Clean Aluminum

Executive Summary

As one of the most important metals for modern life, aluminum is all around us. From our bridges and high-rise buildings to our smartphones and kitchen appliances, this highly durable, lightweight, and conductive material is essential. It’s also a key ingredient for achieving our climate, jobs, and national security goals. As a primary component of solar panels, power lines, electric vehicles (EVs), and other clean technologies, aluminum is a building block of our clean energy solutions. At the same time, producing aluminum requires a tremendous amount of energy, and globally, the sector is a significant contributor to greenhouse gas (GHG) emissions. As the world produces increasing amounts of this material for the clean energy economy, we must simultaneously decrease the emissions from its production in order to achieve global climate targets.

In the United States, our growing need for aluminum already far surpasses the dwindling output from our domestic primary production. As a result, much of the aluminum we use comes from abroad, including from countries where aluminum production is much more emissions-intensive. Increasing our aluminum procurements from highly-polluting overseas producers will only push our climate justice goals further out of reach. What we need to advance these goals is a secure, domestically produced supply of clean aluminum made with high-road labor standards.

Revitalizing clean aluminum manufacturing in the U.S. will not only cut a major source of climate pollution, reduce worker and fenceline community exposure to airborne pollutants, and secure a reliable supply of an essential material for clean energy—it will also create good jobs for hard-hit workers and communities, while supporting the current workforce and retaining existing jobs. This report lays out a set of targeted recommendations for getting there. After assessing the state of the domestic industry, we outline the employment, climate, and community benefits of revitalizing clean aluminum manufacturing and present a set of policy solutions that can help create and sustain a strong, clean aluminum industry.

7.8 Mt A new study finds that the U.S. wind and solar industries will need 7.8 metric tons (Mt) of aluminum per year. This significantly exceed current U.S. aluminum production by 2035.

5 Smelters Most U.S. aluminum smelters have shuttered since the 1990s, leaving only five in operation today.

60% U.S. aluminum the cleanest on the planet. China, the world's leading aluminum exporter, produces 60% more carbon emissions during aluminum production than the United States.

State of the Industry

Up until the turn of the century, the U.S. was the world’s leading aluminum producer. The industry had long provided the country with a stable supply of aluminum and good jobs. But decades of decline have left the industry in tatters. With the closure of nearly 20 smelters, production has dropped by over 80% since its peak in the 1980s. As the industry languished, tens of thousands of aluminum workers have lost their jobs. These losses have been particularly hard since aluminum manufacturing jobs tend to offer better wages, benefits, and access to unions than other available jobs, especially for workers without a college degree.

As displaced aluminum workers lost their high wage jobs, their communities have had to grapple with the economic fallout of shuttered smelters. These forces, as seen within the broader manufacturing sector, have contributed to increased inequality, especially along racial lines.

But job losses and increased inequality have not been the only consequence of the industry’s decline. The U.S. aluminum industry’s deterioration has also led to increased climate pollution. As companies closed U.S. smelters and domestic output diminished, the world’s aluminum started to come from countries with lower environmental and labor standards and higher emissions. China and India, in particular, began to ramp up production. Both countries produce aluminum with substantially higher emissions than the U.S. China’s aluminum production is about 65% more emissions-intensive than ours and India’s aluminum is made with double the emissions compared to U.S. aluminum.

As a result of these trends, about two-thirds of the world’s aluminum is now made in countries with more emissions- intensive production than in the U.S. Building up clean aluminum manufacturing in the U.S. will ensure that our growing use of aluminum in clean technology won’t drive pollution overseas.

A Clean Aluminum Future

A revitalized U.S. aluminum sector has the potential to provide family-sustaining union jobs for tens of thousands of workers and hard-hit communities; support fenceline communities’ fight for clean air and water; offer a reliable supply of a critical material for clean energy and national defense; and serve as a pivotal first mover in our efforts to slash industrial climate pollution.

