Energy and climate change

This sculpture of re-used aluminium, specially commissioned by Hydro, was unveiled at the Nobel Peace Center in Oslo. The sculpture, a house of cards on the verge of collapse, is called “Climax” and symbolizes the fragile balance of the world. It was made by the Norwegian artist Magne Furuholmen, who wanted to address the climate debate.

We have for several decades monitored our impact on the environment as part of a holistic approach to value creation. The increasing urgency of the situation has led us to establish a thorough climate strategy with a revised set of priorities. These priorities are essential to our overall business strategy. They include reducing the environmental impact of our production activities as well as taking advantage of business opportunities by enabling our customers to do the same. Some of the measures we pursue include: 

· Using viable energy sources

· Reducing energy consumption and emissions in production

· Reducing CO₂ emissions through the use of our products

· Increasing recycling of aluminium

· Developing our solar energy business

Renewable energy is our preferred choice. About two-thirds of the electricity used in our primary aluminium production is from renewable sources, and we are the second-largest hydropower producer in Norway with normal production of 9.4 TWh. In 2009, we produced 7.9 TWh. Production was limited due to outage of Suldal I for the large part of the year in addition to the lower-than-average reservoirs going into 2009. 

The part-owned Qatalum smelter, coming in to full production in 2010, is using natural gas as energy source. The International Energy Agency recognizes natural gas as an important energy source that can help contain global temperature increases. 

In addition, we are utilizing our long experience as a hydropower producer to find more renewable sources around the world. In cases where new production triggers the construction of coal-fired power plants, we will require the plant to plan for carbon capture and to be in a location with realistic storage solutions.

Starting in 1990, total greenhouse gas emissions from our ownership equity have decreased from 12.5 million tonnes CO₂ equivalents (CO2e) to 4.8 million tonnes CO2e last year. This is a 62 percent decrease. The 25 percent decrease from 2008 to 2009 was due to the closure of our Søderberg plant at Karmøy, Norway, reduced production in 2009 and operational improvements.

Setting a more ambitious goal

We have also reduced specific greenhouse gas emissions from our primary production by more than 60 percent since 1990. In 2009, we revised our goal to a specific direct emission of 1.52 t CO2e/t aluminium in 2013. This is 18 percent better than the current level of 1.85 t CO2e/t aluminium. To help meet our 2013 target, the Sunndal plant in Norway initiated a project to reduce the PFC emission from anode effects. This has led to a 65 percent reduction in total PFC emissions from 2007 until 2009. The project has also identified other potential improvements. The experience from Sunndal is now being transferred to other Hydro plants. Our vision is to move toward zero emissions.

Our proprietary electrolytic process is among the world's most efficient. It is used in the new plant in Sunndal and has been further improved for use in the Qatalum project. It is now further enhanced through our HAL4e technology. In 2009, the HAL4e test cells achieved an electricity consumption of 12.8 kWh per kilogram aluminium, compared to the target of 12.9 kWh. Hydro's average consumption in 2009 was 13.9 kWh per kilogram aluminium, which is lower than normal due to the curtailment processes. A verification test in February 2010 confirmed that the cells also fulfill the other targets set. Our next-generation technologies are advancing us further, increasing output while reducing electricity consumption and recycling energy from the production process. These technologies also address the challenge of capturing greenhouse gases from the production process. 

Saving energy - reducing emissions

We work closely with customers to develop products that save energy and reduce emissions. Aluminium facades can lead to lower operating costs and also enable buildings to produce as much energy as they consume during operation. Lighter cars result in fuel savings and lower emissions on the road, and lighter aluminium products and packaging reduce transport costs and emissions. 

We have an ambition of a 20 percent reduction in specific climate gas emissions from our rolling processes from 2007 to 2013. Progress was made in 2009 through improvement measures at several plants.

The carbon footprint of our solutions is gaining increasing attention and relevance. This is not least when looking at new ways of application of our material, and when improving the ecological performance of existing ones. Our approach to involve customers and key stakeholders in developing better solutions help us to differentiate and become partner of choice. For example, the rolled products business area works with packaging manufacturers to improve propositions of certain packaging material to provide high functionality while improving recycling routes.

