Review of the Chinese Aluminum Industry’s Low-Carbon Development Driven by Carbon Tariffs: Challenges and Strategic Responses

Abstract

Carbon tariffs are designed to prevent carbon leakage and encourage global industries to adopt low-carbon practices, which present significant challenges for China’s aluminum industry. A critical issue for China’s aluminum sector is how to effectively reduce carbon emissions while maintaining competitiveness in the face of increasingly strict carbon regulations. This review is based on an extensive examination of high-quality, authoritative research literature, industry data, and policy reports. Accurate data have been systematically summarized, and key findings from reputable studies have been extracted to support the perspectives presented in this review. On this basis, this review systematically analyzes the current status of China’s aluminum industry, emphasizing its reliance on fossil fuels, slow transition to low-carbon technologies, and the inadequate use of recycled aluminum. The potential impacts of carbon tariffs are assessed, highlighting increased carbon costs, reduced production scales, and diminished market competitiveness in foreign markets. To address these challenges, the study proposes several pathways for carbon reduction in China’s aluminum industry, including accelerating the adoption of recycled aluminum, enhancing energy efficiency, advancing low-carbon innovations, and developing supportive policy frameworks. Implementing these measures is vital for decreasing carbon emissions and ensuring the long-term sustainability of the industry amid global climate initiatives.

1. Introduction

As global climate change issues become increasingly severe, many countries and regions have implemented more stringent emission reduction policies to achieve carbon neutrality goals. In this context, a series of carbon border mechanisms [1,2] have been proposed, which aim to impose carbon emission-related costs on imported products to prevent carbon leakage [3,4] and encourage the relocation of high-carbon-emission industries to countries or regions with more lenient carbon emission controls [5]. These mechanisms aim to bridge the gap between the carbon price in the original country and the carbon price in the local trading system in order to prevent the inclusion of these goods from undermining the competitiveness of industries such as electricity, steel, and aluminum [6,7]. The current progress of carbon border mechanisms in several major countries is shown in

Table 1. The current progress of carbon border mechanisms in several major countries.

Countries	Current Progress in Carbon Border Mechanism	Characteristics and Content	Implementation Time
European Union	Carbon Border Adjustment Mechanism (CBAM)	The CBAM applies to products exported from other countries to the European Union and requires importers of goods to purchase certificates at the price of the European carbon market; includes six industries: electricity, steel, cement, fertilizers, aluminum, and hydrogen.	Started its transition in October 2023; will be officially implemented in 2026, and fully operational by 2034.
The United States	Clean Competition Act (CCA)	The CCA imposes a carbon emission fee on imported goods and allocates the revenue to developing countries, covering multiple industrial sectors such as cement, steel, aluminum, and glass. Since the United States lacks a unified carbon pricing system, the CCA stipulates that relevant companies only need to pay a carbon fee. The subjects of the levy include not only importers but also domestic producers in the United States.	Since 2024, CCA will impose a carbon tax of USD 55 per tonne on emissions that exceed the baseline level. Subsequently, the price of the carbon tax will increase by 5% on top of the previous year’s price, adjusted for inflation.
Canada	Border Carbon Adjustments (Not yet implemented)	The Canadian government is seeking domestic and international dialog and cooperation to integrate the BCA mechanism into the trade system, aiming to achieve climate goals while maintaining competitiveness.	Since 2021, there has been an exploration to add BCA to Canada’s climate policy toolbox.
United Kingdom	Carbon Border Adjustment Mechanism (Not yet implemented)	The initially covered product categories include aluminum, cement, ceramics, fertilizers, glass, hydrogen, and steel.	The UK’s carbon border adjustment mechanism will be implemented from 2027.

; these mechanisms can effectively accelerate the global carbon neutrality process, but pose important challenges for enterprises, particularly as they are driving global energy-intensive and high-carbon emission industries to transition to being green and low-carbon. Consequently, how high-carbon-emission enterprises can respond to these challenges and implement effective measures to enhance their competitiveness and sustainable development capabilities has become a crucial task.

These carbon policies will have a profound impact on China’s aluminum industry, which is highly dependent on the international market and traditional energy sources. The aluminum industry is an indispensable industry for modern industry and daily life worldwide, yet it is also a major energy consumer and carbon emitter, making it a key area for achieving green and low-carbon development. As the largest producer of aluminum, China’s aluminum industry has experienced rapid growth in the past 30 years. According to data from the International Aluminum Association, China had surpassed the United States in aluminum production by 2002, becoming the world’s largest aluminum producer [7]. In 2023, China’s aluminum production reached 41.67 million tons, accounting for 59.03% of the world’s total production. The carbon emissions from China’s aluminum industry account for over 3% of the global CO₂ emissions [8,9]. However, compared to advanced international standards, there remains a significant gap in clean production and green manufacturing within China’s non-ferrous metal industry. The low level of energy electrification and insufficient resource recycling have resulted in substantial carbon emissions [8].

The EU’s carbon tariffs have clearly indicated legislation to impose new tariffs on imported aluminum products [10], while China has also proposed to expand the coverage of the national carbon emission trading market for the aluminum industry by 2025 [11], accelerating the low-carbon development of key industries with high carbon emissions. This will pose severe competitive challenges for China’s aluminum products in both domestic and international markets. Specifically, due to the heavy reliance of China’s aluminum industry on coal-fired power generation, the carbon intensity of aluminum production in China remains relatively high compared to countries that utilize clean energy. The implementation of these carbon boundary mechanisms will inevitably increase production costs for Chinese aluminum exporters, affecting developed countries such as the United States and the European Union, who may encounter higher carbon costs, resulting in reduced export profits and market share, and further weakening their competitive advantage in the global market [12,13]. The inclusion of China’s aluminum industry in the carbon emissions trading market will increase cost pressures and necessitate greater investment in carbon reduction technologies for aluminum production enterprises [14]. In the long run, these policies may accelerate the structural and green transformation of China’s aluminum industry, encouraging producers to invest in more sustainable practices and technologies. Measures should include transitioning to renewable energy, adopting energy-saving production methods, and exploring carbon capture and utilization technologies. Additionally, domestic policies must align with international carbon pricing mechanisms to mitigate the risks posed by carbon tariffs and enhance the industry’s resilience to future market disruptions [7,15].

