April 27, 2021
Industry low-GHG global and EU benchmarks / EU Green Deal and beyond
Workshop digest
“Russia’s Low Carbon Policies and the Global Science” project is being implemented by CENEf-XXI in cooperation with the European Climate Foundation and the 2050 Pathways Platform. An international workshop “Industry low-GHG global and EU benchmarks / EU Green Deal and beyond”, which was organized by CENEf-XXI, Federal State Autonomous Body Research Institute “Environmental Industry Policy Center”, European Climate Foundation, and the 2050 Pathways Platform on April 27, 2021, was the second in a series of three workshops on low carbon economic transition.
Session 1. EU Green Deal and beyond
Igor Bashmakov. General Director, CENEf-XXI. Moderator
In the introductory remarks he noted, that the RF President set the following tasks in his speeches on April 21 and 22, 2021: “to yield GHG emission reductions, sew up strict control and monitoring”, and to ensure that “over the next 30 years accumulated net GHG emission in Russia be below that of the European Union”. CENEf-XXI estimates, that with an account of the EU’s aspiration to become carbon neutral by the mid-century, its expected total 2020-2050 net emissions of GHG will be 57 billion tCO2eq. In Russia, according to the latest inventory, 2019 net emission of GHG was 1,585 million tCO2eq., which is 49% down from the 1990 level. The task specified by the RF President implies, that efforts to control GHG emissions should be substantially intensified, and the total net GHG emission cap for Russia should not exceed the lowest projection (the ‘intense’ scenario with 56.5 billion tCO2eq. total emissions) of all scenarios described in draft “Russia’s Long-Term Low Carbon Development Strategy to 2050”. This Strategy is the first and so far the only strategic document to determine Russia’s development perspectives to the mid-21st century. In the RF Presidential Address, low carbon transformation is viewed as a driver for economic growth: “Our new energy sector and addressing climate problems should become a powerful incentive for the comprehensive modernization of all economic sectors and the social sphere. This is a direct pathway to creating modern and well-paid jobs”. Industry has a key role to play in solving these problems and needs environmental modernization, substantial energy efficiency improvements, transition to a circular economy, setting up a sector for the utilization of CO2 emissions, ensuring the capture, storage, and use of CO2 from all sources, larger-scale utilization of associated gas, the creation of infrastructure for hydrogen production both for feedstock and energy needs.
Industry is responsible for the largest GHG emission both in Russia and globally. It is for the industrial sector that introduction of certain carbon regulation measures (such as carbon footprint standards, procurement of low carbon products, emission trading, carbon tax, etc.) may significantly affect the competitiveness, particularly in the raw materials markets, and result in ‘carbon leakage’, i.e. relocation of business to countries with ‘soft’ or no carbon regulation.
In order to attain the EU’s and other countries’ carbon neutrality targets by 2050-2060, the plan is to gradually eliminate protection of industry from carbon price market mechanisms (which is currently in place even in the EU), such as free allocation of quotas in the emission trading system or carbon tax benefits. Carbon Border Adjustment Mechanisms are being developed in order to discourage the European business from relocating production to other countries. Final decisions for these mechanisms will be made by July 2021, yet it is quite clear today, that they will affect the exporters, including Russian companies. In addition, marketing of products with ‘low carbon footprint’ and selection of suppliers with ‘low carbon footprint’ is becoming an important element of business-strategies for many companies, including Russian firms. Besides, financial institutions use the ‘green’ criteria when making investment decisions.
Lars Nilsson. Professor, Department of Environmental and Energy Systems Studies, Lund University, Sweden. Decarbonisation transitions in industry.
Industrial emissions have been growing faster, than in any other sector, since 2000, driven by increased extraction and production of basic materials. Plastic is the fastest growing material. Emission-intensive industries were formerly known as ‘hard-to-abate sectors’. It is no harder to decarbonize industry, than any other sector. It is a systems transition with new sectoral couplings, infrastructures, value chains and business models. Cheap renewable electricity is the key factor. The cost impact of more expensive low carbon materials on the final products is very small. Timely creation of an appropriate infrastructure is important for electricity, hydrogen, CCU and CCS.