We also work closely with our customers to develop products that save energy and reduce emissions. Aluminium facades can lower operating costs and help enable buildings to produce as much energy as they consume during operation. In 2009, we opened two such buildings using Hydro products and solutions - one in Bellenberg, Germany, and one in Toulouse, France. Heat pumps, integrated photovoltaic systems and intelligent building design all contribute to energy neutrality.

We support the development of international frameworks on climate change and greenhouse gas emissions and participate actively in e. g. the World Business Council for Sustainable Development and the International Emissions Trading Association in order to provide business solutions to climate change. In addition, we work through aluminium associations to establish a level playing field globally for aluminium production. In 2009, we revised the way we work toward such organizations in order to improve internal coordination and the efficiency of our participation.

Remelting and recycling

Aluminium can be recycled infinitely without degradation of quality. Recycling aluminium requires only roughly five percent of the initial energy used to produce primary aluminium. This makes aluminium a viable material for the future. In 2009, we strengthened our efforts in recycling, and we will in 2010 develop a new recycling strategy.

Hydro is a large remelter of aluminium, with nearly 30 facilities worldwide. We remelt process scrap both from other companies and from our own production. In 2009, we also recovered 195,000 tonnes of coated and contaminated metal. Our expertise in remelting is a good basis for future expansion.

In Europe, 85 percent of the aluminium in automotive applications and 95 percent of the aluminium in buildings is presently recycled at end-of-life. The recycling rate of beverage cans in Europe is from 30 percent to more than 95 percent depending on the country, with an overall average of about 60 percent. This clearly demonstrates the continuing need for efficient recycling schemes. Hydro is participating with customers on projects that aim to improve recycling rates.

Three new recycling furnaces

Over the past three years, we have invested in three new recycling furnaces in Hamburg, Neuss and at Alunorf, Germany, with total capacity of 150,000 tonnes per year. All three are operating.

We will invest further into research and development in the recycling sector. Investment will be split into technology and process development as well as product development. With scrap collection and processing, we will work on optimization tools to avoid downgrading of materials. This includes scrap shredding and sorting technologies, receiving and sampling practices, and scrap blending tools. In the area of scrap-melting technologies, we will concentrate on improving metal recoveries, reducing energy consumption, optimizing furnace operation practices and dross treatment.

Preparing for growth

We have initiated feasibility studies to develop a recycling center in Central Europe. The idea is to close the loops on all scrap types generated by our operations and those of our customers, and to prepare for the end-of-life phase for aluminium components in passenger cars, trucks, trains, ships, airplanes, buildings, etc. We expect significant growth in the amount of end-of-life scrap in the coming years.

Development in solar energy

Solar energy is one of the alternatives that can reduce the world's reliance on fossil fuels. Our experience in metals, industrial development and large-scale project management provides a strong platform for our solar business. Our solar ventures extend from raw materials and solar cell technologies to components and complete systems for solar installations. This includes participation in all main solar technologies: 

• Photovoltaic (PV) solar cells, which convert sunlight directly into electricity
• Solar thermal installations, which use sunlight to heat water
• Concentrated solar power (CSP), which concentrates the sunlight with mirrors to produce heat and also power via steam turbines

Hydro is also a large producer of solar cell constructions.

We have ownership interests in three solar companies: NorSun, Hycore and Ascent Solar. NorSun aims to be a world leader in high-efficiency solar cells, with production plants in Finland and Norway. Hycore has been working on a process to produce solar-grade silicon for use in solar cells. Hycore's research and development activities, however, have been put on hold in 2010 due to the uncertainty related to further development of the technology.

Ascent Solar's building-integrated modules have been successfully pre-tested and the US-based company has started mass production on its new fabrication line in Denver, Colorado. As a result, our building systems business sector is completing the last development phase and certification process before commercialization of the photovoltaic "brise soleil" line of external shading devices under the brand names Technal and Wicona.