Clean Energy Future at Risk
【Summary】The success of the U.S. clean energy economy is at risk due to a lack of domestic production of primary aluminum. The decline of the primary aluminum industry, coupled with the reliance on imports, puts the clean energy sector in a vulnerable position. Aluminum is essential for manufacturing solar panels, electric vehicles, and other clean technologies.
The Inflation Reduction Act has sparked a surge in investment in domestic manufacturing, particularly in the solar, battery, and electric vehicle (EV) sectors. This is a positive development for the Biden administration's goal of revitalizing America's industrial strength through climate policy.
However, this success story hides a significant vulnerability. The production of electric cars, heat pumps, solar panels, and other clean technologies that will drive U.S. manufacturing requires large amounts of primary aluminum. Without a sufficient supply of domestically produced clean aluminum, our economic growth and the clean energy economy will be limited.
Unfortunately, the primary aluminum industry in the U.S. is struggling. In the past, the U.S. accounted for 30% of global aluminum production with nearly 30 smelters. However, due to a lack of policy support and rising electricity prices, the industry has declined significantly. Today, only six vulnerable smelters remain, operating at reduced capacities and producing just 1% of the world's primary aluminum. Without intervention, these smelters could disappear entirely, posing a threat to workers, local communities, and the future of clean technology.
The potential loss of domestic aluminum production capacity could have a detrimental impact on the growing clean energy economy. Currently, the U.S. imports approximately 80% of its primary aluminum, leaving downstream buyers reliant on long supply chains and potentially carbon-intensive imports from unreliable or hostile sources. Relying on imported aluminum for manufacturing is inherently risky, especially considering the expected increase in aluminum demand. It would be short-sighted to surrender this significant source of economic growth and job creation to global competitors.
Aluminum plays a crucial role in building the clean energy economy. It is a key component in solar panels, accounting for 85% of their composition. Additionally, aluminum demand for wind and solar manufacturing is projected to exceed last year's domestic production by 2035. Aluminum is also vital for lightweight EVs and reducing the use of cobalt in batteries, which can significantly decrease the weight of battery packs compared to steel. The demand for direct battery applications is expected to increase tenfold by 2030.
While U.S. primary aluminum producers are declining, major aluminum buyers are seeking to re-shore their supply chains and reduce pollution to meet climate goals. Several prominent companies, including Ford, GM, Rivian, SunPower, Pepsi, and Ball Corp., have called for investment in clean aluminum smelters to clean up and secure their supply chains.
The technology to produce zero-carbon aluminum already exists, but high electricity costs driven by fossil fuel prices pose a significant barrier. The Inflation Reduction Act and the Infrastructure Investment and Jobs Act provide the Biden administration with the tools to secure low-cost, clean electricity for smelters and upgrade them with new technologies. These include increasing the Department of Energy's Loan Program Office direct loan authority and investing in renewable energy programs for rural electric cooperatives. Supporting innovative aluminum proposals and transforming existing smelters is crucial.
Investing in a robust domestic supply of clean aluminum will enhance the competitiveness of American-made clean energy technologies and provide a lasting advantage for U.S. companies and workers. By becoming a global leader in low-carbon aluminum, the U.S. can re-shore manufacturing, meet the increasing demand for clean technologies, reduce pollution, create union jobs, and stimulate economic growth in communities impacted by job losses and offshoring. With the risk of losing U.S. primary aluminum production, it is clear that the Biden administration must prioritize building a clean energy future with American-made clean aluminum.
Annie Sartor is the aluminum campaign director for Industrious Labs, an organization dedicated to transforming the industrial sector into a cornerstone of the U.S. clean energy economy.
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