Norsk Hydro seeks to harness magnetism to deliver on its carbon promise

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KARMOEY, Norway / LONDON (Reuters) – In the cavernous chamber of Norsk Hydro’s aluminum smelter on the Norwegian island of Karmoey, the magnetic forces are so strong that they float heavy iron keys out of the hands of workers .

The company is piloting a technology that tames the effects of this powerful magnetic field, which is a consequence of the electrolysis process to make aluminum and release energy.

Norsk Hydro told Reuters it was using mathematical models to mitigate the effect of magnetism and other energy waste. The pilot project can reduce the amount of energy used in production by 15% compared to the industry average, the company said, but declined to disclose further details, citing commercial sensitivity.

The technique is one of the engines Hydro is counting on to deliver on its ambitious commitment to become carbon neutral from next year, which means it can balance its emissions with carbon savings elsewhere.

The Norwegian company seeks a competitive advantage at a time when the aluminum industry, along with other industrial polluters, is under increasing pressure to reduce CO2 emissions, from investors as well as governments. that formulate carbon taxes.

“If aluminum is to be a material for a low carbon future (…) we have to defend it by having as low emissions and an ecological footprint as possible,” new CEO Hilde Merete Aasheim told Reuters in an interview with Norsk Hydro. Oslo HQ.

“This is where the Karmoey Project will play a role, developing technological elements that can be used in other factories to reduce energy consumption.”

Norsk Hydro said its pilot project produced aluminum using between 11.8 and 12.3 kilowatt-hours of energy per kilogram of aluminum. He said the figure of 11.8 was an industry record which he said averaged 14.1.

RISKS AND RIVALS

The plans have cost billions of Norwegian crowns, however, and there is still a long way to go before they have a major impact on Norsk Hydro’s business.

The Karmoey pilot project alone required an investment of 4.3 billion crowns ($ 490.69 million) – an amount roughly equal to the company’s net income last year – although about a third of this investment is assumed by the state green investor Enova.

The project is still in its early stages, with a capacity of 75,000 tonnes of aluminum per year, a fraction of Norsk Hydro’s annual production of around 2 million tonnes.

The company said carbon neutrality also depends on other measures such as increased recycling.

The technological momentum came at a time when Norsk Hydro was under financial and reputation pressures. It depends on Brazil, home to its largest alumina refinery, where a spill of untreated water into a river last year forced the company to halve the plant’s capacity, brought down the during its action and tarnished its ecological credentials.

Nor is Norsk Hydro alone looking for new technologies to reduce emissions during production, and its competitors say they too are advancing with competing techniques.

Alcoa and Rio Tinto, for example, have created a joint venture called Elysis www.elysis.com/fr Last year. The aim of the project is to achieve carbon-free aluminum production. She is developing a smelting process that emits oxygen instead of greenhouse gases, using a ceramic anode instead of a carbon anode during electrolysis.

Rio Tinto CEO Jean-Sébastien Jacques told shareholders in April that the technology works in principle but needs to be tested on a commercial scale.

While Norsk Hydro is among the top 10 aluminum producers in the world, it is eclipsed by Chinese companies such as China Hongqiao Group and Rusal of Russia. Rio Tinto and Alcoa are also bigger players.

SUSTAINABLE INVESTORS

Despite intensifying competition, Norsk Hydro is the leader in the aluminum industry when assessed on a range of environmental, social and governance (ESG) issues, according to Sustainalytics, which provides data to investors. on ESG risk.

Much of this, however, is due to the fact that the company is based in Norway, where hydropower – favored by most companies as the cheapest way to produce aluminum – is abundant.

Reuters analysis, using data from Refinitiv, of the investor base of the world’s largest aluminum companies shows that Norsk Hydro has 48 mutual fund investors focused on sustainable investing, more than anyone else. which of his peers.

Typically, energy accounts for one-third of the cost of producing aluminum, so reducing energy input is as economical as it is environmental.

Simon Webber, fund manager of Schroder ISF Global Climate Change Equity, shareholder of Norsk Hydro, said the race is on.

“Aluminum production is still incredibly carbon intensive, so it will have to be rationed somehow,” he said. “The most efficient producer, or the least polluting producer, which is Norsk Hydro, will be in a very good position for this. “

CARBON COUNTING

There is, however, some controversy over Norsk Hydro’s promise to be carbon neutral from next year, which was made by the outgoing CEO and which is the responsibility of Aasheim to honor.

Some environmental activists dismiss engagement as a marketing tool because of the method the company uses to measure its net emissions. It will not only include its own emissions, but also emissions avoided by the increased use of aluminum in cars to make them lighter and consume less fuel.

The problem is, it would be better for the environment if everyone drove less.

“Every company claims their products are a solution,” said Nate Aden, senior researcher at the World Resources Institute, who helped develop the Greenhouse Gas Protocol for metering emissions. “It’s a marketing exercise,” he added of Norsk Hydro’s measurement methods.

Kirsten Margrethe Hovi, head of Hydro’s carbon accounting, said her definition of carbon neutrality was transparent, as “the balance between direct and indirect emissions from our own operations and the savings achieved through the application of our metal in the use phase ”.

She added that it was an internal tool the company used to implement its strategy and assess the climate impact of investments.

“This does not rule out decisions that increase our overall emissions, but then we must do more and take mitigation actions elsewhere to stay on track.”

(The story has been passed on to clarify that the measurements in paragraph 8 are per kg of aluminum)

($ 1 = 8.7632 Norwegian crowns)

Additional reporting by Gwladys Fouché in Karmoey and Terje Solsvik in Oslo; Editing by Pravin Char


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