In order to demonstrate the EU’s ambitious commitment to decreasing emissions, the European Commission unveiled the European Green Deal in December 2019. This strategic development plan aims to reduce greenhouse gas emissions by 55% by 2030 compared to the 1990 levels. The severity of these cuts, however, has raised production costs for EU businesses, which has increased the danger of carbon leakage and reduced their competitiveness. Since its inception in 2005, the EU Emissions Trading System (ETS) has evolved. The risk of carbon leakage will increase as a result of rising allowance prices and decreased free allocations, which may lead EU-based businesses to move their operations to nations with laxer carbon regulations or to give up their market share to competitors with higher emissions. In response, the EU proposed the CBAM within the European Green Deal to mitigate this risk. This mechanism involves applying tariffs or other price adjustments to imports based on their embedded greenhouse gas emissions. According to the EU’s plans, a comprehensive carbon border tax will be introduced in 2026. Currently, China’s aluminum processing industry is deeply integrated within international markets, playing a critical role within the global aluminum supply chain. In the short term, without disruptive technologies, the potential to reduce carbon intensity across the aluminum life cycle remains limited. However, in the long term, the impact of the carbon tax may gradually weaken by adjusting the energy mix and accelerating the low-carbon transition. This statement aligns with China’s national policies since 2020. In December 2020, at the Climate Ambition Summit, China announced an increase in its 2030 carbon intensity reduction target, aiming for a reduction of over 65% below 2005 levels, up from the previous target of 60–65%. China’s 14th Five-Year Plan and Vision 2035 set a binding target to reduce CO₂ emissions per unit of GDP by 18% from the 2020 levels by 2025. To achieve these goals, China has been actively promoting energy-saving and emission reduction initiatives in high-energy, high-carbon sectors, including the aluminum industry. Concurrently, China has adjusted their import and export tariffs on energy-intensive industries and gradually established a national carbon market, which includes the aluminum industry.

For China, adapting to carbon tariffs not only presents challenges but also potential opportunities. As the global demand for low-carbon products grows, there exists an increasing market for “green aluminum”. By embracing sustainable production methods and reducing carbon emissions, Chinese aluminum producers may tap into new market segments and even gain a competitive advantage [16,17]. However, achieving this goal requires coordinated efforts between the government and the private sector, including investments in technological innovation and the development of supportive regulatory frameworks [18].

The Chinese aluminum industry faces several constraints on achieving their carbon reduction targets. Firstly, the industry’s production processes are highly energy-intensive, with a heavy reliance on coal-fired power generation. In 2023, coal-fired power accounted for over 72.00% of China’s energy structure, compared to the world average of 49.97%, 0.74% in Europe, and 3.33% in North America [19]. Although clean energy technologies such as wind and solar have made progress, their intermittent nature and limitations on their large-scale application make it difficult to completely replace traditional fossil fuel power generation in the short term [20]. Secondly, China has a huge production of primary aluminum, and there is a significant gap in the technological level of enterprises. Although some large enterprises are promoting energy-saving equipment and process improvements, the overall progress of low-carbon technology in the industry is slow [21]. Currently, less than 30% of enterprises are required to reach the energy efficiency benchmark level by 2025 [22], and the outdated production capacity with an AC electricity consumption of less than 133.5 million kilowatt-hours per ton for aluminum liquid will be eliminated.

Thirdly, technological progress is slow, and innovation in low-carbon technologies is insufficient, especially in the processes for reducing carbon emissions in aluminum production, which are not yet mature. For example, the commercial feasibility of inert anodes has not yet been proven [23], and the application of carbon capture and utilization technology in aluminum production is still in its infancy, currently being in the experimental and demonstration stages, and requiring significant technological and financial investment [24,25]. Fourthly, the low utilization rate of recycled aluminum is an important limiting factor for carbon reduction efforts. In China, primary aluminum production accounts for 81.4% of the total aluminum output [26], and the carbon dioxide equivalent from cradle to gate per ton of primary aluminum production is 15.1 tons [27]. In contrast, carbon emissions from recycled aluminum production are about 0.45–0.5 tons per ton, which is only about 4% of the emissions from primary aluminum production [21]. China’s current aluminum recycling system is incomplete, and the level of resource recovery and utilization needs to be improved [10]. Finally, the lack of policies and incentive mechanisms hinders the effective implementation of carbon reduction measures [28,29]. Enterprises often lack the motivation and financial resources needed to promote the innovation and application of green technologies.

To address the challenges posed by carbon tariffs and the construction of carbon markets, the Chinese aluminum industry must quickly adopt proactive measures. Therefore, driven by factors such as policy restrictions, industry requirements, and the sustainable development of enterprises, how to identify key and effective carbon reduction measures and providing technical guidance for aluminum production enterprises has become an urgent issue to resolve in the short term. This review aims to summarize the progress in aluminum production methods and structures, product compositions, energy consumption patterns, carbon emissions, carbon accounting methods, low-carbon development difficulties, and strategies. The goal is to find effective pathways and response strategies for the low-carbon development of Chinese aluminum enterprises in the context of carbon tariffs and carbon market construction.

During the initial stage of developing this review, we conducted systematic searches across several academic databases and search engines, including Web of Science, Scopus, and CNKI, to ensure a comprehensive literature coverage. We used targeted keywords such as “aluminum production processes”, “carbon border adjustment mechanism”, “aluminum industry carbon emissions”, “decarbonization technology pathways”, and “carbon policies” to gather research related to the “low-carbon development of the aluminum industry under the implementation of carbon policies”. Priority was given to studies published within the past five years to maintain the review’s relevance, while earlier influential studies were also included if appropriate or necessary.

The remainder of this review is structured as follows: Section 2 provides an overview of China’s aluminum production methods and processes, energy consumption patterns, carbon emissions, and carbon accounting methods. Section 3 discusses the difficulties and challenges faced by the aluminum industry in a low-carbon context. Section 4 analyzes the low-carbon development pathways and specific measures for the aluminum industry. Finally, Section 5 presents the conclusions of this review.

2. Current Development Status of China’s Aluminum Industry

Clarifying the current energy consumption and carbon emissions in the aluminum industry is a prerequisite for identifying the industry’s carbon reduction potential and proposing decarbonization measures. This section is organized as follows: Section 2.1 covers the processing of and production processes used for aluminum products, Section 2.2 addresses the energy structure and carbon emission situation in China’s aluminum industry, and Section 2.3 examines the measurement and current status of carbon emissions within aluminum production enterprises.

2.1. Production Process of Aluminum

The production of aluminum is mainly divided into primary aluminum and recycled aluminum production [8], as illustrated in Figure 1. The aluminum production process primarily involves four key stages: mining, refining, electrolysis, and casting.

In the mining stage, bauxite is subjected to grinding and preliminary processing to form bauxite concentrate. Tailings are produced as a by-product during this process and require dedicated management to minimize environmental pollution.

In the refining stage, bauxite is converted into alumina through the Bayer’s process, Sintering, or a combined Bayer–sintering process. The Bayer process is the dominant technology in the global aluminum industry, being particularly suited for processing high-grade bauxite. In this process, bauxite reacts with sodium hydroxide (NaOH) under a high temperature. Sodium hydroxide plays a key role in breaking down the alumina in the bauxite, allowing it to dissolve as sodium aluminate, and separating it from insoluble impurities. The sintering process is more appropriate for low-grade bauxite, where additives such as sodium carbonate and lime are added to improve impurity removal.

In the electrolysis stage, alumina is reduced to liquid aluminum through electrolysis, requiring a significant amount of electricity, making it the most energy-intensive part of aluminum production. Alumina is added to an electrolytic cell, where it is mixed with cryolite (Na₃AlF₆) and other substances. Cryolite’s role is to lower the melting point of the electrolyte, thereby reducing the energy consumption. Additionally, carbon anodes serve as the cathode in the electrolytic cell, participating in the electrochemical reaction to produce liquid aluminum while generating carbon dioxide (CO₂) as a by-product.

