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Material and Resource

Requirements for

the Energy Transition

July 2023

Version 1.0

The Barriers to Clean Electrification Series

Our Commissioners come from a range of organisations

– energy producers, energy-intensive industries, technology

providers, finance players and environmental NGOs – which

operate across developed and developing countries and

play different roles in the energy transition. This diversity of

viewpoints informs our work: our analyses are developed

with a systems perspective through extensive exchanges

with experts and practitioners. The ETC is chaired by Lord

Adair Turner who works with the ETC team, led by Faustine

Delasalle (Vice-Chair), Ita Kettleborough (Director), and Mike

Hemsley (Deputy Director).

The ETC’s Material and Resource Requirements for the

Energy Transition was developed by the Commissioners

with the support of the ETC Secretariat, provided by

Systemiq. This report constitutes a collective view of the

Energy Transitions Commission. Members of the ETC

endorse the general thrust of the arguments made in this

publication but should not be taken as agreeing with every

finding or recommendation. The institutions with which

the Commissioners are affiliated have not been asked to

formally endorse this report.

Accompanying this report, the ETC has developed a

series of Material Factsheets for key materials (cobalt,

copper, graphite, lithium, neodymium and nickel), available

on the ETC website.

This report looks to build upon a substantial body of

work in this area, including from the IEA, IRENA, and ETC

knowledge partners BNEF and RMI.

The ETC team would like to thank the ETC members,

member experts and the ETC’s broader network of

external experts for their active participation in the

development of this report.

The ETC Commissioners not only agree on the importance

of reaching net-zero carbon emissions from the energy

and industrial systems by mid-century but also share a

broad vision of how the transition can be achieved. The

fact that this agreement is possible between leaders from

companies and organisations with different perspectives

on and interests in the energy system should give

decision-makers across the world confidence that it is

possible simultaneously to grow the global economy and

to limit global warming to well below 2°C. Many of the

key actions to achieve these goals are clear and can be

pursued without delay.

Learn more at:

www.energy-transitions.org

www.linkedin.com/company/energy-transitions-commission

www.twitter.com/ETC_energy

www.youtube.com/@ETC_energy

Materials and Resource Requirements

for the Energy Transition

The Energy Transitions Commission (ETC) is a global coalition of leaders

from across the energy landscape committed to achieving net-zero

emissions by mid-century, in line with the Paris climate objective of

limiting global warming to well below 2°C and ideally to 1.5°C.

Barriers to Clean Electrification Series

The ETC’s Barriers to Clean Electrification series focuses on identifying the key challenges facing the transition

to clean power systems globally and recommending a set of key actions to ensure the clean electricity scale-up

is not derailed in the 2020s. This series of reports will develop a view on how to “risk manage” the transition –

by anticipating the barriers that are likely to arise and outlining how to overcome them, providing counters to

misleading claims, providing explainer content and key facts, and sharing recommendations that help manage risks.

Streamlining planning and permitting to accelerate wind and

solar deploymentBetter, Faster, Cleaner: Securing clean energy technology supply chains.

The Energy Transitions Commission is hosted by SYSTEMIQ Ltd.

Front cover Image: Aerial view of an open-pit copper mine in Peru

(Jose Luis Stephens/Shutterstock.com).