Major decarbonisation option categories include: Demand reduction/moderation (in m2, goods consumption and car travel); Materials efficiency (light-weighting and extending product lifetimes); Circular economy (micro-, meso-, and macrorecycling and symbiosis); Energy efficiency (always important); Electrification and hydrogen (H-DRI, green hydrogen is expected to be cheaper in 10 years, than blue hydrogen, and hydrogen storage may well serve the grid balance function); CCU (e.g. a closed loop biogenic carbon economy and thermochemical recycling), and CCS. Some of the existing products, services and technologies have good chances of being presented at Carbon Ruins Exhibition at Eden, Lund, April 2053.
Major technology shifts are needed for basic materials. Suddenly it happens: HYBRIT project in Sweden – Hydrogen Breakthrough Ironmaking Technology. Today 10% of Swedish emissions come from steel industry. Pilot plant production started in 2021 (1 ton/hour capacity). Demo plant scheduled for 2025 (1.3 Mton/year). Joint venture between SSAB, LKAB & Vattenfall. Volvo Group is one dedicated buyer.
A framework for thinking about industrial transition:
Directionality (Visions, roadmaps, and strategies. Whole economy and value chains).
Knowledge creation and innovation (RD&D. Experimentation. Co-evolution with other systems).
Creating and reshaping markets (Risk sharing, de-risking, and green market demand pull).
Capacity for governance and change (Government expertise and ability to manage and evaluate policies for transition. Permit procedures and infrastructure).
International coherence (Carbon leakage, UNFCCC (NDCs), sectoral leadership approaches).
Phase-outs and socio-economic implications (labour market and welfare policies for re-training and re-investment).
Many countries still lack institutions to provide for the industrial low carbon transition.
Question from moderator:
Sweden was one of the first countries to introduce carbon taxes in the early 90s, which are now the highest in the world. At that, Swedish GDP grows fast by EU standards, energy costs to GDP ratio stays below the affordability thresholds, and GHG emissions have substantially declined. How does Sweden manage it? And what is the role of the Swedish industry in such decoupling?
Answer:
20 years ago, there was an extensive discussion in Sweden about the targets. We thought then that it would be very difficult to cut emissions. However, it appeared that it was not all that difficult to move in this direction: GDP has grown up 85% since 1990, while emissions dropped by 30%. It became clear that emission reduction is not a barrier to the economic growth.
Peter Levy. Energy analyst, IEA. Heavy industry at net-zero emissions.
Reliance on the energy sector alone does not allow it to address the decarbonization problem. Proactive policies are needed in other sectors, including the industrial sector (heavy industry in the first place). Industry (net of the energy sector) is responsible for a quarter of direct GHG emissions. In heavy industry, fossil fuels account for 85% of energy consumption. Many industrial facilities were built relatively recently and will be emission sources for a very long time. Service life of Russian heavy industry enterprises is much above average. Therefore, the modernization is inevitable and can be low carbon. After the pandemic, demand for heavy industry products will recover, but the demand growth profile will be largely determined by how successful material intensity reduction will be.
There are a variety of options for industrial decarbonization, including material intensity reduction, energy efficiency improvements, electrification of technological processes, the use of hydrogen, biomass, RE, CCU, and CCS.
Material producers, manufacturers, financial and research institutions, and non-governmental organizations – all have a role to play, but governments will take the center stage. Targeted actions include: managing existing assets and near-term investment (e.g. retrofits and retrofit-ready newly-built plants, tradeable energy efficiency schemes, sunset clauses); creating a differentiated market for low-emissions materials (e.g. carbon contracts for difference, minimum content regulations, public and private procurement regulations); developing early-stage technologies (e.g. RD&D funding, public-private partnerships, knowledge sharing platforms, innovation co-ordination, supporting infrastructure investment); accelerating material efficiency (e.g. improved networks for scrap material collection and better sorting, modified design regulations); priorities for COVID-19 stimulus packages: financial incentives to improve energy efficiency, improvements to recycling systems and strengthened support for pilot and demonstration projects.
Question from moderator:
In your slides we can see that in the SDS scenario global industry doesn’t reach zero emissions even by 2070. Does it mean this target is unrealistic?
Answer:
Getting the last 5-10% of emissions down to zero will be very difficult and costly. In this scenario, by 2070 a certain level of emissions still remains in a number of sectors, such as heavy industry and long-distance transport. It would be cheaper to offset these emissions by carbon capture technologies. Besides, readiness of low carbon technologies is an important factor. Many of these technologies are yet at an early stage of development.
