Why transparency in manufacturing is the game changer for the green transition

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Hilde Merete Aasheim, President and Chief Executive Officer, Hydro

• Demand for materials, such as aluminium, is growing to build the infrastructure needed for the green transition, but where and how those materials are produced matters now.
• Critical metals and other raw materials needed for the green transition must be produced in the most sustainable and responsible way possible.
• Full transparency on a material’s carbon footprint is the necessary game changer for a successful green transition.

For electric cars, buildings or windmills to ever be truly sustainable, they must be made from zero-emission materials. Producing materials comes with challenges, however; impacting nature, climate and social conditions. That is why stronger traceability and transparency about each material’s footprint is crucial to accelerate change.

Demand for materials, such as aluminium, steel and cement, is growing to build the infrastructure needed for the green transition. But it matters where and how materials are produced and all production comes with a footprint. Today, these materials represent roughly a quarter of the world’s carbon footprint, and most of it is still produced using fossil fuels. Electric vehicles, modern energy-efficient buildings and renewable power infrastructure only do half the job, unless the materials they are made from are decarbonized. To get to net zero, we must intensify the green transition of the materials sector. And, we need to empower consumers to make climate-conscious choices. To do that, we need stronger traceability and transparency of a product’s footprint.

DISCOVER

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Materials for the green transition

Building the greener infrastructure of tomorrow will require significantly more raw materials but also different, lighter materials, such as aluminium. Towards 2030 we expect strong growth in demand for aluminium as an enabler for the transition.

However, the most ambitious players in the market are now looking beyond material properties. For new technologies to be solutions to the climate crisis, attention must turn from emissions during the use phase to embedded emissions. Hence, in addition to speeding up the roll out of transformative technologies, we also need to think about how these raw material intensive enablers are produced. Critical metals and other raw materials needed for the green transition must be produced in the most sustainable and responsible way possible.

Investments to eliminate emissions along the value chain come with a cost, especially in hard-to-abate sectors. Consequently, there needs to be knowledge about, demand for – and a willingness to pay for – products produced with the extra diligence needed to realize the low-carbon, circular economy.

Shaping a greener market

As an aluminium producer, we see positive developments as we are aiming to shape the market for greener products. End-consumers, regulators and society at large are becoming increasingly focused on the full value chain emissions in the products that enter the market.

Customers are turning to the materials market to find providers who can deliver aluminium with the lowest possible emissions today and who also have credible pathways towards the ultimate target: net zero.

Industry frontrunners are entering into strategic partnerships helping to establish joint roadmaps and pushing the frontier of what is possible and affordable.

However, the pioneers alone do not make a movement. There needs to be broader pull from markets and a push from regulators to reward greener investments and discourage business as usual on a large scale.

If customers don’t see the difference between a carbon-intensive and zero-carbon product, how should they be able to make the right choices and why should they be willing to pay for the more expensive alternative?

Creating competition for the lowest possible footprint

Industries are experts at competing on costs. Going forward, we should have the same approach to climate emissions, competing for the lowest level of emissions and minimizing the environmental or social impact, as well as costs.

Achieving a real competition for the lowest possible footprint will require new approaches. A precondition to being able to choose between alternative products is full transparency about the actual footprint of producing each of them. Traceability and transparency about the footprint in materials are crucial to accelerate the green transition.

Today we have complete insight into a car’s emissions during use. Why shouldn’t consumers have equal insight into the car’s emissions in production? People often overlook that each car consists of approximately 30,000 components, each contributing its own emissions during production. Today, steel, aluminium and plastics represent more than 80% of the embedded emissions of a car. That means careful material selection is key, as is transparency about the numbers.

From organic foods to tyre sizes, many industries have developed standardized certifications and reporting methods, but the metals industry is still at odds on calculating and disclosing the carbon footprint along the value chain and even how to calculate emissions from recycled aluminium scrap.

This discrepancy can result in greenwashing, distorting market prices for truly greener products and contributing to a lack of transparency and misinformed consumers.

Transparency as a game changer

Transparency cannot be a choice when we know how it can drive better solutions and accelerate progress. Accessible information about a product’s footprint is a precondition for consumers to make informed choices. Just like any consumer has the right to check the labels on their cereal to choose a low-fat or low-carb alternative, customers should have the right to choose products with low-carbon metals and materials. The signals from consumer’s choices are exactly what is needed for producers to deliver on demand.

To accelerate change and have incentives to minimize adverse impacts from production, reporting on production emissions should be mandatory for all. Transparency around recycled content and how to measure the carbon footprint is necessary to avoid greenwashing and drive a real circular, low-carbon economy.

The power to change lies with us. As a material producer, we hold the key to future-proofing the building blocks of modern life. That’s why Hydro is pioneering the green transition, aiming for ‘zero’ and shaping the markets for greener products. But the market pull is eventually crucial for the change to be successful.

Full transparency on every material’s carbon footprint will be the necessary game changer for a successful green transition.