In the casting stage, the generated liquid aluminum is purified and cast into aluminum ingots. During this process, aluminum scrap generated during production can also be recycled. The recycling process of aluminum scrap includes steps such as pre-treatment, melting, and refining, transforming waste aluminum into secondary aluminum.

The primary aluminum smelting process simultaneously involves several steps, including ore beneficiation, crushing, grinding, acid leaching, alumina preparation, and the production of electrolytic aluminum. The high-temperature Bayer process is predominantly utilized, which results in substantial electricity and fuel consumption, along with significant emissions of carbon dioxide and other pollutants. In contrast, the production of recycled aluminum comprises processes such as waste aluminum pretreatment, smelting, refining, and casting. Compared to primary aluminum smelting, the energy consumption and carbon emissions from recycled aluminum production are significantly reduced. The comparison of energy consumption and CO₂ emission intensity for different aluminum production processes is shown in

Table 2. The comparison of energy consumption and LCA carbon dioxide equivalent (CO₂e) emissions for different aluminum production processes.

Aluminum Production Process	Energy Consumption (kgce/t-Al)	CO2e Emission (t-CO2e/t-Al)
Primary aluminum	3086.48	14.98
Recycled aluminum	146.00	0.32

.

In the production of primary aluminum, the most energy consuming parts are the high-temperature Bayer process for preparing aluminum oxide and the Hall–Héroult process for the electrolytic reduction of aluminum oxide to metallic aluminum. Among them, the high-temperature Bayer process is mostly used to process high-grade bauxite. During the calcination stage, heat is provided by burning fossil fuels to heat the aluminum hydroxide to about 1000–1100 °C, dehydrating it to produce alumina. The Hall–Héroult process involves adding aluminum oxide to a cryolite (Na₃AlF₆) solution, where it is dissolved, and maintaining the electrolytic cell at a high temperature of 950–1000 °C through current heating. Under the influence of the current, aluminum is deposited at the cathode while oxygen is released at the anode, reducing aluminum oxide to metallic aluminum. Each ton of primary aluminum production requires approximately 14,110–14,300 kWh of electricity consumption [8]. Consequently, efforts to save energy and reduce carbon emissions in aluminum production primarily focus on these two energy-intensive processes.

2.2. Energy Structure and Carbon Emissions Status of China’s Aluminum Industry

2.2.1. Energy Structure of China’s Aluminum Industry

Electrolytic aluminum production is characterized by a high energy consumption, with its smelting process accounting for over 70% of the total energy used in the aluminum industry [30]. As illustrated in Figure 2, since 1998, the electricity consumption for primary aluminum production in China has surged alongside the increase in production levels. Despite the impact of the financial crisis in 2009, total electricity consumption has shown a consistent upward trend, rising from 46.27 billion kWh in 2000 to 554.29 billion kWh in 2023. This consumption now represents more than 6% of China’s total electricity consumption. During the rapid growth period from 2010 to 2015, the average growth rate of electricity consumption was 15.3%, peaking at 7.68% of the total electricity consumption for electrolytic primary aluminum production in 2015. However, in the past three years, this growth rate has gradually slowed, averaging 4.4%. Recently, the Chinese aluminum industry has focused on technological advancements, implementing measures such as source reduction and process control, and promoting energy conservation and emission reduction across the sector [31,32]. Efforts have also been made to reduce, treat harmlessly, and utilize resources from metallurgical waste residue, wastewater, and exhaust gas effectively [33,34]. These initiatives have led to significant energy-saving and consumption-reducing outcomes.

In addition, the comprehensive alternating current (AC) power consumption of electrolytic aluminum in China has been continuously and rapidly decreasing since 1995. Prior to 2014, it was in a significant reduction phase, marked by a notable decrease. Since 2015, this consumption has steadily declined, albeit at a gentler rate. In 2023, the comprehensive AC electricity consumption for the production of electrolytic aluminum in China was projected to be 13,324 kWh, while the corresponding figures for North America, Europe, and Asia (excluding China) are 14,821 kWh, 15,476 kWh, and 14,738 kWh, respectively. The global average stands at 14,091 kWh [35]. Currently, China’s electrolytic aluminum industry leads the world in terms of energy consumption per unit of product.

Although the electricity consumption per unit of product in China’s aluminum industry is relatively low, the energy consumption structure is heavily dominated by coal, with the electrolytic aluminum industry relying on coal for power generation. This dependence on coal is a fundamental reason for the high carbon emissions in the aluminum industry, which ranks second only to steel and cement in terms of emissions. The energy structure of the global electrolytic aluminum industry in 2023 highlights that over 72% of China’s primary aluminum production relies on coal-fired power generation. In contrast, the contributions of hydropower to primary aluminum production in Europe and North America and the global average are 93.36%, 95.33%, and 33.11%, respectively, all significantly higher than China [19]. In 2023, China’s primary aluminum production was primarily supported by coal for thermal power, accounting for over 72.4%, a decrease from 74.5% in 2022. Hydroelectric power accounts for approximately 19.2%, while other renewable energy sources account for 5.7%, reflecting a substantial increase in the proportion of clean energy compared to 2022. In summary, the aluminum industry is a typical high-carbon emission sector. Although the electricity consumption per ton of alumina is among the lowest globally, the industry’s large production levels and reliance on coal-fired power result in a continual rise in electricity consumption and carbon emissions as primary aluminum production increases. Therefore, in the context of carbon reduction targets, the aluminum industry faces significant challenges in restructuring its energy consumption and reducing carbon emissions.

2.2.2. Current Situation of Carbon Emissions in China’s Aluminum Industry

Due to the high production levels of primary aluminum and the significant reliance on coal-fired power in the electrolytic aluminum production process, carbon emissions from China’s aluminum industry have consistently increased since 2009, as illustrated in Figure 3. Emissions approached their peak in 2020, with the carbon emissions from China’s aluminum production lifecycle reaching 560 million tons and those resulting from electricity consumption totaling 1.18 billion tons. In recent years, these emissions have gradually declined. By 2022, the lifecycle carbon emissions of China’s aluminum industry chain amounted to 1.112 billion tons [7].

According to statistics from the International Association of Aluminum [27], global carbon emissions per ton of primary aluminum (from mining through the entire production process) in 2022 were 15.1 tons, of which 11.4 tons were attributed to the electrolytic aluminum stage, accounting for 75.5% of emissions. The carbon emissions associated with electricity consumption amounted to 9.3 tons, representing 81.6% of the carbon emissions in the electrolytic aluminum process, making it the primary source of emissions. Using the carbon emissions factor of 0.96 kg per kWh of coal-fired power produced in China, the carbon emissions per ton of aluminum from electricity consumed in China’s electrolytic aluminum production are calculated to be 12.3 tons. This carbon emission intensity is significantly higher than that of similar products produced using clean energy abroad. The indirect emissions resulting from electricity consumption are the fundamental reason for the high carbon emissions in electrolytic aluminum production. Therefore, to achieve carbon reduction in the aluminum industry, it is essential to optimize the energy structure and increase the utilization of clean energy.

