Energy Intensity—Global Primary Products
Energy Intensity - Global Primary Products
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Energy Intensity—Global Rolled Products
Energy Intensity - Global Rolled Products

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A Leader in Energy Efficiency

 

As climate change legislation emerges in regions around the world, Alcoa has led industry efforts to enact policy that promotes market-based incentives to deliver an adequate supply of low to no carbon-emitting energy sources, without unduly burdening industry and affecting global competitiveness. More than 50% of our purchased electricity throughout the company and around two-thirds of the electricity used by our smelters globally come from renewable sources, including hydro.

 

We have emphasized energy efficiency since the early days of the company. In 1900, the electrical energy requirements to make a kilogram of aluminum from alumina were more than 55 kilowatt-hours (kWh). By 2000, our electrical energy requirement was reduced to 15 kWh per kilogram. Today, our best smelters can produce primary metal using only 13.1 kWh per kilogram.

 

We are committed to reducing the energy requirements for all of our operations and have set the following long-term strategic targets:

  • From a 2005 baseline, 10% reduction in the energy intensity of Global Primary Products by 2020; 15% by 2030; and
  • From a 2005 baseline, 20% reduction in the energy intensity of all other businesses (Global Rolled Products and Engineered Products and Solutions) by 2020; 30% by 2030.

 

All three businesses have made significant progress toward their long-term energy intensity goals. In 2012, Global Primary Products reduced its energy intensity by 0.5% compared to 2011 and 2.6% compared to the 2005 baseline. Global Rolled Products had a 6.7% reduction compared to 2011 and 14.4% decrease compared to the 2005 baseline. Engineered Products and Solutions reduced its energy intensity by 1.8% compared to 2011 and 8.4% compared to the 2005 baseline.

 

To encourage support of our energy goals, we link a portion of our incentive compensation to achieving carbon dioxide (CO2) emission reductions through process improvements and energy-efficiency gains.

 

Energy Intensity—Global Primary Products
Gigajoules per metric ton of aluminum produced
Goal: 10% reductionProgress: As of Dec. 2012 
2.6%

 

Energy Intensity—Global Rolled Products 
Gigajoules per metric ton of production
Goal: 20% reductionProgress: As of Dec. 2012 
14.4%

 

Energy Intensity— Engineered Products and Solutions
Gigajoules per metric ton of production
Goal: 20% reductionProgress: As of Dec. 2012 
8.4%
2012 Purchased Electricity by Source
Source Megawatt Hours Percent
Hydro 30,035,575 60%
Coal 11,890,299 24%
Natural Gas 3,500,270 7%
Nuclear 3,108,165 6%
Other Renewables 1,153,995 2%
Oil 94,306 0%
Total 49,782,610 100%
2012 Direct Energy Consumption by Source
Source Gigajoules Percent
Natural Gas 138,843,277 59%
Oil 44,811,443 19%
Coal 43,331,555 18%
Hydro 5,397,638 2%
Diesel 4,313,059 2%
Distillates 242,521 0%
Propane 221,777 0%
Total 237,161,270 100%
 
Energy Developments

We are a global producer of energy, controlling nearly three gigawatts of generating capacity to provide for the energy needs of our smelting and refining systems.

 

We operate energy-producing assets in North America and Suriname, and we have partnership positions in Australia, Brazil, Canada, and Jamaica. We are actively developing new energy strategies to mitigate our energy risk and improve our energy portfolio.

 

In Western Australia, for example, our three alumina refineries are powered on gas sourced primarily from the northwest shelf. At our Pinjarra Refinery in that region, we have two gas-fired cogeneration units.

 

Cogeneration is around 75% energy efficient compared to 30% to 50% for other power plants operating in Western Australia. A year’s electricity from each of Pinjarra Refinery’s cogeneration units saves approximately 450,000 metric tons of greenhouse gas emissions annually compared to a similar-sized coal-fired plant. That’s roughly equivalent to preventing the annual emissions from around 112,000 average cars. In addition, the cogeneration plants reduce our refinery emissions by 270,000 metric tons per year through more efficient steam generation.

