A special report by the International Energy Agency (IEA) has concluded that supplies of critical minerals essential for key clean energy technologies will need to be drastically increased over the coming decades to meet the world’s climate goals.
The report, entitled ‘The Role of Critical Minerals in Clean Energy Transitions’, highlights the central importance of minerals such as copper, lithium, nickel, cobalt and rare earth elements in securing a rapid transformation of the global energy sector. It also notes that governments must act now to prevent potential energy security hazards caused by an increase in demand for these minerals.
“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions,” Fatih Birol, executive director of the IEA, said. “The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action. By acting now and acting together, they can significantly reduce the risks of price volatility and supply disruptions.
“Left unaddressed, these potential vulnerabilities could make global progress towards a clean energy future slower and more costly and therefore hamper international efforts to tackle climate change. This is what energy security looks like in the 21st century, and the IEA is fully committed to helping governments ensure that these hazards don’t derail the global drive to accelerate energy transitions.”
As part of the IEA’s ‘World Energy Outlook’ series, the report places emphasis on the fact that the mineral requirements of an energy system powered by clean energy technologies differ profoundly from one that runs on fossil fuels. A typical electric car requires six times the mineral inputs of a conventional car, and an offshore wind plant requires nine times the mineral resources than a similarly sized gas-fired power plant.
Growing need for critical minerals
Demand outlooks and supply vulnerabilities vary widely by mineral, but the energy sector’s overall needs for critical minerals could increase by as much as six times by 2040, depending on how rapidly governments act to reduce emissions. Not only is this a massive increase in absolute terms, but as the costs of technologies fall, mineral inputs will account for an increasingly important part of the value of key components, making their overall costs more vulnerable to potential mineral price-swings.
The commercial importance of these minerals will also grow rapidly: today’s revenue from coal production is ten times larger than from energy transition minerals. However, in climate-driven scenarios, these positions are reversed well before 2040.
To produce the report, the IEA has built on its energy modelling tools to establish a database showing future mineral requirements under varying scenarios that span a range of levels of climate action and 11 different technology evolution pathways. In climate-driven scenarios, mineral demand for use in batteries for electric vehicles and grid storage is a major force, growing by at least 30 times current levels by 2040.
The rise of low-carbon power generation to meet climate goals also means a tripling of mineral demand from this sector by 2040. Wind takes the lead, bolstered by material-intensive offshore wind. Solar photovoltaic power follows closely, due to the sheer volume of capacity that will need to be added. The expansion of electricity networks also requires a huge amount of copper and aluminium.
Overcoming complex supply chains
According to the report, today’s supply and investment plans are geared to a world of more gradual, insufficient action on climate change. They are not ready to support accelerated energy transitions, and there are several vulnerabilities that may increase the possibility of market tightness and greater price volatility.
Unlike oil, a commodity produced around the world and traded in liquid markets, production, and processing of many minerals such as lithium, cobalt and some rare earth elements are highly concentrated in a handful of countries, with the top three producers accounting for more than 75 per cent of supplies. Complex and sometimes opaque supply chains also increase the risks that could arise from physical disruptions, trade restrictions or other developments in major producing countries. In addition, while there is no shortage of resources, the quality of available deposits is declining as the most immediately accessible resources are exploited. Producers also face the necessity of stricter environmental and social standards.
The IEA have recommended six key areas of action for policy makers to foster stable supplies of critical minerals. These include the need for governments to lay out their long-term commitments for emission reductions, which would provide the confidence needed for suppliers to invest in and expand mineral production. Governments should also promote technological advances, scale up recycling to relieve pressure on primary supplies, maintain high environmental and social standards, and strengthen international collaboration between producers and consumers.[/et_pb_blurb][/et_pb_column][/et_pb_row][/et_pb_section]