Material and Resource Requirements for the Energy Transition2

Our Commissioners

Mr Shaun Kingsbury,

Chief Investment Officer – Just Climate

Mr. Bradley Andrews,

President, UK, Norway, Central Asia &

Eastern Europe – Worley

Mr. Jon Creyts,

Chief Executive Officer – Rocky Mountain

Institute

Mr. Spencer Dale,

Chief Economist – bp

Mr. Bradley Davey,

Executive Vice President, Head of

Corporate Business Optimisation –

ArcelorMittal

Mr. Jeff Davies,

Chief Financial Officer – L&G

Mr. Pierre-André de Chalendar,

Chairman and Chief Executive Officer –

Saint Gobain

Mr. Agustin Delgado,

Chief Innovation and Sustainability

Officer – Iberdrola

Dr. Vibha Dhawan,

Director General – The Energy and

Resources Institute

Mr. Craig Hanson,

Managing Director and Executive

Vice President for Programs – World

Resources Institute

Dr. Thomas Hohne-Sparborth,

Head of Sustainability Research

at Lombard Odier Investment

Managers – Lombard Odier

Mr. John Holland-Kaye,

Chief Executive Officer – Heathrow Airport

Dr. Jennifer Holmgren,

Chief Executive Officer – LanzaTech

Mr. Fred Hu,

Founder, Chairman and Chief Executive

Officer – Primavera Capital

Dr. Rasha Hasaneen,

Chief Product and Sustainability Officer –

Aspen Technology

Ms. Mallika Ishwaran,

Chief Economist – Royal Dutch Shell

Mr. Mazuin Ismail,

Senior Vice President – Petronas

Dr. Timothy Jarratt,

Director of Strategic Projects –

National Grid

Mr. Greg Jackson,

Founder and Chief Executive

Officer – Octopus Energy

Mr. Alan Knight,

Group Director of Sustainability – DRAX

Ms. Zoe Knight,

Group Head, Centre of Sustainable Finance,

Head of Climate Change MENAT – HSBC

Ms. Kirsten Konst,

Member of the Managing

Board – Rabobank

Mr. Martin Lindqvist,

Chief Executive Officer and

President – SSAB

Mr. Johan Lundén,

Senior Vice President, Project

and Product Strategy Office – Volvo

Mr. Rajiv Mangal,

Vice President, Safety, Health

and Sustainability – Tata Steel

Ms. Laura Mason,

Chief Executive Officer – L&G Capital

Dr. María Mendiluce,

Chief Executive Officer – We Mean

Business

Mr. Jon Moore,

Chief Executive Officer – BloombergNEF

Mr. Julian Mylchreest,

Executive Vice Chairman, Global Corporate

& Investment Banking – Bank of America

Mr. David Nelson,

Head of Climate Transition – Willis Towers

Watson

Ms. Damilola Ogunbiyi,

Chief Executive Officer – Sustainable

Energy For All

Mr. Paddy Padmanathan,

Vice-Chairman and Chief Executive

Officer – ACWA Power

Mr. KD Park,

President – Korea Zinc

Ms. Nandita Parshad,

Managing Director, Sustainable

Infrastructure Group – EBRD

Mr. Alistair Phillips-Davies,

Chief Executive – SSE

Mr. Andreas Regnell,

Senior Vice President, Head of Strategic

Development – Vattenfall

Mr. Menno Sanderse,

Head of Strategy and Investor Relations –

Rio Tinto

Mr. Siddharth Sharma,

Chief Executive Officer, Tata Trusts – Tata

Sons Private Limited

Mr. Ian Simm,

Founder and Chief Executive Officer –

Impax Asset Management

Mr. Sumant Sinha,

Chairman, Founder and Chief Executive

Officer – ReNew Power

Lord Nicholas Stern,

IG Patel Professor of Economics and

Government – Grantham Institute – LSE

Dr. Günther Thallinger,

Member of the Board of Management,

Investment Management, Sustainability –

Allianz

Mr. Simon Thompson,

Senior Advisor – Rothschild & Co

Mr. Thomas Thune Andersen,

Chairman of the Board – Ørsted

Mr. Nigel Topping,

Global Ambassador – UN High Level

Climate Action Champions

Dr. Robert Trezona,

Founding Partner, Kiko Ventures – IP Group

Mr. Jean-Pascal Tricoire,

Chairman and Chief Executive Officer –

Schneider Electric

Ms. Laurence Tubiana,

Chief Executive Officer – European

Climate Foundation

Lord Adair Turner,

Chair – Energy Transitions Commission

Senator Timothy E. Wirth,

Vice Chair – United Nations Foundation

Material and Resource Requirements for the Energy Transition 3

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MaterialandResourceRequirementsfortheEnergyTransitionJuly2023Version1.0TheBarrierstoCleanElectrificationSeriesOurCommissionerscomefromarangeoforganisations–energyproducers,energy-intensiveindustries,technologyproviders,financeplayersandenvironmentalNGOs–whichoperateacrossdevelopedanddevelopingcountriesandplaydifferentrolesintheenergytransition.Thisdiversityofviewpointsinformsourwork:ouranalysesaredevelopedwithasystemsperspectivethroughextensiveexchangeswithexpertsandpractitioners.TheETCischairedbyLordAdairTurnerwhoworkswiththeETCteam,ledbyFaustineDelasalle(Vice-Chair),ItaKettleborough(Director),andMikeHemsley(DeputyDirector).TheETC’sMaterialandResourceRequirementsfortheEnergyTransitionwasdevelopedbytheCommissionerswiththesupportoftheETCSecretariat,providedbySystemiq.ThisreportconstitutesacollectiveviewoftheEnergyTransitionsCommission.MembersoftheETCendorsethegeneralthrustoftheargumentsmadeinthispublicationbutshouldnotbetakenasagreeingwitheveryfindingorrecommendation.TheinstitutionswithwhichtheCommissionersareaffiliatedhavenotbeenaskedtoformallyendorsethisreport.Accompanyingthisreport,theETChasdevelopedaseriesofMaterialFactsheetsforkeymaterials(cobalt,copper,graphite,lithium,neodymiumandnickel),availableontheETCwebsite.Thisreportlookstobuilduponasubstantialbodyofworkinthisarea,includingfromtheIEA,IRENA,andETCknowledgepartnersBNEFandRMI.TheETCteamwouldliketothanktheETCmembers,memberexpertsandtheETC’sbroadernetworkofexternalexpertsfortheiractiveparticipationinthedevelopmentofthisreport.TheETCCommissionersnotonlyagreeontheimportanceofreachingnet-zerocarbonemissionsfromtheenergyandindustrialsystemsbymid-centurybutalsoshareabroadvisionofhowthetransitioncanbeachieved.Thefactthatthisagreementispossiblebetweenleadersfromcompaniesandorganisationswithdifferentperspectivesonandinterestsintheenergysystemshouldgivedecision-makersacrosstheworldconfidencethatitispossiblesimultaneouslytogrowtheglobaleconomyandtolimitglobalwarmingtowellbelow2°C.Manyofthekeyactionstoachievethesegoalsareclearandcanbepursuedwithoutdelay.Learnmoreat:www.energy-transitions.orgwww.linkedin.com/company/energy-transitions-commissionwww.twitter.com/ETC_energywww.youtube.com/@ETC_energyMaterialsandResourceRequirementsfortheEnergyTransitionTheEnergyTransitionsCommission(ETC)isaglobalcoalitionofleadersfromacrosstheenergylandscapecommittedtoachievingnet-zeroemissionsbymid-century,inlinewiththeParisclimateobjectiveoflimitingglobalwarmingtowellbelow2°Candideallyto1.5°C.BarrierstoCleanElectrificationSeriesTheETC’sBarrierstoCleanElectrificationseriesfocusesonidentifyingthekeychallengesfacingthetransitiontocleanpowersystemsgloballyandrecommendingasetofkeyactionstoensurethecleanelectricityscale-upisnotderailedinthe2020s.Thisseriesofreportswilldevelopaviewonhowto“riskmanage”thetransition–byanticipatingthebarriersthatarelikelytoariseandoutlininghowtoovercomethem,providingcounterstomisleadingclaims,providingexplainercontentandkeyfacts,andsharingrecommendationsthathelpmanagerisks.PreviouspublicationsinthisseriesincludeETC(2023),StreamliningplanningandpermittingtoacceleratewindandsolardeploymentandETC(2023),Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains.TheEnergyTransitionsCommissionishostedbySYSTEMIQLtd.Copyright©2023SYSTEMIQLtd.Allrightsreserved.FrontcoverImage:Aerialviewofanopen-pitcoppermineinPeru(JoseLuisStephens/Shutterstock.com).MaterialandResourceRequirementsfortheEnergyTransition2OurCommissionersMrShaunKingsbury,ChiefInvestmentOfficer–JustClimateMr.BradleyAndrews,President,UK,Norway,CentralAsia&EasternEurope–WorleyMr.JonCreyts,ChiefExecutiveOfficer–RockyMountainInstituteMr.SpencerDale,ChiefEconomist–bpMr.BradleyDavey,ExecutiveVicePresident,HeadofCorporateBusinessOptimisation–ArcelorMittalMr.JeffDavies,ChiefFinancialOfficer–L&GMr.Pierre-AndrédeChalendar,ChairmanandChiefExecutiveOfficer–SaintGobainMr.AgustinDelgado,ChiefInnovationandSustainabilityOfficer–IberdrolaDr.VibhaDhawan,DirectorGeneral–TheEnergyandResourcesInstituteMr.CraigHanson,ManagingDirectorandExecutiveVicePresidentforPrograms–WorldResourcesInstituteDr.ThomasHohne-Sparborth,HeadofSustainabilityResearchatLombardOdierInvestmentManagers–LombardOdierMr.JohnHolland-Kaye,ChiefExecutiveOfficer–HeathrowAirportDr.JenniferHolmgren,ChiefExecutiveOfficer–LanzaTechMr.FredHu,Founder,ChairmanandChiefExecutiveOfficer–PrimaveraCapitalDr.RashaHasaneen,ChiefProductandSustainabilityOfficer–AspenTechnologyMs.MallikaIshwaran,ChiefEconomist–RoyalDutchShellMr.MazuinIsmail,SeniorVicePresident–PetronasDr.TimothyJarratt,DirectorofStrategicProjects–NationalGridMr.GregJackson,FounderandChiefExecutiveOfficer–OctopusEnergyMr.AlanKnight,GroupDirectorofSustainability–DRAXMs.ZoeKnight,GroupHead,CentreofSustainableFinance,HeadofClimateChangeMENAT–HSBCMs.KirstenKonst,MemberoftheManagingBoard–RabobankMr.MartinLindqvist,ChiefExecutiveOfficerandPresident–SSABMr.JohanLundén,SeniorVicePresident,ProjectandProductStrategyOffice–VolvoMr.RajivMangal,VicePresident,Safety,HealthandSustainability–TataSteelMs.LauraMason,ChiefExecutiveOfficer–L&GCapitalDr.MaríaMendiluce,ChiefExecutiveOfficer–WeMeanBusinessMr.JonMoore,ChiefExecutiveOfficer–BloombergNEFMr.JulianMylchreest,ExecutiveViceChairman,GlobalCorporate&InvestmentBanking–BankofAmericaMr.DavidNelson,HeadofClimateTransition–WillisTowersWatsonMs.DamilolaOgunbiyi,ChiefExecutiveOfficer–SustainableEnergyForAllMr.PaddyPadmanathan,Vice-ChairmanandChiefExecutiveOfficer–ACWAPowerMr.KDPark,President–KoreaZincMs.NanditaParshad,ManagingDirector,SustainableInfrastructureGroup–EBRDMr.AlistairPhillips-Davies,ChiefExecutive–SSEMr.AndreasRegnell,SeniorVicePresident,HeadofStrategicDevelopment–VattenfallMr.MennoSanderse,HeadofStrategyandInvestorRelations–RioTintoMr.SiddharthSharma,ChiefExecutiveOfficer,TataTrusts–TataSonsPrivateLimitedMr.IanSimm,FounderandChiefExecutiveOfficer–ImpaxAssetManagementMr.SumantSinha,Chairman,FounderandChiefExecutiveOfficer–ReNewPowerLordNicholasStern,IGPatelProfessorofEconomicsandGovernment–GranthamInstitute–LSEDr.GüntherThallinger,MemberoftheBoardofManagement,InvestmentManagement,Sustainability–AllianzMr.SimonThompson,SeniorAdvisor–Rothschild&CoMr.ThomasThuneAndersen,ChairmanoftheBoard–ØrstedMr.NigelTopping,GlobalAmbassador–UNHighLevelClimateActionChampionsDr.RobertTrezona,FoundingPartner,KikoVentures–IPGroupMr.Jean-PascalTricoire,ChairmanandChiefExecutiveOfficer–SchneiderElectricMs.LaurenceTubiana,ChiefExecutiveOfficer–EuropeanClimateFoundationLordAdairTurner,Chair–EnergyTransitionsCommissionSenatorTimothyE.Wirth,ViceChair–UnitedNationsFoundationMaterialandResourceRequirementsfortheEnergyTransition3MajorETCreportsandworkingpapersSectoralfocusesprovideddetaileddecarbonisationanalysesonsixoftheharder-to-abatesectorsafterthepublicationoftheMissionPossiblereport(2019).AsacorepartneroftheMPP,theETCalsocompletesanalysistosupportarangeofsectorialdecarbonisationinitiatives:MPPSectorTransitionStrategies(2022–2023)aseriesofreportsthatguidethedecarbonisationofsevenofthehardest-to-abatesectors.Ofthese,fourarefromthematerialsindustries:aluminium,chemicals,concrete,andsteel,andthreearefromthemobilityandtransportsectors–aviation,shipping,andtrucking.GlobalReportsSectoralandcross-sectoralfocusesGeographicalfocusesKeeping1.5°CAliveSeries(2021–2022)COPspecialreportsoutliningactionsandagreementsrequiredinthe2020stokeep1.5°Cwithinreach.BarrierstoCleanElectrificationSeries(2022–2024)recommendsactionstoovercomekeyobstaclestocleanelectrificationscale-up,includingplanningandpermitting,supplychainsandpowergrids.UnlockingtheFirstWaveofBreakthroughSteelInvestments(2023)ThisETCseriesofreportslooksathowtoscale-upnear-zeroemissionsprimary(ore-based)steelmakingthisdecadewithinspecificregionalcontexts:theUK,SouthernEurope,FranceandUSA.Canada’sElectrificationAdvantageintheRacetoNet-Zero(2022)identifies5catalyststhatcanserveasastartingpointforanationalelectrificationstrategyledbyCanada’spremieresattheprovincelevel.China2050:AFullyDevelopedRichZero-carbonEconomy(2019)AnalysesChina’senergysources,technol-ogiesandpolicyinterventionsrequiredtoreachnet-zerocarbonemissionsby2050.AseriesofreportsontheIndianpowersystem,outliningdecarbonisationroadmapsforIndia’selectricitysupplyandheavyindustry.Settingupindustrialregionsfornetzero(2021–2023)explorethestateofplayinAustralia,andidentifiesopportunitiesfortransitioningtonet-zeroemissionsinfivehard-to-abatesupplychains.MissionPossible(2018)outlinespathwaystoreachnet-zeroemissionsfromtheharder-to-abatesectorsinheavyindustry(cement,steel,plastics)andheavy-dutytransport(trucking,shipping,aviation).MakingMissionPossible(2020)showsthatanet-zeroglobaleconomyistechnicallyandeconomicallypossiblebymid-centuryandwillrequireaprofoundtransformationoftheglobalenergysystem.MakingMissionPossibleSeries(2021–2022)outlineshowtoscale-upcleanenergyprovisiontoachieveanet-zeroemissionseconomybymid-century.FinancingtheTransition(2023)quantifiesthefinanceneededtoachieveanet-zeroglobaleconomyandidentifiespoliciesneededtounleashinvestmentonthescalerequired.PreparedbySupportedbyINSIGHTREPORT/MARCH2023UNLOCKINGTHEFIRSTWAVEOFBREAKTHROUGHSTEELINVESTMENTSintheUnitedStatesUNLOCKINGTHEFIRSTWAVEOFBREAKTHROUGHSTEELINVESTMENTSintheUnitedKingdomPreparedbySupportedbyINSIGHTREPORT/March2023UNLOCKINGTHEFIRSTWAVEOFBREAKTHROUGHSTEELINVESTMENTSinFrancePreparedbySupportedbyINSIGHTREPORT/MARCH2023UNLOCKINGTHEFIRSTWAVEOFBREAKTHROUGHSTEELINVESTMENTSinSouthernEuropePreparedbySupportedbyINSIGHTREPORT/March2023UNLOCKINGTHEFIRSTWAVEOFBREAKTHROUGHSTEELINVESTMENTSInternationalOpportunitiesTHEUNITEDKINGDOM,SPAIN,FRANCE,ANDTHEUNITEDSTATESPreparedbySupportedbyINSIGHTREPORT/April2023MaterialandResourceRequirementsfortheEnergyTransition4GlossaryBEVorEV:(Battery)electricvehicle.Bioenergy:Renewableenergyderivedfrombiologicalsources,intheformofsolidbiomass,biogasorbiofuels.Bioenergywithcarboncaptureandstorage(BECCS):Atechnologythatcombinesbioenergywithcarboncaptureandstoragetoproduceenergyandnetnegativegreenhousegasemissions,i.e.removalofcarbondioxidefromtheatmosphere.Carboncaptureandstorage(CCS):Theterm“carboncapture”isusedtorefertoprocessofcapturingCO2onthebackofenergyandindustrialprocesses.Theterm“carboncaptureandstorage”referstothecombinationofcarboncapturewithundergroundgeologicalstorageofcarbon.Carbonemissions/CO2emissions:Thesetermsareusedinterchangeablytodescribeanthropogenicemissionsofcarbondioxideintotheatmosphere.DirectAirCarbonCapture(DACC):Thetermusedforvarioustechnologieswhichusechemicalprocessestoseparatecarbondioxidefromtheatmosphere.Thistermdoesnotcarryanyimplicationsregardingsubsequenttreatmentofthecapturedcarbondioxide,i.e.itcouldbeutilisedorstored.Electrolysis:Atechniquethatuseselectriccurrenttodriveanotherwisenon-spontaneouschemicalreaction.Oneformofelectrolysisistheprocessthatdecomposeswaterintohydrogenandoxygen,takingplaceinanelectrolyserandproducting”green”hydrogen.Thisprocesscanbezero-carboniftheelectricityusediszero-carbon.Environmentalimpacts:Harmfuleffectsofhumanactivitiesonecosystemsandnaturalresources.Theseincludeclimatechangeimpacts(throughgreenhousegasemissions),ecotoxicityimpacts,land-userelatedbiodiversityloss,andwaterstress.1Griscometal.(2017),Naturalclimatesolutions.FCEV:Fuel-cellelectricvehicle.Greenhousegases(GHGs):Gasesthattrapheatintheatmosphere.GlobalGHGemissioncontributionsbygasareroughly76%CO2,16%methane,6%nitrousoxide,and2%fluorinatedgases.Materials:Asub-setofresourcesthatincludebiomass,fossilfuels,metalsandnon-metallicminerals.Inthisreportwefocusonasetofmetalsthatarehighlyrelevanttotheenergytransitionandareinterchangeablyreferredtoas”energytransitionmaterials”,“energytransitionmetals”,or”criticalrawmaterials”.(SeealsoPrimaryandSecondaryMaterials.)Materialsefficiency:Usinglessmaterialstoprovidethesamelevelofperformanceforagiventechnology,typicallyinunitsofmass(kg)perinstalledcapacity(MWorMWh).MineralReserves:Adynamicworkinginventoryofeconomically-extractableminerals/commoditiesthatarecurrentlyrecoverable.MineralResources:Thetotalamountofamineral/commoditythatisgeologicallyavailableinsufficientconcentrationsthatextractionispotentiallyfeasible.Typicallyusedtorefertomaterialsavailableonland(i.e.excludingdeep-searesources).NaturalClimateSolutions(NCS):“Conservation,restorationand/orimprovedlandmanagementactionstoincreasecarbonstorageand/oravoidgreenhousegasemissionsacrossglobalforests,wetlands,grasslands,agriculturallandsandoceans”.1Thiscanbecoupledwithtechnologytosecurelong-termorpermanentstorageofgreenhousegases.NaturalResources:Theseincludeland,waterandmaterials,andarepartsofthenaturalworldthatcanbeusedineconomicactivitiestoproducegoodsandservices.Ore:Naturalrockorsedimentdepositsthatcontainsoneormorevaluableminerals.Oregrade:Thepercentageofanelementofinterestwithinapotentiallymineableore.Theoregradeofdifferentmetalsvaryconsiderably,e.g.,around50%forironoreoraround0.6%forcopperore.PrimaryMaterials:Materialsthathavebeenextractedfromthenaturalenvironment,typicallythroughmining.RareEarthElements(REEs):Asetofseventeenmetallicelements,madeupofthefifteenlanthanides,aswellasscandiumandyttrium.Thisreportfocusesontheneodymium,arareearthelementtypicallyusedinhigh-strengthmagnetsinbothwindturbinesandelectricvehicles.SecondaryMaterials:Materialsthathavebeenrecycledfromaprevioususe-caseandaresuppliedbackintotheeconomyas“new”rawmaterials.Tailings:Thisisthegroundrockresidualthatremainsfollowinganymillingorbeneficiationprocesseswhichremovesthevaluablemetallicconstituentsfromtheminedore.WasteRock:Thisisrockthathasbeenminedandtransportedoutofaminepit,butdoesnotcontainmetalconcentrationsofeconomicinterest.Sometimesreferredtoas“overburden”.MaterialandResourceRequirementsfortheEnergyTransition5OurCommissioners3MajorETCreportsandworkingpapers4Glossary5Introduction7Chapter1Sufficientnaturalresourcesforaninherentlymoresustainableenergysystem121.1Landandwaterrequirementsforacleanenergysystem151.2Rawmaterialrequirementstobuildacleanenergysystem191.3Thenewsystemvs.theold-adramaticallyreducedimpactontheglobalenvironment251.4Summary28Chapter2Supply-demandbalanceto2030andthepotentialforefficiencyandrecycling302.1Materialsdemandprojectionsfortheenergytransition–fourscenarios312.2Balanceofdemandversussupplyto2030intheBaselineDecarbonisationscenario342.3Thepotentialforefficiencyandrecycling382.4Reserveandsupplygapswithefficiencyandrecyclingimprovements532.5Actionstoimproveefficiencyandincreaserecycling61Chapter3Ensuringadequateandsecuresupply683.1Theprimaryroleofimperfectmarkets693.2Challengestoasmoothscale-upinprimarysupply713.3Actionstoaddresssupplysidechallenges783.4Geographicconcentrationandsecurityofsupplyconcerns823.5Actionstobuildresilientandsecuresupplychains83Chapter4Minimisingandmanagingenvironmentalimpactsofmaterialssupply884.1Greenhousegasemissionsfrommaterialsproduction904.2Materialquantities,landuse,andbiodiversity934.3Localtoxicityandpollutionimpacts964.4Theimpactofwaterconsumptioninmining984.5Impactsonlocalcommunitiesandsociety994.6Keyareasoffocustoensuresustainableandresponsiblematerialsfortheenergytransition1004.7Actionsrequiredtomakematerialsupplymoresustainableandresponsible101Chapter5Implicationsforcleanenergytechnologiesandkeyactionsforthe2020s1155.1Summaryofkeyrisksandpotentialshort-termimplications1165.2Keyactionsforthe2020s121AppendixOverviewofkeymodelassumptions123Acknowledgements128ContentsMaterialandResourceRequirementsfortheEnergyTransition6IntroductionTheParisClimateAccordcommittedtheworldtokeepingglobalwarmingtowellbelow2°Cfrompre-industriallevels,aimingideallyfora1.5°Climit.Tohavea90%chanceofstayingbelow2°Canda50%chanceoflimitingwarmingto1.5°C,theworldmustreduceCO₂andothergreenhousegasestoaroundzerobymid-century,withareductionofaround40%achievedby2030.TheETCsupportstheseobjectivesandbelievesthatallhigh-incomecountriesshouldreachnet-zeroby2050atthelatest,andallmiddle-andlower-incomecountriesby2060.Achievingthiswillrequiretherapidandlarge-scalerolloutofmultiplecleanenergytechnologies,ofwhichthemostimportantsupportthemassiveexpansionandcompletedecarbonisationofelectricitysupply,adeepelectrificationofmostenergyfinaluses,andahugelyexpandedroleforlow-carbonhydrogen,primarilyproducedviaelectrolysis(“greenhydrogen”).Totalelectricitysupplywillneedtorisefromtoday’sroughly30,000TWhtoover100,000TWhbymid-century;greenhydrogenproductioncouldreach500–800Mtperannum;transmissionanddistributiongridswillneedtoexpandfromaround70millionkilometrestoupto200millionkilometres;and1.5billionpassengerelectricvehicles(EVs)wouldrequirearound100TWhofaggregatebatterycapacity.Buildingthisnewcleanenergysystemwillrequireawiderangeofcriticalrawmaterials,fromcopperforwiring,steelforwindturbinetowers,rareearthelementsforelectricmotors,lithium,nickelandgraphiteforbatteries,andsiliconforsolarphotovoltaic(PV)panels.Supplyingthesematerialswillrequirelargescaleinvestmentsandrapidexpansionofminingandrefiningcapacity.Atthesametime,coalproductionwouldhavetodecreasemorethan90%fromcurrentlevelsastheenergytransitionunfolds.2ThisETCreportbuildsuponexistingworkandassesses:3•Whethertherearesufficientrawmaterialresourcestosupporttheenergytransition.•Whethersupplycangrowfastenoughtomeetdemand.•Theglobalandlocalenvironmentalimpactsofincreasedminingandmetalsrefining.•Theactionswhichcanbetakentoensureadequateandsecuresupplyandtoreduceadverseenvironmentalimpacts.Thekeyconclusionsarethat:•Thenewcleanenergysystemhasmanageablerequirementsforland,waterandmaterials–andwillleadtodrasticallyloweremissions,helpingtoreachnet-zeroemissionsandavoidfutureclimatechangeanditsimpacts.