2.3. Current Status of Carbon Emissions in the Aluminum Production Enterprise

2.3.1. Carbon Accounting Method Based on LCA

The carbon emission accounting method is crucial for effective carbon measurement and reduction efforts, as it offers a systematic and standardized approach to quantifying and evaluating greenhouse gas (GHG) emissions. At present, some scholars have analyzed the greenhouse gas emissions and overall environmental impacts of aluminum products and aluminum production processes using Life Cycle Assessment (LCA) methods [36,37,38,39]. These studies explore the principles of carbon emissions and CO₂ generation [40], determine environmental emissions at various stages, such as the production and use stages [41], evaluate energy-saving and emission reduction effects [36,42], and predict greenhouse gas emission reduction strategies and potentials for China’s aluminum industry through scenario analysis [43,44]. Therefore, the use of LCA is widely recognized as an effective method for assessing carbon dioxide emissions from aluminum production. LCA provides a comprehensive perspective that encompasses all stages of the production process, allowing for a more accurate reflection of the overall environmental impact of the entire system.

2.3.2. Carbon Emission Sources and Situation in Aluminum Production

It is essential to combine carbon emission accounting methods with the production processes used by aluminum production enterprises to understand and quantify the current status of carbon dioxide emissions. Figure 4 illustrates the inputs and outputs of the aluminum production process, including bauxite mining, alumina refining, electrolytic aluminum smelting, and recycled aluminum production, along with the emissions of various pollutants.

The carbon emissions during aluminum smelting primarily come from two sources: the preparation of alumina and the electrolytic aluminum production process. The specific sources and principles of carbon emissions are as follows:

(1) High-Temperature Calcination for Producing Alumina

In the Bayer process, a high-temperature environment (1000–1100 °C) is required for calcination to produce alumina. The combustion of fuel directly generates carbon dioxide (CO₂), and the carbon emissions from the high-temperature Bayer process largely depend on the type of fuel used and the efficiency of combustion. Typically, producing one ton of alumina results in approximately 1.2 to 1.5 tons of CO₂ emissions.

(2) Anodic reaction during aluminum electrolysis (anode carbon consumption)

The electrolysis process of aluminum primarily employs the Hall–Héroult process, which utilizes a carbonaceous anode for electrolysis at high temperatures. In this process, aluminum oxide (Al₂O₃) decomposes within the electrolytic cell, and the chemical reaction is as follows:

2Al₂O₃ + 3C→4Al + 3CO₂

(1)

In addition to the main carbon consumption reaction in the electrolytic cell, there are also the following electrolytic cell side reactions:

2Al₂O₃ + 3C→4Al + 3CO

(2)

These reactions could produce CO₂ and CO, which is further oxidized to CO₂.

Additionally, anode materials are typically composed of petroleum coke and asphalt. During the anode manufacturing process, petroleum coke is mixed with asphalt and baked at high temperatures, which also generates a significant amount of carbon dioxide.

(3) Perfluorinated carbon (CF₄ and C₂F₆) emissions

Perfluorinated carbons (CF₄ and C₂F₆) are primarily produced during the electrolytic aluminum production process due to the anodic effect. When the fluoride concentration in the electrolyte is excessively high, it leads to an abnormal increase in the voltage of the electrolytic cell, resulting in the formation of perfluorinated carbon compounds.

C + 2AlF₃→CF₄ + 2Al

(3)

2C + 6AlF₃→C₂F₆ + 6Al

(4)

(4) Indirect carbon emissions caused by electricity consumption

When using different sources of electricity, such as coal and natural gas combustion for power generation, carbon emissions are generated.

Using the LCA analysis method, Shen et al. presented the results of an LCA model for China’s aluminum production process in 2021, with detailed energy inputs and pollutant outputs, which are shown in

Table 3. Life cycle material flows in aluminum production in China [8].

Type	Material	Unit	Production Process of Primary Aluminum					Primary Aluminum
			Mining	Refining	Anode Production	Electrolysis	Casting
Energy Import	Fuel Oil	kg/t	7.73	21	69	0	0	114.11
	Electricity	kWh/t	16.5	289	211	13,543	411	15,817.04
	Raw Coal	kg/t	12.2	276	0	0	0	625.78
	Natural Gas	M3/t	0.247	85	79.3	0	1.05	217.78
	Coal Gas	m3/t	0	0	1.3	0	0	0.66
	Coke	kg/t	0	32	0	0	0	66.01
	Dissolvent	kg/t	0	0	0	0	4	4
	Aluminum Pad	t/t	0	0	0	0	1.08	1.08
Pollution Export	CO2	kg/t	59.54	1089.06	862.34	10,384.77	284.13	14,459.42
	CO	kg/t	0.145	1.52	400	659	0.71	919.28
	SO2	kg/t	0.16	1.43	3.03	16.8	0.93	24.3
	NOX	kg/t	0.008	0.17	0.855	0.0015	0.00066	0.82
	CH4	kg/t	0.0002	0.005	0.005	0	0.00004	0.01
	PM10	kg/t	0.04	0.08	0.16	5.48	0.27	6.62
	PM2.5	kg/t	0.18	5.87	0.1	3.15	0.16	16.55
	HF	kg/t	0	0.01	0.05	15	0	16.25
	C2F6	kg/t	0	0	0	0.0034	0	0
	CF4	kg/t	0	0	0	0.034	0	0.04
	PAHs	kg/t	0	0	0.027	0	0	0.01
Total	CO2e	kg/t	120.12	1137.36	1113.03	10,385.2	296.62	14,979.55

. The carbon-equivalent emissions from the refining, anode production, and electrolysis processes accounted for approximately 7.59%, 7.73%, and 69.32%, respectively. In 2021, the estimated greenhouse gas emissions per ton of primary aluminum production were 14.98 tons of CO₂e [8].

3. Challenges and Dilemmas in the Development of the Chinese Aluminum Industry

3.1. Irrationality of the Cleaner Power Structure

The energy structure of aluminum electrolysis in China is overly simplistic, with the vast majority of enterprises relying on thermal power for their electricity supply. This is in stark contrast to the international trend of widely using green energy sources such as hydropower. Therefore, it is necessary to promote an energy structure adjustment for China’s aluminum industry.