Stefano Cabras. Policy Analyst for the EU ETS and International Carbon Markets, European Roundtable on climate change and sustainable transition (ERCST). Making EU industry fit for 55%, challenges and opportunities.
European Green Deal (EGD): “EU industry needs ‘climate and resource frontrunners’ to develop the first commercial applications of breakthrough technologies in key industrial sectors by 2030.”
Industry emissions are regulated by the EU ETS, which today covers around 40% of the EU emission. Between 2005-2019, ETS emissions declined by almost 35%, including by 10.6% in 2020 alone. ETS has almost reached its old 2030 emissions reduction target. ETS sectors must yield 67.5% of additional emission reductions under the EGD. Industry has reduced its emissions by more than 30% since 1990, and by more than 20% since 2004. However, emissions reduction has mostly stagnated since 2013 (at least until 2018). Average yearly emission reductions since 2013: power – 5.6%; industrial heat – 2.8%; industry – 1.4%. The EU objective is to decouple emissions and economic output. There is some progress, but the pace is too slow. By 2030 the decline should be between 18 and 23%. The necessary reductions by 2030 can be achieved through further adopting more energy efficient processes, and through fuel switch (from fossil fuels to electricity/biomass). However, this would not put the industry on the right trajectory towards 2050. To prepare for 2050 and ensure the uptake of breakthrough low-carbon technologies beyond 2030, the economic and technical feasibility of these technologies has to be proven at scale in the coming years. While the carbon price is an important factor, it will not reach the levels necessary to do so in the coming decade.
Both ‘pull’ and ‘push’ policies are necessary, and many are being discussed: EU ETS Innovation Fund; Carbon Contracts for Difference; Consumption Charge; Labels and Standards; Public procurement; Infrastructure; etc. As long as climate change policies continue to be asymmetrical, the risk of carbon leakage will persist. The use of free allocation is facing pressure from multiple fronts. It mutes the carbon price signal going through the value chain. It has led to windfall profits due to inflexible rules as well as passing-through of carbon costs. Not being sustainable in the long-run under current rules: at some point in the (near) future, there will not enough free allocation available as the cap continues to go down. Other countries are also taking climate actions.
Simultaneous efforts to better target current carbon leakage protection and design alternatives (CBAM). Design and implementation of alternatives will take time and will not be instantaneous: free allocation is here to stay in the near- to mid-term. Changes introduced in the 2018 review: update of the carbon leakage assessment and list; update of the benchmarks based on past improvement rates; free allocation more in line with production changes. EC Public Consultation: share of Free Allocation vs. Auctioning; ‘revised definition of product benchmarks to incentivize innovation’; Better target Free Allocation – E.g. Court of auditors recommendations (2020){ (take into account sectors’ ability to pass through costs? tiered approach to free allocation based on relative risk of carbon leakage?; ex-post correction to ensure free allocation is in line with output changes?)
Questions from moderator:
1) Stefano, in your presentation you show that EU industry emissions are 30% down since 1990 and 20% down since 2005. By 2030, they should go down by additional 18-23%, or 134-165 MtCO2. Over 20 years after 2030 the expected decline is 430-550 MtCO2. It looks like the heavier burden is shifted to the next generation. Is it so?
Answer:
Over the next 10 years, we shall be paving the road and developing industrial technologies that will be cheaper and will allow for a more dynamic emissions reduction beyond 2030.
2) Substantial intellectual resources are needed to ensure the transition of industry to low carbon pathways. How many think-tanks are working on this in the EU?
Answer:
More than 20 in Brussels alone. They are increasingly shifting the focus from the energy sector to industry.
Session 2. Industry low-GHG global, EU and Russian benchmarks
Dmitry Skobelev. Director, Federal State Autonomous Body Research Institute “Environmental Industry Policy Center”. Moderator
Igor Bashmakov. General Director, CENEf-XXI. Benchmarking of greenhouse gas emissions in industrial production.
