En+ Group, the world’s leading producer of low carbon aluminum and largest private sector generator of hydropower, notes the response published this week by the London Metal Exchange (LME) to industry feedback on its sustainability discussion paper, which En+ believes do not address the industry’s concerns.
En+ believes the LME’s announced plans represent a lost opportunity to drive industry-wide meaningful change as the world looks to ‘build back better’ from the impact of the global COVID-19 pandemic in 2021.
Lord Barker of Battle, Executive Chairman of En+ Group, said: “We warmly welcome this long-overdue first step by the LME into the low carbon age, but it doesn’t go far enough. London should lead global Green commerce and trading; timid actions don’t cut it. So, we will be looking for further steps to make voluntary carbon disclosure mandatory for the LMEpassport and to create a new derivative contract for Low Carbon Aluminium.”
In its formal response to the LME’s consultation paper issued in September, En+ set out three core recommendations and called on the exchange to take a more active role in guiding the aluminum market towards a low-carbon future. En+ believes the following measures are critical to incentivizing the decarbonization of the aluminum industry, which is currently responsible for 2% of global carbon emissions, and where there is a huge disparity between the emissions from the production of low-carbon aluminum (produced with renewable energy) and aluminum produced with coal-fired plants.
- En+ called for mandatory carbon content and sustainability-related disclosure by metal producers (not voluntary), and this should be fully integrated with the existing trading system. This would mean that LME Passports, which are attached to warrants traded on the exchange, should include mandatory information about each aluminum product’s carbon footprint, whether it is ASI certified, and the source of energy used to produce it.
- En+ also warned that the LME’s plans for a separate spot trading platform for low-carbon aluminum would not be effective in supporting a low-carbon transition. The platform proposed by the LME would not impact normal trading routes for the metal and is therefore unlikely to gain the widespread traction needed to spur a low-carbon transition.
- En+ called for the creation of a separate low-carbon aluminum futures contract. The establishment of a futures market – the vast majority of the trades on LME – in low carbon aluminum would transform the way purchasers and low-carbon aluminum producers can manage price risks. Moreover, it would ensure sustainability is truly integrated into the marketplace for LME-listed aluminum.
En+ remains resolute in its mission to lead the aluminum industry into the low-carbon economy and looks forward to furthering engagement with the LME in this area.