 

In Brazil, our challenge is to secure sources of energy while simultaneously reducing our impacts on the environment and society. For example, we primarily consume hydroelectric power, which is a clean and renewable energy source. While hydroelectric power does not have the potential effects on global climate change like fossil fuels do, it does impact the environment and community in other ways.

 

We are a partner in the Estreito hydroelectric plant in Brazil, which became fully operational in the first quarter of 2013. We have established a social agreement with stakeholders and government authorities at three levels to promote the sustainable development of the 12 municipalities located near the facility. Along with our partners and the Brazilian Development Bank (BNDES), we have developed a fund to invest in social projects for these municipalities. Through the end of 2012, approximately US$55 million was invested in 73 social projects in five major areas: social development, education, health, sanitation, and economic development.

 

Barra Grande Hydroelectric Plant

Barra Grande hydroelectric plant

We are also a partner in three existing hydroelectric plants in Brazil—Barra Grande HPP, Machadinho HPP, and Serra do Facão. Two additional plants in the licensing stage in which we are a partner are Pai Querê and Santa Isabel.

 

In 2012, an external firm audited Barra Grande’s sustainability system for compliance with all requirements of the Sustainability Assessment Protocol from the International Hydropower Association. All sustainability areas received a score of 4 or 5 (maximum), establishing a benchmark for hydropower plants in Brazil.


In partnership with Gasmig, we invested US$8 million to change the energy matrix at our Poços de Caldas refinery in Brazil from fuel oil to natural gas. In 2011, the plant achieved a 36% reduction (80,209 metric tons) in CO2 emissions compared to 2005 and practically eliminated the emissions of sulfur dioxide (SO2) in the bauxite refining process.

 

To further reduce our costs and environmental footprint, we are converting the burners at our alumina refinery in San Ciprián, Spain, from fuel oil to liquefied natural gas (LNG). In July 2011, we replaced 8% of the refinery’s annual fuel oil consumption with LNG. In early 2013, Gas Natural received approval for a natural gas pipeline to the San Ciprián region. Once completed in 2014, the pipeline will enable our refinery to further shift its energy mix and reduce its CO2 emissions by up to 250,000 metric tons per year, or 25%, while running at full capacity.

 

Our Canadian smelters in Deschambault, Baie-Comeau, and Bécancour are supplied almost entirely (approximately 97%) with hydroelectricity. With improvements totaling 336 gigawatt-hours per year, these smelters are “Elite” members of Hydro-Quebec’s Ecolectrique Club, which is the highest recognition in energy efficiency in the province of Québec.

 

In 2013, we will deploy a pilot project at the Deschambault casthouse to convert a furnace to burn carbon dust (sourced from scrapped pot lining) as a fuel to displace natural gas. If successful, this project has the potential to benefit other Alcoa facilities around the world.

 

At our smelter in Baie-Comeau, we are assessing the potential to convert a boiler from oil to biomass (wood pellets) for possible implementation in late 2013.

 

Energy Efficiency Initiatives

We voluntarily committed to reducing the energy intensity of our midstream and downstream manufacturing operations in the United States as a leader company in the U.S. Department of Energy’s (DOE’s) Better Buildings Better Plants program.

 

This program is a national initiative aimed to reduce industrial energy intensity by providing U.S. companies with access to technical support and expertise to help them take steps toward becoming more energy efficient.

 

Our showcase project for the program is the expansion of our Barberton, Ohio, wheels production plant to include a 4,645-square-meter (50,000-square-foot) recycling facility that uses a novel technology to reduce energy use by 25% relative to comparable, existing plants. In addition to the process improvements, co-location of the recycling plant with an existing production facility dramatically reduces trucking needs, leading to a cut in transportation-related energy use of about 90%. We will share the unique market innovations that we have instituted at Barberton as part of the DOE program.