3.2. Insufficient Supply of Low-Carbon Raw Materials

The development of the recycled aluminum industry not only enables energy conservation and emission reduction in the aluminum sector but also ensures a growing demand for aluminum (energy consumption and greenhouse gas emissions of recycled aluminum production are only 3–5% of those in primary aluminum production). The aluminum recycling system in China is shown in Figure 5, and mainly includes four periods: the collection of scrap aluminum and the preprocessing, recycling, and processing of recycled aluminum. China’s scrap aluminum recycling rate has reached a level comparable to developed countries, with an overall recycling rate exceeding 76%, while the recycling processes remain relatively underdeveloped. The complex composition of raw materials results in recycled aluminum with a lower purity and quality. Additionally, the lack of systematic and precise management in scrap aluminum classification and recovery means that high-quality wrought aluminum alloy scrap is often downcycled. Most of the recycled aluminum ingots produced in China have limited ductility, restricting their applications and leading to a significant downgrading of high-quality wrought aluminum alloy scrap. Currently, only about 20% of wrought aluminum alloys are recycled at their original grade, compared to over 50% in developed countries.

3.3. Trade Risks Arising from the Carbon Border Mechanism

3.3.1. Impact on Export Costs of Aluminum Products

(1)

Purchase of additional carbon certificates. The implementation of a carbon tariff necessitates that importers acquire electronic certificates that correspond to the carbon emissions embedded in imported products. This regulatory requirement is designed to hold importers accountable for the environmental impact of their products. Since China’s current carbon market lacks a robust carbon pricing mechanism for high-carbon industries [46,47] and has not yet aligned with international markets, Chinese aluminum products cannot benefit from foreign carbon offset policies, which indirectly increases the costs and prices of Chinese aluminum in the foreign market.

(2)

Expansion of carbon tariff coverage. Carbon tariffs currently exclude indirect carbon emissions, focusing only on the direct emissions from the production and processing of products, and they do not yet account for the wider emissions generated throughout the upstream and downstream supply chains. Once indirect emissions from electricity consumption are incorporated into the carbon accounting framework, aluminum exporters will be required to pay additional carbon taxes based on their electricity usage. As carbon tariffs gradually extend their sectoral coverage to downstream products in the supply chain, the cost burden placed on the aluminum industry will likely continue to expand. The cumulative effect of these changes could lead to a substantial increase in the overall cost burden placed on the aluminum sector.

(3)

Purchase advanced technology. In order to meet the carbon emission standards for aluminum exports, Chinese companies may invest in advanced foreign production equipment and technologies, further driving up costs, which will translate into higher export costs for aluminum products [48]. However, such investments often come with substantial financial implications. Although these investments are crucial for compliance and long-term sustainability, they also bring immediate financial challenges that could affect market share and profit margins.

(4)

Potential price advantage. Chinese aluminum products that are exported are already subject to stringent environmental standards, and even exceed the regulations, and so adherence to high environmental standards could reverse the current situation and yield competitive price advantages [7]. By demonstrating compliance with rigorous environmental criteria, Chinese manufacturers could attract customers who are willing to pay a premium for products that align with their sustainability goals. In addition, regarding the CBAM, the additional costs are more likely to be passed on to consumers in other regions.

3.3.2. Impact on Export Volume of Aluminum Products

(1)

Price increases cause reductions in capacity and export volumes. An increase in aluminum product prices will result in the loss of competitive pricing advantages for exported aluminum products, which may lead to a decrease in international market demand and a potential loss of orders [49,50]. Consequently, market contraction could cause overcapacity and insufficient demand, leading to significant issues related to idle capacity and inventory buildup in China’s aluminum industry [51]. Consequently, the anticipated reduction in orders could pose serious challenges for Chinese aluminum exporters and supply chains.

(2)

Elimination of outdated production capacity. The implementation of carbon tariffs will drive an overall low-carbon transformation within the industry, including the elimination of outdated production capacities. In the short term, a series of changes will directly affect aluminum production levels, resulting in a reduction in exportable quantities. This transition may initially result in a decrease in the quantity of aluminum available for export, as production facilities are restructured and optimized to align with new regulatory requirements.

(3)

Develop low-carbon industries and expand domestic demand. The carbon tariff may also stimulate China to accelerate the development of low-carbon industries, such as new energy vehicles, thereby increasing domestic demand for aluminum products and alleviating export pressures. The demand for materials that support these initiatives, like green aluminum, is expected to rise significantly. By redirecting resources and innovation efforts towards the production of high-quality aluminum and other green technologies, Chinese companies can strengthen their competitive position both domestically and internationally.

3.3.3. Impact on the Competitive Position

(1)

A late start for technological systems and carbon markets leads to a decline in initial competitiveness. The implementation of carbon tariffs will lead to disadvantages for aluminum products from developing countries with relatively less advanced industrialization, including China. Green barriers and trade friction caused by the CBAM will intensify, causing Chinese aluminum products to lose their competitiveness compared to those from more developed economies, which benefit from advanced recycling processes and lower carbon footprints [52].

(2)

Transition to high-quality supply chains. The implementation of carbon border mechanisms will impose additional carbon regulation costs on high-carbon products throughout the supply chain. To mitigate these costs, superior supply chain segments may shift from high-carbon to low-carbon countries. Such a shift in supply chain dynamics may lead to disruptions in established trade relationships, logistical inefficiencies, and reduced economies of scale.

(3)

Chain reactions exacerbate the complexity and competition of exportation. The adoption of carbon border mechanisms may prompt other countries to consider similar carbon tariff policies. As more nations follow suit, the ripple effect may intensify, creating additional layers of complexity and costs for Chinese exporters and exacerbate the impact on China’s export trade, leading to further challenges for the aluminum industry in maintaining its market position. Consequently, maintaining competitiveness and market share will become increasingly difficult for China’s aluminum industry as it contends with heightened regulatory barriers and rising production costs.

4. Strategies for the Chinese Aluminum Industry in Response to Low-Carbon Development Regulated by Carbon Tariffs

To address the impacts of carbon tariffs on development, China’s aluminum industry must immediately take measures to reduce carbon emission intensity as much as possible. Additionally, it is necessary to implement policy and market measures to mitigate the market risks associated with carbon tariffs.

4.1. Source Substitution: Transformation to a Cleaner Energy Structure

Up to now, relying solely technological advancements has been proven unable to fully offset the growth in aluminum consumption and the associated carbon emissions [53]. Achieving low-carbon electricity substitution is one of the key pathways for decarbonizing the aluminum industry. The aluminum industry needs to reduce its carbon footprint by prioritizing cleaner energy sources such as water, wind, and solar energy [54,55] and changing the combination of electricity consumption in the aluminum electrolysis industry and reducing dependence on high-carbon energy sources, such as coal [56,57,58].

Some studies indicate the optimized allocation and integration of renewable energy in industrial production, modeling, analyzing, and optimizing them under different scenarios. For example, Sgouris et al. [59] adopted an optimal combination of renewable energy and fossil fuels, along with innovative power regulation schemes, leading to a continuous reduction in aluminum smelting costs by 2.2% to 5.3%. Without using energy storage, the share of solar photovoltaic power generation exceeds 40%, resulting in a decrease in process emission intensity from 5.13 to 2.87 tons of CO₂.

In addition, while wind and solar power generation are undergoing accelerated development, there still exists a series of technological constraints such as load stability, frequency regulation and energy storage elimination. These series of issues can be addressed through enhanced demand response management, the deployment of smart grid control technologies, the implementation of rapid response frequency regulation, and the introduction of flexible energy storage technologies [60,61,62,63].