Notable benefits of a revitalized aluminum sector may include the:

Increase in the share of U.S. aluminum demand for critical clean energy and national defense purposes that’s met via domestic supplies;
Creation of new—and retention of existing—union jobs in the domestic aluminum industry;
Increase in the average wage in the domestic aluminum industry;
Economic benefits from increased aluminum production shared with impacted communities, including environmental justice, deindustrialized, and low-income communities and communities of color;
Reductions in GHG emissions and toxic pollution from domestic aluminum facilities, relative to the current baseline; and
improved ranking of the U.S. versus other major aluminum producers in the carbon and pollution intensity of aluminum production.

Federal Policy Recommendations

The federal government has an array of tools to help advance a thriving U.S. aluminum industry. These include national security measures; federal procurement policies; programs for investing in industrial efficiency, emissions reductions, and clean manufacturing; authority over federally supported electricity generation; and trade policy. These policy recommendations lay out a set of three tools the federal government can deploy to help build and sustain clean aluminum manufacturing.

Procurement

Buy America(n): To revitalize U.S. aluminum manufacturing, part of the solution is to catalyze a large domestic market for clean U.S. aluminum. Buy America, Buy American, and related domestic content rules offer policy tools to do just that. For example, the Inflation Reduction Act, signed into law in 2022, includes domestic content provisions that could help compel private developers and manufacturers of solar, wind, transmission, and electric vehicle components to purchase U.S.-made aluminum. The law offers solar and wind developers a 10% bonus tax credit if a little over half of their parts and materials are U.S. made.* Given that aluminum is a primary ingredient in solar panels and other clean energy technologies, this policy creates a strong incentive for clean energy firms to buy domestic aluminum.

Investment

Loan, grant, and tax credit programs and use of national defense policies: The federal government should directly invest in clean aluminum production. It can do so by extending a mix of tax credits, loans, and grants to aluminum manufacturers to ramp up their capacity while cutting emissions.

For example, The Inflation Reduction Act includes more than $50 billion for new grants, loans, and tax credits to support clean manufacturing. Some of this financing could help existing U.S. aluminum smelters become even cleaner and more globally competitive by boosting efficiency and slashing pollution. New investments also could help to reopen recently closed smelters by cutting production costs and offering an affordable supply of clean electricity.

Specific Inflation Reduction Act investments that could help revitalize clean aluminum manufacturing include:

A new manufacturing production tax credit (45X) worth over $30 billion to support expanded manufacturing of solar and wind components, batteries, and critical materials like high-purity aluminum;
An expanded tax credit (48C), worth $10 billion, that is now available for manufacturers to install technology that achieves an at least 20% reduction in climate pollution; and
New grants and loans worth $5.8 billion for energy-intensive industrial facilities, including aluminum manufacturers, to adopt transformative, first-at-scale technologies with the potential for deep emissions cuts and sector-wide adoption.**

In addition to these Inflation Reduction Act investments, the Biden administration should also consider taking executive action under national defense policies such as the Defense Production Act and National Defense Stockpile to support clean aluminum manufacturing.

Trade

A trade mechanism on climate-polluting aluminum imports: Smart trade policy can support growth in clean U.S. aluminum manufacturing by helping to reverse outsourcing to emissions-intensive countries and shift U.S. demand toward cleaner aluminum production. For example, a well-designed border fee on highly climate-polluting imports— frequently called a Carbon Border Adjustment Mechanism (CBAM)—could serve each of these ends while also supporting good aluminum manufacturing jobs and helping to curb aluminum emissions beyond our borders.

* For iron and steel, 100% of materials must be U.S. made to qualify.

** Another $500 million is available under the Infrastructure Investment and Jobs Act for demonstration projects to help reduce emissions at industrial facilities, potentially including aluminum smelters.

Aluminum Revitalized: Strengthening the Backbone of our Clean Economy

Download this comprehensive study on how to reverse the recent decline of the U.S. aluminum industry to meet rising aluminum demand for clean energy while creating good-paying jobs, strengthening national security, and reducing industrial emissions.