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Energy Transition Requires More Minerals, Metals Investment

Renewable energy developers will soon have to deal with a shortage of critical minerals and metals unless there’s more investment made in certain projects, the International Energy Agency said in report out last Friday (The Wall Street Journal, subscription).

What’s going on: “While market pressures eased in 2023—leading to a slump in prices for metals including copper, lithium, cobalt and nickel—long-term investment is vital to avoid projected demand outpacing supply, according to the analysis from the IEA. The minerals are used in a number of technologies essential to the green transition.”

  • The world’s current projected supply of lithium will only meet half of global demand by 2035, and copper resources will meet a little over two-thirds. 

Why it’s important: “Secure and sustainable access to critical minerals is essential for smooth and affordable clean energy transitions,” IEA Executive Director Fatih Birol said in a statement. “The world’s appetite for technologies such as solar panels, electric cars and batteries is growing fast—but we cannot satisfy it without reliable and expanding supplies of critical minerals.”

What can be done: Increased recycling and innovation efforts—as well as the investment of about $800 billion in mining by 2040—“will be crucial to ease potential supply strains.”

  • In the absence of strong recycling and reuse efforts, the cash infusion would need to be a third higher, according to the report.
  • Recycled critical metals from clean energy technologies could slash the need for new metals by as much as 30%.

However … While there are established recycling practices for base metals, such as aluminum, there aren’t any for many “energy transition” minerals, including nickel and lithium.

  • Investment in critical minerals is growing (it rose 12% in 2023, and exploration funding increased 15%), but those figures are down from 2022.

Our take: “The IEA’s report should serve as a wakeup call to U.S. policymakers: We need permitting reform that offers real regulatory certainty for the development and deployment of mining projects,” said NAM Director of Energy and Resources Policy Michael Davin. “Without it, we will not get the investment we need to increase the domestic sourcing of these key metals and minerals.”

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