“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,” IEA chief Fatih Birol said in the report.
“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 added.
Low-carbon technologies typically require more critical minerals than their fossil fuel counterparts. An electric vehicle (EV), for instance, requires six times the amount of critical minerals as an internal combustion engine (ICE) car, according to the IEA.
Prices for many of the metals tied to emerging green technologies have already seen major price jumps over the past year. Strong demand from China has met supply disruptions caused by the coronavirus pandemic. Other metals, such as copper, have seen strong speculative action as investors have bet big on the energy transition by investing in the metals that will power it.
Copper prices traded on the London Metal Exchange rose above $10,000 a tonne for the first time since 2011 last week. Prices for lithium in China have jumped more than 100% so far this year, according to Benchmark Mineral Intelligence. And they are likely to keep climbing, the IEA said, as demand needs to grow by more than 40 times if countries want to meet the goals of the Paris agreement.
With governments rolling out green stimulus packages, EVs sales climbed by 41% last year, with about three million sold globally.
Energy security
Supply of some critical metals is also heavily concentrated in a few countries, raising security concerns, the IEA said.
The agency, created in the 1970s to ensure global oil supplies in the wake of the first Arab oil embargo, said critical minerals have taken the centre stage.
“Concerns about price volatility and security of supply do not disappear in an electrified, renewables-rich energy system,” it said.
“Concerns about price volatility and security of supply do not disappear in an electrified, renewables-rich energy system”
IEA: “The Role of Critical Minerals in Clean Energy Transitions”
The Democratic Republic of Congo, for instance, produces about 70% of the world’s cobalt. China, in turn, is responsible for 60% of the rare-earth elements.
The processing of critical metals is even more concentrated, the IEA warns, with China accounting for over 80% of rare-earth processing, around 60% of lithium and cobalt processing, and 40% of copper processing, the IEA said.
More supplies are needed, but the slow pace of new mining projects and caution from investors poses problems, the agency warned.
New mining projects take on average 16 years to go from discovery to production and that timeline is unlikely to shorten unless governments show investors they support the development of new mines by making clear that they are serious about the energy transition, the IEA concluded.
