In this 1999 reply, Bo Weidema responds to the aluminium industry’s comment on marginal production technologies in life cycle inventories. The industry argued that aluminium is traded globally, so extra demand cannot be linked to one new smelter or electricity source. Weidema agrees that analysts must identify the geographical market affected, while arguing that marginal modelling is useful when the boundary reflects actual market conditions.
Because aluminium smelting uses much electricity, access to low-cost power influences where new capacity is built. Weidema describes smelters locating where underused hydropower or natural gas otherwise flared during oil extraction is available. He cites data showing hydropower supplied about 56% of primary aluminium production, and projections in which it remained the largest expected source for announced new plants. He argues that market-based data could therefore retain a substantial hydropower share rather than assume one universal fossil-fuel marginal.
The reply distinguishes the global aluminium market from regional electricity markets. A global commodity’s electricity marginal may combine several regional marginals, whereas a smaller, relatively isolated product market may have one relevant marginal. The Danish packaging study discussed in the reply considered central European and Nordic electricity markets, which were described as having different long-term marginal generation. It also examined a future scenario with a more integrated European market, based on planned transmission expansion and liberalisation.
Weidema’s main point is to define the affected market in time, geography and economic conditions before selecting data. He notes that averages can also change with market boundaries and with the treatment of electricity imports, exports and transit trade. The choice between average and marginal data should reflect which model best represents the actual market. This is a methodological argument based on conditions and projections available in 1999.
