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The International Energy Agency has warned that high commodity prices could delay the transition to clean energy due to the amount of metals needed. batteries, solar panels and wind turbines.
Achieving the goals of the Paris climate agreement would result in a fourfold increase in demand for minerals in 2040, the IEA said. However, the lack of investment in new mines runs the risk of substantially increasing the costs of clean energy technologies, according to a report released on Wednesday.
“Meeting climate targets will generate a demand for critical minerals,” Fatih Birol, IEA executive director, told the Financial Times. “Is it like that [the energy transition] it could definitely slow down as a result of rising costs. ”
Commodity prices, from lithium to cobalt – have met this year as the demand for clean energy technologies has increased and governments have deployed green stimulus packages. According to the IEA, electric car sales rose 41% last year, with about 3 million sold worldwide.
“Having enough electric cars, wind turbines, hydrogen, solar energy, batteries, for that we need critical minerals at affordable prices, otherwise it will be a formidable barrier to achieving our climate goals,” Birol said.
The group of raw materials used in batteries is expected to get the biggest increase in demand, according to the report. Demand for lithium will grow more than 40 times if countries want to meet the goals of the Paris agreement, he said.
The IEA, which was founded in the 1970s to ensure security of global oil supply in the wake of the first Arab oil embargo, said critical minerals had become the key to countries ’energy security.
The production of critical minerals needed for clean energy technologies was concentrated much more than in the oil market, the IEA said. The Democratic Republic of the Congo, for example, produces more than 60% of the world’s supply of cobalt, a critical material for the battery.
“Concerns about price volatility and security of supply are not going away in an electrified energy-rich energy system,” he said.
Birol warned that higher commodity prices could offset the cost reductions achieved by increased production in clean energy technologies such as batteries. If the price of lithium and nickel doubles, the cost of producing lithium-ion batteries for electric vehicles will increase by 6%.
Rising copper prices, which to hit a ten-year high of more than $ 10,000 last week could add half a trillion dollars to the costs of meeting climate targets in the next two decades, Birol added.
However, investors are not investing enough in new mines. A mining project takes on average more than 16 years to move from discovery to first production, so investment is now needed, the IEA wrote.
“Investors are not yet convinced that governments are serious [about] achieving its climate goals, “Birol said.” There are not strong enough and clear enough signals given by policymakers about the speed and determination of the energy transition. ”
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