•Overthelongterm,therearesufficientresourcesofalltherawmaterials(andoflandareaandwater)tosupporttheenergytransition,andinthosecaseswherecurrentlyassessed“reserves”4fallshortofpotentialcumulativedemand–inparticularcopperandnickel–reserveexpansioncanandwillbeachieved.•Thereismajorpotentialtoreducefuturecumulativedemandforenergytransitionmaterialsviatechnicalinnovationandrecycling,whichshouldbestronglysupportedandrequiredbypublicpolicy.•Miningwillneedtoexpand.Scalingsupplyrapidlyenoughtomeetdemandgrowthbetweennowand2030willbechallengingforsomemetals,inparticularlithium,copper,nickel,cobalt,graphiteandneodymium;butactionscanbetakenbygovernmentsandcompanieswhichwouldpreventanyseriousconstraintonthepaceoftheenergytransition.•Miningcanexpandinasustainableandresponsibleway.◦Theadverseglobalandlocalenvironmentalimpactsofextractingthematerialsandmineralsrequiredforacleanenergysystemarefarlessthanthoseimposedbytheextractionanduseoffossilfuels.Shiftingfromuseofconsumablefossilfuelswhichmustbecontinuouslyextractedtotheuseofdurablemetalswhichcanbereusedandrecycled,createsafundamentallymoresustainableenergysystem.◦Mineralextractionandrefiningdoescurrentlyhavesignificantimpactsonlocalenvironmentsandcommunities.However,thesecanbeminimisedthroughbestpractiseresponsiblemining,whichshouldberequiredbystrongregulation.2Coalproductionwouldbeapproximately650Mtp.a.in2050(accountingforboththermalcoalforpowergenerationandmetallurgicalcoalforsteel)comparedtoexistinglevelsofover8,000Mtp.a.TheETCwillbecoveringthistopicindetailinanupcomingreportonfossilfuels.SystemiqanalysisfortheETC,basedonETC(2020),Makingmissionpossible;ETC(2022),Mindthegap;IEA(2021),Netzeroby2050:Aroadmapfortheglobalenergysector;BP(2023),EnergyOutlook–Netzeroscenario;Shell(2021),Energytransformationscenarios–Skyscenario;BNEF(2022),Newenergyoutlook–NetZeroScenario.3Seee.g.,ETC(2023),Better,faster,cleaner:Securingcleanenergytechnologysupplychains;IEA(2022),Theroleofcriticalmineralsincleanenergytransitions;WorldBank(2020),MineralsforClimateAction;WWF/SINTEF(2022),CircularEconomyandCriticalMineralsfortheGreenTransition;Watarietal.(2019),Totalmaterialrequirementsfortheglobalenergytransitionto2050:Afocusontransportandelectricity.4Theeconomicallyandtechnicallyexploitablesubsetoftypicallylargerresources–seeBoxA.MaterialandResourceRequirementsfortheEnergyTransition7Thereportcoversinturn:➀Theavailabilityandsufficiencyofnaturalresourcesforaninherentlymoresustainableenergysystem.➁Projectionsofdemandandsupplyto2030andthepotentialtoreducedemandthroughtechnicalinnovationandrecycling.➂Challengesfacingrapidsupplyrampupandactiontoensureadequateandsecuresupply.➃Globalandlocalenvironmentalimpactsandactionstoreducethem.➄Summaryactionsforindustryandpolicymakersinthenextdecade.ThisreportisaccompaniedbyasetofMaterialFactsheets,coveringkeyinformationforsixpriorityenergytransitionmaterials:cobalt,copper,graphite,lithium,neodymiumandnickel.AshortExecutiveSummaryofthisreportisalsoavailable.8MaterialandResourceRequirementsfortheEnergyTransitionMATERIALANDRESOURCEREQUIREMENTSFORTHEENERGYTRANSITIONHCO2ENERGYTECHNOLOGIESKEYMATERIALNEEDSThecleanenergysystemin2050WINDSOLARPOWERGRIDGREENHYDROGENEVsANDBATTERIESCARBONCAPTURE20222050DeployingcleanenergytechnologieswillrequirearangeofmaterialsALUMINIUMANDSTEELCOPPERNICKELPOLYSILICONPLATINUM&PALLADIUMNEODYMIUMSILVERLITHIUMCOBALTGRAPHITENICKELSORBENTCHEMICALSE.G.MONOETHANOLAMINEREQUIREDSCALE-UPINMATERIALSDEMANDBY2050Relativeincreaseindemandforkeymaterialsfromcleanenergytechnologies,from2022x5x10x15x2020202025203020352040204520502022MATERIALSMillionmetrictonnesCOBALT1025COPPER13005600NICKEL185300LITHIUM2085EnergyTransitionsCommission-July2023LITHIUMNICKELGRAPHITENEODYMIUMCOPPERCOBALTSTEELSILICONSILVERALUMINIUMAgriculture2,700bnm3CleanEnergy58bnm3FossilFuels37bnm34,000bnm3ofglobalannualwaterconsumptionAgriculture51Millionkm2CleanEnergy0.75Millionkm2FossilFuels0.3Millionkm2106mKm2ofglobalhabitablelandAcleanenergysystemwillhavemanageableresourcerequirementsforlandandwater-andleadtodrasticallyloweremissions.SUFFICIENTGLOBALRESOURCESLANDUSE-TOTALWATERUSE-ANNUALGLOBALEMISSIONS-2022-2050CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2~1000GtCO2eemissionsfromfossilfuelscontinuingindefinitely+Emissionswillfalltozeroasminingandmanufacturingdecarbonise.Emissionsfromproducingallofthematerialsneededforacleanenergysystem.CO240GtCO2eCO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2CO2ENERGYTRANSITIONMAINDRIVEROFDEMANDOTHERSECTORSMAINDRIVERSOFDEMANDAMIXOFBOTH14-15TW1TWx1526-34TW1.2TWx25200MillionKm70MillionKmx37-10GtCO2p.a.0.05GtCO2p.a.x100500-800MT<1MTx5001500M25MEVFLEETx60Scale-upneededNEODYMIUMGlobalResourcesEnergytransitionrequirementsby2050Otherrequirementsby205070%<2%~1%~50%<1%<1%_<MaterialandResourceRequirementsfortheEnergyTransition9SIXKEYMATERIALSFORTHEENERGYTRANSITIONConcertedactionisrequiredto:COBALTCOPPERHGRAPHITELITHIUMNICKELNEODYMIUM+150%-40%0.170.420.260.2525373334+50%-10%0.120.760.560.51x7-30%0.120.090.090.05+140%-30%3.34.65.53.9+70%-30%4176x6-15%Potentialsupplygap-40%-10%Trendawayfromcobalt-richbatterieswilleasesupplyimbalances.HighpotentialtoincreaserecyclingfromEVbatteries.UncertaintyoversupplyfromDRC(~70%ofmarket+concernsaroundhumanrights),butstrongsupplygrowthfromIndonesia.Highpriceswillincentivisethriftingorsubstitution,butwidespreadneedlimitspotentialforlargedemandreductions.Decliningproductionfromexistingmines,fallingoregrades.Upto20yearsfornewlargeminestocomeonline.SupplydominatedbyChina,butnewprojectsinUS,Africa.Additionalsyntheticgraphitesupplycouldclosesupplygaps,buthashighcarbonintensity.Inthelong-term,highpotentialtosubstitutewithsiliconorlithiuminanodesandforrecycling.Relativelyfastertimelinesfornewmines(4-7years).Sodium-ionbatteriescanreducelithiumdemandfrom2030–butlikelytobesmallshareofmarket.Highpotentialforrecyclingoverlongterm.Concernsaroundwaterandcarbonintensityofproduction.Potentialtoreducematerialintensityandshifttoneodymium-freemotors.SupplyheavilyconcentratedinChina,butpotentialnewsupplyinMyanmar,USA,Australia.Miningandrefininggeneratelargevolumesoftoxicwasteandhistoricallypoorlyregulated.FastincreaseinsupplyfeasiblewithgrowthofmininginIndonesia–butcurrentproductioniscarbonintensive.ChallengestosupplyhighqualityClass1nickelandrefinednickelsulphateforbatterycathodes.Strongpotentialtoshiftawayfromnickel-richbatteries.MaxPrimaryDemand1SupplyMinPrimaryDemand2EstimatedSupply3202220301Maxdemand:Upperboundofmaterialrequirementsforrapiddecarbonisation2Mindemand:Materialrequirementswithgreatermaterial/technologyefficiencyandrecycling3Estimatedsupply:miningforecasts2030basedoncurrentplansPrimarydemandfortheenergytransitionDemandforotherusesTherearemorethanenoughmaterialsonearthtomeetdemandsfortheenergytransition……butrampingupsupplyfastenoughthisdecadetodecarbonisetheglobaleconomyby2050willbechallenging.ReduceprimarymaterialrequirementsthroughinnovationandrecyclingRapidlyincreasemininginasustainableandresponsiblewayEnergyTransitionsCommission-July2023KeyConsiderationsPROJECTEDDEMANDANDSUPPLYIN2030MillionmetrictonnesPotentialsupplygapPotentialsupplygap-40%-10%PotentialsupplygapPotentialsupplygap-30%Potentialsupplysurplus+20%MaterialandResourceRequirementsfortheEnergyTransition1011MaterialandResourceRequirementsfortheEnergyTransitionChapter1SufficientnaturalresourcesforaninherentlymoresustainableenergysystemMaterialandResourceRequirementsfortheEnergyTransition12Thereareeasilysufficientresourcesandmaterialsavailabletosupporttheneedsofaglobalnet-zeroeconomyanddeliverwidespreadprosperity.Thisnet-zeroeconomywill,overthelong-term,imposeadramaticallylowerimpactontheworld’satmosphereandenvironmentthantoday’sfossilfuelbasedsystembyavoidingclimatechangeandtransitioningtoanewsystemoflargelyone-offmaterialsextraction.Inaseriesofreportsoverthepastsixyears,theETChasdescribedthetechnologiesandinvestmentsrequiredtobuildaglobalnet-zeroeconomywhichcandeliverwidespreadprosperityacrosstheworld.5Keyfeaturesinclude[Exhibit1.1]:6•Adramaticincreaseinglobalelectricityuse,risingfrom28,000TWhin2022toreachasmuchas110,000TWhby2050.Over75%ofthiswouldbesuppliedbywindandsolar,requiringaround26–34TWofsolarand14–15TWofwind,upfromaround1.2TWand1TW,respectively,today.Therestwillbeprovidedbyamixofnuclear,hydropowerandotherzero-carbonsources,alongwithbatteryandotherstoragetosupportaround5%ofdailygenerationneeds.•Amajorexpansionofelectricitygrids,expandingfromthecurrent75millionkmoftransmissionanddistributiontoover200millionkmby2050.•Amajorroleforlow-carbonhydrogen,withtotalhydrogenusegrowingfromtoday’s90–100Mt(ofwhichonlyaround1Mtislow-carbon)to500–800milliontonnesperannum,ofwhichthestrongmajority(e.g.,85%)islikelytobe“green”hydrogenmadeviaelectrolysispoweredbylow-carbonelectricity.Thisrequireselectrolysercapacityofupto7,000GWin2050.•Thenear-totaldecarbonisationoftheglobalpassengervehiclefleetby2050,requiringover1.5billionelectriccarsand~200millionelectrictrucksandbuses.Thisrequiresatotalbatterycapacityofupto150TWh.•Carboncapture,utilisationandstoragecapacityofaround7–10GtCO2perannum,tooffsetremainingfossilfueluseandprocessemissionsinspecificapplicationsanddelivercarbonremovals.5ETC(2020),MakingMissionPossible;ETC(2021),MakingCleanElectrificationPossible;ETC(2021),MakingtheHydrogenEconomyPossible;ETC(2022),CCUSintheenergytransition:vitalbutlimited.6Rangesacrosstechnologiesheredependontotalenergydemandin2050,theshareofelectricitygeneratedbywindandsolar,efficiencyofgridbuild-outanddemandforcleanhydrogenandefficiencyofitsproductionviaelectrolysis.13MaterialandResourceRequirementsfortheEnergyTransitionBuilding,operatingandmaintainingthiscleanenergysystemwillrequirelarge-scalenaturalresourceandmaterialinputsincluding:7•Landtositesolarandwindfarmsandgrowbiomass.•Waterformining,powergenerationandasaninputtohydrogenelectrolysis.