Energy transition ‘critically hinging on the availability of critical minerals’
In its first annual market review, the International Energy Agency (IEA) has noted a significant surge in planned clean tech projects, leading to a 30% rise in investments centred around developing critical minerals in 2022. And the supply might be able to meet the demand.
The market for minerals that help power electric vehicles, wind turbines, solar panels and other technologies key to the clean energy transition has doubled in size over the past five years, according to the report which was released today.
The first annual IEA Critical Minerals Market Review, released alongside a new online data explorer, shows that record deployment of clean energy technologies is propelling huge demand for minerals such as lithium, cobalt, nickel and copper.
Over the last five years, finds the Agency, the energy sector was the main factor behind a tripling in overall demand for lithium, a 70% jump in demand for cobalt and a 40% rise in demand for nickel.
The market for energy transition minerals reached $320 billion in 2022, they added, and is set for continued rapid growth.
During the review’s release, IEA executive director Fatih Birol commented: “A secure and affordable clean energy transition will be critically hinging on the availability of critical minerals around the world.
“The market response, increasing investments, is an important signal that the markets are buying into [the energy transition], that the clean energy transition will be faster in the years to come and that we will need more critical minerals.”
Birol elaborated on worries that were expressed within the report, namely on diversification, specifically around the refining segment that continues to be dominated by China, as well as the emission intensity of production, which has been increasing.
According to the report, investments in critical mineral development rose 30% last year, following a 20% increase in 2021. Among the different minerals, lithium saw the sharpest increase in investment with a jump of 50%, followed by copper and nickel.
The report finds that, should all planned critical mineral projects worldwide be realised, supply could be sufficient to support the national climate pledges announced by governments. However, the risk of project delays and technology-specific shortfalls leaves little room for complacency about the adequacy of supply.
More projects would in any case be needed by 2030 in a scenario that limits global warming to 1.5 °C.
Earlier this year the IEA released a report on supply chains, finding diversity of supply as a critical concern – a finding that remains with the market review, which finds many new project announcements coming from already dominant countries.
Compared to three years ago, they stated, the share of the top three critical mineral producers in 2022 either remained unchanged or increased further, especially for nickel and cobalt.
Accompanying the announcement of the review is the new IEA Critical Minerals Data Explorer, an open interactive online tool that allows users to access and navigate the IEA’s data and projections for critical minerals.
In this first version, the tool provides users with access to the IEA’s demand projections under various scenarios and technology trends. Supply-side information will be added in future updates.