2025 State of Low-Carbon Aluminium

Introduction

The aluminium industry has entered a new era — one shaped as much by carbon data as by cost and quality. From expanded pricing benchmarks for low-emission products to the accelerating impact of regulations like the EU’s Carbon Border Adjustment Mechanism (CBAM), low-carbon aluminium is no longer a niche offering. In 2025, it is becoming a distinct and increasingly valuable commodity class, with its own price signals, market incentives and compliance requirements.

This article explores the major developments shaping the state of low-carbon aluminium today, and what they mean for producers, traders, and buyers navigating the net-zero transition.

The data: Emissions trends for primary aluminium

Global trends

Our raw data suggests that, on average, primary aluminium emissions intensities have decreased by 3.5% for smelter gate-to-gate emissions from 2018 to 2023. Cradle-to-gate primary aluminium emissions intensities followed the same trend, decreasing by 2.7% across the same five-year period.

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Scope 1 and 2 (fuel and electricity) contributions to emissions intensities at the smelter remained relatively flat across the period 2018-2023. Scope 1 contributions increased 1.5% from 68.3% to 69.8%, and scope 2 contributions decreased from 31.7% to 30.2%. Figures available in Appendix 2.

The average electricity required to produce 1t of primary aluminium decreased 1.2% from 2018-2023. This is not exactly a significant decrease, revealing that the technology and practices in use within facilities have seen little improvement. However, the average grid factor applied for scope 2 electricity has dropped by over 10%. Emissions from sourcing energy/electricity appear to be on the way down, perhaps suggesting that grids are getting greener.

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Regional trends

By region, we observed similar trends across gate-to-gate and cradle-to-gate emissions intensities for Primary Aluminium.

From 2018-2023, gate-to-gate intensities trended downward significantly across Europe (by approximately 26%), North America (by approximately 21%) and Oceanic regions (by approximately 10%). Asia also showed a slight decrease (by approximately 4%). A similar trend was observed for cradle-to-gate emissions intensities.

Within regions that observed a decrease, the gate-to-gate figures have decreased more than cradle-to-gate figures, and so we can conclude that the smelter intensities have decreased more significantly (in % terms) than upstream bauxite mining and alumina smelting sectors.

This likely reflects more decarbonisation opportunities in primary aluminium smelting processes than those upstream processes, plus the smelting contributions (gate-to-gate intensities) are most significant to the full supply chain intensities.

Low-carbon aluminium pricing expands

To understand low-carbon aluminium pricing, it’s first helpful to understand LCAP (Low-Carbon Aluminium Price) and ZCAP (Zero-Carbon Aluminium Price).

LCAP and ZCAP

LCAP and ZCAP are new aluminium price assessments launched by Platts (part of the S&P Global Commodity Insights) to help bring transparency to the market value of low-emission aluminium. These tools aim to support companies in navigating growing regulatory and commercial pressures around emissions — and to quantify the value of decarbonisation.

The Low-Carbon Aluminium Price (LCAP) tracks a premium for aluminium with verified Scope 1 and 2 emissions of no more than 4 tonnes of CO₂ per tonne of aluminium at the smelter. This premium is assessed on top of the LME cash-settlement price and standardised to Rotterdam delivery.

The Zero-Carbon Aluminium Price (ZCAP) builds on LCAP by adding the cost of offsetting any remaining emissions to zero, using Platts’ price for voluntary, aviation-grade carbon credits (CORSIA-eligible credits). The ZCAP = LCAP + (4 × CEC), where CEC is the carbon offset price on a given day.

LCAP and ZCAP act as benchmarks to provide a clearer commercial signal for low- and zero-carbon aluminium, supporting low-carbon procurement decisions, improving price transparency, and creating market incentives for producers to decarbonise.

LCAP and ZCAP expansion (July 2024)

In July 2024, Platts expanded its European Low-Carbon Aluminium Price (LCAP) and Zero-Carbon Aluminium Price (ZCAP) assessments to provide more granular transparency for primary aluminium markets navigating decarbonisation.

