The aluminium sector’s decarbonisation story is deceptively simple: approximately 80% of its emissions come from the electricity used to power the electrolysis process, and almost all of that electricity in India comes from captive coal-fired power plants. Switching from coal-based captive power to renewable electricity is the single most impactful lever available to the sector — and it is increasingly commercially attractive given solar and wind tariffs below Rs 2.50 per unit in competitive auctions facilitated by the National Solar Mission.

The CBAM complication is important to understand correctly. The EU’s rules currently cover only direct emissions from the electrolysis process itself, not the indirect emissions from electricity generation — which is where 80% of India’s aluminium emissions actually sit. This means Indian producers initially face CBAM levies only on their direct process emissions. But as the EU methodology potentially expands to indirect emissions and EU ETS prices rise, the pressure will increase. Early movers on renewable power procurement through open access are building a structural cost and competitiveness advantage now.

See the Industrial Decarbonisation Policy Map for a full view of how these regulations interact across the sector. For India’s broader NDC targets and climate commitments, see the India Decarbonisation page. To compare aluminium with the other four covered sectors, visit the Sectors overview.