Simultaneously, the large-scale application of new energy in the aluminum industry faces challenges related to carbon emissions transfer. For example, to achieve local emission reduction targets, some regions may require aluminum smelters to shift their electricity consumption to local hydropower facilities. However, this approach could potentially increase overall carbon emissions, as other regions would become more reliant on fossil fuel power generation to compensate for the shortfall in the electricity supply [64].

4.2. Source Replacement: Low-Carbon Materials Substitution

The low-carbonization of raw materials is an important pathway for promoting sustainable carbon reduction in the aluminum industry, which includes the low-carbon processing of aluminum ore, the development of green electrolysis technologies to reduce dependence on fossil raw materials, enhancing the efficiency of aluminum recycling, and utilizing recycled aluminum.

4.2.1. Adopting Low-Carbon Anodes During the Electrolysis Process

Although the Hall–Héroult process has undergone years of development and achieved improvements in current and energy efficiency through process optimization, it still cannot overcome its inherent flaw of producing high emissions. Previous research has explored alternative technologies that utilize carbon to convert bauxite into relatively unstable aluminum chloride, aluminum sulfide, or aluminum carbide. However, these alternatives have not demonstrated significant advantages in terms of emission reduction. Therefore, low-carbon anodes are indispensable for achieving low-carbon production through electrolysis, including a variety of electrode forms, as shown in Figure 6.

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Inert anode materials. The types of inert anode materials mainly include three systems: ceramics, metals, and metal ceramics [23]. The ideal inert anode material should have a good electrical conductivity, high chemical stability and corrosion resistance, excellent mechanical properties, and cost advantages [65,66].

(2)

Hydrogen anode. Hydrogenated anode technology adopts appropriate cathodes and hydrogen diffusion anodes for electrochemical reactions [67].

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Low-temperature electrolysis anode. The electrolytic aluminum process can achieve approximately 140 kW·h/kg of energy-savings for every 10 °C decrease in temperature. Simultaneously, the physicochemical properties of the electrolyte will be severely affected during the process of reducing the electrolysis temperature and voltage. The current temperature for aluminum electrolysis has reached 950 °C, while the melting point of aluminum is 660 °C and such a high temperature is not necessary. Theoretically, low-temperature technologies such as Al₂O₃-based, aluminum-based salt, and ionic liquid-based electrolysis have been proposed and developed to achieve energy conservation and carbon reduction.

4.2.2. Enhancing Aluminum Recycling Efficiency and the Utilization of Recycled Aluminum

The energy requirement for the secondary melting (recycling) of aluminum is only 5–10% of that required for the original production of aluminum [68]. Based on a life cycle assessment, the carbon dioxide equivalent (CO₂e) emissions per ton of primary aluminum and recycled aluminum are 14.98 tons and 0.32 tons, respectively [8]. To achieve a substantial reduction in CO₂ emissions in the Chinese aluminum industry, it is necessary to adopt a cycle strategy, establish a perfect recycled aluminum recycling system, raise the recovery rate and technical level, and promote low-energy-consumption and efficient recyclable aluminum processes [55,69,70].

The energy consumption and energy efficiency of various aluminum production processes vary significantly, reflecting both technological advancements and ongoing challenges in reducing carbon emissions. For instance, rotary furnaces exhibit an energy consumption range of 2–9 GJ per ton of aluminum [71], while reverberatory furnaces are characterized by a thermal efficiency of 15–39% [72]. Electrically heated crucibles offer a higher energy efficiency of 83%, with a metal loss range of 0.5–3%, whereas gas-fired crucibles have a lower energy efficiency, between 15 and 28% [72]. Induction furnaces, on the other hand, achieve a notable energy efficiency of 90%. In contrast, newer techniques like ionic liquid-based processes have energy consumption rates ranging from 3.20 to 6.70 kWh per kilogram of aluminum [73], while three-layer electrolysis consumes about 120 MJ per kilogram of aluminum [74]. Solid-state electrolysis, an emerging technology, has a lower energy consumption at approximately 64 MJ/kg-Al [74]. Improving energy efficiency and reducing energy consumption can effectively promote carbon reduction. Evidently, traditional recycling of recycled aluminum is based on the recovery and reuse of aluminum from melt furnaces, which will cause a relatively large energy consumption and high costs. The technology of electrolyzing aluminum from mixed waste using ionic liquids [75,76] and carbon-based electrothermal regeneration for the preparation of crude aluminum alloys [77] can replace traditional melting furnace recycling, with certain low energy consumption and cost advantages. Based on the traditional aluminum electrolysis process, the improved design of electrolytic tanks [78,79] can also effectively improve the recovery efficiency of scrap aluminum and reduce the waste gasses and solid waste generated during production process.

In addition, the aluminum cycle should give priority to keeping aluminum resources level or ultimately achieving an upgrade. The traditional recycling of scrap aluminum using separation, impurity removal, and remelting technology will reduce the quality of aluminum, which cannot meet the future demand for high-quality aluminum. Two common grade-preserving recycling processes for aluminum are closed-loop recycling and solid-state recycling. Closed-loop recycling enables scrap waste aluminum generated by end users or post-consumer recycled aluminum to be used to manufacture corresponding alloy products, thereby supplying downstream customers or end consumers and establishing a closed-loop system for aluminum resource recycling. For example, a closed-loop recycling system [80] for automotive scrap aluminum and aerospace scrap aluminum has been established in Europe and America, while Japan has achieved a remarkable recycling rate of 97.9% for aluminum cans [81]. Solid-state recycling of waste aluminum below the solidus temperature can, to some extent, ensure the performance of the raw materials. Although both methods of premium utilization can maximize the value of waste aluminum resources, their application scenarios are notably restricted. With the recycling of waste aluminum, the accumulation of alloying elements is inevitable, which will result in traditional downcycling and preservation recycling technologies being unable to absorb this recycled aluminum. Therefore, it is necessary to develop upgraded recycling technology for waste aluminum to restore downgraded waste aluminum to the original aluminum quality level. The three-layer liquid electrolysis method utilizes the interaction between three liquid layers to improve electrolysis efficiency and purity. The segregation method utilizes the phenomenon of aluminum segregation in the molten state in both solid and liquid phases to purify the aluminum content [82]. The dissolution method employs specific metals to selectively dissolve aluminum at certain temperatures. A solid-state electrolysis (SSE) process using melted salt has been proposed to increase the recovery rate of waste aluminum, with an energy consumption nearly half that of the three-layer method [74]. In addition, there numerous molten salt electrolysis processes still exist at various temperature levels.

The large amounts of solid waste after recycling contain high levels of elemental pollution, which must be considered in a more sustainable alloy design strategy to make green aluminum. Mechanical, laser selection techniques should be used to enhance the purity of waste aluminum [83,84,85], or battery- and electrolysis-based composite aluminum upgrade systems to promote sustainable upgrading of waste aluminum [86]. The innovation of the recycling paradigm of aluminum should be advanced, and it is necessary to promote the high-value processing and use of waste aluminum [87,88].