Previously, Platts had offered “carbon-accounted aluminium prices” — a bundled figure combining the P1020 market price with any carbon-related premium. As of July 1, Platts has unbundled these to separately publish:

• A clear premium for low-carbon aluminium (LCAP) over standard P1020 aluminium
  
  
• A separate premium for zero-carbon aluminium (ZCAP), based on the cost of offsetting the remaining emissions from low-carbon aluminium using voluntary carbon credits

The move allows buyers and sellers to isolate and price the carbon-related component of aluminium more precisely, as aluminium producers and buyers can now see the actual premium being paid for lower-emissions material, separate from the baseline market price. It will also make for easier benchmarking, as smelters can better assess the commercial impact of their emissions performance and track it over time. And finally, buyers seeking low- or zero-carbon aluminium can now reference clear market-based price signals tied to verified emissions intensity.

With increased regulatory pressure (e.g. CBAM) and rising demand for low-carbon materials, these updated Platts benchmarks strengthen the pricing infrastructure needed for the aluminium sector’s low-carbon transition.

Platts launches daily Japan + Asia LCAP assessments

Effective 2 January 2025, Platts introduced daily low-carbon aluminium premium assessments for Japan (Japan-LCAP) and Wider Asia (Asia-LCAP).

These assessments mark a key shift in how the market differentiates and prices aluminium based on carbon intensity, particularly in Asian markets where demand for low-carbon commodities is rising. The move introduces transparent, region-specific carbon premiums, giving producers and buyers:

• A benchmark for low-carbon value recognition in Asia, similar to what exists in Europe and the US
  
  
• Incentive to decarbonise smelting operations, particularly for producers competing in Asia’s growing low-carbon aluminium segment
  
  
• Clearer commercial signals to secure premiums and differentiate low-emissions product

This development reinforces the emergence of low-carbon aluminium as a tradable product class with distinct price signals. Producers with verifiable low-emissions output — especially those using renewable-powered smelting — now have a clear pathway to capture value in Asia.

For aluminium buyers, the assessments support procurement strategies that align with decarbonisation goals and reporting obligations — essential as demand for climate-aligned materials grows across automotive, packaging and electronics sectors.

Scrap rates for aluminium

Scrap metals, especially in the aluminium industry, are gaining renewed strategic value as both a cost-saving input and a lever for reducing carbon emissions. With rising regulatory and consumer pressure to decarbonise, manufacturers are increasingly turning to scrap as a route to produce lower-carbon aluminium products — particularly in response to emissions-based mechanisms like the EU’s Carbon Border Adjustment Mechanism (CBAM) and Corporate Sustainability Reporting Directive (CSRD).

Aluminium made from scrap — especially post-consumer scrap — carries near-zero embedded emissions, since it has already fulfilled a previous life cycle. This makes it an attractive raw material under CBAM, which treats both pre-consumer and post-consumer scrap as zero-emission inputs. As a result, sourcing and using scrap can significantly lower a product’s reported carbon intensity, helping manufacturers stay competitive in carbon-regulated markets.

However, the emissions implications vary depending on the type of scrap used. Internal scrap is typically excluded from carbon accounting, as it never leaves the production system. However, it does reduce waste and demand for virgin material, thereby minimising the embodied carbon of the final product. Pre-consumer scrap, created during manufacturing, presents a grey area — with different standards treating it either as a waste (zero emissions) or as a co-product (sharing emissions with final goods). While CBAM currently aligns with the former approach, this has sparked debate over potential loopholes and future regulatory tightening.

