OSLO - Hydro expects demand for its low carbon aluminium to grow at a fast pace over coming years, the CEO of one of the world's largest aluminium producers told Reuters, adding that US customers are starting to ask for recycled material.

Aluminium is a key material for the energy transition, which includes electric vehicles. It is used to reduce weight which helps extend the driving range of EVs and offsets the heaviness of other parts such as batteries.

But the production of primary aluminium, which needs large amounts of electricity, is extremely carbon intensive and consumers looking to reduce their emissions are seeking to use as much recycled and low carbon aluminium as possible.

Hydro's low carbon aluminium includes recycled material and the metal produced by its plants using hydro power.

"Growth in demand for low-carbon aluminium far exceeds expectations for average consumption," the Norwegian company's Chief Executive Hilde Merete Aasheim said.

While Hydro expects demand for its low carbon products to rise 20% a year on average until 2030, the market for primary aluminium is only seen growing 3% a year over the same period.

Hydro did not detail the premium it could command for its low carbon aluminium, but it did say the lower the CO₂ content the higher the premium.

Emissions from aluminium production vary globally.

Producing one metric ton of aluminium in China can emit up to 20 tons of carbon as much of the industry relies on burning coal to produce power, and in Europe the number is less than seven tons. One ton of Hydro's primary aluminium emits four tons of carbon.

Recycled or secondary aluminium typically uses 95% less energy than primary.

Hydro has in the past year signed deals to sell its low carbon aluminium to European auto makers Porsche and Mercedes-Benz.

Aluminium, which is also used in the packaging and construction industries, is classified as a critical mineral by the United States and the European Union.

Despite higher prices of raw materials and slowing activity in European construction, the sector's demand for recycled aluminium products is "remarkable", Aasheim said.

Global demand for primary aluminium is estimated at around 70-million tons this year

Hydro is also boosting its recycling capacity in the United States, partly aided by the U.S. Inflation Reduction Act (IRA), which contains a commitment to increasing domestic supply of minerals critical to the energy transition.