How to optimize the aluminum supply chain network?

It’s hot in Thoni Alutec’s aluminum casting foundry hall in Stalowa Wola, southeastern Poland, and a plethora of noises fills the air: a rumbling diesel engine, beeping sounds, hissing hydraulics, and whirring cooling fans. 

Amid that soundscape, a crane lifts the ladle, positioning it above a pre-prepared mold. The aluminum flows smoothly and precisely, filling the intricate cavities of the form that will ultimately become a switchgear housing. After the pouring process concludes, the ladle is carefully returned to its place, and the newly formed housing begins its cooling phase.

To reach that goal, Siemens Energy Grid Technologies has been pushing to reduce Scope 3 greenhouse gas emissions associated with raw materials used for energy infrastructure The reason is simple: Raw materials significantly impact the components’ environmental footprint. Consequently, Siemens Energy has already committed to purchasing more recycled copper and CO₂ reduced electrical steel for its transformers.

Now, the company has aluminum in its crosshairs: “Most of the infrastructure components for extending grids will operate for more than 30 years”, says Dirk Averesch, Business Strategy Manager at Grid Technologies, Siemens Energy. “So, before we install them, we must ensure their carbon footprint is as low as possible. And after copper and steel, we’re also targeting aluminum for that purpose.”

With this strategic goal in mind, Siemens Energy teamed up with Thoni Alutec, based in Poland and one of the world’s largest companies specializing in aluminum casting and machining, and We Don’t Need Roads (WDNR), a Paris-based consulting firm focused on sustainability. The objective is to calculate the detailed environmental footprint of Thoni Alutec’s housing parts to identify hotspots and the emissions reduction potential of Siemens Energy’s switchgear supply chain.

The potential is great: Over a hundred thousand of new substations with two dozen or more bays of gas-insulated switchgear are needed by 2040. That means millions of tons of aluminum. And according to European Aluminum, a member-based European industry association, emission reductions of 78% could be achieved by 2040 for aluminum and even more than 90% by 2050 compared to 2021 baseline. Given that, according to the Internal Energy Agency, the aluminum industry in 2022 was responsible for 3% of direct industrial CO₂ emissions, decarbonizing the aluminum supply chain can have a big impact on global greenhouse emissions. 

But how to go about it? While an essential step toward achieving climate neutrality, decarbonizing the supply chain is a significant challenge. Sure, one report alone won’t change the energy industry’s ingrained habits, as Siemens Energy creates transparency on the emissions of its Tier 1 suppliers’ supply chains, this knowledge can be used to reduce emissions within the industry.

It enables a harmonized approach resulting in consistent Lifecycle Assessments (LCAs) and Environmental Product Declarations (EPDs) that support comparability and verifiability. It addresses an essential need in the energy industry, where the meaning of numbers related to the supply chain’s environmental footprint is often unclear. Having sound data helps identifying emission hotspots and showcase best practice examples for decarbonization. “The whole industry benefits from a pilot study like this,” says Averesch. “Now we can compare environmental footprints with better confidence. And it also paves the way for meeting stricter regulatory requirements.” 

Taking part in the study was in Thoni Alutec’s interest. It’s not just that Siemens Energy is a major customer of theirs. Rather, they recognized the need. “We understand that our production significantly contributes to the environmental footprint of Siemens Energy’s switchgear. So, it’s good business practice to participate in a project like this,” says Lothar Thoni, owner of Thoni Alutec. “Furthermore, it helps us better understand the environmental impact and identify measures for improvement. And a detailed report adds market value to our products and helps us to stay ahead of evolving environmental regulations.” 

Finally, even for WDNR, participating in the study wasn’t just because they specialize in conducting sustainability studies for corporate clients. “Our goal is always to find actions that assist companies in identifying hotspots and how to implement measures”, says Rija Goldscheider, one of the founders of WDNR. “We recognized a great opportunity here.” 

Together, Siemens Energy and Thoni Alutec chose three different housings of switchgear for the study, composed entirely of aluminum and coated with a thin layer of paint. Two were circuit breakers, enabling conducting or breaking electrical flows within a medium-sized electrical system, one is a cross housing, connecting and supporting multiple switchgear units.  

As the study got underway, Thoni Alutec created a team to come up with the correct data, allowing them to quantify the environmental impact of their products. With those, WDNR evaluated the housings’ LCAs, meaning the environmental impacts across the products' entire life cycle, from raw material extraction to end-of-life, and considering the recovery and recycling potential.

They followed a clear path. For evaluating the housings’ LCA Thoni Alutec and Siemens Energy chose an established standard: EN 15804+A2. While it is typically used in the construction industry, the choice is not as far-fetched as it may seem: The energy industry’s environmental footprint is closely tied to its infrastructure. On top of it, it is compatible with IEC 63366, which defines category rules for electrical and electronic products and systems like switchgear permanently installed in buildings. Likewise, because the approach aligns with European regulations, it helps build stakeholder trust in the product. All in all, the EN 15804+A2 standard serves as a robust foundation for LCAs in the energy sector. 

As WDNR ran their first calculations, it became clear that the climate change impact contributed most to the housing’s environmental impact compared to other categories such as land use or ozone depletion.  

That’s why the analysis focused on carbon hotspots for the raw material sourcing and the manufacturing of the switchgear housings. The study of Thoni Alutec’s manufacturing process consists of fifteen steps, including, among others, sourcing aluminum ingots from suppliers to transport, melting, casting, or coating. All were analyzed to pinpoint primary carbon contributors and potential reduction strategies.  

It quickly became clear that the biggest contributor is not directly under Thoni Alutec’s control: It’s the primary aluminum they buy. For example, for a circuit breaker housing for a 145 KV switchgear all steps, from bauxite extraction to primary aluminum production, amount to 71% of the housings’ carbon emissions.

But Thoni Alutec is not at their supplier’s mercy either. After all, they can choose. They can buy certified aluminum, ensuring certain environmental and social requirements are met; they can use recycled aluminum or aluminum that uses more environmentally friendly processes of transforming bauxite to aluminum. And some of that Thoni Alutec, in fact, already does. 

Beyond the raw material sourcing, there’s manufacturing. It contributes 18% to the housings’ carbon footprint. This helps identify levers to reduce environmental footprints even further. For one, pushing the electrification of processes based on natural gas is a big lever if renewable electricity is used. For example, in the future, Thoni Alutec could transition gas-fired furnaces to electric furnaces for efficient melting – a significant million-dollar investment, for sure, that would require careful evaluation.

Second, to the degree that processes are already electric today, Thoni Alutec should ensure the power comes from renewable sources. 

Overall, it’s clear that pushing the levers for decarbonization identified in the study certainly won’t be a cakewalk. It requires ambitious efforts, including financial investments and even technological development. And similarly, the best practice examples coming out of this study won’t be adopted by companies manufacturing and supplying energy infrastructure components overnight.

But the study has achieved its main goal: demonstrating that transparency is essential for decarbonizing the supply chain. Implementing standardized LCA methodologies can enhance comparability and enable stakeholders to benchmark their progress. “This study gives us tools that allow our suppliers to decarbonize the supply chain together more efficiently,” says Averesch. “And with that we need to continue doing the work.

About the author: Hubertus Breuer is a science and technology journalist based in Germany.