•Materialsandmetalstobuildsolarandwindfarms,batteries,electrolysers,powergridsandothercleanenergytechnologies.Thisreportconcentratesprimarilyonthematerialsandmineralsrequired,butinthischapterwealsoassessthelandandwaterrequirementstosupportanet-zeroeconomybasedprimarilyoncleanelectricity.Whenconsideringtheserequirements,itisimportanttokeepinmindhowtheycomparetothecounterfactualofindefinitelycontinuingtoday’sfossilfuelenergysystem,andtocurrentrequirementsintheglobalagriculturesector.7TheInternationalResourcePanel(IRP(2019),GlobalResourcesOutlookdefinesresourcesasland,waterandmaterials,whicharepartofthenaturalworldthatcanbeusedineconomicactivitiestoproducegoodsandservices.Materialsareasub-setofresourcesthatincludebiomass,fossilfuels,metalsandnon-metallicminerals.Inthisreport,wefocusonasetofmetalsthatarehighlyrelevanttotheenergytransitionandareinterchangeablyreferredtoas”energytransitionmaterials”,”energytransitionmetals”,or“criticalrawmaterials”.Whenconsideringtheresourcesandreservesofmineralsavailabletomeetmaterialdemand,thisreportfocusesonthosethatareavailableonland.Rapiddecarbonisationrequiresamajorramp-upofarangeofcleanenergytechnologiesSOURCE:SYSTEMIQanalysisfortheETC;ETC(2021),MakingCleanElectrificationPossible;ETC(2021),MakingtheHydrogenEconomyPossible;BNEF(2023),Interactivedatatool–Generation;IEA(2022),Globalhydrogenreview;BNEF(2023),Newenergyoutlook:Grids;BNEF(2022),Long-termelectricvehicleoutlook.ElectricitygenerationEXHIBIT1.11000sofTWh/year281102022202520302035204020452050Solarx4WindNuclearHydroFossilFuelsOtherCleanPower020406080100120TotaltransmissionanddistributionpowerlinelengthMillionsofkm732102022202520302035204020452050TransmissionDistribution050100150200250x2.5–3HydrogenproductionMt/year958002022202520302035204020452050Couldfallto~500MtwithstrongenergyproductivityimprovementsGreenBlueGrey02004006008001000x8PassengervehiclefleetBillionsofvehicles1.41.52022202520302035204020452050BEVICE0.00.51.01.52.0MaterialandResourceRequirementsfortheEnergyTransition14Mostimportantly,itiscrucialtounderstandthatanyimpactsonlandandwatertobuildandoperateacleanenergysystemwillbesignificantlylessthantheadverseimpactsthatwillarisefromtemperaturerisesabove1.5°Candbeyond2°Cintheabsenceofarapidenergytransitionby2050.Thissectionthereforecoversinturn:➀Landandwaterrequirementstooperateandmaintainacleanenergysystem.➁Materialandmineralrequirementscomparedwithgloballyavailableresources.➂Thenewsystemvs.theold:adramaticallyreducedimpactontheglobalenvironmentoverthelong-term.1.1LandandwaterrequirementsforacleanenergysystemTotallandandwaterrequirementsfortheglobalenergysystemaresmallcomparedtoothermajorusessuchasagriculture.Thissectionoutlineslandandwaterrequirementstobuildandmaintainacleanenergysystem,comparedtoafossilfuelenergysystem.•Landrequirementsforazero-carbonenergysystemaremuchlargerthanforafossilfuelbasedsystem,butaresmallrelativetoagriculturaluseandtotalavailableland–likelylessthan2%oflanddedicatedtoagriculture.Inmanycaseslow-carbonenergycanbesitedonworkingagriculturalland.•Waterrequirementsformetalsmining,cleaningsolarpanels,nuclearpowergeneration,carboncaptureandelectrolysisforhydrogencouldbeasmuchas1.5–2timeslargerthanafossilfuelenergysystem,butrequirementsarearound50timeslowerthanforagriculture.TherequiredlandandwaterforminingthematerialsneededtobuildcleanenergytechnologiesisdiscussedinmoredetailinChapter4.Itisalsoworthrememberingtheadverseimpactsclimatechangewouldhaveonlandandwater,whichwouldbeavoidedwiththeenergytransition.Theseimpacts,outlinedinSection1.3below,wouldlikelybesignificantlyworsethantherequirementstobuildandoperateacleanenergysystem–whetherfromwaterscarcityoravailableland.81.1.1LandrequirementsforacleanenergysystemExhibit1.2setsoutthelandrequirementsforanet-zeroenergysystemcomparedwithafossilfuelsystemandglobalagricultureuse.Keypointsare:•Landrequirementsforwindandsolar,includingpowergenerationfordirectelectricityuse,greenhydrogenproduction,anddirectaircarboncapture(DACC),accountforaround0.4–1.1millionsquarekilometresofland9–around1%ofgloballanduseandanareaoflandslightlylessthancurrenturbanareas.10Importantly,theimpactonglobalbiodiversityoragricultureismuchlessthanthiswouldimply,giventhat:◦Muchsolarphotovoltaic(PV)canbeplacedonrooftopsorondesertandotherlandwhichisunsuitableforagriculture–around40%ofsolarPVinstallationsin2021wereonrooftops.11◦Windfarmscompeteonlyminimallywithagriculturallanduse,andsolarfarmscanalsobecombinedwithsomeagriculturalactivityandbiodiversity.•Thelargestlandrequirementsforrenewableenergy–andthebiggestpotentialadverseimpactonbiodiversity–derivesnotfromwindandsolardeployment,butfrombioenergyproduction.Butsustainableuseofbioresources8Forexample,theIPCCestimatesthatone-quarteroftheworld’snaturallandnowexperienceslongerwildfireseasons,andthatat2°Cofwarminglandthatiscurrentlyusedforlivestockandcrops“willincreasinglybecomeclimaticallyunsuitable”.ExtremeagriculturaldroughtoverNorthandSouthAmerica,EurasiaandtheMediterraneancouldbeuptothreetimesaslikelyat2°Cofwarming.CarbonBrief(2022),In-depthQ&A:TheIPCC’ssixthassessmentonhowclimatechangeimpactstheworld.9Wehaveconservativelyassumedonlyutility-scaleground-mountedsolarisused.Thedirectlandrequirementsofonshorewindareminimal.TherangedependsonboththescaleofonshorewindandsolarPVuptake,andtheextentofcleanelectrification–seeETC(2021),Makingcleanelectrificationpossible;OurWorldinData(2022),Landuseofenergysourcesperunitofelectricity;UNECE(2021),Lifecycleassessmentofelectricitygenerationoptions;IEA(2022),SolarPVtrackingreport.10Urbanareasoccupyaround1.5millionkm2.OurWorldinData(2019),Landuse.11IEA(2022),Approximately100millionhouseholdsrelyonrooftopsolarPVby2030.MaterialandResourceRequirementsfortheEnergyTransition15neednotexceedthelandalreadydedicatedtothoseresourcestoday,implyingnonetincrease:◦TheETCbelievesthatalmostallfuturebioenergyusecouldbemetfromwasteandresidues,withminimaladditionalenergycropuse.Thisimpliesfuturelanduseforbioenergywouldnotgobeyondexistinglevels,whichtotals0.5–2.5millionkm2.12◦Bioenergydevelopmentmuststillbecarefullymanagedwithinsustainabilitylimitsandusedonlyinapplicationswherealternativezero-carbontechnologiesarenotavailable.•Thus,newadditionallandusefromtheenergytransitionwouldonlybearound0.4–1.1millionkm2,comparabletothe0.2–0.4millionkm2usedforthefossilfuelenergysystem.13•However,bothenergysystemsareverysmallcomparedwiththe51millionkm2devotedtoagriculture,ofwhich41millionkm2directly(i.e.grazingland)orindirectly(i.e.arablelandusedforanimalfeed)supportsmeatanddairyproduction.Thisisamuchgreaterdriverofadverselanduseimpacts,includingbeingtheprimarydriverofdeforestation.14•Deforestationispredominantlydrivenbyagriculture,15andbiodiversitylossesareoverwhelminglydrivenbyland-usechangeforfoodproduction,orbyclimatechangeimpactsinducedbyuseoffossilfuels.16Atthegloballevel,therearethereforenosignificantlandresourceconstraintsontheabilitytobuildamassivelybiggerelectricitysystembasedprimarilyonwindandsolar.However,incertaincountries,constraintsacrossland,windandsolaravailabilitywillmakeitimpossibletorelysolely(orevenprimarily)ondomesticwindandsolarresourcestodeliverrequiredelectricitysupply.Conservativeestimatesof“available”landforwindandsolaramountto0.5–5millionkm2globally,17inexcessoftherequirementsabove–butwithpotentialpinch-pointsatamorelocalorregionallevelinresource-constrainedordenselypoplatedcountriessuchasNigeriaorBangladesh.Insuchcases,countrieswillneedtorelyeitherondomesticnuclearpower,onthecontinueduseoffossilfuelswithcarboncaptureandstorage(CCS),orontheimportofzero-carbonpowerfromothercountries,whetherintheformofelectricity(viahigh-voltagedirectcurrentlines),hydrogen,orotherenergycarriers.12TheETChascoveredthetopicofbioresourcesextensivelyinETC(2021),Bioresourceswithinanet-zeroeconomy,includinganoutlineofasustainablescaleoffutureuseofbioresources,alongsidetheactionsrequiredforresponsiblesupplyandthetrade-offsbetweendifferentformsoflanduse,theirmitigationpotential,andtheirimpactsonnatureandbiodiversity.13EstimatedbasedonOurWorldinData(2022),Landuseofenergysourcesperunitofelectricity;Allredetal.(2015),EcosystemserviceslosttooilandgasinNorthAmerica.14ETC(2023),Financingthetransition:Supplementaryreportonthecostsofavoidingdeforestation.15ETC(2023),Financingthetransition:Supplementaryreportonthecostsofavoidingdeforestation.16Jaureguiberryetal.(2022),Thedirectdriversofrecentglobalanthropogenicbiodiversityloss;IPBES(2023),Modelsofdriversofbiodiversityandecosystemchange.17Estimatedbasedonavailablewindandsolarresourcesandassumptionsaroundavailabilityoflandforelectricitygeneration–seeDengetal.(2015),Quantifyingarealistic,worldwidewindandsolarelectricitysupply.16MaterialandResourceRequirementsfortheEnergyTransition1.1.2WaterrequirementsforacleanenergysystemAcleanenergysystemwillhavehigherwaterconsumption18(around58billionm3ayear)thanafossilfuelsystem(around37billionm3ayearacrosspowergenerationandextraction).19However,totalwaterconsumptionwillonlybeequivalenttoaround2%ofglobalagriculturalwateruse,whichstandsataround2,700billionm3eachyear.20Exhibit1.3setsouttheestimatesandcomparisons.Keypointsare:•Windandsolarrequirenowaterforoperation,butsolarpanelsdorequireregularcleaningasdustanddirtcanpreventsunlightreachingthecells.Asanupperlimit,waterforcleaningsolarpanelscouldneedupto4billionm3eachyear–butstrongeffortsarebeingmadetoreducecleaningrequirements.21•Nuclearpowerdominateswaterrequirementsforelectricitygenerationandcouldreachupto14billionm3eachyear,similartocurrentfossilfuelpowergenerationneeds.22Aswithcurrentthermalpowerplants,mostwouldbeexpectedtobesitedadjacenttoriversorcoastalwaters.18Waterconsumptionisdefinedasthe“net”waterusedthatispermanentlylostfromasource.Thisdiffersfromwaterwithdrawal,whichisdefinedasthetotalamountofwaterwithdrawnfromasurfaceorgroundwatersource.19IEA(2016),Water-energynexus.20OurWorldinData(2017),Wateruseandstress.211GWofinstalledsolarcapacityrequires45,000–230,000m3ofwaterforcleaningeachyear,butthereisongoingresearchtoreducewaterconsumptionforcleaning.PanatandVaranasi(2022),Electrostaticdustremovalusingadsorbedmoisture-assistedchargeinductionforsustainableoperationofsolarpanels.22Assumingmaximumnucleargenerationofupto5,700TWhandwaterconsumptionofaround2.5m3/MWhfornucleargeneration,basedonMacknicketal.(2012),Operationalwaterconsumptionandwithdrawalfactorsforelectricitygeneratingtechnologies.Landuseassociatedwiththeenergytransitionwouldbeover10xsmallerthanagriculture,whichusesaround50%ofglobalhabitableland–buttrade-offsmightbeneededlocallyEXHIBIT1.21Barrenlandincludesdeserts,saltflat,beaches,sanddunesandexposedrocks–seeOurWorldinData.2Suitablelandexcludesforests,protectedareas,landcoveredinice,water,cliffs,dunesandrock–seeDengetal.3Mostfuturebioresourceuseof40–60EJp.a.canbemetbyresiduesandwaste,withenergycropsmakinguponly5–10EJ.Thiscouldbemetwithlanddedicatedtoexistingbioenergycropproduction,i.e.0.5–2.5millionkm2.4Availablelandaccountsforminimumsolarandwindresourceavailability,aswellasestimatesforthepercentageofsuitablelandthatwouldbeavailableforelectricityproduction–seeDengetal.5Includesrenewablesforgreenhydrogenproduction.Assumingonlyutility-scaleground-mountedsolarPVandonlyaccountingforlanddirectlyimpactedbywindturbines.6EstimatedfromOurWorldinData(2022),Landuseofenergysourcesperunitofelectricity;Allredetal.(2015),EcosystemserviceslosttooilandgasinNorthAmerica.SOURCES:SystemiqanalysisfortheETC;OurWorldinData(2019),LandUse;Dengetal.