Governments must act with urgency to ensure critical minerals such as copper, lithium, nickel, cobalt and rare earth elements enable the clean-energy transition rather than create a bottleneck, the International Energy Agency (IEA) has warned.
In a report, the agency stated that it expects demand for critical minerals to increase by as much as six-fold by 2040, depending on how quickly the world transitions to clean energy. This could lead to price volatility and supply disruptions, it argues.
The agency warned that offshore wind could be particularly exposed to these impacts given its greater need for such minerals compared to other renewable energy sources (see chart below).
“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 Faith Birol, executive director of the IEA.
Continued growth in low-carbon power generation is estimated to lead to a tripling of mineral demand from this sector alone by 2040. Over the past decade, the average amount of minerals needed for a new unit of power generation capacity has increased by 50%.
With rare earth elements being essential components of permanent magnet generators, wind power – bolstered by material-intensive offshore wind – leads the sector for demand, followed by high-volume solar photovoltaic. Expanding electricity networks will also require vast amounts of copper and aluminium, according to the report.
The production of minerals such as lithium, cobalt and rare earths is highly concentrated, with the top three countries accounting for more than 75% of volumes produced. This makes supply chains extremely susceptible to disruption, the IEA argues. The level of concentration is even higher for processing operations, with China refining 90% of rare earth elements.
The report urges policymakers to lay out long-term commitments to cutting carbon emissions, which would provide more visibility over the demand for minerals.
Governments should also diversify sources of supply and improve market transparency, promote technological advances, scale up recycling, boost environmental and social standards, and strengthen international collaboration between producers and consumers.
Recycling, in particular, will greatly benefit regions with wider deployment of clean energy technologies, due to economies of scale.