Energy efficiency and carbon intensity benchmarking is used in regulations to set energy saving and GHG emission reduction targets and to monitor how these are attained. The principle “Who has done less will get a more ambitious task”; revealing the best technologies and practices and formation of policy packages to expand the market niches for these; development and coordination of industry-wide decarbonization plans and roadmaps; free-of-charge quotas in emission trading systems; determination of payment rates in CBAM systems; marketing of products with low carbon footprints (important to ensure comparability and fair competitiveness); selection of suppliers with a low carbon footprint; determination of ‘green’ criteria in taxonomies.
A number of Russian companies, for example WSA, participate in international benchmarking systems. Specific CO2 emissions (per 1 t of steel) of Russian companies are higher, than the global averages (both direct and indirect CO2 emissions). Ensuring comparable conditions begins with determining comparable system boundaries. For many products there are different production processes. Benchmarks are not set forever. Their evolution is expected to substantially accelerate. Distribution curves go down over time. The gap with the benchmark will be growing for those who cannot modernize fast enough.
Benchmarking systems are very information-intense. The question is: should we develop our own (Russian) systems or use those that are in place? Development of Russian calculators for benchmarking purposes. CENEf-XXI and EIPC are launching a pilot project for steel and metals. BAT reference books should include sections on energy- and resource efficiency. Calculators may become parts of the reference books.
Question from moderator:
There are 54 benchmarks in the EU. How many do we need in Russia?
Answer:
Primarily for products covered by CBAM. Preliminary analysis shows that these mechanisms will affect steel and metals in the first place. Therefore, we will start with this sector.
Julia Shabala. Deputy General Director, Metalloinvest. Low carbon strategy of Metalloinvest
The 2021-2050 Climate Strategy of the METALLOINVEST Group was approved in 2021. Strategic targets to 2025 include 6% GHG emission reductions from the 2019 level and 45% emission reductions by METALLOINVEST’s partners. Strategic targets to 2036 include 77% GHG emission reduction and 56-80% emission reductions from the 2019 level by METALLOINVEST partners. And the targets to 2050 include 100% GHG emission reduction from the 2019 level and 61-89% emission reductions by METALLOINVEST partners.
Key measures to attain these targets include:
Reduced consumption of natural gas due to the switch to hydrogen in the production of HBI and DRI; decarbonization of boilers and CHP (between 2025 and 2044); reduced consumption of diesel fuel due to the transport electrification (between 2040 and 2045) and of coal and coke due to the optimization of the agglomerate/coke oven/blast furnace production and transition to DRI (between 2024 and 2032).
With the decarbonization of production processes, total Scope 1, Scope 2, and Scope 3 (Upstream, Downstream) emissions will drop by 64% by 2050. Transition to the production of DRI using green hydrogen as a reducing agent.
Maximum disclosure of climate reporting will allow for high ESG rating positions, including the highest possible “A” CDP rating position, which make eligible for ‘green’ financing (lower loan interest rates). METALLOINVEST Group prepares annual reporting under the Greenhouse Gas Protocol. Calculations for one and the same plant made using WSA and Eurofer methodologies yield different values of specific indicators. The World Steel Association’s CO2 emission estimation methodology requires calculation with an account of all on-site production processes: Scope 1 and 2 + partially Scope 3. CO2 emissions estimation methodology of European Steel Association (Eurofer) – with an account of all processes – requires calculation of Scope 1 and 2.
We would recommend that the Methodology for estimating GHG emissions be supplemented with “mobile combustion” category; an option to change the reporting period; an option to expand the range of emission categories (indirect energy-related and other GHG emissions); a possibility to report preparation by a third party; and integration of rolled products into the “stationary combustion” category. Develop a list of reported categories (the best scenario would be to report Scope 1, 2, and 3). Approve of the verification procedure for climate projects based on the guidelines for Article 6 of the Paris Agreement. Develop verification criteria for different types of reporting based on the global practices. Approve of the emissions estimation procedure under climate projects. Update BAT books of reference by adding requirements to specific GHG emissions and a list of low carbon conversion technologies. Specify in the draft Green Projects Taxonomy, which is being developed by the RF Ministry of Economy, attainable specific GHG emissions per ton of steel with an account of production process (for example, pellets-agglomerate-cast iron-converter or pellets-HBI-electric steel). Today, it is only proposed to set the lower limit for carbon steel at <0.283 tCO2e/ton of steel and for high-alloy steel at <0.352 tCO2e/ton of steel.
Question from moderator:
Are you going to engage in climate projects as soon as the necessary environment is in place in Russia?
