Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

Biden’s Big Bet on Aluminum

Climate policy is once again intertwined with industrial policy.

Green aluminum.
Heatmap Illustration/Getty Images

Famously energy intensive and dominated by Chinese smelters, aluminum sits at a curious nexus of climate and industrial policy.

The famously lightweight metal is something like the base metal of green industry. It’s used in the frames for solar panels, the control equipment for wind turbines, and in the hardware of electricity distribution. It’s lighter than steel, which makes it appealing to electric car manufacturers, like Tesla, who want to expand the range of their vehicles. Aluminum is often found in the batteries themselves, as well, specifically their enclosures. Overall, aluminum demand is projected to rise by some 40% by the end of the decade.

Like other industrial metals (namely steel), the U.S. aluminum industry has been a poster child of deindustrialization. Employment in the aluminum production industry has fallen from around 100,000 in 2000 to around 60,000 in 2022, with much of the fall happening in the few years after the United States established permanent normal trade relations with China. Earlier this year, the second largest smelter in the country said it would lay off most of its employees.

So, can the Biden administration bring aluminum smelting back to the United States?

The Department of Energy today announced $6 billion of funding for 33 industrial decarbonization projects, including four for aluminum, worth almost $670 million total. That includes up to $500 million for Century Aluminum to build a new primary smelter, which would make it the first new smelter in the United States since the late 1970s.

“Aluminum is a metal that is of incredible strategic importance to the U.S. and the world,” Jane Flegal, the former White House Senior Director for Industrial Emissions, told me. “We used to do a lot of aluminum production. That has declined precipitously.”

Obama, Trump and Biden have tried some combination of tariffs and negotiations to bring order to the global aluminum market — some of the Trump-era tariffs remain in place — but none of them had much success. Traditional climate policy, meanwhile, has focused more on the greenhouse gas emissions that come from transportation and electricity generation.

Heavy industry is a massive source of emissions, comprising about a fifth of the global total. The aluminum industry on its own makes up about 2% of global emissions, of which the smelting is responsible for about 80%, with the lion’s share going to the electricity being used to power the process. This makes smelting especially sensitive to both the price and availability of power. It’s no coincidence that Iceland, with its plentiful and always available hydropower and geothermal resources, is a major aluminum producer.

Many industrial processes themselves also produce emissions, which makes industrial decarbonization not just an adjunct of decarbonizing the electricity sector but rather an area that requires its own technological breakthroughs. For example, to make aluminum out of alumina, a powder that is refined from bauxite, requires consuming a carbon anode, which itself is made from an oil refining byproduct. These are businesses that operate on small margins and require huge capital investments to expand or change production, Flegal told me.

And the new technology necessary to decarbonize them wasn't being developed because “there wasn’t the level of investment in new technological pathways,” Todd Tucker, director of industrial policy and trade at the Roosevelt Institute, told me. “These demonstration projects are the first step of showing viability of new production methods.”

The Department of Energy said the smelter “would double the size of the current U.S. primary aluminum industry while avoiding an estimated 75% of emissions from a traditional smelter.” The DOE noted the preferred site for the smelter would be “Kentucky or Ohio/Mississippi River Basins.” Kentucky’s Governor Andy Beshear said Monday that Century had indicated an interest in the Bluegrass State, and that his office was working to put together a bundle of incentives to make the state more attractive.

Wherever it’s located, the facility is expected to create more than 1,000 permanent jobs, Century and the Department of Energy said, which would go to members of the United Steelworkers union. The USW has recently endorsed President Biden and applauded the DOE program.

The decades of job losses in the aluminum sector have “been devastating for our members and communities we work at,” Emil Ramirez, the USW’s vice president for administration, told me. “We have to give the Biden administration credit for recognizing the need to revitalize this important industry.”

Green

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Electric Vehicles

Tesla Is Now a Culture War Totem (Plus Some AI)

The EV-maker is now a culture war totem, plus some AI.

A Tesla taking an exit.
Heatmap Illustration/Getty Images, Tesla

During Alan Greenspan’s decade-plus run leading the Federal Reserve, investors and the financial media were convinced that there was a “Greenspan put” underlying the stock market. The basic idea was that if the markets fell too much or too sharply, the Fed would intervene and put a floor on prices analogous to a “put” option on a stock, which allows an investor to sell a stock at a specific price, even if it’s currently selling for less. The existence of this put — which was, to be clear, never a stated policy — was thought to push stock prices up, as it gave investors more confidence that their assets could only fall so far.

While current Fed Chair Jerome Powell would be loath to comment on a specific volatile security, we may be seeing the emergence of a kind of sociopolitical put for Tesla, one coming from the White House and conservative media instead of the Federal Reserve.

Keep reading...Show less
Green
Climate Tech

Climate Tech Is Facing a ‘Moment of Truth’

The uncertainty created by Trump’s erratic policymaking could not have come at a worse time for the industry.

Cliimate tech.
Heatmap Illustration/Getty Images

This is the second story in a Heatmap series on the “green freeze” under Trump.

Climate tech investment rode to record highs during the Biden administration, supercharged by a surge in ESG investing and net-zero commitments, the passage of the Infrastructure Investment and Jobs Act and Inflation Reduction Act, and at least initially, low interest rates. Though the market had already dropped somewhat from its recent peak, climate tech investors told me that the Trump administration is now shepherding in a detrimental overcorrection. The president’s fossil fuel-friendly rhetoric, dubiously legal IIJA and IRA funding freezes, and aggressive tariffs, have left climate tech startups in the worst possible place: a state of deep uncertainty.

Keep reading...Show less
Blue
Energy

AM Briefing: Overheard at CERAWeek

On the energy secretary’s keynote, Ontario’s electricity surcharge, and record solar power

CERAWeek Loves Chris Wright
Heatmap Illustration/Getty Images

Current conditions: Critical fire weather returns to New Mexico and Texas and will remain through Saturday • Sharks have been spotted in flooded canals along Australia’s Gold Coast after Cyclone Alfred dropped more than two feet of rain • A tanker carrying jet fuel is still burning after it collided with a cargo ship in the North Sea yesterday. The ship was transporting toxic chemicals that could devastate ecosystems along England’s northeast coast.

THE TOP FIVE

1. Chris Wright says climate change is a ‘side effect of building the modern world’

In a keynote speech at the energy industry’s annual CERAWeek conference, Energy Secretary Chris Wright told executives and policymakers that the Trump administration sees climate change as “a side effect of building the modern world,” and said that “everything in life involves trade-offs." He pledged to “end the Biden administration’s irrational, quasi-religious policies on climate change” and insisted he’s not a climate change denier, but rather a “climate realist.” According toThe New York Times, “Mr. Wright’s speech was greeted with enthusiastic applause.” Wright also reportedly told fossil fuel bosses he intended to speed up permitting for their projects.

Keep reading...Show less
Yellow