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## Shifting Tides: The Impact of Green Technologies on Aluminum and Steel Demand by 2030
As the world moves towards a greener future, the demand for both aluminum and steel is set to undergo significant changes. Here's a closer look at the expected impacts:
### Aluminum Demand
The demand for aluminum is projected to soar by approximately 40% by 2030, primarily driven by its use in clean energy technologies and the automotive sector, particularly in electric vehicles (EVs) and renewable energy systems. This surge in demand is due, in part, to the metal's lightweight properties, which are ideal for electric vehicles and renewable energy systems.
Moreover, the demand for low-carbon aluminum will increase due to environmental regulations and company commitments to reduce emissions. This could lead to price premiums for aluminum producers with strong green credentials, such as Rio Tinto.
### Steel Demand
While steel is also essential for renewable energy infrastructure and EVs, its demand might be less directly impacted by the clean energy transition compared to aluminum. However, steel producers are also focusing on low-carbon production methods to meet sustainability goals.
The development of green steel technologies, such as hydrogen-based production, could significantly reduce emissions and increase demand for steel in sustainable applications. However, these technologies are still in development and may not fully scale by 2030.
Steel will continue to be vital for construction and infrastructure projects, which are also evolving towards more sustainable practices.
### Overall Impact
The transition to green technologies will drive demand for metals with low-carbon production credentials, benefiting companies that invest in decarbonization and sustainability. Regulatory frameworks, such as the EU's Carbon Border Adjustment Mechanism (CBAM), will further incentivize low-carbon metal production, impacting global trade dynamics.
### Additional Factors
It's worth noting that the oil price remains at a high level, mainly due to OPEC countries failing to agree on new production quotas. Meanwhile, US oil inventories have been at pre-crisis levels for weeks and are currently around 11.1 million barrels per day, down from the 13 million barrels per day produced at the beginning of 2020. In China, oil inventories have also fallen to a yearly low.
The demand for aluminum is expected to increase by 13 million tons by 2030, raising its share of global total demand from 4% to 18%. This surge in demand is due, in part, to the metal's use in clean energy technologies and the automotive sector. New production facilities for aluminum can only be brought online if existing capacity is shut down.
Coal-fired power plants only need 0.5 tons of aluminum per MW, a fraction of the amount required for renewable energy systems. The average amount of steel used in internal combustion engines has not been specified in the provided information. Steel demand from the automotive industry is expected to decrease in the long run.
In the medium term, the aluminum industry, which has struggled with overcapacity in recent years, is expected to change due to the increased demand for low-carbon aluminum. On the other hand, experts at Postbank expect the long-term outlook for steel to be weaker due to the expected decrease in demand from the automotive industry.
Finally, it's worth noting that a plug-in hybrid vehicle uses nearly 80 kilograms more lightweight metal than an electric vehicle, while an electric vehicle requires approximately 60 kilograms more aluminum than an internal combustion engine. Offshore wind energy installations require 3.6 tons of aluminum per megawatt of power, while solar projects require 12.9 tons per MW. In contrast, wind turbines require between 80 and 150 tons of steel per MW, with offshore installations needing up to 250 tons; solar plants require 35 to 40 tons per MW.
In summary, the transition to green technologies will have a profound impact on the demand for both aluminum and steel. While aluminum demand is expected to rise significantly due to its use in clean energy and EV technologies, steel's demand will be influenced by its role in infrastructure and the development of green production methods.
- The investment strategy in the renewable-energy sector, particularly in low-carbon aluminum production and the development of green steel technologies, is likely to attract significant financial interest due to increased demand and regulatory incentives.
- In environmental-science circles, there is a growing focus on the impact of climate-change mitigation efforts on the aluminum and steel industry, with a focus on the shift towards renewable energy and the use of these metals in clean technologies.
- The stock-market performance of companies in the aluminum and steel industry could be influenced by their commitment to lower carbon emissions and adoption of renewable-energy technologies, as demonstrated by Rio Tinto's potential price premiums.
- The technology sector plays a crucial role in facilitating the transition to green technologies, with innovations in areas such as hydrogen-based steel production and lightweight materials for EVs having significant implications for the future demand for both aluminum and steel.
- As the demand for renewable energy systems and EVs increases, the technology industry, particularly science and engineering, is likely to play a key role in advancing the efficiency of these systems, reducing their reliance on traditional metals like steel and increasing their use of lightweight metals like aluminum.
