FOR IMMEDIATE RELEASE
Washington, D.C. (August 15, 2023)—Aluminum is essential to the energy transition, our modern economy, and national defense, but the U.S. and allies are rapidly losing the capacity to produce it while China corners the market.
A new report from SAFE’s Center for Strategic Industrial Materials (C-SIM), “Global Insights: Energy and Environmental Aluminum Solutions,” examines what the U.S. and allies can learn from aluminum manufacturing policies around the world to overcome challenges to the industry’s viability, including high energy costs, price volatility, and strategic market manipulation by Beijing.
“Aluminum underpins everything in our modern economy. It is vital for U.S. reindustrialization, our national defense, and our energy transition,” said SAFE CEO and Founder Robbie Diamond. “But the U.S. and our allies are fast losing our capacity to produce this vital material because the high costs of manufacturing and China’s strategic manipulation of the global aluminum market. We ignore this trend at our peril.”
C-SIM’s new report dives into the strategies—and policies—that work for aluminum manufacturers globally, and how the U.S. can avoid becoming dependent on foreign entities of concern for our supply of this vital material.
Beijing, recognizing the strategic importance of aluminum, has flooded the global market to drive down prices, forcing other producers out of business and discouraging investment in new production capacity outside of China.
The U.S. should consider some of these strategies which have worked to keep aluminum smelters afloat in other market-based economies:
- Pegging the price of aluminum to the cost of electricity.
- Imposing carbon taxes on imported aluminum made with fuels like coal.
- Strategically subsidizing aluminum smelting through tax breaks and lower energy costs.
- Coordinating with utilities to help smelters become demand-side energy providers to buoy operations.
“Aluminum is the building block of our modern world,” said C-SIM Director Joe Quinn. “We have to take action now to ensure that manufacturers in the U.S. and in friendly countries can remain viable in the face of global challenges to the industry.”
“As the U.S. and other countries decarbonize, demand for aluminum will only grow,” he said. “It is in our interest to make sure we can source aluminum domestically and from our allies rather than become dependent on unreliable or hostile actors.”
This most recent report is part of a series from C-SIM looking at challenges to—and offering solutions for—the viability of the aluminum industry. In February, C-SIM released “The U.S. Aluminum Industry’s Energy Problem and Energy Solution,” a report examining the paradox of rising demand for aluminum’s energy-saving benefits versus the declining production due to its energy intensity in the production phase. Released in May, the “Legislative Analysis for the U.S. Aluminum Industry” report examined how federal incentives to produce more clean energy transition products do not address the main obstacle to production—access to energy. And, in June C-SIM released “Political Tailwinds: Examining Trade Policy for the U.S. Aluminum Industry,” which looked at how previous presidential administrations approached aluminum trade policy, examining what worked, what didn’t, and how the current administration should move forward.
About SAFE’s Center for Strategic Industrial Materials (C-SIM)
C-SIM is a policy initiative dedicated to advancing more secure, reliable, and sustainable supply chains for aluminum and other industrial materials critical to America’s national and economic security. The Center is exploring new federal government purchasing regulations that prioritize domestic aluminum and developing policy recommendations designed to reduce carbon emissions to net zero by 2035.
SAFE is a non-partisan, non-profit policy thought leadership organization dedicated to accelerating the real-world deployment of secure, resilient, and sustainable transportation and energy solutions of the United States, and its partners and allies, by shaping policies, perceptions and practices that create opportunity for all. Visit secureenergy.org to learn more.
Leslie Hayward | firstname.lastname@example.org | Phone: +1 202 461 2386