While the world transitions to alternative energy solutions such as wind turbines and electric vehicles (EV), adequate supplies of critical minerals essential for these technologies must be met to avoid potential security hazards, according to the International Energy Agency (IEA). 

The global energy watchdog in a new report, “The Role of Critical Minerals in Clean Energy Transitions,” detailed the discrepancy between the world’s climate goals and the availability of critical minerals. Copper, nickel and cobalt, among other minerals are necessary to produce alternative energy technologies. 

Executive Director Faith Birol said the discrepancy can be corrected, 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.”

According to IEA researchers, a typical electric car needs six times more mineral resources than a conventional car. An onshore wind plant requires nine times more mineral inputs than a similarly sized natural gas-fired plant. 

“Left unaddressed, these potential vulnerabilities could make global progress toward a clean energy future slower and more costly – and therefore hamper international efforts to tackle climate change,” Birol said.

Depending on the speed at which governments transition energy sources, overall demand for critical minerals could rise up to six times by 2040. IEA underscored that not only is it an enormous increase in absolute terms, but as the cost of alternative technologies decline, mineral resources would remain increasingly important. That suggests that the overall costs would  be more vulnerable to fluctuations in mineral prices. 

The commercial necessity of critical minerals is likely to grow rapidly. While coal pulls in a revenue 10 times larger than energy transition minerals, the situation is likely to reverse before 2040. Based on IEA data, mineral demand for batteries in EVs and grid storage could drive demand to increase at least 30 times by 2040. 

Meanwhile, with the increase in low-carbon power generation, minerals in this industry could also contribute to a tripling in demand by 2040. Wind takes the lead, bolstered by material-intensive offshore wind. Solar follows closely, simply because of the sheer volume of capacity needed. Growth of electricity networks will also require a large supply of copper and aluminum. 

Unlike oil, production and processing of many minerals such as lithium, cobalt and some rare earth elements are highly concentrated in a handful of countries, with the top three producers accounting for more than 75% of supplies. In major producing countries, physical disruptions and trade restrictions, as well as other geopolitical circumstances, can result in complex and opaque supply chains. 

The IEA further noted that while there is no shortage of these minerals, the quality within deposits is declining as most of the readily accessible resources are exploited. Producers in these regions may face the necessity of stricter social and environmental standards.