As a “storehouse of value,” gold has long attracted investors. Yet other commodities may be as good as gold. Aluminium is one such commodity; its historical price trend has roughly tracked that for gold. Importantly, hydroelectric facilities often are a strong partner in producing aluminium.
That’s because one-third of the expense of producing aluminium is for electricity. During production, alumina, an oxide of aluminium derived from bauxite, is smelted in refineries containing electrically powered “potlines.” The bauxite ore is found in deposits around the world, with the bulk of resources in only a few countries. Economics drives aluminium producers to locate their smelters where reliable supplies of low-cost electricity can be obtained. Hydropower often has been employed, and the resulting aluminium becomes a valuable regional export.
Hydropower’s role in today’s aluminium industry came to my attention due to the recent inauguration of the 690-mw Kárahnjúkar hydroelectric project. (See article on page 28.) Developed by Iceland’s national electric utility Landsvirkjun, the Kárahnjúkar project’s primary purpose is to provide electricity to a new Alcoa smelter. The facilities have doubled Iceland’s aluminium production and raised the country’s position as an international source of supply. Historically, Iceland’s economy depended largely on the fishing industry — a revenue source that, today, is both fragile and less significant. Increasing aluminium exports have brought the country valuable new revenues and greater financial strength.
An important benefit of using hydropower for producing aluminium (or other energy-intensive commodities) owes to the fact that using hydro helps minimize the carbon footprint of these activities. In Kyoto Protocol negotiations, Iceland received recognition for this attribute. The country was authorized to increase emissions 10% above its 1990 level — a more generous allowance than was given to any other nation. Kyoto participants acknowledged that, by locating energy-intensive industrial production in Iceland, net worldwide emissions would be reduced owing to the country’s almost exclusive reliance on electricity from renewable hydro and geothermal resources. At some other world locations, aluminium, for example, is produced using electricity from coal- and natural gas-fueled plants, with resulting high levels of carbon emissions.
In addition to Iceland, many other countries have untapped hydro resources worthy of development for serving international markets. Iceland’s accomplishments demonstrate how hydropower can serve as the foundation for key partnerships, delivering sustainable economic benefits to a nation and its citizens for generations to come. Also, by minimizing the carbon footprint of industrial activities, this new hydro can benefit people worldwide by substantially reducing releases of greenhouse gases.