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- 1. UpcomingCarbonManagementLegislations: Upcoming Carbon Management Legislations: ImpactsonandOpportunitiesfortheGlobal AluminumIndustry Aluminum Industry Dr.SubodhDas Dr.AdamGesing Phinix,LLC CarbonManagementandCarbonDioxideReductionSessions TMSLMD/EPDandEnergyCommittee gy Seattle,Washington February17,2010
- 2. GlobalMetalsIndustry Global Metals Industry (MillionMetricTonnes) (Million Metric Tonnes) Metals WorldProduction(2008) CO2E(T/T) %GlobalGHG Iron&Steel1,3301.0>4 Aluminum359.8>1 Aluminum 35 98 >1 Copper175.5<<1 Magnesium1>18<<1 Titanium0.1>20<<1 2
- 3. ImpactofAluminumIndustryonGHG Aluminumisresponsiblefor>1%ofglobalhumaninduced greenhousegases(CarbonDioxideandPerfluoroCarbons) CarbonDioxide(CO2) 15.6kgCO2 perkgofaluminumproduction g p g p 453.8billionmetrictonnesCO2 peryearforworldwideproduction PerfluoroCarbons(PFC) Perfluoro Carbons (PFC) 1.0kgPFCpertonneofaluminumproduction Equivalentto208millionmetrictonnesofCO2 3
- 4. AdventoftheCarbonMarket • 1992 RatificationoftheUnitedNationsFrameworkConventiononClimateChange • 1997 NegotiationoftheKyotoProtocol,alegallybindingtreaty • 2004 RussiaratifiestheKyotoProtocol,makingtheprotocolbindingforsignatories y g p g g • 2005 PhaseIoftheEuropeanUnionEmissionsTradingScheme(EU‐ETS)begins • 2006 Californiapasses“GlobalWarmingSolutionsAct”(AB32),firststatetodoso • 2008 PhaseIIoftheEU‐ETSbegins;Kyotocomplianceperiodbegins • 2009 CopenhagenDrama • 2010 EPAInvokesCleanAirActRegulating,Reportingfor>>25,000MTCO2E
- 5. KyotoProtocol • ReductioningreenhousegasemissionCO2,CH4,CF4,SF6,PFC(CF4), Nox Dividestheworldinto:Developed/transition/Developingeconomies 5.2%CO reductionfrom1990levelby2012 5 2% CO2eqreduction from 1990 level by 2012 • EmissionlimitsonDevelopedandTransitioneconomiesonly. • NoemissionlimitsonDevelopingcountries. • Emissionreductionsareadministerednationallyorregionally • CreditsforcarbonreductioninDevelopingeconomies. • Bothcarboncreditsandemissionallowancesaretraded • RatifiedbyallbutAfghanistan,SomaliaandUS. • KyotoProtocolexpiryattheendofMayanCalendarin2012 K t P t l i t th d f M C l d i 2012
- 6. KyotoProtocolDetails • DevelopedCountrieswillreducetheiremissions by5.2%(average)below1990levelsby2012 • ThreeFlexibleMechanisms(Alldenominatedin tCO2e) EmissionsTrading JointImplementation(JI) CleanDevelopmentMechanism(CDM) p ( ) • CarbonMarkethasdoubledeveryyearsince2006 32BUS$(2006) 64BUS$(2007) 120BUS$(2008)
- 7. Kyotoprotocolprogress Kyoto protocol progress • CO2eq emissionscappedinEU,Japanandregionally fromutilitiesineasternNAthrough(RGGI) from utilities in eastern NA through (RGGI) • CarbonAllowanceandCredittradingsystemoperating inEUsince2005andintheeasternUSsince2008 • Allowancesareawindfalltoexistingcompaniesthat downsize&nationaleconomiesinrecession. • C dit f d d l CreditsfunddevelopmentinChinaandIndia, t i Chi d I di accelerateglobalization&transferofindustrytoAsia. • Kyoto emission reductions ahead of target in EU KyotoemissionreductionsaheadoftargetinEU de‐industrialization
- 8. KyotoOutcome/Concerns • EU reductions balanced by emission growth in NA EUreductionsbalancedbyemissiongrowthinNA. • Chinarapidlyexpandscoal‐basedpower generationandbecome#1CO2emitter. • ChinaandIndiataketheleadincement,steeland metalproduction. • Pi PrimaryAlcapacityexpansiontakingplaceincoal Al it i t ki l i l andoilbasedChinaandMiddleeast • Magnesium production shifts from electrolytic Magnesiumproductionshiftsfromelectrolytic extractionintheWesttocoalbasedCO2 emission inefficientPigeonprocessinChina. • Billionsof$worthofKyotoCleanDevelopment ll f$ h f l l MechanismcreditsbenefitoverwhelminglyChina andIndia.SF eliminationinthenewChineseMg and India. SF6 elimination in the new Chinese Mg industryfundedthroughCDMcredits.
