RMI has released the Sustainable Aluminum Finance Framework, providing a pathway for banks to make climate-aligned financing decisions in the aluminum sector while meeting their own decarbonization goals.
The publicly available framework, made in partnership with Citi, ING, Société Générale, and Standard Chartered, will help banks measure, benchmark, and disclose the alignment of their aluminum lending portfolios with the 1.5-degree warming scenario outlined in the Paris Agreement.
Aluminum is a key material needed for clean energy development, yet the sector currently accounts for about 2% of global emissions. Financing may support the use of clean power sources, recycling, and breakthrough technologies that may work to decarbonize the industry.
The framework should outline funding for such low-carbon solutions and new technology investment while also assessing emissions related to banks’ aluminum loan books and allowing clients to report on their emissions.
“Transparency, accuracy, and comparability of GHG emission baseline and targets are key to building trust and confidence among all players, especially the finance sector,” said Marlen Bertram, director of scenarios and forecasts at International Aluminum Institute. “I hope the tool will help the aluminum sector to further decarbonize and invest in decarbonization projects around the world.”
In October 2023, major companies such as Ford, GM, and Pepsi sent an open letter to the Department of Energy, calling for funding to modernize and grow the clean aluminum industry.
The aluminum sector faces spiking electricity prices and little access to low-cost renewable energy amidst increased demand for the material. Especially as aluminum is used in electric vehicles, heat pumps, and renewable energy infrastructure, demand for the material is expected to grow by 40% by 2030 and 80% by 2050, supporting the clean energy transition. Investment in domestically-produced, low-carbon aluminum will reportedly be required for achieving the sector’s carbon neutrality goals while meeting this increased demand.
The new framework is expected to allow banks and aluminum producers to work together in achieving decarbonization targets. The tool provides a methodology for tracking and reporting progress, roadmaps for primary and recycled aluminum production, and access to standardized data through client reporting guidance.