Answer:
Yes, absolutely. Particularly under the Udokan copper project. In METALLOINVEST, we are planning to address these issues through hydrogen.
Johanna Lehne. Senior policy adviser, E3G. What policies are envisioned in the EU to foster industrial decarbonisation?
Energy-intensive industries (steel, cement, aluminium, paper and chemicals) account for roughly 17% of the EU emissions. To date, there has been little robust policymaking to drive change, especially in comparison to other sectors, and emissions have been stagnating since 2012, while breakthrough decarbonisation technologies remain trapped at the pilot stage.
With the European Green Deal, the EU has set the ambition for Europe to become the first climate-neutral continent by 2050. This will require a step-change in emission reductions across the EU economy, including in heavy industry: steel, cement, paper and chemicals. The “hydrogen hype” has injected a much-needed optimism in the possibility of transitioning to cleaner production processes in the industrial sector.
The industrial sector still receives more than 95% of its emission allowances for free, as this sector is deemed to be at risk of carbon leakage due to its exposure to international competition. The EU is exploring the introduction of a Carbon Border Adjustment Mechanism (proposal expected at the end of June alongside a proposal for the revision of the ETS). This proposal is likely to cover steel, cement and power sectors in the first instance and will allow for the phase-out of free allowances.
The EU Innovation Fund was created to ensure that more Emissions Trading System revenues support clean energy innovation. An estimated €12.5 billion from the auctioning of 450 million allowances (at a price of €25t/CO2) will be available during 2020-2030 to finance the commercial demonstration of innovative low-carbon technology solutions. The first call for the Innovation Fund launched last year was 20 times oversubscribed, clearly showing the huge appetite for more funding in this area prompting the Commission to explore ways of speeding up the application process for future calls.
The TEN-E Regulation sets out the EU guidelines for cross-border energy infrastructure and outlines the process for selecting projects of common interest (PCI). This is where plans for industrial energy & CO₂ infrastructure planning and financing happens, relevant for future natural gas consumption, H2 roll out, renewables deployment, CCS infrastructure. The EU H2 Strategy specifies a set of targets for H2 deployment in the EU, including installation in phase 1 of at least 6 GW of renewable hydrogen electrolysers in the EU by 2024 and in phase 2, of 40 GW of renewable hydrogen electrolysers in the EU, along with an additional 40 GW electrolyser capacity target in the eastern and southern ‘neighbourhoods’ of Europe.
Policies to build demand for cleaner industrial materials. This has been the biggest gap to date in terms of the EU industrial decarbonisation policies. Here are lots of proposals for how to build lead markets for cleaner materials: сlimate surcharge on basic materials-intensive products; рroduct requirements for basic industrial materials covering carbon-content and material-content; quotas for scaling up private and public procurement of cleaner materials. Still missing an adequate governance structure: currently, the legislative framework includes no targets for heavy industry. This is a significant gap, as targets provide clarity on the pace and direction of travel.
The EU is about to introduce a set of policies for industrial decarbonisation, which will not only help accelerate the transition in Europe but will impact trade partners, in particular the EU neighbourhood countries, which depend on exports of their goods to the EU: Carbon Border Adjustment Mechanism; product standards: changes to public procurement; waste management.
The EU is pursuing more concerted industrial policy in what it considers critical areas around digital and clean technologies, e.g. on batteries, critical raw materials, hydrogen. Dedicated innovation support could bring down learning costs on these technologies for other countries. However, a more assertive approach by the EU on some of these supply chains could impact the diffusion of this technology abroad and/or impact the ability of other countries and regions to build up their competitiveness in these areas.
Question from moderator:
What is the EU sectors’ attitude towards the newly enforced carbon regulation mechanisms?
Answer:
At first, the sectors’ response to CBAM was: ‘fine’ from steel, from cement they were very cautious, did not want any experiments on them. The sectors are not sure if this mechanism could protect them. And they want to keep the current protection mechanisms. Everyone is lobbying their own interests. But the current ETS mechanism cannot persist much longer.