- 9. ChangeinPoliticalRealities • EUexpandsadding10EasternEuropean countriesin transition. countries in‐transition. • Asiabecomestheworld’smanufacturinghub. • EU and NA de‐industrializes leading to EUandNAde‐industrializesleadingto significantunemployment • China and Middle East become world’s ChinaandMiddleEastbecomeworld s leadingcreditors. • US becomes world’s biggest debtor USbecomesworld sbiggestdebtor • DemocratsinUSSenateloosesupermajority • World’s financial system collapses World’sfinancialsystemcollapses
- 10. What scookingintheU.S.? What’s cooking in the U.S.? • AB32 Californialawrequiringreductionofemissionsto1990levelsby2020 • RegionalGreenhouseGasInitiative(RGGI) Northeasterntradingmarketforpowerplants;reduceemissions10% by2020 • Western Climate Initiative (WCI) WesternClimateInitiative(WCI) VoluntaryinitiativeamongwesternstatesandCanadianprovinces • Waxman Markey Waxman‐Markey LegislationpassedtheU.S.HouseofRepresentativesinJune 17%reductioninGHGemissionsfrom2005levelsby2020
- 11. WaxmanandMarkeyHouseBill WaxmanandMarkey“TheAmericanClean EnergyandSecurityAct”of2009 • includes: – federal“carboncapandtrade”system. – USaluminumindustryCO2 equivalentsourcesof morethan25,000CO2eq tonsperyear • passedbytheHousein2009 • supportedbyObamaWhitehouse, • withlossofsupermajoritywillnotpasssenate withoutmajoramendments.
- 12. Kerry BoxerSenatebill Kerry‐Boxer Senate bill • Likelytoincludecarboncap‐and‐trade. • Similarcap‐and‐tradeprovisionstothe Waxman‐MarkeyHouseBill • Initialfreeallocationof~50%ofallallowances • May get bipartisan support with inclusion of Maygetbipartisansupportwithinclusionof subsidiestonuclearandoilandgas exploration • Cap‐and‐Tradeisthemostpoliticallypalatable optionintheUSpoliticalclimate option in the US political climate
- 13. CopenhagenCOP 15meeting Copenhagen COP‐15 meeting • Increasedpublicpressureforurgentaction. • Politicalacknowledgementofclimatechange l k l d f l h problembyUS,China,IndiaandBrazil. • UScommitmentofsomemoneyforclimate changeabatementinDevelopingNations • Yet: Nobindingcommitmenttodoanything No binding commitment to do anything OnlyvoluntaryGHGreductiontargets
- 14. HowwillCarbonpolicyimpact AluminumIndustry? l d • DomesticCarbonLegislation g • H.R.2454,TheAmericanCleanEnergyand SecurityAct(ACES)(akaWaxmanMarkey) PassedbytheHouseinJune2009;covers7GHGtypes Passed by the House in June 2009; covers 7 GHG types Establishesemissionscapson85%oftheeconomy EmpowerstheEPAtoestablishreportingrequirementsandanationalregistry Allowsfordomesticandinternationaloffsets Regulatesoffsetsandallowancesascommodities(jurisdictionoftheCFTC) Regulates offsets and allowances as commodities (jurisdiction of the CFTC) Aimstoreduceemissionsbelow2005levels: – 17%by2020 – 83%by2050 • AB 32 The Global Warming Solutions Act AB32,TheGlobalWarmingSolutionsAct CalifornialawlimitsGHGemissions Returnto1990levelsby2020 Establishstate‐widereportingrules
- 15. ImpacttoEuropean/AmericanAluminumIndustry p p / y • Existingplants‐ InitiallyGivenFreeAllowances gp y • MinimalImpactonExpansions– notmanyplanned p p yp • Future ‐ May negatively affect ongoing operations ?? Future Maynegativelyaffectongoingoperations??