4.3. Intermediate Process Control: Innovation of Key Technologies and Production Processes

Optimizing production processes and promoting technological innovation are crucial for mitigating the CO₂ emissions from China’s aluminum industry [43,53,89]. The application of advanced technologies plays a crucial role in promoting carbon neutrality [90]. Processing industries need to clarify the long-term mechanisms through which different technological combinations contribute to industry-wide carbon reduction [91].

Strengthening process integration and optimization is necessary to enhance material and energy use [92,93,94,95,96], such as adjusting the composition structure of bauxite. Improving process energy efficiency is essential for promoting system-wide energy savings and carbon reduction [90,97,98], among which waste heat recovery is one of the relatively effective means of energy conservation and efficiency enhancement [99,100].

In addition, the development and widespread adoption of new carbon reduction processes and technologies in aluminum production must be promoted. The aluminum electrolysis process using aluminum chloride that was previously mentioned can be combined with the recycling of CO₂, generating chlorine and metallic aluminum through the reaction, while capturing and recovering the carbon dioxide produced, achieving a closed-loop cycle [101,102]. The Solid Oxide Membrane (SOM) electrolysis process with zero-direct carbon emission similarly uses a solid oxide membrane to replace the traditional carbon anode, thereby avoiding the oxidation reaction of the carbon anode during electrolysis [103]. Such carbon anode substitution technologies can significantly reduce carbon dioxide emissions. Molten salt electrolysis uses an electrolyte with a lower melting point than alumina, enabling aluminum electrolysis to occur at lower temperature, thus saving more energy [104,105]. The aluminum electrolysis process based on a direct carbon fuel cell (DCFC) directly uses the carbon as a fuel, generating electricity and CO₂ at the anode simultaneously, with this electricity being used to drive the aluminum electrolysis process, indirectly reducing carbon emissions [106,107]. Some other typical energy conversion and carbon reduction technologies which can be applicable to aluminum industry and effective in supporting carbon reduction are presented in

Table 4. The key energy conversion and carbon reduction technologies in the aluminum industry.

Technologies	Energy Saving (GJ/t-Al)	CO2 Reduction (kg/t-Al)	Annualized Capital Cost (CNY/t)	Ref.
Tubular falling film evaporator technology	0.92	87.33	2130	[89]
High-efficient and energy-saving kiln technology for use in alumina baking process	0.66	62.66	2788	[89]
Novel cathode structure of aluminum rebate cell	3.69	90.00	583.99	[108]
Aluminum abatement cell structure optimization techniques with low temperatures	0.58	91.25	60.00	[108]
Comprehensive technology of current intensifying and high-efficiency energy-saving	3.60	570.30	20.00	[108]
New energy saving technology of stable current insulation aluminum electrolytic cell	1.80	285.15	45.00	[89]
Pipe heating and pot holding technology	0.60	56.56	11,216	[89]
Gas-operated anode for prebaked aluminum abatement cell with low voltage	0.45	71.29	35.00	[89]
Starting up and closing down cell appliances of aluminum reduction cell without a cut-off	0.27	42.77	30.00	[108]
New cathode casting technology	1.80	285.15	45.00	[89]
Carbon-free slag anode technology	0.36	57.03	25	[89]
Aluminum electrolysis waste heat recovery technology	3.60	570.30	367.00	[108]
New type of coke particle roasting starting technology for aluminum reduction cells	1.74	275.45	150.00	[89]

.

4.4. End-of-Pipe Treatment: Applications of Carbon Capture and Utilization

4.4.1. Carbon Capture Technologies

The integration of carbon capture and utilization (CCU) technologies into aluminum production systems can be considered to achieve zero carbon emissions [41,109]. The continuous demand for CCU has led to an increased focus on material development, selection, and integration utilizing strategies for carbon capture and utilization, driving further research in this area [110,111], to enhance technological preparedness [112,113,114,115,116].

Regarding different stages, carbon capture can be divided into three categories, as shown in Figure 7. Pre-combustion capture refers to the capture of carbon before fuel combustion, such as fuel modification, gasification, or carbon separation [117,118,119]. Mid-capture occurs during combustion, typically within furnaces or reactors, with oxygen-enriched combustion technology being one of the typical representatives [120,121,122]. Post-combustion capture involves capturing carbon from flue gasses after combustion, for which a variety of technological pathways have been developed [123,124,125].

The technical pathways for carbon capture can be divided into four categories according to their methods and forms. Physical adsorption methods use solid adsorbents to capture CO₂, such as molecular sieves, activated carbon, metal–organic frameworks (MOFs), and zeolites [126,127,128,129,130,131]. Chemical absorption involves the chemical binding of CO₂ with absorbents to form stable compounds, such as amine absorption, metal oxide absorption, and carbonate looping [132,133,134]. Membrane separation methods leverage differences in gas molecule size or polarity and their permeation rates through membranes to selectively separate CO₂ [135,136]. Cryogenic separation cools the flue gas to an extremely low temperature, causing CO₂ to condense into a liquid or solid, allowing for its separation from other gasses.

Figure 7. Sources of carbon dioxide in the aluminum industry, capture technologies, and commonly used chemical catalytic conversion technologies [137].

Figure 7. Sources of carbon dioxide in the aluminum industry, capture technologies, and commonly used chemical catalytic conversion technologies [137].

4.4.2. Carbon Utilization Technologies

The captured CO₂ can be utilized through various pathways, including chemical conversion, mineralization, biomass conversion via microalgae, enhanced oil and gas recovery, and the production of polymers, as also shown in Figure 7. As the mainstream method for industrial-scale carbon utilization, chemical conversion can synthesize high-value chemicals, such as hydrogen, methane, syngas, and olefins, through catalyst-driven chemical reactions [138,139,140].

Photocatalytic reactions are facilitated by a photocatalyst that captures light and converts it into a form of reactive energy, activating CO₂ and other reactants [141,142,143]. When the light energy is equal to or greater than the bandgap of the semiconductor material, electron–hole pairs will be generated. CO₂ adsorbed onto the catalyst’s surface can be activated through electron transfer, forming a more reactive radical species, CO₂⁻, which can react with nearby protons and other chemical species, further converting it into valuable chemical products.

Electrocatalytic technology uses electricity to drive CO₂ reduction reactions through the design of nanostructured electrocatalysts, effectively improving the efficiency of carbon conversion and controlling reaction selectivity [144]. Surface-catalyzed electro-activation involves charge transfer across the interface between a surface (often metallic) and adsorbed CO₂, which occurs from the metal’s Fermi level, forming the radical species CO₂⁻. Producing highly reduced chemicals necessitates multiple electron transfers, often coupled with protonation or through proton-coupled electron transfer reactions [137].

