The Role of Critical Minerals in Clean Energy Transitions - K.C. Michaels and Tae-Yoon Kim, IEA Paris, 2 June 2021
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The Role of Critical Minerals in Clean Energy Transitions K.C. Michaels and Tae-Yoon Kim, IEA Paris, 2 June 2021 IEA 2021. All rights reserved.
Live polling question #1 – www.menti.com IEA 2021. All rights reserved.
What is the IEA – a ‘NATO’ for energy security
• Treaty-based energy security mechanism
- Collective assistance
- Each Member has agreed to assist each other in times of energy supply disruption
- Associated obligations
- disclose and cooperate on energy data
- consult with industry
- peer-review Members’ national policies/legislations at regular intervals
• Concept of energy security has shifted over time
- In addition to strategic oil stocks, IEA activities now encompass gas security, electricity
security, and clean energy transitions
IEA 2021. All rights reserved.IEA Special Report on critical minerals
• Mandate from IEA Members
“[to] pay closer attention to the security of supplies of
the critical mineral resources that will be needed to
support the acceleration of clean energy transitions”
• Key highlights
- Estimates of demand for critical minerals in
clean energy transitions
- Outlook for supply
- Exploration of energy security implications
- Need for sustainable and responsible
development of minerals
https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions
IEA 2021. All rights reserved.Live polling question #2 – www.menti.com IEA 2021. All rights reserved.
Context
• Countries accounting for more than 70% of today’s global GDP and emissions have committed to
net-zero emissions, implying a massive acceleration in clean energy deployment
• An energy system powered by clean energy technologies needs significantly more minerals, notably:
Lithium, nickel, cobalt, manganese and graphite for batteries
Rare earth elements for wind turbines and electric vehicles motors
Copper, silicon and silver for solar PV
Copper and aluminium for electricity networks
IEA 2021. All rights reserved.The shift to a more mineral-intensive energy system
Minerals used in selected energy technologies
Transport (kg/vehicle)
Electric car
Conventional car
50 100 150 200 250
Power generation (kg/MW)
Offshore wind
Onshore wind
Solar PV
Nuclear
Coal
Natural gas
4 000 8 000 12 000 16 000 20 000
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 power plant
IEA 2021. All rights reserved.Context
• Countries accounting for more than 70% of today’s global GDP and emissions have committed to
net-zero emissions, implying a massive acceleration in clean energy deployment
• An energy system powered by clean energy technologies needs significantly more minerals, notably:
Lithium, nickel, cobalt, manganese and graphite for batteries
Rare earth elements for wind turbines and electric vehicles motors
Copper, silicon and silver for solar PV
Copper and aluminium for electricity networks
• There is no shortage of mineral resources, but recent price rises for cobalt, copper, lithium and nickel
highlight how supply could struggle to keep pace with the world’s climate ambitions
• An evolving energy system calls for an evolving approach to energy security; policy makers must
expand their horizons and act to reduce the risks of price volatility and supply disruptions
IEA 2021. All rights reserved.Meeting climate goals will turbo-charge demand for minerals
Mineral demand for clean energy technologies by scenario
Growth to 2040 by sector Growth in the SDS, 2040 relative to 2020
50 50
Mt
Index (2020 = 1)
6x Hydrogen 42x
40 40
Electricity
networks
30 4x 30
EVs and 25x
battery storage 21x
19x
20 20
Other low-carbon
power generation 7x
10 10
Wind
Solar PV
SDS NZE SDS: Sustainable Development Scenario Lithium Graphite Cobalt Nickel Rare
2020 2040 NZE: Net-zero by 2050 Scenario earths
As learning and economies of scale bring down other cost components, mineral inputs also account for
an increasingly large share of the total cost of batteries and other key clean energy technologies
IEA 2021. All rights reserved.Clean energy in the driving seat for mineral demand growth
Share of clean energy technologies in total demand for selected minerals in the SDS
100%
80%
60%
40%
20%
2010 2020 2040 2010 2020 2040 2010 2020 2040 2010 2020 2040 2010 2020 2040
Lithium Cobalt Nickel Copper Rare earth elements
As learning and economies of scale bring down other cost components, mineral inputs also account for an
increasingly large share of the total cost of batteries and other key clean energy technologies
IEA 2021. All rights reserved.New reasons to go underground
Revenue from production of coal and selected energy transition minerals in the SDS
2020 2030 2040
400 Rare earths
USD billion (2019)
Silicon
300 Manganese
Graphite
200
Cobalt
Nickel
100
Lithium
Copper
Coal Energy transition Coal Energy transition Coal Energy transition
minerals minerals minerals
Today’s revenue from coal production is ten times larger than from energy transition minerals.