(2015),Quantifyingarealistic,worldwidewindandsolarelectricitysupply;ETC(2021),Bioresourceswithinanet-zeroemissionseconomy;OurWorldinData(2022),Landuseofenergysourcesperunitofelectricity;UNECE(2021),Lifecycleassessmentofelectricitygenerationoptions;Mausetal.(2022),Anupdateonglobalmininglanduse.LandusebytypeMillionkm2Totalelectricitygenerationrequirementsare0.4–1.1Millionkm2,wellbelowsuitablelandforwindandsolar.Earth’sLandSurface14981–97510.2–0.40.1HabitableLand106Glaciers15BarrenLand128LandSuitableforWindandSolar²AgriculturalLandLivestock:meatanddairy40Crops11RangeSolarandOnshoreWindin2050⁵CurrentFossilFuels⁶CurrentBioenergy3DACCin2050CurrentMiningSolarandOnshoreWindin2050⁵DACCin20500.003–0.30.4–0.80.5–2.5MaterialandResourceRequirementsfortheEnergyTransition17•Greenhydrogenrequirementsfortheelectrolysisofwaterwouldbeatmost11billionm3eachyear.23•Carboncaptureandstorage(CCS)andDACCcouldrequire19–29billionm3perannum,24Thisincludeswateruseacrosspoint-sourceCCS,bioenergywithCCS(wherebioenergywouldpredominantlycomefromwasteandresidues,asoutlinedabove),andDACC.•Bioenergyproductionfromenergycrops(whichtheETCsuggestsshouldsupplyonlyasmall5–10EJoftotalbioenergysupply)couldrequirewaterforirrigation,butwouldbeverysmallrelativetototalagriculturalwateruse.25Overall,atthegloballevel,watersupplyisnotaconstraintontheabilitytooperateazero-carbonenergysystem.Insomeareasoftheworld(e.g.,desertsorhighlywater-stressedregions),additionalwaterconsumptioncouldcreatesometrade-offswithotherdemandsforwater.Inareasoftheworldwithabundantsaltwater,notfreshwater,desalinationcanbeaviablelowcostoption.26Highwaterconsumptionforenergytransitionminingtobuildacleanenergysystem(estimatedatanadditional4.5billionm3perannumatmost)couldalsoposechallengesatalocallevel,requiringcarefulmanagement.27Chapter4discussesthesechallengesandtherequiredresponse.23Assumingdemandforupto800Mtofhydrogenin2050.ETC(2021),Makingthehydrogeneconomypossible.24Assuming2.9–4.8GtCO2ofpoint-sourceCCSatawaterintensityof2m3/tCO2,and3–4.5GtCO2ofDACCatawaterintensityof4m3/tCO2,basedonETC(2022),Carboncapture,utilisationandstorageintheenergytransition;Rosaetal.(2021),Waterfootprintofcarboncaptureandstoragetechnologies.25ETC(2021),BioresourceswithinaNet-ZeroEmissionsEconomy.26Althoughenergyrequirementsarequitehigh(upto16kWh/m3),costsfordesalinationhavefallentobelow$2/m3,providinganopportunityforexpandeduseofdesalinationwherelocalenergy,costs,andmanagementofbrinedischargepermit.Ekeetal.(2020),Theglobalstatusofdesalination:Anassessmentofcurrentdesalinationtechnologies,plantsandcapacity;ShokriandFard(2022),Techno-economicassessmentofwaterdesalination:Futureoutlooksandchallenges.Forexample,ICMMmembershavecommittednottoexploreormineinWorldHeritageSites.27Itisworthnotingthatthecurrentfossilfuelsystemalsohassignificantwaterconsumptionassociatedwithminingofmetalsusedinthefossilfuelsystem(e.g.,miningofironoreforsteel).Wateruseforthecleanenergysystemwouldbehigherthanforfossilfuels,butwellbelowcurrentagriculturalconsumptionEXHIBIT1.31Doesnotincludewaterforbioenergycrops,astheirusewouldnotbeadditionalbeyondtoday’suseofbioenergy.SeeETC(2021),Bioresourceswithinanet-zeroemissionseconomy.SOURCES:SystemiqanalysisfortheETC;IEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions;IEA(2016),Water-EnergyNexus;Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities;Macknicketal.(2012),Operationalwaterconsumptionandwithdrawalfactorsforelectricitygeneratingtechnologies;OurWorldinData(2017),Wateruseandstress;ETC(2021),Makingthehydrogeneconomypossible;Smithetal.(2016),BiophysicalandeconomiclimitstonegativeCO2emissions;Rosaetal.(2021),Thewaterfootprintofcarboncaptureandstoragetechnologies.AnnualwaterconsumptionBillionm383744-141119-29582,700OilandGasExtractionCurrentuseCoalminingFossilfuelpowergenerationTotalfossilfuelsSolar(Cleaning)NuclearElectrolysisBECCS,DACCandpoint-sourceCCS1MaxtotalcleanenergysystemAgricultureAgriculturemakesup70%oftotalglobalwaterconsumption.FutureuseRangeoffutureuse1910Wateruseforthecleanenergysystemwouldbehigherthanforfossilfuels,butwellbelowcurrentagriculturalconsumptionEXHIBIT1.31Doesnotincludewaterforbioenergycrops,astheirusewouldnotbeadditionalbeyondtoday’suseofbioenergy.SeeETC(2021),Bioresourceswithinanet-zeroemissionseconomy.SOURCES:SystemiqanalysisfortheETC;IEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions;IEA(2016),Water-EnergyNexus;Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities;Macknicketal.(2012),Operationalwaterconsumptionandwithdrawalfactorsforelectricitygeneratingtechnologies;OurWorldinData(2017),Wateruseandstress;ETC(2021),Makingthehydrogeneconomypossible;Smithetal.(2016),BiophysicalandeconomiclimitstonegativeCO2emissions;Rosaetal.(2021),Thewaterfootprintofcarboncaptureandstoragetechnologies.AnnualwaterconsumptionBillionm383744-141119-29582,700OilandGasExtractionCurrentuseCoalminingFossilfuelpowergenerationTotalfossilfuelsSolar(Cleaning)NuclearElectrolysisBECCS,DACCandpoint-sourceCCS1MaxtotalcleanenergysystemAgricultureAgriculturemakesup70%oftotalglobalwaterconsumption.FutureuseRangeoffutureuse1910Wateruseforthecleanenergysystemwouldbehigherthanforfossilfuels,butwellbelowcurrentagriculturalconsumptionEXHIBIT1.31Doesnotincludewaterforbioenergycrops,astheirusewouldnotbeadditionalbeyondtoday’suseofbioenergy.SeeETC(2021),Bioresourceswithinanet-zeroemissionseconomy.SOURCES:SystemiqanalysisfortheETC;IEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions;IEA(2016),Water-EnergyNexus;Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities;Macknicketal.(2012),Operationalwaterconsumptionandwithdrawalfactorsforelectricitygeneratingtechnologies;OurWorldinData(2017),Wateruseandstress;ETC(2021),Makingthehydrogeneconomypossible;Smithetal.(2016),BiophysicalandeconomiclimitstonegativeCO2emissions;Rosaetal.(2021),Thewaterfootprintofcarboncaptureandstoragetechnologies.AnnualwaterconsumptionBillionm383744-141119-29582,700OilandGasExtractionCurrentuseCoalminingFossilfuelpowergenerationTotalfossilfuelsSolar(Cleaning)NuclearElectrolysisBECCS,DACCandpoint-sourceCCS1MaxtotalcleanenergysystemAgricultureAgriculturemakesup70%oftotalglobalwaterconsumption.FutureuseRangeoffutureuse1910MaterialandResourceRequirementsfortheEnergyTransition181.2RawmaterialrequirementstobuildacleanenergysystemInassessingwhetherthereissufficientmineralandmaterialsupplytosupportthetransitiontoacleanenergysystem,itisimportanttoconsiderboth:•Thecumulativedemandfornewmaterialsneededoverthetransition–aretheresufficientmaterialsavailableonland?Thisisdiscussedinthissection.•Theannualdemandfornewmaterialsversuspotentialsupply–cansupplydevelopfastenoughtomeetrisingdemand?ThisisdiscussedinChapter2.1.2.1MaterialneedsforcleanenergytechnologiesExhibit1.4setsoutthematerialsandmineralsconsideredinthisreport.28Insomecases,materialssuchascopper,steel,nickelandaluminiumarerequiredacrossmostofthecleanenergytechnologies.Andforthesematerials,demandisalsodrivenbyawiderangeofotherindustrialorconsumeruses,suchassteelforconstructingnewbuildingsandcopperforelectronicproducts.Inothercases,suchaslithiumorpolysilicon,needsaremorespecifictocertaincleanenergytechnologies(e.g.,batteriesandsolarpanels),andtheenergytransitionisthedominantdriveroftotaldemandforthesematerials.28Materialsnotincludedare,forexample:cadmiumandtelluriumusedinthin-filmsolarPV;iridiumusedinhydrogenelectrolysers;orsteelandaluminiumusedtomanufactureelectricvehicles–thelastisnot”additional”energytransitiondemand,asrequirementsaresimilarbetweeninternalcombustionengineandelectricvehicles.Twomaterialsnotincludedinthisstudyareiridiumandtinduetodataavailabilityissues:Iridiumisimportantforthecurrentgenerationofelectrolysers,anddemandcouldriserapidlytolevelsinlinewithexistingglobalsupplyof5–8tonnesperannum.However,highpricesandscarcesupplyareincentivisingrapidinnovationtoreducetheiridiumintensityofelectrolysers.Kiemeletal.(2021),CriticalmaterialsforwaterelectrolysersattheexampleoftheenergytransitioninGermany;Minkeetal.(2021),Isiridiumdemandapotentialbottleneckintherealizationoflarge-scalePEMwaterelectrolysis?Tinisusedinsoldertocreateelectricalconnections,forexampleinelectroniccircuits.Thus,althoughnotnecessarilyuseddirectlyincleanenergytechnologies,tinisanimportantenablingmaterialfortheenergytransition.WoodMackenzie(2021),Tin-theforgottenfootsoldieroftheenergytransition.19MaterialandResourceRequirementsfortheEnergyTransition1.2.2Totalmaterialrequirementsto2050Totalcumulativematerialrequirementsfortheenergytransitionareestimatedtobearound6.5billiontonnesofend-usematerials,equivalentinmasstolessthanoneyearofcurrentcoalconsumption[Exhibit1.5].Thebasisfortheseestimates,whichallowfortheimpactoftechnologicalinnovationandrecycling,isdescribedinChapter2.29Measuredintonnesofmaterial,demandsforsteel,aluminiumandcopperaccountfor95%ofthetotalend-usematerialrequirementsfortheenergytransition.However,theenergytransition’sroleindrivingfuturedemandvariessignificantlyacrossthethreematerials:•Inthecaseofsteel,theaverageannualrequirementbetween2022–50of170milliontonneswouldstillaccountfor29Throughoutthisreportwemakeuseofthemass,inmetrictonnes,ofmaterialsrequiredonanannualorcumulativebasis,asthisisthemostintuitiveandsimplewaytocarryoutconsistentcomparisons.However,wealsohighlightthevariationinrockmovedpertonofmaterialinChapter4,andthevalue/marketsizeofdifferentmaterialsinChapter3.NOTE:1Structuralsteelandaluminiumforelectricvehiclesarenotincludedasenergytransitiondemand,asthisisnot'additional'demand–thesematerialswouldbeusedinsimilaramountsininternalcombustionvehiclesaswell.CleanenergytechnologieswilldriveincreaseddemandformanykeymaterialsEXHIBIT1.4HighAluminiumSolarWindNuclearHydropowerOtherUsesPowerGridsHydrogenElectrolysersElectricVehiclesandBatteries1CobaltCopperLithiumNeodymiumNickelPolysiliconImportanceofmaterialtocleanenergytechnology:SilverSteelUraniumGraphite(forAnodes)PalladiumandPlatinumMidLittle/norequirement,ornotapplicableConstruction,transport,industry,beveragesConsumerelectronics,steelalloysIndustry,construction,electronics,wiringSteelproduction,lubricants,pencilsMagnetsforindustry,consumerelectronicsAlloys,lubricants,semiconductorsJewellery,industry,investmentConstruction,transport,consumergoodsConsumerelectronicsSteelalloysAutocatalystsDefenceMaterialandResourceRequirementsfortheEnergyTransition20lessthan10%oftoday’sglobalsteelproductionofabout1900Mtperannum.Thiswouldcorrespondtoapproximatelyadoublingfromcurrentlevelsofsteeldemandfromthefossilfuelindustryof70–80Mteachyear.30•Foraluminium,averageannualrequirementsbetween2022–50couldbearound30milliontonnes–around30%ofcurrentannualaluminiumproductionof110Mteachyear.