A special report by the International Energy Agency (IEA), The Role of Critical Minerals in Clean Energy Transitions, released on 5 May, is a comprehensive global study on the central importance of minerals such as copper, lithium, nickel, cobalt and rare earth elements in a secure and rapid transformation of the global energy sector. The 287-page report recommends six key areas of action for policy makers to ensure that critical minerals are available to accelerate the transition to clean energy, rather than becoming a bottleneck.
“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 Executive Director Fatih Birol. “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.”
“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,” Dr Birol said. “This is what energy security looks like in the 21st century, and the IEA is fully committed to helping governments ensure that these hazards don’t derail the global drive to accelerate energy transitions.”
The report is part of the IEA’s World Energy Outlook series. It underscores that 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.
Demand outlooks and supply vulnerabilities vary widely by mineral, but the energy sector’s overall needs for critical minerals could increase by as much as six times by 2040, depending on how rapidly governments act to reduce emissions. The commercial importance of these minerals is also expected to grow rapidly, the IEA noted. Currently, revenue from coal production is ten times that from energy transition minerals. However, in climate-driven scenarios, these positions are reversed well before 2040.
To produce the report, the IEA used energy modelling tools to establish a unique database showing future mineral requirements under varying scenarios across a range of levels of climate action and considered 11 different technology evolution pathways. In climate-driven scenarios, mineral demand for use in batteries for electric vehicles and grid storage is a major force, increasing 30-fold by 2040.
The rise of low-carbon power generation to meet climate goals also requires a tripling of mineral demand from this sector by 2040. Wind leads (especially offshore wind) followed by solar photovoltaics, due to the volume of capacity that is added. The expansion of electricity networks also requires a huge amount of copper and aluminium. Hydropower, biomass and nuclear have comparatively low mineral requirements. In other sectors, the rapid growth of hydrogen as an energy carrier leads to growth in demand for nickel and zirconium for electrolysers, and for platinum-group metals for fuel cells.
Nuclear and hydropower are the low-carbon technologies with the lowest mineral intensity. The report estimates nuclear's key mineral needs, based on data from the European Commission Joint Research Centre, to include chromium (2190 kg per MW), copper (1470 kg/MW), nickel (1300 kg/MW), hafnium (0.5 kg/MW) and yttrium (0.5 kg/MW). IEA said uranium is not included within the scope of the analysis, which focuses on mineral requirements for production of equipment, and not for operations. The assessment is based on mineral requirements for light-water reactor technology, although mineral intensities could be different for small modular reactors or more advanced nuclear technologies, it notes.
Production and processing of many minerals - such as lithium, cobalt and some rare earth elements - are highly concentrated in a few countries, with the top three producers accounting for more than 75% of supplies. Complex and sometimes opaque supply chains also increase the risks that could arise from physical disruptions, trade restrictions or other developments in producing countries. There is no shortage of resources, but the quality of available deposits is declining as the most immediately accessible resources are exploited, IEA said. Producers also face stricter environmental and social standards.
The IEA report offers six key recommendations for policy makers to foster stable supplies of critical minerals to support accelerated clean energy transitions. These include:
- Ensure adequate investment in diversified sources of new supply. Strong signals from policy makers about the speed of energy transitions and the growth trajectories of key clean energy technologies are critical to bring forward timely investment in new supply. Governments can play a major role in creating conditions conducive to diversified investment in the mineral supply chain.
- Promote technology innovation at all points along the value chain. Stepping up R&D efforts for technology innovation on both the demand and production sides can enable more efficient use of materials, allow material substitution and unlock sizeable new supplies, thereby bringing substantial environmental and security benefits.
- Scale up recycling. Policies can play a pivotal role in preparing for rapid growth of waste volumes by incentivising recycling for products reaching the end of their operating lives, supporting efficient collection and sorting activities and funding R&D into new recycling technologies.
- Enhance supply chain resilience and market transparency. Policy makers need to explore a range of measures to improve the resilience of supply chains for different minerals, develop response capabilities to potential supply disruptions and enhance market transparency. Measures can include regular market assessments and stress-tests, as well as strategic stockpiles in some instances.
- Mainstream higher environmental, social and governance standards. Efforts to incentivise higher environmental and social performance can increase sustainably and responsibly produced volumes and lower the cost of sourcing them. If players with strong environmental and social performance are rewarded in the marketplace, it can lead to greater diversification among supply.
Strengthen international collaboration between producers and consumers. An overarching international framework for dialogue and policy co-ordination among producers and consumers can play a vital role, an area where the IEA’s energy security framework could usefully be leveraged. This could include (i) providing reliable and transparent data; (ii) regular assessments of potential vulnerabilities across supply chains and potential collective responses; (iii) promoting knowledge transfer and capacity building to spread sustainable and responsible development practices; and (iv) strengthening environmental and social performance standards to ensure a level playing field.