However, in climate-driven scenarios, these positions are reversed well before 2040
IEA 2021. All rights reserved.Many mineral supply chains lack diversity
Share of top three producing countries in production of selected minerals and fossil fuels, 2019
Extraction Processing
Philippines
Fossil fuels
Fossil fuels
Oil US Oil refining US
Saudi Arabia
Natural gas LNG export Russia
US Qatar
Iran
Copper Chile Copper China Myanmar
Peru
Nickel Indonesia Nickel China Japan
Minerals
Minerals
Finland
Cobalt DRC Cobalt China
Belgium
Rare earths China Lithium China Argentina
Malaysia
Lithium Australia Rare earths China Estonia
20% 40% 60% 80% 100% 20% 40% 60% 80% 100%
Production and processing of many minerals such as lithium, cobalt and some rare earth elements are
geographically concentrated, with the top three producers accounting for more than 75% of supplies
IEA 2021. All rights reserved.A looming mismatch between mineral supply and climate ambition
Committed mine production and primary demand (SDS) for selected minerals
Copper Lithium Cobalt
35 3 200 400
kt of LCE
Mt
kt
30 2 400 300
25 1 600 200
20 800 100
15
2020 2025 2030 2020 2025 2030 2020 2025 2030
Production (operating) Production (under construction) Primary demand in the SDS
Today’s investment plans are geared to a world of gradual change; given long leads times for new
projects, an accelerated energy transition could quickly see demand running ahead of supply
IEA 2021. All rights reserved.Critical minerals do not undermine the case for clean energy
Comparative life-cycle GHG emissions of a mid-size battery electric versus a conventional car
50
tCO2-eq per vehicle lifetime
40 Fuel cycle (well-to-wheel)
Electricity
30
Batteries - minerals
20
Batteries - assembly and other
10 Vehicle manufacturing
Gasoline- Base High-GHG minerals Base
fuelled car Global average electricity mix (SDS) Cleaner electricity
Battery electric vehicle
Even though mineral extraction is relatively emissions-intensive, on average the full lifecycle emissions of
an EV bought today are around half those of a conventional car
IEA 2021. All rights reserved.Recycling becomes a significant source of supply
Contributions from spent lithium-ion batteries from EVs and storage to reducing primary demand in the SDS
Amount of spent batteries Recycled and reused minerals
GWh 1 500 kt 1 500 15%
Cobalt
Energy storage
1 200 1 200 12%
Nickel
Electric trucks
900 900 9% Lithium
Electric buses
Copper
600 600 6%
Electric two- and
three-wheelers Share of
300 300 3% total demand
Electric cars (right axis)
2020 2025 2030 2035 2040 2030 2040
By 2040, recycled quantities of copper, lithium, nickel and cobalt from spent batteries could reduce
combined primary supply requirements for these minerals by around 10%
IEA 2021. All rights reserved.IEA plan of action: a comprehensive approach to mineral security
Building on the IEA’s leadership role in energy security, these six key areas of action can ensure that
critical minerals enable an accelerated transition to clean energy
1. Ensure adequate investment in diversified sources of supply
2. Promote technology innovation at all points along the value chain
3. Scale up recycling
4. Enhance supply chain resilience and market transparency
5. Mainstream higher environmental, social and governance standards
6. Strengthen international collaboration between producers and consumers
IEA 2021. All rights reserved.Strong linkage between ESG and supply security
Distribution of production of selected minerals by governance and emissions performance, 2019
100%
Low governance score and
high emissions intensity
80%
Low governance score and
60% low emissions intensity
High governance score and
40%
high emissions intensity
20% High governance score and
low emissions intensity
Copper Lithium Nickel Cobalt
The majority of current production volumes come from regions with low governance scores or high
emissions intensity
IEA 2021. All rights reserved.Environmental and social impacts must be carefully managed
Selected environmental and social challenges related to energy transition minerals
Areas of risks Description
Climate With higher greenhouse gas emission intensities than bulk metals, production of energy transition minerals can be a significant
change source of emissions as demand rises
Land use Mining brings major changes in land cover that can have adverse impacts on biodiversity and communities
Water Mining and mineral processing require large volumes of water for their operations, and pose contamination risks through acid
management mine drainage, wastewater discharge or the disposal of tailings
Declining ore quality can lead to a major increase in mining waste (e.g. tailings, waste rocks); tailings dam failure can cause large-
Waste
scale environmental disasters (e.g. Brumadinho dam collapse in Brazil)
Mineral revenues in resource-rich countries have not always been used to support economic and industrial growth and are often
Governance
diverted to finance armed conflict or for private gain
Health and
Workers face poor working conditions and workplace hazards (e.g. accidents, exposure to toxic chemicals)
safety
Human rights Mineral exploitation may lead to adverse impacts on the local population such as child or forced labour
IEA 2021. All rights reserved.Mineral development is generating increasing volumes of residues
Waste generation from copper and nickel mining
Mined output Tailings Waste rock
25 1.0% 5 000 250x 12 500 750x
Mt
Mt
Mt
20 0.8% 4 000 200x 10 000 600x
15 0.6% 3 000 150x 7 500 450x
10 0.4% 2 000 100x 5 000 300x
5 0.2% 1 000 50x 2 500 150x
2010 2017 2010 2017 2010 2017
Mined output Tailings Waste rock
Ore quality Tailings per mined output Waste rock per mined output
As ore grades decline and volumes increase, policies and industry standards will be increasingly
important to ensure that waste is managed sustainably
IEA 2021. All rights reserved.Artisanal and small-scale mining (ASM) poses special challenges
• Regulatory protections at ASM sites are often ineffective or non-existent
- Unsafe working conditions
- Lack of personal protective equipment
- Inadequate safeguards against the worst forms of child labour
• Efforts to formalise ASM activities may improve health and safety conditions and reduce human
rights concerns, particularly for child labour
- Despite promising results, long-term viability of this model remains unclear
• Stronger commitment to formalisation needed both from industry and from governments
IEA 2021. All rights reserved.The role for international and regional coordination
• International co-ordination already plays a vital role in encouraging companies to identify and
address risks across their entire supply chains
• Multilateral efforts to enhance capacity building and knowledge sharing can be particularly effective
at addressing key resource gaps between countries
- Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF)
- Energy Resource Governance Initiative (ERGI)
- Extractives Industries Transparency Initiative (EITI)
• Despite many success stories, the proliferation of international initiatives increases the risk of
duplication and inconsistency
- A high-level forum for co-ordination could play a key role in standardising environmental and
social standards while ensuring security of supply
IEA 2021. All rights reserved.Live polling question #3 – www.menti.com IEA 2021. All rights reserved.
IEA 2021. All rights reserved.
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