Introduction
Toward the realization of a decarbonized society, the demand for reducing CO₂ emissions across the entire supply chain (Scope 3) in the manufacturing industry is increasing like never before. In particular, “aluminum,” a key material for automobiles, building materials, and electronic devices, is often called “canned electricity” due to the vast amount of power consumed in its production process. Reducing its environmental impact has become an urgent issue. However, this challenge also presents a golden opportunity to dramatically enhance corporate competitiveness through appropriate procurement strategies and technological understanding.
This article explains in detail the latest technological innovations toward carbon neutrality in the aluminum industry, the importance of recycling, and strategic perspectives on overseas procurement. We will also touch upon the energy situation in Vietnam, where Daiwa Aluminum Vietnam is based, and present concrete solutions for Japanese manufacturing industries to achieve both “environmental compliance” and “cost competitiveness.” Through this article, we provide insights to accelerate your company’s sustainability strategy.
The Current State of “Decarbonization” Facing the Aluminum Industry
Breaking Away from “Canned Electricity”: The Current Status of CO₂ Emissions
Aluminum is a material that is lightweight, highly processable, and excellent for recycling. However, the process of smelting primary aluminum (new ingots) from bauxite consumes enormous amounts of electricity. According to data from the International Aluminium Institute (IAI), CO₂ emissions from the entire aluminum industry reach approximately 1.1 billion tons annually, accounting for about 2% of global emissions.
In particular, primary aluminum produced in smelters dependent on coal-fired power generation is said to emit an average of about 16.6 tons of CO₂ per ton of aluminum. On the other hand, when renewable energy sources such as hydropower are used, emissions can be suppressed to under 4 tons. This structure means that the difference in energy sources is directly linked to the environmental load.
In Japan, due to soaring electricity costs, the mining (smelting) business has effectively withdrawn, and the country relies on imports from overseas for almost 100% of its new ingots. Therefore, for Japanese manufacturers to achieve carbon neutrality, it is essential not only to purchase materials but also to ensure traceability: “What kind of energy was used to make this aluminum?” and “How much recycled material does it contain?”
“Scope 3” Compliance Required Across the Entire Supply Chain
Currently, companies listed on the Prime Market are required to reduce emissions not only from their own operations (Scope 1 and 2) but also across the entire supply chain, from raw material procurement to disposal (Scope 3).
Taking the automotive industry as an example, with the shift to EVs (Electric Vehicles), the need for vehicle body lightweighting to offset battery weight is rapidly increasing. The amount of aluminum used per vehicle is predicted to increase from approximately 180 kg in 2020 to nearly 250 kg by 2030. However, if CO₂ emissions during material production are high, the zero-emission effect during driving (Tank to Wheel) will be negated (from a Life Cycle Assessment perspective).
Consequently, procurement departments are now required to select suppliers based on “QCDE,” adding Environmental performance (Environment) to Cost, Quality, and Delivery (QCD).
Technological Innovations Realizing Green Aluminum
Revolution in Smelting Processes: Inert Anode Technology
In conventional aluminum smelting (Hall-Héroult process), carbon anodes are used, so oxygen and carbon react during electrolysis, inevitably generating CO₂. In contrast, “Inert Anode” technology is currently being practically applied worldwide.
This technology uses materials that do not contain carbon, such as ceramics or metal alloys, for the anode, emitting only pure “oxygen” instead of CO₂. Projects like ELYSIS, a joint venture between major aluminum manufacturers Alcoa and Rio Tinto, are leading development. Once commercialized, it will be possible to reduce direct emissions from the smelting process to nearly zero. Commercial-scale production is expected to begin gradually from 2024 onwards, and procurement managers need to closely watch the supply trends of this “true green aluminum.”
Conversion of Thermal Energy: Hydrogen and Ammonia Combustion
In melting furnaces, holding furnaces, and heat treatment processes, fuel conversion is also progressing from conventional heavy oil and natural gas (LNG) to hydrogen and ammonia, which do not emit CO₂ during combustion.
The “Aluminum Industry Carbon Neutral 2050” vision formulated by the Japan Aluminium Association sets a goal of decarbonizing heat sources in manufacturing processes by 2050. For example, technical demonstrations using hydrogen burners in industrial furnaces are underway, which can significantly reduce carbon emissions in the die-casting process. However, the development of hydrogen supply infrastructure and cost reduction remain challenges for widespread adoption, making a combination with energy-saving technologies the realistic solution for the time being.
