An energy system powered by clean energy technologies differs profoundly from one fuelled by traditional hydrocarbon resources. Solar photovoltaic (PV) plants, wind farms and electric vehicles (EVs) generally require more minerals to build than their fossil fuel-based counterparts. A typical electric car requires six times the mineral inputs of a conventional car and an onshore wind plant requires nine times more mineral resources than a gas-fired plant. Since 2010 the average amount of minerals needed for a new unit of power generation capacity has increased by 50% as the share of renewables in new investment has risen.
The shift to a clean energy system is set to drive a huge increase in the requirements for these minerals, meaning that the energy sector is emerging as a major force in mineral markets. Until the mid-2010s, for most minerals, the energy sector represented a small part of total demand. However, as energy transitions gather pace, clean energy technologies are becoming the fastest-growing segment of demand. In a scenario that meets the Paris Agreement goals (as in the IEA Sustainable Development Scenario [SDS]), their share of total demand rises significantly over the next two decades to over 40% for copper and rare earth elements, 60-70% for nickel and cobalt, and almost 90% for lithium.
EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040.
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a concerted effort to reach the goals of the Paris Agreement (climate stabilisation at “well below 2°C global temperature rise”, as in the SDS) would mean a quadrupling of mineral requirements for clean energy technologies by 2040. An even faster transition, to hit net-zero globally by 2050, would require six times more mineral inputs in 2040 than today.
Today’s supply and investment plans are geared to a world of more gradual, insufficient action on climate change (the STEPS trajectory). They are not ready to support accelerated energy transitions. While there are a host of projects at varying stages of development, there are many vulnerabilities that may increase the possibility of market tightness and greater price volatility.
These risks to the reliability, affordability and sustainability of mineral supply are manageable, but they are real. How policy makers and companies respond will determine whether critical minerals are a vital enabler for clean energy transitions, or a bottleneck in the process.
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