Kentucky may lose project over lack of clean energy
Biden’s climate goals hinge on reliable supply of aluminum
Kentucky could lose a massive, 1,000-job aluminum smelter project to another state if it can't scrape up enough clean energy to support it.
Century Aluminum would like to build its plant in Kentucky, but is considering other options. The facility is predicted to double the size of the U.S. primary aluminum extraction industry and help curb the industry's emissions, company and state leaders announced recently.
But the “green” aluminum project coming to fruition will hinge on access to huge amounts of clean energy – a resource Kentucky has been slow to cultivate compared to competing states, as state lawmakers have fought to keep coal-fired power plants burning.
Century was selected for a cost share of up to $500 million, pending award negotiations, from the U.S. Department of Energy to support the project as part of the Biden administration's efforts to decarbonize key U.S. industries.
In recent decades, the U.S. has ceded its position as a leading producer of aluminum globally. There are only four operating primary aluminum extraction sites, known as smelters, left in the U.S., and Century's proposed plant would be the first built in 45 years.
The metal – used in solar panels, wind turbines and electric vehicles – is pivotal to the Biden administration's plans for combating climate change. And Century's new smelter would cut out 75% of the emissions from a traditional smelter due to “energy-efficient design and use of carbon-free energy,” according to the Department of Energy.
In a news briefing, Gov. Andy Beshear touted the smelter proposal as potentially “the largest investment on record in eastern Kentucky.”
It would create 1,000 permanent jobs represented by the United Steelworkers union, and 5,500 additional construction jobs. Salary and benefits packages for workers are expected to be over $100,000 annually, according to the company.
At a Department of Energy presentation in April, a Century representative said the company wants to facilitate minority and female representation in the new workforce, as well as create jobs in “energy communities” – regions of the nation that have seen hardship as a result of the declining fossil fuel industry.
But “a myriad of steps” remain in the company’s final decision for a site, according to Jesse Gary, Century’s president and CEO, including costs of development, utilities, workforce and incentives.
A company spokesperson did not respond to a phone call and email requesting further comment on its decision-making process or elaboration on its preference for Kentucky. A spokesperson from the state’s Cabinet for Economic Development declined to share additional details on “an active project.”
However, Century has indicated it’s also considering other states around the Ohio River and Mississippi River basins, which together make up more than 40% of the contiguous U.S.
And Kentucky is more reliant on fossil fuels for electricity generation than almost any other state in the region of consideration.
The Inflation Reduction Act and Bipartisan Infrastructure Law infused billions of dollars into the Department of Energy’s Industrial Demonstrations Program, with the aim of decarbonizing important industries.
And without a reliable supply of aluminum, the Biden administration’s climate goals could remain out of reach.
Under the DOE-funded proposal, the smelter will be “primarily powered by carbon-free energy.”
“They say they want clean energy. They say they want to be in Kentucky,” said Annie Sartor, aluminum campaign director for Industrious Labs, an organization advocating for decarbonizing U.S. industry. “I think we’re going to find out here in a few months if they’re able to find it, or if they need to go somewhere else.”
Access to affordable clean energy is necessary for the “green” aluminum project – and the cost of electricity typically accounts for a significant portion of smelters’ production costs.
“The aluminum industry’s reliance on fossil fuels has put its future in jeopardy,” according to a news release from Ford Motor Co., whose supply chain leans heavily
STONE/LOUISVILLE COURIER JOURNAL FILE
on aluminum. “At the same time, the price of electricity from renewable sources like wind and solar has plummeted over the last 10 years.”
Aluminum is important to the production of solar panels, wind turbines and electric vehicles, among other key climate solutions prioritized in President Joe Biden’s efforts to decarbonize the economy and electrify transportation.
But traditionally, the production of aluminum has been carbon intensive, largely due to reliance on large amounts of fossil fuel-based energy.