Thermocatalytic conversion refers to the process of converting CO₂ into chemicals and energy products under thermal driving, for which the activation process involves the transfer of electrons from the metal to CO₂, forming adsorbed free radicals [137]. Enzymatic catalysis leverages CO₂-reducing enzymes found in nature to achieve efficient CO₂ conversion under mild reaction conditions with a high catalytic efficiency [145].

Plasma is a state of matter in which the electrons are not bound to atoms or molecules, resulting in fully or partially ionized gas. Thermodynamically challenging reactions can occur even under ambient conditions in the plasma state. By imparting 5.5 eV to the CO₂ molecule, the C=O bond can be broken through stepwise vibrational excitation, enabling the reaction without extreme heat and finally converting the molecules to high-value chemicals.

Moreover, some studies have designed special materials and mediums to enhance the catalytic effect on the reaction with carbon dioxide. Covalent organic frameworks (COFs), with their multiple active sites, represent a promising class of porous crystalline materials and are widely researched for their efficiency in CO₂ conversion [146]. Deep eutectic solvents (DESs), as a novel class of green solvents, have attracted significant attention due to their flexible design and high affinity for CO₂, making them highly effective in carbon capture and utilization [147].

4.5. Policy Incentive: Optimize the Management of the Supply Chain and Policy Implementation

In addition to directly alleviating carbon emission pressures through technological applications and structural adjustments, a flexible carbon policy design is also an effective means to promote the aluminum industry’s alignment with international standards. The pollutant emissions from the aluminum industry vary significantly across regions, and national industrial policies have a substantial impact on emissions in the aluminum sector [38]. From the policy perspective, it is essential to actively promote the implementation of policies aimed at adjusting the energy structure and resource recovery processes, reducing energy intensity, encouraging the use of cleaner energy, controlling production capacity, and decarbonizing electricity in order to mitigate greenhouse gas emissions [148,149]. Sustainable management also plays a crucial role in achieving a sustainable performance in the aluminum industry [150], as it can reduce carbon emissions associated with production processes. However, energy-related inflation negatively affects the relationship between sustainable management and the sustainable performance of the aluminum industry, forcing companies to balance cost control with environmental management, which increases the difficulty of implementing sustainable management [151]. The complexity of carbon market mechanisms, combined with market uncertainty, raises questions about how carbon markets interact with other markets, such as energy markets, potentially limiting carbon risk management and efficiency [152,153].

In addition, it is necessary to further improve domestic carbon market mechanisms and implement a market-oriented and standardized carbon trading system for electrolytic aluminum and incorporate it into the national unified carbon emissions trading market. The main obstacle to resolving the contentious issue of carbon leakage is rooted in political tensions driven by the resurgence of great power competition and protectionist industrial policies [154], making it difficult for countries to reach a consensus on unified emissions reduction measures or a global carbon pricing mechanism. The implementation of carbon tariffs may lead to an increase in the importation of indirectly carbon-intensive products, potentially exacerbating carbon leakage [155,156]. Emission-intensive and trade-exposed industries, such as the aluminum sector, are subject to high marginal abatement costs, limiting the effectiveness of existing carbon pricing policies. To reduce leakage risks, a flexible policy mix must be adopted, including differentiated domestic and import policies, and research on the interaction mechanism between domestic carbon market and carbon tariff. Carbon pricing and allowance mechanisms should be regarded as core policy tools, as they can both promote emission reductions and reduce adverse economic impacts through revenue redistribution [157,158]. An analysis of variations in industry characteristics and carbon allowance allocation methods reveals that the effects of a pilot carbon trading policy on the international low-carbon competitiveness of industries are primarily observed in sectors characterized by low carbon emissions, substantial state-owned capital, and a high export intensity [159].

Facilitating the integration and linkage between green certificates and carbon tariff is also a key countermeasure, as it provides companies with a tool to reduce compliance costs related to carbon emissions. Through trading green certificates, companies can not only meet domestic and international environmental policy requirements but also maintain a competitive edge in the global market [50]. However, the international recognition of green certificates needs to be improved. It is necessary to quantify the environmental attributes and contributions of green electricity and incorporate them into the design of carbon emission accounting mechanisms, promoting the recognition of the green environmental value represented by green certificates within the CBAM.

5. Conclusions

The implementation of carbon tariffs will significantly impact industries covered by these policies, such as aluminum production. Therefore, clarifying the mechanisms underlying the impact of carbon tariffs on high-carbon industries and developing strategies to support future low-carbon transitions are of great significance. Based on an extensive literature review, this paper presents the following conclusions:

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This study highlights the current status of China’s aluminum industry from three critical perspectives: energy consumption, carbon emissions, and trade dynamics. The aluminum industry has demonstrated significant progress but is poised to face ongoing challenges. Coal-fired power generation continues to dominate the energy consumption landscape in the aluminum sector. Despite improvements in energy efficiency driven by technological innovation, the persistent reliance on coal has still resulted in elevated carbon emissions. Furthermore, since 2000, the trade dynamics of Chinese aluminum products have exhibited a robust growth trajectory, indicating a deep integration of the aluminum value chain into the global supply chain. As carbon tariffs are implemented and China’s carbon market aligns with international standards, the aluminum industry will encounter substantial challenges that necessitate strategic adaptations to maintain competitiveness and sustainability in an evolving regulatory environment.

(2)

The implementation of carbon tariffs presents significant challenges and opportunities for China’s aluminum industry. Firstly, the expected increase in aluminum export costs may undermine the pricing competitiveness of Chinese aluminum products in international markets. However, this situation simultaneously incentivizes enterprises to transition towards low-carbon production methods. The additional operational costs incurred to meet carbon emission standards could initially lead to a decline in export volumes and exacerbate existing overcapacity issues. Nevertheless, adherence to stringent environmental regulations may gradually confer competitive advantages in a global market that is increasingly attuned to sustainability concerns. Thus, the Chinese aluminum industry must formulate strategic responses to carbon tariffs to navigate the dual pressures of compliance and competitiveness effectively.

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China’s aluminum industry must adopt a comprehensive approach to address the challenges posed by carbon tariffs, encompassing upstream low-carbon materials and energy management, intermediate process control, end-point governance, and policy incentives. Transitioning to clean energy and optimizing raw material usage are critical to reducing the carbon footprint of aluminum production. The industry must invest in technological innovations to enhance energy efficiency and strengthen carbon capture and utilization efforts. Furthermore, establishing robust recycling systems and adopting advanced recycling technologies can significantly reduce emissions and operational costs. Simultaneously, optimizing the policy framework is essential to promote sustainable practices and incentivize the industry’s low-carbon transition.

Moreover, due to the limitation of the existing literature studies, this review still lacks the introduction of models or theoretical methods related to the future development of the aluminum industry and the coordination mechanisms of policies and markets. It is found that predicting market development dynamics under reasonable scenarios is an important direction for future research. More forward-looking models can be established to assess the long-term impact of different policies on the aluminum industry, and it should be considered that integrating factors such as market dynamics, technological advancements to support the formulation of strategies to respond to carbon tariffs comprehensively, and to provide scientific support for the low-carbon transition of the aluminum industry.