Technology diffusion in metal industries: driving forces and barriers in the German aluminium smelting sector

It is the objective of this paper to explain the driving forces of and barriers to technology diffusion in the metal industries with application to the German aluminium, smelting industry. The developed economic model concentrates solely on the process of modernising existing smelters because in Germany, due to the unfavourable production conditions for primary aluminium (high tabour and power tariffs) the construction of new smelters is not a realistic option. The scenario calculations show the great significance of different factors, such as technological potential or the prices of main inputs, in particular electricity, on technology diffusion in the metal industries. They predict a further reduction in the average level of specific power consumption because of the ongoing process of plant modernisation and the closing down of smaller, less competitive smelters. The optimisation of pot control and the implementation of wettable cathodes seem to be the most attractive modernisation options for the future. Furthermore, the calculations clarify the particular situation of energy-intensive industries in regions with comparably high energy prices and the ensuing problems for environmental policy strategies. On the one hand, there is already a huge incentive to implement energy-saving technologies. On the other hand, the comparably high electricity tariffs endanger the continued existence of smelters. A further worsening of production conditions could easily lead to a closing down of smelters and to a loss of employment and value added. (c) 2007 Elsevier Ltd. All rights reserved.