Kentucky doesn’t have utility-scale wind generation, although researchers at utility companies are experimenting with its potential. Other potential carbon-free sources, like nuclear, would take years to establish in the state – making solar the most obvious energy source for filling the renewable gap, Sartor said.
As of late last year, Kentucky had less than 200 megawatts of solar installed statewide, according to the Solar Energy Industries Association, or SEIA.
Judging by the plant’s projection to double the size of the U.S. primary aluminum industry, Sartor said the “back-of-the-napkin math” suggests Century’s new facility could demand somewhere between 7001,000 megawatts.
“That scale of renewables does not currently exist in Kentucky,” she said. “They’re going to need to find an energy provider partner to build truly massive-scale renewables in order for this project to be sited in Kentucky, and not go somewhere else.”
There are about 40 solar projects in various stages of development around the state, according to Lane Boldman, executive director of the Kentucky Conservation Committee. At least some of those could likely help feed Century’s carbon-free energy needs.
Construction of the new smelter could take up to five years, according to a company presentation, and the SEIA estimates Kentucky could add nearly 3,000 megawatts of solar in that time, as prices continue to fall.
“The main point is the technology is already here for solar,” Boldman said. “It just requires the political will to do it.”
But state lawmakers have consistently resisted energy transition, instead looking to preserve the coal industry. Boldman pointed to the recent legislative session, in which Republicans passed a bill, despite the governor’s veto and fervent pushback from utility companies, as well as various business and consumer advocacy groups.
The bill gives the fossil fuel industry a greater voice in Kentucky’s energy policy decisions, such as coal-fired power plant retirements.
“From those lawmakers that have districts in the coalfields, I totally understand their concern,” Boldman said.
But clean energy projects like Century’s, she added, are “the new economy coming to their region.”
In 2022, Century announced a temporary halt in production at its Hawesville, Kentucky, smelter “as a direct result of skyrocketing energy costs.”
The company originally expected to idle the plant – once its largest U.S. smelter and “the largest producer of high purity primary aluminum in North America” – for less than a year, but it still has not come back into production nearly two years later.
Based on Century’s latest earnings calls, Sartor said it appears bringing Hawesville back online “is not off the table” – but she expects it would take significant amounts of affordable, renewable energy to support it.
Hawesville is one of many U.S. smelters that have been idled or permanently shuttered in the last 40 years. The trend of closures, often citing energy affordability, has led to tens of thousands of lost jobs and a steady decline in the country’s global share of aluminum production.
At the turn of the century, the U.S. was still the leading producer of primary aluminum, according to the BlueGreen Alliance. By 2022, American-made primary aluminum represented only a 1.2% share of the global market, lagging far behind countries like China, India and Russia, according to critical mineral data from the U.S. Geological Survey.
In September, Ford Motor Co., General Motors, PepsiCo, SunPower and other companies sent a letter to Energy Secretary Jennifer Granholm, calling on her department to prioritize the growth and decarbonization of the domestic aluminum industry in its deployment of federal infrastructure funding.
“Spiking electricity prices, lack of access to low-cost renewable energy, and insufficient federal investment” have pushed remaining primary aluminum smelters “to the brink,” the companies wrote.
Emissions from the smelters also contribute to warming – perfluorocarbons released from Century’s Sebree, Kentucky, plant in 2021 were equal to the annual greenhouse gas contributions of 40,000 automobiles, according to Inside Climate News.
Smelters in Kentucky owned by Century Aluminum have also had a history of harmful pollution released into local air and water.
The Environmental Integrity Project, a watchdog group, issued a report last year on “the aluminum paradox,” describing the industry’s fundamental role in energy transition and its historically high rates of toxic and planet-warming emissions.
Between 2018 and 2023, Century’s Kentucky operations racked up at least 39 violations of air and water pollution standards, according to the group’s analysis of federal data.
These violations point to another challenge of restarting a traditional smelter like the one in Hawesville.
“They’re older operations. They’re more polluting operations,” Boldman said. “It would take a lot to get those cleaned up.”