Christopher Bataille. Senior Researcher, IDDRI.org Institut du Développement Durable et des Relations Internationales, Adjunct professor, Simon Fraser University, Faculty of the Environment. Technology and Policy Pathways to Net-Zero Heavy Industry
Recent literature has shown, that there are emerging and near commercial options to decarbonize all industrial sectors. Options: Material efficiency & circular economy: High potential, but what happens if it isn’t easy, cheap, or fast? Electrification: Capacity constraints matter and could be very expensive (electric steel example). Carbon capture, utilization, storage: What happens if CCS reservoirs, CCUS opportunities in a given region are limited? Or post-combustion CCS doesn’t pan out (concentrated flow is already commercial)? Alternative heat sources: Regional limits on biomass, solar, etc.
There are options for decarbonizing steel, cement and chemicals. Better use of steel, cement, and other materials for infrastructure, buildings and vehicles requires supply chain overhaul by architectural, civil engineering, and construction firms to yield 26-40% reductions. Recycling of concrete by grinding up and recovering unreacted cement & aggregates. More steel recycling; needs less contamination, especially copper. PD Steel: biocharcoal; BF-BOF with post combustion CCS; advanced smelting + concentrated CCS; blue or green hydrogen DRI EAF; aqueous or molten oxide electrolysis. Cement: cementious material substitution; better concrete mixing; alternative fuels; CCS for process and/or heat. Chemicals: hydrogen; biogenic carbon; electrocatalysis. One possibility for heat and feedstocks: Regionally tailored hybrids of electricity, hydrogen, biomass & synthetic hydrocarbons?
To make this possible, we need a diversified portfolio of tools (a “toolbox”) to be used based on regional resources and needs. Simple carbon pricing and regulations are not enough: the challenges are more than technological. While emerging tech exists, innovation will be slow because of low profit margins; in a competitive environment they can’t pass on costs without losing market share; capital costs are focused and upfront, they often can’t capture the benefits of innovation; facility lives are long and turnover is slow. So far there is no market for more expensive low GHG materials. Policy for heavy industry needs to target these challenges directly. Fundamentally, this is about reducing and controlling risks. Eventual exposure of all sectors to full GHG pricing with competitiveness protection, e.g. border carbon adjustments, to “mine” material efficiencies. Early retirement, if necessary, for long-lived, highly GHG intense facilities.
Combined strategies for a “local solution finding” policy package: multi-level policy commitment to transition to net-zero GHG industry; building code, design & recyclability policies for material efficiency/circularity; a transition pathway planning process including all key stakeholders to assess strategic & tech options, competitive advantages and uncertainties; accelerated R&D and commercialization; create lead markets to build economies of scale with green procurement, content regs, supply chain branding, guaranteed pricing & output subsidies (e.g. CfDs); eventual exposure of all sectors to full GHG pricing with competitiveness protection, e.g. carbon border adjustments, to “mine” material efficiencies; early retirement, if necessary, for long-lived, highly GHG intense facilities; supporting institutions; just transition; monitoring; electricity, H2 & CCS infrastructure; lifecycle accounting; education; regulatory backdrop. «Not the end, nor the beginning of the end, but the end of the beginning».
Sergey Chestnoy. Official Representative for International Communications, OK RUSAL; Chairman, ICC Russia Commission for the economics of climate change and sustainable development. Climate strategy of RUSAL.
RUSAL started to reduce emissions in 2007 and by 2015 had reduced them by 53%. RUSAL’s climate strategy requires at least 95% of power purchased from hydro power plants and other no-carbon generation sources. We have attained our goal earlier, than planned. In 2019, no-carbon power purchased for aluminium plants amounted to 98.9% (98.3% hydro, 0.1% nuclear, and 0.5% other RE). While the goal was to bring down direct specific GHG emissions from operating aluminium plants by 15% from the 2014 level, in 2019 the reduction was 11% compared to 2014. Average specific power consumption by aluminium plants was 7% down from the 2011 level. From 2017 onwards, domestic carbon price has been used for strategic and investment decision-making. This mechanism is being used on a large scale. Support for Russian and international initiatives and associations which focus on proactive strategies to combat climate change and introduce carbon price and are in line with RUSAL’s goals. RUSAL is largely involved in climate mitigation initiatives.
In 2017, a new product, ALLOW, was launched. Its mean carbon footprint is 2.4 tCO2eq/ton of aluminium (both direct and indirect emissions), which is ~4 times lower, than the industry-wide average. Perspectives for further carbon footprint reduction: RE-based aluminium production.
