Refusing aluminum wire rod from Russia may harm decarbonization in EU

The European Commission’s idea to restrict the import of aluminum wire rod from Russia has encountered resistance from industrial companies in at least two EU countries, as reported by the industry publication Harbor Aluminum. Customers are concerned that alternatives to Russian production will be much more expensive and much less environmentally friendly.

According to Harbor Aluminum, EU countries imported nearly 65,000 tons of aluminum wire rod last year, equivalent to approximately $200 million. Aluminum wire rod is used in the production of aluminum cables, commonly employed to connect renewable energy sources like wind turbines and solar panels to the energy grid.

In Russia, aluminum plants rely on hydroelectric power, resulting in a low carbon footprint for Russian wire rod—only 2.2 tons of CO2 per ton of product, compared to 7.1 tons of CO2 in Oman and 8.9 tons of CO2 in Egypt. Given that the development of renewable energy aims to decarbonize the economy, this sector prefers materials with minimal carbon footprints.

Experts contend that aluminum wire rod from the Middle East or India will not only be less environmentally friendly but also more expensive for European industrial customers. Europe’s own production of aluminum wire rod is insufficient, mainly because wire rod can only be produced from primary aluminum, and the output of primary aluminum has been on the decline in Europe.

Due to the transition to green energy, the consumption of aluminum wire rod in EU countries has been on the rise, while domestic production has been declining due to increasing costs. Consequently, Russia, offering outstanding value-in-use, has become Europe’s largest supplier of aluminum wire rod.

Europe’s rejection of Russian oil and gas has previously led to a surge in inflation and posed challenges for EU industrial enterprises. However, it was at least strategically justified. Firstly, it dealt a blow to the state-controlled Russian energy sector, thereby affecting Russia’s military budget. Secondly, it hastened the European Union’s transition to green energy.

Aluminum wire rod is a much more niche product, manufactured by Russian non-state companies. Banning such a product will hardly have any impact on Russian politics and the economy. However, it could be a self-inflicted wound for the European Union, as it would lose a crucial component of its green energy infrastructure.

If a political decision to ban Russian-origin aluminum wire rod is made, it will inevitably lead to increased costs for EU customers. Furthermore, the carbon footprint will exceed the level typically required by European industrial companies. This could jeopardize the decarbonization of the economy, a goal actively pursued by the European Union, and turn it into a victim of geopolitics.