This data-file captures the energy economics of aluminium production via the electrolysis of alumina, breaking down the costs line-by-line. The overall process is energy intensive, emitting 10kg of CO2 per kg of aluminium.
It is possible to generate a 10% IRR on a new aluminium plant, at recent aluminium prices of $2.3/kg. production. However, this is only possible under lower power prices, no landfill taxes, no CO2 prices and reasonable opex.
A more challenging set of environmental standards can literally double the requisite aluminium price. This illustrates a key challenge for policy formulation in heavy industry. Fifty years ago, the US and Europe produced two-thirds of the world’s aluminium, while today, their combined share is less than 10%.