•Inthecaseofcopperhowever,theaverageannualrequirementbetween2022–50ofabout20milliontonnescompareswithtoday’sglobalannualproductionforallusesofabout25milliontonnes.Copperdemandtosupporttheenergytransitionthereforeimpliestheneedforabigincreaseintotalglobalcoppersupply.Intonnageterms,demandsforsomeofthemostimportantkeymaterialsaretrivial.Forinstance,allthebatteriesrequiredtopoweralmosttotalelectrificationoftheworld’sroadvehicleswillrequireatmostonemilliontonnesannuallyofpurelithiumproductionbetweennowand2050,31withrecyclingprovidingthevastmajorityofanysubsequentneed.Invaluetermshowever,thesemineralsarefarmorerelativelyimportant.Thecurrentveryhighmarketpricesforlithiumwouldgiveavalueof$370bnfor1Mtofpurelithium,whereas170Mtofsteelmightcostaround$100bn.3230RystadEnergy(2023),Pedaltothemetal–enoughmaterialtosupplythegrowth?31Forthreekeybatterymaterials,lithium,cobalt,nickel,amountsdiscussedinthisreportareforcontainedelementalmetal,andnotforrefinedproductssuchaslithiumcarbonate/hydroxide,cobaltsulphate,ornickelsulphate.32Usingestimatedaveragepricesofaround$600/tonforsteeland$70,000pertonneoflithiumcarbonateequivalent(LCE)–oraround$370,000pertonneofcontainedlithium.Notethat2022wasayearwithexceptionallyhighpricesforlithiumproducts.BNEF(2022),2HBatterymetalsoutlook.Anupperboundoftotalmaterialrequirementsfortheenergytransitionwouldstillbelessthanoneyearofcoal,bymass;steelaccountsforover75%EXHIBIT1.5NOTE:1BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.Thisisforend-useofmetals/materials,andquantitiesrefertoamountsofcontainedmaterial.Forexample,thevaluesgivenareforend-usealuminium,notminedbauxite,orforelementallithium,notlithiumcarbonate/hydroxide.SOURCE:SystemiqanalysisfortheETC;BP(2022),Statisticalreviewofworldenergy.Cumulativematerialrequirementsfortheenergytransition,12022–50Annualcoaldemandisover8000Mt,greaterthancumulativeenergytransitionmaterialsdemandto2050.MillionmetrictonnesSteel5,000Aluminium950Graphite170Nickel100Silicon65Copper650Lithium,20Cobalt,6Silver,Platinum,Palladium,Neodymium,UraniumAnupperboundoftotalmaterialrequirementsfortheenergytransitionwouldstillbelessthanoneyearofcoal,bymass;steelaccountsforover75%EXHIBIT1.5NOTE:1BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.Thisisforend-useofmetals/materials,andquantitiesrefertoamountsofcontainedmaterial.Forexample,thevaluesgivenareforend-usealuminium,notminedbauxite,orforelementallithium,notlithiumcarbonate/hydroxide.SOURCE:SystemiqanalysisfortheETC;BP(2022),Statisticalreviewofworldenergy.Cumulativematerialrequirementsfortheenergytransition,12022–50Annualcoaldemandisover8000Mt,greaterthancumulativeenergytransitionmaterialsdemandto2050.MillionmetrictonnesSteel5,000Aluminium950Graphite170Nickel100Silicon65Copper650Lithium,20Cobalt,6Silver,Platinum,Palladium,Neodymium,UraniumAnupperboundoftotalmaterialrequirementsfortheenergytransitionwouldstillbelessthanoneyearofcoal,bymass;steelaccountsforover75%EXHIBIT1.5NOTE:1BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.Thisisforend-useofmetals/materials,andquantitiesrefertoamountsofcontainedmaterial.Forexample,thevaluesgivenareforend-usealuminium,notminedbauxite,orforelementallithium,notlithiumcarbonate/hydroxide.SOURCE:SystemiqanalysisfortheETC;BP(2022),Statisticalreviewofworldenergy.Cumulativematerialrequirementsfortheenergytransition,12022–50Annualcoaldemandisover8000Mt,greaterthancumulativeenergytransitionmaterialsdemandto2050.MillionmetrictonnesSteel5,000Aluminium950Graphite170Nickel100Silicon65Copper650Lithium,20Cobalt,6Silver,Platinum,Palladium,Neodymium,UraniumAnupperboundoftotalmaterialrequirementsfortheenergytransitionwouldstillbelessthanoneyearofcoal,bymass;steelaccountsforover75%EXHIBIT1.5NOTE:1BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.Thisisforend-useofmetals/materials,andquantitiesrefertoamountsofcontainedmaterial.Forexample,thevaluesgivenareforend-usealuminium,notminedbauxite,orforelementallithium,notlithiumcarbonate/hydroxide.SOURCE:SystemiqanalysisfortheETC;BP(2022),Statisticalreviewofworldenergy.Cumulativematerialrequirementsfortheenergytransition,12022–50Annualcoaldemandisover8000Mt,greaterthancumulativeenergytransitionmaterialsdemandto2050.MillionmetrictonnesSteel5,000Aluminium950Graphite170Nickel100Silicon65Copper650Lithium,20Cobalt,6Silver,Platinum,Palladium,Neodymium,UraniumAnupperboundoftotalmaterialrequirementsfortheenergytransitionwouldstillbelessthanoneyearofcoal,bymass;steelaccountsforover75%EXHIBIT1.5NOTE:1BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.Thisisforend-useofmetals/materials,andquantitiesrefertoamountsofcontainedmaterial.Forexample,thevaluesgivenareforend-usealuminium,notminedbauxite,orforelementallithium,notlithiumcarbonate/hydroxide.SOURCE:SystemiqanalysisfortheETC;BP(2022),Statisticalreviewofworldenergy.Cumulativematerialrequirementsfortheenergytransition,12022–50Annualcoaldemandisover8000Mt,greaterthancumulativeenergytransitionmaterialsdemandto2050.MillionmetrictonnesSteel5,000Aluminium950Graphite170Nickel100Silicon65Copper650Lithium,20Cobalt,6Silver,Platinum,Palladium,Neodymium,UraniumMaterialandResourceRequirementsfortheEnergyTransition211.2.3TherearemorethanenoughmaterialsonearthtomeetmaterialdemandsfortheenergytransitionInassessingtheadequacyofmaterialsupplytosupporttheenergytransition,itisimportanttounderstandthemeaningofpublishedestimatesforresourcesandreserves[BoxA]:•“Resources”areanestimateofmaterialstocksavailableinsufficientconcentrationtomakeexploitationaneconomicinterestatsometime.Itisimportanttonotethateventheseestimatestendtoincreaseovertime.•“Reserves”arethecurrentlyeconomicallyandtechnicallyextractablesubsetofresources.Foralltherequiredmaterials,asExhibit1.6illustrates,currentlyestimatedresourcesalreadyeasilyexceedcumulativedemandbetweennowand2050.Inmostcases,estimatedreservesarealsoinexcessofneeds.Thereareenoughresourcesonlandtomeettotalmaterialsdemandbetween2022–50,butmoreexplorationtoexpandreserveswillbeneededforkeyenergytransitionmaterialsEXHIBIT1.61Reservesandresourcesofcontainediron.2Reservesandresourcesofbauxite.Demandforaluminiumconvertedtobauxiteassuming4tonnesofbauxitearerequiredtoproduceonetonneofaluminium.3Graphitereserves/resourcesrefertonaturalgraphiteanddonotincludesyntheticgraphite.4Noestimatedreservesforsilicon,butquartz(thekeyinput)iswidelyavailableinmostgeographies.5BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.NOTE:“Resources”areanestimateofmaterialstocksavailableinsufficientconcentrationtomakeexploitationaneconomicinterestatsometime.“Reserves”arethecurrentlyeconomicallyandtechnicallyextractablesubsetofresources.Itisimportanttonotethateventheseestimatestendtoincreaseovertime.SOURCE:SYSTEMIQanalysisfortheETC;USGeologicalSurvey(2023),Mineralcommoditysummaries.Cumulativeprimarydemand2022–50fromenergytransitionandothersectors(BaselineDecarbonisationscenario5),comparedtoestimatedreservesandresourcesBillionmetrictonnes(Industrialmaterials);Millionmetrictonnes(Allothermaterials)Siliconiswidelyavailable238483001,1355,600652580.010.070.1316515985Steel(Iron)1Aluminium(Bauxite)2Graphiteanodes3NeodymiumPolysilicon4UraniumPalladiumandPlatinumCopperNickelLithiumCobaltSilver230800Cumulativeprimarydemand(allsectors)2022–50EstimatedreservesEstimatedresourcesSufficientreservesandresourcesKeymaterialsatriskofexceedingreservesIndustrialmaterialsOtherimportantcleanenergytechnologymaterials3308901701003002126861182510.61.7Thereareenoughresourcesonlandtomeettotalmaterialsdemandbetween2022–50,butmoreexplorationtoexpandreserveswillbeneededforkeyenergytransitionmaterialsEXHIBIT1.61Reservesandresourcesofcontainediron.2Reservesandresourcesofbauxite.Demandforaluminiumconvertedtobauxiteassuming4tonnesofbauxitearerequiredtoproduceonetonneofaluminium.3Graphitereserves/resourcesrefertonaturalgraphiteanddonotincludesyntheticgraphite.4Noestimatedreservesforsilicon,butquartz(thekeyinput)iswidelyavailableinmostgeographies.5BasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.NOTE:“Resources”areanestimateofmaterialstocksavailableinsufficientconcentrationtomakeexploitationaneconomicinterestatsometime.“Reserves”arethecurrentlyeconomicallyandtechnicallyextractablesubsetofresources.Itisimportanttonotethateventheseestimatestendtoincreaseovertime.SOURCE:SYSTEMIQanalysisfortheETC;USGeologicalSurvey(2023),Mineralcommoditysummaries.Cumulativeprimarydemand2022–50fromenergytransitionandothersectors(BaselineDecarbonisationscenario5),comparedtoestimatedreservesandresourcesBillionmetrictonnes(Industrialmaterials);Millionmetrictonnes(Allothermaterials)Siliconiswidelyavailable238483001,1355,600652580.010.070.1316515985Steel(Iron)1Aluminium(Bauxite)2Graphiteanodes3NeodymiumPolysilicon4UraniumPalladiumandPlatinumCopperNickelLithiumCobaltSilver230800Cumulativeprimarydemand(allsectors)2022–50EstimatedreservesEstimatedresourcesSufficientreservesandresourcesKeymaterialsatriskofexceedingreservesIndustrialmaterialsOtherimportantcleanenergytechnologymaterials3308901701003002126861182510.61.7MaterialandResourceRequirementsfortheEnergyTransition22Thereisthereforenofundamentalshortageofrawmaterialstosupportacompleteglobaltransitiontoanet-zeroeconomy,whilesupportingeconomicgrowthpoweredbygreatlyincreasedelectricityconsumption.However,forsomematerials,currentestimatedreservesareinsufficienttomeetthelevelsofdemandexpectedforboththeenergytransitionandothersourcesofdemand.Reservesmightneedtoexpandbyupto30%forcopper,70%fornickel,and90%forsilvertomeettotalexpecteddemandbetween2020–50.Turningresourcesintoreservesisnotexpectedtobeamajorchallenge.Acombinationofeconomicincentives,technologicaldevelopmentsandincreasedexplorationalltendtoleadtoexpansionsinestimatedreservesovertime[Exhibit1.8].However,reservesforsomematerialsarelocatedinsensitiveandcostlylocations,suchastropicalregionswithhighbiodiversity,andtimelinesfordevelopingnewminescantake15ormoreyears.BoxA:DefiningmaterialreservesandresourcesAssessmentoffuturematerialrequirementsneedtoconsiderbothcurrentestimatesofglobalresourcesandreservesofmaterials[Exhibit1.7]:33•MineralResourcesarenaturalconcentrationsofmineralsthatare,ormaybecome,ofpotentialeconomicinterest.Resourcescanincludeinferred,indicatedandmeasuredquantities–withincreasinglevelofgeologicalknowledgeandconfidence.