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Huge mismatch between critical minerals supply and global climate needs

The International Energy Agency (IEA) says supplies of critical minerals essential to key clean energy technologies such as electric vehicles and wind turbines must increase sharply over the coming decades to meet the world’s climate needs.

This could create potential energy security hazards which governments must act now to address, according to their new special report, The Role of Critical Minerals in Clean Energy Transitions.

The report looks at the central importance of minerals such as copper, lithium, nickel, cobalt and rare earth elements in a secure and rapid transformation of the global energy sector. It recommends six key areas of action for policymakers to ensure that critical minerals enable an accelerated transition to clean energy rather than becoming a bottleneck.

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Fatih Birol, IEA executive director, said: “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. 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 disruption.”

“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 are fully committed to helping governments ensure that these hazards don’t derail the global drive to accelerate energy transitions.”

Critical mineral use in renewable systems will increase exponentially

The special report is part of the IEA’s flagship World Energy Outlook series. It underscores that the mineral requirements of an energy system powered by clean energy technologies differ profoundly from one that runs on fossil fuels.

A typical electrical vehicle requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a similarly sized gas-fired power plant.

While demand outlooks and supply vulnerabilities vary widely by mineral, the energy sector’s overall needs for critical minerals could increase by as much as six times current levels by 2040, depending on how rapidly governments act to reduce emissions.

In addition to being a massive increase in absolute terms, mineral inputs will account for an increasingly important part of the value of key components as the cost of technologies falls. This makes their overall costs more vulnerable to potential mineral price swings.

The commercial importance of these minerals 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 used its technology-rich energy modelling tools to establish a unique database showing future mineral requirements under varying scenarios that span a range of levels of climate action and 11 different technology evolution pathways.

Recommendations to foster stable supplies

In climate-driven scenarios, mineral demand for use in batteries for electric vehicles and grid storage is a major force, growing at least 30 times by 2040. The rise of low-carbon power generation to meet climate goals also means tripling of mineral demand from this sector by minimum.

Wind energy takes the lead, bolstered by material-intensive offshore wind. Solar PV follows closely, due to the sheer volume of capacity that is added. The expansion of electricity networks also requires a huge amount of copper aluminium.

Unlike oil, a commodity produced around the world and traded in liquid markets, the production and process of many minerals such as lithium, cobalt and some rare earth elements are highly concentrated in a handful of countries. The top three producers account for more than 75% 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 report provides six recommendations for policymakers to foster stable supplies of critical minerals to support accelerated clean energy transitions. 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 productions.

Governments should also promote technological advances, scale-up recycling to relieve pressure on primary supplies, maintain high environmental and social standards and strengthens international collaboration between producers and consumers.

The Role of Critical Minerals in Clean Energy Transition report is available online.

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.

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