Evolution of Recycling Technology: The Possibility of Secondary Alloys
“Urban Mines” with 97% Energy Reduction Effect
The greatest feature of aluminum is that it is a “permanent resource” that can be recycled repeatedly without degrading its quality. The energy required to produce recycled aluminum (secondary alloys) is only about 3% of that required to produce new ingots. In other words, using recycled materials can reduce energy consumption and CO₂ emissions by as much as 97%.
Currently, about 65% of Japan’s aluminum demand is met by recycled materials, but “cascade recycling” (reuse for lower quality applications), such as from wrought materials (rolled/extruded) to casting materials, is mainstream. In the future, “horizontal recycling” (returning wrought materials to wrought materials) and higher quality recycling for casting materials will be required.
Sophistication of Sorting Technology: LIBS and AI Sorting
A barrier to improving recycling rates is the contamination of impurities (iron, copper, zinc, etc.) in scrap. To remove and manage these, the latest sorting technologies are being introduced.
Of particular note is “Laser Induced Breakdown Spectroscopy (LIBS).” This is a technology that irradiates scrap pieces with a laser and analyzes the emission spectrum of the generated plasma to instantly identify and sort alloy types. Furthermore, by combining this with AI (Artificial Intelligence) image recognition, it is becoming possible to sort alloys of similar weight, which was difficult with conventional specific gravity sorting. This facilitates the securing of high-quality recycled raw materials (post-consumer materials) with few impurities, forming the foundation for casting manufacturers like Daiwa Aluminum Vietnam to supply high-quality and low-carbon products.
The Solution of “Overseas Procurement x Environmental Compliance” Proposed by Daiwa Aluminum Vietnam
Vietnam’s Energy Transition (PDP8) and Procurement Benefits
When considering overseas procurement, the local energy policy (energy mix) is an extremely important factor. In the “8th National Power Development Plan (PDP8)” approved in 2023, the Vietnamese government has set a policy to stop new development of coal-fired power generation after 2030 and significantly increase the ratio of renewable energy (solar, wind, hydro).
This means that the “carbon footprint” of aluminum casting parts manufactured in Vietnam will be further reduced in the future. Compared to regions with high dependence on coal such as China, procurement in Vietnam may work advantageously in medium- to long-term decarbonization strategies.
Optimal Balance Between Cost and Environment
For Japanese manufacturing industries, environmental compliance is important, but cost competitiveness cannot be sacrificed. At Daiwa Aluminum Vietnam, we maintain a strict quality management system equivalent to Japanese standards (ISO 9001/14001, etc.) while carrying out production that leverages Vietnam’s cost benefits.
Furthermore, we promote the active use of recycled ingots and the efficiency of manufacturing processes (improving yield and reducing energy loss by lowering defect rates). By establishing an integrated system of procurement, processing, and assembly locally in Vietnam, we can offer total proposals including the optimization of logistics CO₂ associated with transport to Japan.
Summary
Efforts toward carbon neutrality in the aluminum industry are transforming from mere environmental activities into a technological competition for corporate survival. “Technological innovations” such as inert anode technology and hydrogen combustion in primary smelting, and the sophistication of “recycling” with its 97% energy-saving effect, are the two wheels of CO₂ reduction.
For Japanese manufacturing industries, especially procurement and purchasing managers, the following three points are important as future action plans:
- Check Supplier Power Sources and Raw Materials: Understand what energy and how much recycled material are used to make the aluminum products you procure.
- Watch Technology Trends: Assess the market introduction status of LIBS sorting and green ingots, and consider early trial adoption.
- Strategic Use of Overseas Hubs: Utilize regions like Vietnam where renewable energy introduction is progressing, and strengthen cooperation with partners like Daiwa Aluminum Vietnam who can balance “Quality” and “Environment.”
Balancing decarbonization and cost reduction is not easy, but it is achievable with the right knowledge and partnership. When considering overseas procurement of aluminum castings or switching to environmentally friendly products, please consult with Daiwa Aluminum Vietnam.