Electrification may prove very expensive: IEA
The already expensive process of decarbonising world energy will push up the prices of key minerals still further, according to a report by the International Energy Agency published May 5. As more wind farms and solar panels are built, and more electric vehicles take to the roads, the scarcity of many materials will make the energy transition even harder to achieve financially and practically.
Unlike oil, where OPEC accounts for less than a third of production capacity, the production and processing of many minerals are highly concentrated in a handful of countries, with the top three accounting for more than three quarters of supplies, the OECD's energy security watchdog says. So there is a potential risk that countries could slow down electrification on economic grounds, even without a physical shortage.
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"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,” said IEA CEO Fatih Birol. “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,” he said.
The mineral requirements of an energy system powered by clean energy technologies differ profoundly from one that runs on fossil fuels. 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 similarly sized gas-fired power plant, according to the analysis.
Mineral demand for use in batteries for electric vehicles and grid storage could grow at least 30 times by 2040 while the rise of low-carbon power generation to meet climate goals also means a tripling of mineral demand from this sector by 2040. The expansion of electricity networks also requires a huge amount of copper and aluminium.
Further, the supply chains are complex and sometimes opaque, which increases the risks that may 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," it said.
Among its recommendations – which appear to rely heavily on good will in some capital cities – the IEA says governments should "lay out their long-term commitments for emission reductions, which would provide the confidence needed for suppliers to invest in and expand mineral production." They should also increase recycling to relieve pressure on primary supplies, maintain high environmental and social standards, and strengthen international collaboration between producers and consumers.