Use of carbon credits in aluminium – Industry Decarbonisation Strategies: Issues and Guidance

The International Aluminium Institute (IAI) has identified pathways for decarbonizing the aluminium industry by 2050, using a combination of electricity decarbonisation, direct emission reductions, and recycling and resource efficiency.

Although these pathways chart aggressive efforts to dramatically reduce greenhouse gas (GHG) emissions associated with aluminium production, they still anticipate some residual emissions by midcentury.?

As the world increasingly focuses on how to achieve net zero emissions, aluminium producers may want to explore the use of carbon credits as a complement to their decarbonisation strategies. Carbon Credits, for example, can provide a means to net out residual emissions, to achieve carbon neutrality, or to channel investment into climate change mitigation as part of broader, net zero-aligned corporate ESG strategies.?

Use of carbon credits, however, can sometimes pose reputational risks. Risks can arise from (1) using carbon credits of suspect quality; and/or (2) using carbon credits in ways that are perceived as irresponsible, e.g., in lieu of decarbonising operations in line with agreed GHG reduction pathways.?

Earlier this year, the Stockholm Environment Institute and the Greenhouse Gas Management Institute,?prepared guidance on managing the reputational risks of using carbon credits. The document also sets out essential criteria for carbon quality, identifies project types and sectors to prioritise or potentially avoid, and offers advice on strategies for procuring higher-quality credits.

Download the document here.