The SAFE Center for Strategic Industrial Materials (C-SIM) released a report examining how recent domestic policies designed to promote the energy transition and reduce carbon emissions are increasing demand for aluminum used in many of the needed technologies but without addressing supply-side challenges—specifically the affordable electricity generation and distribution required to sustain domestic aluminum production.

Aluminum, the report says, is caught in the middle of the clean energy transition—it is a crucial component enabling economy-wide decarbonization, but at the same time is one of the highest emitting industrial materials. This paradox requires equivalent supply and demand-side policies to simultaneously reduce power and transportation sector emissions and emissions of aluminum production, the report says.

Recent legislative incentives to produce more solar panels, EVs, electrical charging infrastructure, and other clean energy transition products will require more domestic primary aluminum. However, the series of bills do not address the main obstacle to producing primary aluminum: access to ample supplies of affordable energy, the report says.

The SAFE “Legislative Analysis for the U.S. Aluminum Industry” report examines the details of the 2022 Inflation Reduction Act, the 2021 Infrastructure Investment and Jobs Act, the Defense Production Act, and the 2022 CHIPs Act. These new laws will cumulatively increase demand for aluminum in significant ways:

• The IRA incentivizes more production of solar, batteries, and electric vehicles, the latter requiring hundreds of pounds more aluminum (per automobile) compared to traditional internal combustion engine vehicles.

• The IIJA funds $73 billion for aluminum-heavy electric infrastructure and $5 billion for a nationwide network of EV charging stations.

• DPA supports the domestic production of strategic materials, including aluminum, used in large-capacity batteries used in EVs and military systems.

• CHIPS Act sets aside $39 billion in direct federal assistance to produce semiconductors in the US, which is the fastest growing demand share of high purity aluminum discs

These laws do offer some supply-side support, specifically the manufacturing production tax credit (45X) and investment tax credit (48c). Unfortunately, the demand-side drives for aluminum outpace these few supply-side investments. For comparison, the IRA contained sourcing provisions to incentive critical minerals production within the US and among reliable trading partners to address the added demand for advanced batteries. The IRA did not contain comparably scaled support for strategic industrial materials, including domestic aluminum production.

With billions allocated to transition the US economy away from fossil fuels, US industry will inevitably fill demand for aluminum from somewhere. Whether demand is met domestically or in allied countries or from foreign entities of concern remains up to US policymakers.

—,Joe Quinn, Director of the Center for Strategic Industrial Materials

In the coming months, C-SIM will release additional reports examining trade policy options and global best practices for primary aluminum production.