The SAFE Center for Strategic Industrial Materials (C-SIM) released the first report in a series of policy papers regarding the various issues impacting domestic primary aluminum production: The US Aluminum Industry’s Energy Problem and Energy Solution.

Aluminum demand will continue to grow as the economy transitions to a more sustainable energy future with the electrification of automobiles and new green technologies. This report analyzes the dichotomy between rising demand for aluminum and its energy-saving benefits versus the declining production in the US due to its energy intensity in the production phase.

As the aluminum sector is expected to rapidly grow over the next twenty years, the United States should evaluate whether it is likely to maintain a secure and reliable supply of primary aluminum, or whether vulnerabilities exist in the supply chain. Global demand is outpacing supply, so we can see a potential supply shocking coming. The US has the power to avoid these damaging results by creating opportunities for industry to overcome current and future energy challenges.

—Joe Quinn, Director of C-SIM

Without action to stabilize and decarbonize domestic primary aluminum, the United States is at risk of increasing its reliance on the UAE, Russia and China for critical infrastructures, military needs, and clean technologies. In the report, C-SIM recommends government leaders leverage new and existing policies, like the recent Infrastructure Investment and Jobs Act and the Inflation Reduction Act, to ensure secure supply chains and improve environmental outcomes.

Source: SAFE

Key takeaways from the report include:

• In the face of rising demand, a critical segment of aluminum is declining. Energy and environmental issues are at the core of this dichotomy.

• Defense, aerospace, electric power, and transportation have long been and will continue to demand aluminum. Electrification of transport and deployment of renewable energy technologies will increase demand for primary aluminum. Together, existing and new drivers for aluminum are growing rapidly, which will widen the gap between demand and secure supply.

• As vital as recycling is, the volume of secondary output is not sufficient to meet rising demand; more US production of primary aluminum is needed.

• Production of primary aluminum from allied countries is also decreasing or stagnant. Without action on domestic primary, the US is at risk of a much larger reliance on the UAE, Russia, and China for critical infrastructures, military needs, and clean technologies.

• Narrowed focus on the smelting process of the supply chain will help overcome the US demand-secure production gap.

• Energy challenges underpin this threat and undermine the economic viability of the primary aluminum industry in the USand abroad. China is meeting this energy challenge through subsidies, thus prompting overproduction and hollowing out the aluminum industry across almost all segments with low prices.

• Lowering and stabilizing energy costs—commensurate with an energy transition and climate goals—will bolster industry. Decarbonizing innovations in primary aluminum technologies can be a lifeline to industry as green aluminum becomes increasingly globally competitive.

In the coming months, C-SIM will release additional reports examining domestic and global policy options for aluminum to preserve economic and national security while enabling a clean technology transition.