Numerous countries are currently intensifying on the investment on renewable energy and electric vehicles in the hope of achieving their respective targets in carbon reduction and zero carbon emission, though the International Energy Agency (IEA) has given a corresponding warning regarding how energy transformation has been constantly actuating the demand for minerals, especially essential rare-earth minerals such as nickel, cobalt, lithium, and copper, and the drastic increment in mineral prices may decelerate the development of green energy.
Energy transformation and carbon reduction in transportation require a substantial quantity of metallic minerals, and the supply of critical materials will become the latest threat to the transformation. In addition, miners have yet to invest enough funds in developing new mines amidst the surging demand for minerals, which may elevate the cost of clean energy by a sizeable margin. Fatih Birol, Managing Director of IEA, commented that the significant increase in both the demand and cost of critical materials in order to achieve climate targets is bound to decelerate the speed of energy transformation.
Among which, electric vehicles require 6 times the amount of minerals compared to traditional vehicles, and onshore wind power requires 9 times the amount of mineral resources compared to similar gas-fired power plants. IEA commented that despite the differentiated demand and supply loopholes for each mineral, the vigorous actions in carbon reduction implemented by the government will generate a sixfold increase in the overall demand for minerals within the energy sector.
IEA also modeled and analyzed the demand for minerals in the future through a simulation on various climate measures and the development of 11 technologies, and discovered that the highest ratio of demand comes from electric vehicles and battery energy storage systems under the propulsion of climate policies. The demand is expected to ascend at least 30 times in 2040, and the demand for lithium will skyrocket 40 times if the world is to achieve the targets stipulated in the Paris Agreement, whereas the mineral demand from low carbon energy will also triple within 30 years.
IEA, at the same time, also warns that the production and processing of rare-earth minerals, including lithium and cobalt, are centralized in a few countries, and the top 3 countries combine to 75% of the total volume, whereas the complex and opaque supply chain also increases relevant risks. The development on restricted resources will face environmental and social standards that are even more rigorous. IEA proposes that the government should draft a long-term research surrounding the guarantees on carbon reduction, vote of confidence in investment from suppliers, and the need of expansion on recycling and reusing, so as to stabilize the supply of raw materials and accelerate on the transformation.
(Cover photo source: shutterstock)