- The demand for these minerals could increase six-fold by 2040, the International Energy Agency said.
- A typical electric car requires six times more minerals than a conventional car.
- The IEA recommended six steps to lead to more stable supplies of these critical minerals.
As the world switches to clean energy technologies to combat climate change, demand for the minerals needed to build those technologies is going to skyrocket, according to a new report.
That rising demand could create potential energy security hazards that governments must act now to address, the International Energy Agency said in the report.
“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions,” Fatih Birol, executive director of the IEA, said in a news release. “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.”
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Solar power plants, wind farms and electric vehicles require more minerals than traditional fossil fuel-based technologies.
Batteries need lithium, nickel, cobalt, manganese and graphite. Wind turbines and electric vehicle motors require permanent magnets that rely on rare earth elements. Electricity networks need huge amounts of copper and aluminum.
According to the report, an onshore wind plant requires nine times more mineral resources than a similarly sized gas-fired power plant. A typical electric car requires six times more minerals than a conventional car.
Overall, mineral requirements for clean-energy technologies are expected to double by 2040 under energy policies in place or announced, the IEA said.
However, a concerted effort to meet the goal of the Paris climate agreement to keep global warming below 3.6 degrees (2°C) would quadruple mineral requirements by 2040. Reaching net-zero warming by 2050 would increase the demand for minerals six-fold by 2040, the IEA said.
Current supply chains are not set up to meet these rising demands, the IEA warned.
The three countries that produce the most lithium, cobalt and rare earth elements control well over three-quarters of global output, the report said.
For example, the Democratic Republic of the Congo was responsible for 70% of the global production of cobalt in 2019. China was responsible for 60% of the production of rare earth elements.
China also processes nearly 90% of rare earth elements and 50% to 70% of lithium and cobalt.
South Africa is responsible for about 70% of the global production of platinum.
Because the mineral supply is so concentrated, it is at greater risk from physical disruption, trade restrictions or other developments in the major producing countries, the report said.
The production and processing of these minerals also often creates environmental problems and raises social issues around working conditions and fair pay. The IEA said companies may not be ready to respond to consumer and investor demand to source minerals that are sustainably and responsibly produced.
The mining and production of these minerals also face a higher exposure to the effects of climate change. More than half of copper and lithium production, which requires a lot of water, is concentrated in areas with severe water shortages. Other major production regions, such as Australia, China and Africa, are subject to extreme heat or flooding.
“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,” Birol said.
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The IEA offered six recommendations to lead to more stable supplies of these critical minerals.
-Policymakers can ensure adequate investment in diversified sources of the minerals by sending clear signals to investors of their commitment to meeting climate change goals. “If companies do not have confidence in countries’ climate policies, they are likely to make investment decisions based on much more conservative expectations,” the report said.
-Promoting technological innovation could lead to more efficient use of existing materials or the discovery of materials that could be substituted for the minerals. It could also unlock sizeable new supplies.
-Scale up recycling as current products like batteries and wind turbines near the end of their lives. “Recycling would not eliminate the need for continued investment in new supply to meet climate goals, but we estimate that, by 2040, recycled quantities of copper, lithium, nickel and cobalt from spent batteries could reduce combined primary supply requirements for these minerals by around 10%,” the report said.
-Policymakers have to improve the resilience of supply chains for minerals and determine what to do during supply disruptions. They also need to enhance market transparency.
-Incentivizing and maintaining higher environmental and social standards can increase sustainably and responsibly produced supplies and lower the cost of sourcing them.
-Collaboration between producers and consumers needs to be strengthened.
“There is no shortage of resources worldwide, and there are sizeable opportunities for those who can produce minerals in a sustainable and responsible manner,” Birol said.
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