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Critical minerals

The Role of Critical Minerals in Clean Energy Transitions

An energy system powered by clean energy technologies differs profoundly from one fuelled by traditional hydrocarbon resources. Critical minerals such as copper, lithium, nickel, cobalt and rare earth elements are essential components in many of today’s rapidly growing clean energy technologies – from wind turbines and electricity networks to electric vehicles. Demand for these minerals will grow quickly as clean energy transitions gather pace.

Introduction

Solar photovoltaic plants, wind farms and electric vehicles generally require more critical minerals to build than their fossil fuel-based counterparts. A typical electric car requires six times the mineral inputs of a conventional car and an offshore wind plant requires thirteen times more mineral resources than a similarly sized gas-fired plant. Since 2010 the average amount of mineral resources needed for a new unit of power generation capacity has increased by 50% as the share of renewables in new investment has risen.

The types of mineral resources used vary by technology. Lithium, nickel, cobalt, manganese and graphite are crucial to battery performance. Rare earth elements are essential for permanent magnets that are used in wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies.

As countries accelerate their efforts to reduce emissions, they also need to make sure that energy systems remain resilient and secure. The rising importance of critical minerals in a decarbonising energy system requires energy policy makers to expand their horizons and consider potential new vulnerabilities. Concerns about price volatility and security of supply do not disappear in an electrified, renewables-rich energy system.

This is why the IEA is paying close attention to the issue of critical minerals and their role in energy transitions.

Key findings

Total mineral demand for clean energy technologies by scenario, 2020 compared to 2040

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Clean energy transitions implies a significant increase in demand for minerals

Our bottom-up assessment of energy policies in place or announced suggests that the world is currently on track for a doubling of overall mineral requirements for clean energy technologies by 2040, according to our Stated Policies Scenario.

However, a concerted effort to reach the goals of the Paris Agreement (as in the Sustainable Development Scenario) would mean a quadrupling of mineral requirements for clean energy technologies by 2040. An even faster transition, to hit net-zero globally by 2050, would require up to six times more mineral inputs in 2040 than today.

Share of top three producing countries in extraction of selected minerals and fossil fuels, 2019

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The rising risk of delayed or more expensive energy transitions

The prospect of a rapid rise in demand for critical minerals poses huge questions about the availability and reliability of supply. 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. There are many vulnerabilities that may increase the possibility of market tightness and greater price volatility for critical minerals, such as the high geographical concentration of production, long project development lead times or even higher exposure to climate risks.

These risks are real, but they are surmountable. How policy makers and companies respond will determine whether critical minerals are a vital enabler for clean energy transitions, or a bottleneck in the process.