Global average scrap rates for aluminium by source

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CBAM updates drive new trends for aluminium producers and traders

Financial incentives to decarbonise

The EU’s Carbon Border Adjustment Mechanism (CBAM) is already reshaping the aluminium industry — and its impact will only deepen over time. CBAM is not just a regulatory driver for emissions reporting; it’s also putting a cost on carbon. Manufacturers now have a major incentive to decarbonise. Producers whose emissions are above the threshold (expected to align with the EU’s top 10% lowest emitters) will face a cost on entry to the EU market, while those who can meet or beat that benchmark — including producers of certified low-carbon aluminium — stand to gain a commercial edge.

Interest in scrap

CBAM is also prompting importers to re-evaluate their supply chains, actively seeking aluminium with verified low emissions. Interest in scrap is rising sharply, since both pre- and post-consumer scrap are considered zero-emission inputs under CBAM. This could lead to increased scrap usage or, conversely, creative accounting to minimise CBAM liability.

EU producers face price pressure

Meanwhile, EU producers may face price pressure on exports — but globally, the market for verified low-carbon aluminium is growing as more jurisdictions explore similar border mechanisms. For producers, the message is clear: emissions data is becoming not just a reporting requirement, but a lever of competitive advantage.

Greenhouse gas targets will drive transition to low-carbon aluminium

At COP28, the International Aluminium Institute (IAI) launched the Aluminium Industry GHG Initiative, a global effort to standardise and track emissions reduction commitments across the sector. Backed by major aluminium producers, the initiative now aggregates corporate targets and emissions disclosures to establish an industry-wide dashboard, enhancing transparency and accountability.

Key findings from the dashboard (as of January 2025):

• 79% of reporting companies have long-term GHG reduction targets (typically aiming for 2050 net zero)
  
  
• 71% have interim targets (often around 2030)
  
  
• 58% have committed to net-zero targets covering at least Scopes 1 and 2
  
  
• Scope coverage: Most companies report Scope 1 and 2; Scope 3 reporting is increasing but not yet universal

What does this tell us about the industry?

1. Corporate ambition is rising, but uneven‍

While most leading producers (e.g. Alcoa, Hydro, Rio Tinto) have set clear emissions targets, the ambition and timelines vary. Many companies are aligning with national targets — especially in China and the Middle East — which influences the pace of action. For example, Chinese producers are relocating capacity to hydro-powered regions like Yunnan to meet national carbon peaking goals before 2030.

2. Supply chain emissions are coming into focus‍

A growing number of companies (e.g. Hydro, Hindalco, Vedanta) are now disclosing Scope 3 emissions for their global operations, even though much of the reporting pressure for Scope 3 emissions has come from Europe. This signals increasing industry alignment with emerging regulations and buyer expectations, particularly in Europe (where mechanisms like CBAM will penalise high-carbon imports of aluminium), but also globally.

3. Data is spurring action‍

Although targets vary, the act of publicly disclosing them — and benchmarking progress through IAI’s dashboard — has already prompted internal strategy shifts across the sector. Transparency is driving dialogue on operational decarbonisation and investment in cleaner production pathways.

What does it mean for the low-carbon aluminium market?

The transition to low-carbon aluminium is no longer hypothetical. Targets and disclosures are becoming prerequisites for market access, particularly in the EU. Companies with granular carbon data calculated by a verified methodology will be best placed to respond to buyer and financier scrutiny, avoid punitive default emissions values under CBAM, and even command green premiums for certified low-carbon aluminium.

GHG targets are setting the foundation, but access to accurate, asset-level emissions data and proactive decarbonisation strategies will define tomorrow’s market leaders.

Conclusion

In 2025, the path to market access and profitability in aluminium is being redrawn by emissions intensity. Verified, asset-level data is becoming essential — not only to avoid regulatory penalties under frameworks like the EU CBAM and a potential UK CBAM, but also to unlock premiums, secure finance, and meet growing customer demand for climate-aligned products. As global pricing systems evolve and scrap becomes a strategic input, the producers and traders best positioned for success will be those who treat decarbonisation as a commercial opportunity, not just a compliance exercise. Low-carbon aluminium is here — and the market is starting to price it accordingly.

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