A transition to energy resources with lower emissions will lead to skyrocketing demand for critical minerals, and current production plans are expected to fall short, the International Energy Agency reported May 5.
Government action is needed to ensure adequate supplies of minerals such as nickel, cobalt and rare earth elements that are vital to the world's electric vehicles, power grids, wind turbines and other technologies, the Paris-based organization said. Otherwise, a lack of raw materials could stymie the world's transition to cleaner energy, the organization concluded.
"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," IEA Executive Director Fatih Birol 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."
The agency called on international governments to promote innovation along the supply chain, boost recycling efforts and take other measures to guarantee critical mineral supplies.
A typical electric car requires six times the minerals needed to make a car that runs on fossil fuels, according to the IEA report. Similarly, an onshore wind generation facility needs nine times more mineral resources than a comparable gas-fired power plant. The IEA estimated that the overall need for minerals could increase by as much as six times by 2040, depending on how rapidly governments act to fulfill global climate goals.
"Our numbers show that the critical minerals are not a sideshow in our journey to reach climate goals, but it's a part of the main event," Birol said during a webinar to launch the report.
The energy sector is becoming a fast-growing demand segment for mineral producers. In a modeled scenario assuming the world meets goals related to the Paris Agreement on climate change, clean energy technologies' share of total demand "rises significantly over the next two decades to over 40% for copper and rare earth elements, 60% to 70% for nickel and cobalt, and almost 90% for lithium," the IEA report said.
"Today's supply and investment plans for many critical minerals fall well short of what is needed to support an accelerated deployment of solar panels, wind turbines and electric vehicles," the report said. "Many minerals come from a small number of producers. For example, in the cases of lithium, cobalt and rare earth elements, the world's top three producers control well over three-quarters of global output."
As costs decrease for manufacturing renewable energy technologies and electric vehicles, the share of the expense attributable to raw materials could rise. Those technologies could become increasingly sensitive to fluctuations in the price of commodities as a result.
"This would mean that the clean energy transition may well be costlier and, therefore, slower than we would like to see," Birol said.
Today, coal production revenues are about 10 times larger than those generated by energy transition minerals, the IEA wrote. However, in scenarios where governments prioritize climate action, revenues from energy transition minerals would overtake coal revenues "well before 2040."