- 16. Howdowequantifyyourliabilities? • M d t MandatoryGHGemissionsreportingbeganin2010 GHG i i ti b i 2010 • EPA’sreportingauthorityaprovisionoftheCleanAir Act,NOT WaxmanMarkey • Someentitiesover10,000mtCO2erequiredtoreport • Allfleetsover25,000mtCO2erequiredtoreport • 2007 2010 2007– 2010emissionsrequiredby2011;quarterly i i i d b 2011 t l reportingbeginsin2011 • EnergyEfficiencyrequirementstoincrease gy y q • Reportingtools: EPAGHGReportingProtocols CAR • RenewableEnergyStandardwillincreasethe percentageofrenewableenergyUtilitiesmust percentage of renewable energy Utilities must purchase
- 17. Hall‐ HeraultCO2eq Emissions kgCO2eq / tonAl Emissions Mining Refining Anode f SmeltingCasting Total Process 388 1,626 2,014 Electricity Electricity 58 63 5,801 77 5,999 FossilFuel 16 789 135 133 155 1,228 Transport 32 61 8 4 136 241 Auxiliary 84 255 339 Fluoro‐ 2,226 2,226 carbons carbons Total 48 992 849 9,790 368 12,047
- 18. ElectricityGenerationonGHGEmissions Smelting TotalGHG electricity Change Where Emissions source kgCO2eq/kgAl % Quebec, Hydro 6 ‐50% Norway Averagegrid 12 0% World Naturalgas 13 8% MiddleEast Heavyoilor H il 16 33% China coal
- 19. AlternativeAluminumProductionRoutes tCO2eq /tAl Change H‐H@4.5cmACD 12.7 0% Wetteddrainedcathode@2cmACD 9.5 ‐25% Wettedcathodeandinertanode@2cm 8.7 ‐31% ACD Carbothermicelctricfurnace 8.6 ‐32% Claycarbochlorination&chlorideelectrolysis Cl b hl i ti & hl id l t l i 9 ‐29% 29%
- 20. Carbonmanagementstrategiesinother aluminumproductionintensiveregions l d Country Strategy Canada FollowUSleadforNAcontinentalstrategy Australia ConfusionfollowingdefeatofCap‐and‐Trade legislation Brazil Getcreditfromavoidanceofjungle deforestation China,India Use availablecashtoinvestinbestavailable, mostefficienttechnology,claimcreditfor emission/GDPreductionfuelledbyraidGDP growth.Nofixedcaps MiddleEast Invest oilwealthinmodernAlindustry,Nofixed caps. caps
- 21. ClimateNeutralServices Climate Neutral Services Calculate yourEmissions Develop anEffective,Tailor‐MadeCarbonManagementStrategy Reduce theAvoidableEmissionsandCutCosts Offset theUnavoidableEmissionswithHighQualityCarbonCredits Communicate yourEngagementtotheStakeholdersthatMatterMost
- 22. PossibleOffsetProjectActivitiesinAluminum Possible Offset Project Activities in Aluminum • Emissionsresultfrom: ‐EnergyConsumption(Coal‐based) ‐PFCConsumption ‐CO2 emissions during smelting emissionsduringsmelting • EmissionReductionProjectActivitiescouldinclude: AM0059:ReductionofPFCsintheAluminumIndustry MethodologyapplicableintheCDMandtheVCS ReductionsinPFCsand EnergyConsumption Reductions in PFCs and Energy Consumption ReductionscannotleadtoincreaseinAlproduction
- 23. LegislativeSolutions 1. PromoteBottle/DepositBill 1 Promote Bottle / Deposit Bill 2. Develop/ImplementProtocolsforQualifyingRecyclingasCarbon Credits/Offsets 3. Meet&PromoteVoluntaryCommitments(EPAClimateLeadership Programs) 23