For customers, the carbon footprint is verified by an independent international auditor; carbon footprint guarantee is specified in the contract; GHG emissions estimation transparency is guaranteed ‘from cradle to grave’. In 2019, RUSAL’s management company and three production sites were certified for ASI compliance and were awarded ASI Performance Standard and ASI Chain of Custody Standard. The plan is to keep on with the certification of the production plants involved in the production of aluminium and aluminium products. RUSAL was rated “A” in CDP.
Carbon free aluminium is no fantasy. In January 2021, En+ Group, the largest RUSAL’s stakeholder, declared its mid- and long-term GHG emissions target. En+ Group estimates its targets as the most ambitious ever set in the aluminium industry. In the next 10 years RUSAL will build four aluminium plants in Krasnoyarsk, Bratsk, Shelekhov, and Novokuznetsk to use the cutting-edge and most environmental friendly pre-baked anodes technology. More than 50% of the production capacity will be renovated. RUSAL is creating a totally new industrial infrastructure and is giving up the technologies of the last century. Aluminium production will be totally renovated at four key Siberian aluminium plants: in Krasnoyarsk, Bratsk, Irkutsk, and Novokuznetsk. The basic programme parameters will be published after the corresponding corporate procedures are finalized.
There is a natural physical limit to the reduction of GHG emissions throughout the entire aluminium production chain. Carbon offsets are a good solution. Carbon neutrality can be attained only through the offset mechanism, by offsetting the irreducible GHG emissions with mitigation projects or increasing CO2 absorption beyond RUSAL’s production sites. One unique opportunity for Russia is the development and preservation of boreal forests. Since 2019 onwards, RUSAL has been involved in two types of forestry projects: 1) reforestation (more than 1.1 million trees were planted on some 500 ha in Krasnoyarsky Krai and Irkutsk Oblast); and 2) aviation to contribute to wildfire protection (leadership in firefighting aviation programme covering 505 thousand ha in Nizhne-Yeniseysk forestry department, Krasnoyarsky Krai). In 2019, more than 440 thousand tCO2 were thus offset.
Question from moderator:
Can you see any increase in demand for green aluminium? Which market segments show interest? Is there a price premium for green aluminium?
Answer:
There is some price premium, even if not a large one. The number of consumers in the automobile industry and other sectors who pay attention to the carbon footprint is growing. I am sure that a few years from now it will become as important a requirement, as the quality of products. The answer to all three questions is yes.
Question from Chris Bataille:
What is the application scale for pre-baked anodes?
Answer:
The process is being developed, but there is no large-scale application so far. When this problem is solved, aluminium will become carbon-neutral.
Tatiana Guseva. Deputy director, Federal State Autonomous Body Research Institute “Environmental Industry Policy Center”. Russian industry: cost-effective deep decarbonisation practices
Ammonia production is the largest source of CO2 emissions in the chemical industry, it is responsible for 34.7 mln tCO2eq/year, or for 60.6% in 2016. In Russia, we already have experience in CO2 capture from ammonia production and further utilization of more than 5 mln tCO2eq per year in carbamide production (approximately 0.5 tCO2 captured per 1 ton of ammonia, or 400 thousand tCO2 per year per individual plant). A similar scheme is implemented in combined lime and soda ash production. There are quite a few examples of a circular economy, when wastes from some processes (slag from steel plants) become feedstock for others (cement and crushed stone production), thus improving the competitiveness of cement by bringing its carbon footprint below the EU reference level.
Every additional 10% of cullet in glass production feedstock brings energy use for melting down by 2-3% and CO2 emissions by 7%. At the same time, fossil fuel use and demand for natural lime and crushed stone also goes down, and processing of already accumulated slag dumps is promoted.
Carbon intensity – in the first approximation – can be viewed as a universal indicator of the resource (energy- and material-) intensity of production. Specific indicators are needed for target-setting, from an individual plant to the whole sector. Benchmarks can be used to incentivize reductions in specific emissions. A national benchmarking could be used to set industry-wide targets.
Today, decarbonization means reduction in energy-sector and process emissions of greenhouse gases; energy efficiency improvements; fuel switch; reduction in energy- and material intensity (de-materialization); reduction in losses and leaks; light-weighting; recycling; partial replacement of feedstock (secondary materialization); and setting up production complexes (to provide CO2 sinks).