 

We also have placed all of our other U.S. midstream and downstream manufacturing locations in the program and pledged to reduce our energy intensity 25% by 2020 from a 2005 baseline. These locations produce a variety of products, such as turbine fan blades for jet engines, aluminum sheet used to make cans, and Reynobond®, an aluminum composite used on the exteriors of commercial buildings. At the end of 2012, we had an 11.6% reduction in energy intensity at these locations.

 

Renewable Energy Initiatives

In China, we are collaborating with the China Power Investment Corporation to develop clean-energy projects, such as wind and solar and state-of-the-art aluminum smelting operations.

 

We also have taken action to support the development and operation of wind power by providing developers with land and access to local grids through our large grid connections at operating plants and by modulating our electric load. For example, our Portland Aluminium facility in Australia gave Pacific Hydro access to land on which to construct wind turbines and the substation for its Portland Wind Energy Project (PWEP). In addition, Portland Aluminium facilitated the grid connection of the PWEP via its switchyard infrastructure. The wind turbines have been supplying power to Australia’s National Electricity Market since February 2008.

 

We continue to enhance the efficiency of existing hydroelectric resources and develop new facilities where possible. We believe that the environmental and social impacts of well-designed hydroelectric systems can be minimal if the projects are properly planned and constructed.

 

For each hydroelectric project, we work with the government and local stakeholders to ensure that proper environmental and social impact studies are conducted and we understand and respond to any local and regional issues of concern. (See the Stakeholder Engagement section for further discussion of our stakeholder processes.)

 

The hydroelectric systems are designed to minimize the impacts on the local habitat, aquatic life, landowners near the reservoirs, and downstream users of the water resources.

 

We also use biodiesel fuel to power mobile equipment, and our Brazilian facilities are using various grades of biodiesel in baking furnaces and to power industrial vehicles. These fuels are sourced from social fuel seal holders—companies recognized by the government as producing fuels using sustainable practices.

 

In addition to our own renewable energy initiatives, Alcoa Foundation and the World Resources Institute are collaborating to develop renewable energy pilots that highlight persistent market barriers and seek solutions that enable renewable energy to make a larger contribution to the energy grid.

 

Demand Response Initiatives

Unlike other energy sources, such as oil or gas, electricity cannot be stored economically or put in inventory. The electricity produced (generation) must be balanced with the electricity used (load) on a real-time basis to preserve the stability of the electrical grid and prevent blackouts and other system disruptions. The challenge to utilities is that the normal peaks and valleys of demand vary throughout each day, by season, and by region.

 

Demand response is a practice where certain customers, usually larger ones, adjust their electrical load in response to a signal from a utility or the electric grid. This adjustment by the customer helps the utility manage the stability of the electrical system by balancing generation and load. For this service, the customer is compensated.

 

A number of our smelters in the United States are participants in demand response, providing some or all of the following services:

  • Capacity: Utilities are required to have more generation capacity than load to compensate for unpredicted spikes in demand. If a utility can consider a portion of a customer’s load as system capacity, then the utility may avoid spending money to build additional generation to meet its reserve capacity requirements.
  • Emergency demand response: A customer will respond within minutes to reduce large blocks of load for short periods of time to balance spikes in demand from other parts of the electric grid. The overall system remains in balance as a result.
  • Spinning reserves: This service is similar to emergency demand response but on a smaller scale and shorter length of time.
  • Regulation response: A small percentage of a customer’s load is controlled directly by the utility, allowing for real-time adjustments to assist with managing the grid.

 

MISO, a regional transmission organization, implemented two years of regulatory work and supporting market changes to the U.S. compensation structure for demand response in June 2012. These changes represent formal recognition of the value that demand response brings to the electric grid.

 

In Australia, we have an electricity demand management program for both our smelters and refineries. At these facilities, we reduce our demand for electricity during the hottest days of the year, which generally coincide with the highest demand for electricity. This helps support efficient investment in electricity infrastructure and avoid additional costs of electricity generation to cover events that only occur a few times a year.

 

Our facilities in Spain and Norway provide load interruptibility to their respective transmission system operator to help manage the risk of system electrical blackouts. The facilities are remunerated for providing these services.