway,includingthoseforpowergeneration,andwoulddevelopaconversationabouttheunderlyingdata(e.g.usingsectorspecificpowermixesvsnational/regionalgridmix).Stakeholdersengagementandtheunderlyingdataintegrityisimportant.KeyWGdiscussionpoints:Therewasdiscussionthatthe8tCO2epermetrictonneAluminiumascurrentlyrequiredintheASIPerformanceStandardtodayexcludes90%ofaluminiumsectoremissions(andwelloverhalfofprimarymetalvolume).TherewasdiscussionattheStandardsCommitteemeetingoverthelasttwodaysthatthePerformanceStandardneedstobealignedwithabelow1.5°Ctarget.TherewasdiscussionthatWRIcouldindicatewhattheemissions/tonnethresholdwouldlooklikeovertimeforittobealignedwithwell-below2°Cand1.5°Ctargets.Suchathresholdwouldsitbelowtheperformanceofanyprimaryproducertodayacrossallunitprocesses.TheGHGworkinggroupcommentedthattheIEAaluminiumsectordataforawell-below2°Cpathwayshownduringthepresentationweremisleadingandthebaselineshouldbeatleasttwiceashigh.24Thechallengeforthealuminiumindustrytomeetproductionemissiontargetsneedstobearticulatedtopreventacredibilitygap.TheCommitteerecommendthattargetsbyunitprocesswouldbehelpful,aswouldregionalisedSectoralDecarbonisationApproaches(SDA).TherewasacommentthatSBTmaynotbereadilyapplicablefordownstreamcompanies(recycling,rollingandextrusion)inthealuminiumvaluechainandthatdifferentapproachesshouldbeexploredforsettingtimebundGHGreductiontargets.Scope3emissionsarenotcurrentlypartoftheSDAandcompaniesusingmorescrapinthefuturemayfindtheirscope1and2emissionsincreasing,evenastheirtotalfalls(whichisnotallowedunderSBTi)soadditionalconsiderationsforthedownstreamaluminiumsupplychainareneeded.ApplicationoftheGHGreductionpathway5.DiscusshowtoapplythisrevisedpathwaytotheASIcarbonstandard(8kgCO2e/kgAlforelectrolysisprocess)andotherbenchmarks(e.g.companylowcarbonstandards,LME)6.ExplorehowthesectorcancollaboratetodriveemissionsreductionsinlinewiththeSBTipathway(below1.5°C)KeyWGdiscussionpoints:IAIpresentedonthealuminiummarket,productionandGHGemissionsscenariosto2040.Thepresentationnotedthatdecarbonisationoftheglobalaluminiumsectorrequiressignificantchangestotheexisting(andrelativelyyoung)Chineseindustrialcapacity.Ofthe1.1billiontonnesofemissionsfromthealuminiumsectorgloballytoday,750milliontonnesareevolvedinChina,500Mtofwhicharefromcoal-firedpowerstations.LinkstoIAIdatabelow:ohttp://www.world-aluminium.org/statistics/massflow/ohttp://www.world-aluminium.org/statistics/primary-aluminium-smelting-power-consumption/ohttp://www.world-aluminium.org/media/filer_public/2018/02/19/lca_report_2015_final_26_june_2017.pdfohttp://www.world-aluminium.org/media/filer_public/2017/07/04/appendix_a_-_life_cycle_inventory.xlsxTherewasadiscussionaboutwhatimpactASIcanhaveonclimatechangeandreducingGHGemissionsifthose(smelters)whicharecertifiedarealreadybelow8tonnesCO2epertonneofAluminium.Thereisalsoaquestionofwhatthepathwaymaybeforother(non-electrolysis)processes,whichwillalsorequirereductiontoachieveabelow1.5°Ctarget.Therewasadiscussionaboutdifferentialaccesstopowerfromelectricitygrids,theshareofcaptivepowerindifferentregions,andtherolethatthealuminumindustryhasplayedandwillplayinthefuture.Coalandhydrohavebeenthesuppliersofbaseloadpower(drivenbylocalresources),andsmeltershaveplayedanenablingroleinthesegridsasbaseloadconsumers,butthefuturewillrequireothertechnologiestobackupsupplywithoutdestabilizingthegrid;optionsarelimited.Therewasdiscussiononthecostsoftheseotherpowersourcessuchashydro,wind,orsolar.25TherewasdiscussionthatsettingasectortargetiscomplexandthegoalshouldalwaysbeincentivizingcompaniestoreduceGHGemissions,butalsothatemissionsacrosstheanthropogenicsystemshouldbereduced,whichisnotnecessarilydeliveredatthemagnituderequiredbyindividualcorporatetargetsetting.Recapandclose1.Agreeanyfinalpost-meetingactionsandtimeframesbyWorkingGroup2.AgreeactionsbySecretariat3.Finalreflections4.Close

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