Dominish, E., Florin, N. and Teske, S.
This report explores how the planet can meet the demand for minerals which will be needed to deliver on the clean energy transition, in a responsible way.
In order to meet the goals of the Paris Climate Agreement, a transition to 100% renewable energy is urgently needed.
But this does not come without challenges. Renewable energy technologies, electric vehicles and battery storage technologies require high volumes of environmentally sensitive materials. The supply chains for these materials and technologies need to be appropriately managed, to avoid creating new adverse impacts.
What kind of metals do we need?
Lithium-ion batteries: cobalt, lithium, nickel and manganese
Electric vehicles: rare earths (neodymium and dysprosium)
Solar PV: cadmium, indium, gallium, selenium, silver, tellurium
Wind power: rare earths (neodymium and dysprosium)
Aluminium and copper: used in all of these technologies
This paper aims to assess the projected demand for fourteen such materials, considering potential efficiencies and recycling to reduce demand and what the supply risks and impacts may be.
This study focuses only on the metal demand for renewable energy and storage technologies. There could be other demand streams for such metals which may also increase or decline over time. Their modelling is based on a high demand scenario based on current technologies, and ambitious on renewable energy – which will be necessary to keep global temperature rises limited to under 1.5 degrees Celsius and deliver on the commitments made in the Paris agreement.
The rapid increase in demand for cobalt, lithium and rare earths is found to be of the most concern. This is because demand for lithium and rare earths from lithium-ion batteries for EVs and storage exceeds current production rates, whilst demand for cobalt and nickel exceeds current production rates by around 2030.
Supply chain risks
Cobalt is the metal of most concern for supply risks as it has highly concentrated production and reserves, with 58% of production in the DR Congo. Batteries for EVs are expected to be the main end-use of cobalt in only a few years.
The supply chains for renewable energy technologies are opaque and involve a vast number of countries and companies. Chinese companies have significant control of supply chains, including mining, processing and manufacturing, and China is also the largest end-market.
Concentration of supply in few countries presents a risk on two fronts – security of supply for manufacturers, and vulnerability to price fluctuations.
And the responsible management of these supply chains will be key given the significant environmental and social impacts associated. These include;
Cobalt: Heavy metal contamination of air, water and soil has led to severe health impacts in DR Congo, and the cobalt mining area is one of the top ten most polluted places in the world. Around 20% of cobalt from DR Congo is from artisanal and small-scale miners who work in dangerous conditions in hand-dug mines and there is extensive child labour.
Copper: Copper mining can lead to heavy metal contamination, environmental pollution from a major tailings dam spills, as seen in the US, and there are health impacts for workers which have been observed in China and Zambia.
Lithium: concern over water contamination and shortages in the lithium triangle of Argentina, Bolivia and Chile, and the inadequate compensation for affected local communities.
Nickel: Damage to freshwater and marine ecosystems has been observed in Canada, Russia, Australia, Philippines, Indonesia and New Caledonia.
Rare earths: processing requires large amounts of harmful chemicals and produces large volumes of solid waste, gas and wastewater.
Silver: There has been heavy metal contamination of soil and water from recent and historical mines in the US, Mexico, Peru and Bolivia, and social conflicts in Guatemala.
Encouraging responsible sourcing
There are a large number of responsible sourcing initiatives, that promote environmental stewardship and the respect of human rights in the supply chain. However most are voluntary, and industry led.
The report finds that harmonisation of these initiatives, and widespread adoption of them, may improve the current situation, and lead to more responsible supply chains.
But it is a difficult balance to strike – responsible sourcing initiatives need to ensure that they do not lead to unintended negative consequences, such as increasing poverty, by avoiding sourcing from countries with poorer governance.
The way forward?
The report makes four key conclusions.
Encouraging recycling and responsible sourcing are the key strategies to promote
environmental stewardship and the respect of human rights in the supply chain.
Recycling and responsible sourcing are fundamental to improving the sustainability of the renewable energy transition. Demand for metals could increase dramatically, and many of them will only have been mined in small amounts before.
Recycling is the most important strategy to reduce primary demand.
Recycling of metals from end-of-life batteries will have the greatest opportunity to reduce primary demand for battery metals. Increasing efficiency or shifting away from cobalt also has a significant impact (although this may increase demand for other metals including nickel and lithium).
Many electric vehicle (EV) and battery manufacturers have been proactive in establishing recycling initiatives and improving efficiency, but there is still potential to improve recycling rates. It is important to note that not all types of
metals are currently being recovered in the recycling process (e.g. lithium and manganese), or only at low rates.
Improving the efficiency of material use was found to have the greatest potential to reduce demand for materials needed for solar PV, given the long lifetime of these products.
Overall recycling was found to be the most important strategy for the renewable energy and battery industries going forward, it is already a key focus for the industry, and this is expected to continue to improve over time.
Responsible sourcing is needed where supply cannot be met by recycled sources.
Recycling can significantly reduce primary demand, especially for batteries, however it cannot meet all demand.
New mining is likely to take place to meet demand in the short term, and new mines are already under development linked to renewable energy (e.g. for cobalt, copper, lithium, rare earths, nickel). If not managed responsibly, this has the potential for new adverse environmental and social impacts.
When supply cannot be met by recycled sources, verified certification schemes and due diligence of supply chains is needed to reduce potential negative social and environmental impacts.
The EV and battery industries have the most urgent need to avoid negative impacts in their supply chains.
Cobalt, lithium and rare earths are the metals of highest concern, considering their projected future demand and supply risks.
The industry as a whole should engage further with responsible sourcing, and this will encourage more mines to engage in responsible practices and certification schemes.
EV manufacturers have an important role to play – as strong consumer facing brands, they can drive change up the supply chain and influence their suppliers upstream.
It is expected that with the clean energy transition, renewable energy technologies will consume a growing share of these metals. This provides an opportunity, to promote stewardship of both primary sources and technologies at end-of-life – which will in turn improve the sustainability of the supply chain for these metals more broadly.
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