•MineralReservesarethecurrentlyeconomicallyandtechnicallyextractablepartofresources.Reservescanbesub-dividedintoprobableandprovedreserves.Bothresourcesandreservesaredynamic,andtendtoincreaseovertime–evenasproductiondepletesexistingstocks.Historically,priceincentivesdrivingmoreexplorationandimprovedexplorationandextractiontechnologieshaveledtoanexpansioninestimatedreservesandresourcesacrossmostmineralsandmetals.Thiscanbeseenclearlyforcopper,nickelandlithiuminExhibit1.8.33Definitionsadaptedfrom:BritishGeologicalSurvey/MineralsUK/NERC(2023),Whatisthedifferencebetweenresourcesandreservesforaggregates?;USGeologicalSurvey,Mineralreserves,resources,resourcepotential,andcertainty;Boliden(2023),Mineralresourcesandmineralreserves.Resourcesandreservesdependongeology,technologyandeconomicsSOURCE:AdaptedfromBritishGeologicalSurvey/MineralsUK/NERC(2023),Whatisthedifferencebetweenresourcesandreservesforaggregates?EXHIBIT1.7Technology:IncreasingaccessibilityGeology:DegreeofgeologicalcertaintyEconomics:FeasibilityofeconomicrecoveryRESERVESRESOURCESResourcesandreservesdependongeology,technologyandeconomicsSOURCE:AdaptedfromBritishGeologicalSurvey/MineralsUK/NERC(2023),Whatisthedifferencebetweenresourcesandreservesforaggregates?EXHIBIT1.7Technology:IncreasingaccessibilityGeology:DegreeofgeologicalcertaintyEconomics:FeasibilityofeconomicrecoveryRESERVESRESOURCESResourcesandreservesdependongeology,technologyandeconomicsSOURCE:AdaptedfromBritishGeologicalSurvey/MineralsUK/NERC(2023),Whatisthedifferencebetweenresourcesandreservesforaggregates?EXHIBIT1.7Technology:IncreasingaccessibilityGeology:DegreeofgeologicalcertaintyEconomics:FeasibilityofeconomicrecoveryRESERVESRESOURCESMaterialandResourceRequirementsfortheEnergyTransition23Evenasproductionhasincreased,resourcesandreserveshaveexpanded,drivenbyexplorationEXHIBIT1.8NOTE:1TheUSGeologicalSurveyreducedthethresholdforland-basednickelresourcesfrom1%containednickeldownto0.5%,increasingthetotalglobalestimateofresources.SOURCE:USGeologicalSurvey.Reserves,resourcesandproductionofkeyenergytransitionmaterialsEstimatedResourcesEstimatedReservesMillionmetrictonnesLithiumNickelCopper100806040200201320150.03Mt0.11Mt201720192021Gradual,continuousexpansionasexplorationhasincreased300250200150100500201320152.8Mt2.7Mt201720192021Largeone-offincreaseinresourceestimateduetoreductioninthresholdfororegrade1Copperreserveshaveexpandedevenasproductionhasgrownsteadilysince2013.5,8005,6001,00080060040020002013201520172019202118Mt21MtAnnualproductionin2013and2021:MaterialandResourceRequirementsfortheEnergyTransition241.3Thenewsystemvs.theold–adramaticallyreducedimpactontheglobalenvironmentBuilding,operatingandmaintainingalow-carbonenergysystemwillhaveasignificantimpactonsomelocalenvironments.Itisimpossibleforoverninebillionpeopletoenjoyagoodstandardoflivingwithouttheneedtoextractlargeresourcesandwithoutsomeadverseenvironmentalimpactsatalocallevel.However,itisimportanttounderstandthat:•Acleanenergysystemwillhavethesinglebiggestimpactonlimitingglobalwarmingandavoidingtheenvironmentalimpactsofclimatechange.Theseavoidedimpactsaredramaticallylargerthantheenvironmentalimpactsassociatedwithacleanenergysystem.•Thelocalenvironmentalimpactsassociatedwithmaterialandresourceextractionforacleanenergysystemmaybeofthesameorderofmagnitudeasforafossilfuelbasedsystem,butthesewilllikelybelargelyone-off;incomparison,theimpactsofmaintainingafossilfuelenergysystemwouldoccurinperpetuity.1.3.1GlobalemissionsandclimateimpactsBuildingazero-carboneconomywillinitselfresultinsomeCO2emissions.Thefirstgenerationofwindturbines,solarpanels,orbatteries,havetobemadeusingfossilfuelbasedenergy,andthefirstgenerationofelectricvehicleswilluseelectricityfromgridswhichhavenotyetbeenfullydecarbonised.Itisthereforeimportanttoidentifythetotallifecycleemissionsinvolvedinlowcarbontechnologiesandhowthoselifecycleemissionswillchangeovertime.DetailsofthisanalysisaresetoutinChapter4andsuggestthat,overthewholeperiod2022–50,extractingandproducingthematerialsneededforcleanenergysystemmayresultinabout35GtCO2eofcumulativeemissions.Butthiscumulative35GtCO2ecompareswiththe41GtCO2eemissionsproducedbythecurrentfossilfuel-basedenergysystemeveryyear–andwouldlikelybeevenlower(seeChapter4,Section4.1).34Furthermore,ifweremainedwithafossilfuel-basedenergysystem,those41GtCO2emissionsayearwouldcontinueinperpetuity,andpotentiallygrow.Incomparison,life-cycleemissionsforcleanenergytechnologiesarealreadylowerthantheirfossil-basedalternatives[Exhibit1.9],andthestockofemissionsentailedinbuildinganet-zeroenergysystemwillbeone-off–oncetheelectricitysystemisdecarbonised,buildingthewindturbines,solarpanelsandbatteriesrequiredtosupportfurthereconomicgrowthwillbeproducedwithzero-carbonenergyandwillhavenear-zerolifecycleemissions.35Itisimportanttoassessthelifecycleemissionsarisingfromalltheactivitiesinvolvedinbuildinganet-zeroeconomyasaccuratelyaspossibleandtoreducethemasfastaspossible.However,itisvitaltorecognisethatbuildinganet-zeroeconomy,withallitsmaterialneeds,istheonlywaytoreachnet-zeroemissionsandtolimitharmfulclimatechange.34IEA(2023),CO2emissionsin2022.Thevalueof41GtCO2eincludesemissionsfromindustrialprocessesandwaste,andassumesaGWP100valueof30formethane–seeExhibit4.1.35Itisimportanttonotethatby2050therewillstillbeasmall,butresidualroleforfossilfuels.By2050,thetotalscaleoffossilfuelsinanet-zeroalignedsystemcouldbeatmost650milliontonnesofcoal(includingboththermalcoalforfossilfuelsandmetallurgicalcoalforsteelproduction),and3.2billiontonnesofoilandgas(thescaleofsustainablebiomassuseforenergywouldremainsimilartocurrentlevelsof40–60EJperannumin2050).Thiswillbetosupportenergysystembalancinginsomecountries(e.g.,wheretheseasonalintermittencyofrenewablesisanissue),andbecausesomepartsoftheworldwillbeslowertotransitiontoacleanpowersystem(e.g.,thoseheavilyendowedoreconomicallydependonfossilfuels).Thisisbasedon2050demandof1,400–3,000bcmofgasand10–20Mb/dofoil.TheETCwillbecoveringthistopicindetailinanupcomingreportonfossilfuels.Source:SystemiqanalysisfortheETC,basedonETC(2020),Makingmissionpossible;ETC(2022),Mindthegap;IEA(2021),Netzeroby2050:Aroadmapfortheglobalenergysector;BP(2023),EnergyOutlook–Netzeroscenario;Shell(2021),Energytransformationscenarios–Skyscenario;BNEF(2022),Newenergyoutlook–NetZeroScenario.25MaterialandResourceRequirementsfortheEnergyTransitionTheseavoidedemissionsmeanthatacleanenergysystemwillresultinadramaticreductioninfutureenvironmentalandhumanimpacts,comparedtocontinuingthecurrentfossilfuelsystem.TheIPCChascoveredsuchimpactsextensively,andtheseavoidedclimatechangeimpactsinclude:36•Waterscarcity:at2°Cofglobalwarming,3billionpeoplecouldfacewaterscarcity,risingto4billionat4°C.Extremeagriculturaldroughtisprojectedtobetwiceaslikelyat1.5°C,and150-200%morelikelyat2°C.•Biodiversityandnature:at2°Cofglobalwarming,roughlyone-in-tenspeciesarelikelytofaceaveryhighriskofextinction–andthissharerisesto12%at3°C.•Humanhealthandwellbeing:Extremeheatisamajorrisk,alongsideincreasedspreadofdiseases(especiallymosquito-borneones).TheIPCCestimatesthatanadditional250,000deathseachyearfrom“climate-sensitivediseasesandconditions”couldbeattributabletoclimatechange.37Further,therapidincreaseinurbanisationacrossAsiaandAfricacouldexposehundredsofmillionsmorepeopletoheatandfloodingextremes.36IPCC(2022),Climatechange2022:impacts,adaptationandvulnerability;CarbonBrief(2022),Explainer:Canclimatechangeandbiodiversitylossbetackledtogether.37Comparedtothe1961–91baselineaverage,andformid-emissionscenarios.IPCC(2022),Climatechange2022:Impacts,adaptationandvulnerability.Allcleanenergytechnologieshavesignificantlylowerassociatedemissionsthantheirfossil-fuelcounterpartsEXHIBIT1.9NOTES:1Includesupstreamemissionsofmethanefromcoalandgasproduction.EmissionsfromBECCSincludethosefromlandusechange,operationandcarboncaptureandstorage,seePehletal.2Foramedium-sizedvehiclepurchasedin2022,withabatterymadeinChinaandchargedusingtheEU’saveragegridintensity.3Foramedium-sizedvehiclepurchasedin2030,withabatterymadeinSwedenandchargedusingsolarpower.Remainingemissionsarefrommanufacturingofthevehicleandbattery,andupstreamemissionsinelectricitygeneration.4Assuminglow-carbonpowerisusedforelectrolysis(carbonintensityof37gCO2e/kWh),andincludingmethaneleakageduringproductionviasteammethanereformation.Residualemissionsforelectrolysisarefromelectricitysupply.SOURCE:Pehletal.(2017),Understandingfutureemissionsfromlow-carbonpowersystemsbyintegrationoflife-cycleassessmentandintegratedenergymodelling;UNECE(2021),Integratedlife-cycleassessmentofelectricitysources;Transport&Environment(2022),Howcleanareelectriccars–onlinetool;IEA(2023),Energytechnologyperspectives.Life-cycleemissionsoffossilfuelvs.cleanenergytechnologiesPowerGeneration1PassengerVehiclesHydrogen40050100150200300151050200-200-400CoalGasSolarWindNuclearInternalCombustionEngineSteamMethaneReformationElectrolysisElectricVehicle2ElectricVehicle-Decarbonised33–65–2010–80-250–280240112802015–230400–510750–1,10010–100xloweremissionsthanCoalorGasHydroBECCS40060080010001200gCO2e/kWhofelectricitygCO2e/kmtCO2e/tonneH2250-60%-75%-80%MaterialandResourceRequirementsfortheEnergyTransition261.3.2LocalenvironmentalandhumanhealthimpactsTheextractionoftherawmaterialsrequiredtobuildanet-zeroeconomymayhavesignificantenvironmentalimpactsinsomelocations,includingpollutionrelatingtoeffluentsdischargeandleakagefromtailings.Chapter4setsoutthesepotentialimpactsindetailanddescribeshowthesecanbebetteridentified,managedandreduced.Exhibit1.10illustratesthekeyexampleofwasterockproducedbydifferenttypesofmaterials–anissuedeterminedbyoregrades,akeyfactorinassociatedenvironmentalimpactsofparticularmaterials.Energytransitiondemandformaterialscouldleadtoupto13bntonnesofwasterockeachyear–lessthanthe15bntonnesoffossilfuelsextractedandburnedeachyearEXHIBIT1.10NOTE:Wasterockaccountsforbothoregradeandforadditionalwasterockmoved(e.g.overburden).MaterialrequirementsarebasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.The13billiontonnestotalincludesallmaterialsassessedinthisreport.¹Steeltendstohave>95%ironcontent,somassofsteelrequiredisassumedtobeequivalenttomassofironrequired.²Forlithiumminedfromhardrock.3Assuminglithiumfromhardrockmakesuphalfoftotallithiumsupply.SOURCE:Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.IEA(2023),CO₂emissionsin2022;IEA(2022),Coal2022;IEA(2022),Oilmarketreport–December;IEA(2022),Gasmarketreport,Q4;ICMM(2022),Tailingsreductionroadmap.Annualwasterockmovedtoproducematerialsfortheenergytransition15billiontonnesoffossilfuels(30%ofwhichisinternationallytraded)Upto13billiontonnesofwasterockproducedfromallenergytransitionmaterials(storedon-site)0.3billiontonnesofmaterialsincleanenergytechnologiesAluminium2050:Theenergymaterialssystem2022:ThefossilfuelsystemSteelLithiumCopper100Mtofwasterock1000Mtofwasterock600Mtofwasterock310,000Mtofwasterock7tonnesofrockmovedperaluminium9tonnesofrockmovedpertonofiron/steel¹1,600tonnesofrockmovedpertonoflithium²500tonnesofrockmovedpertonofcopperMax16Mtp.a.ofprimaryaluminiumdemandfromenergytransitionMax110Mtp.a.ofprimarysteeldemandfromenergytransitionMax0.8Mtp.a.ofprimarylithiumdemandfromenergytransitionMax20Mtp.a.ofprimarycopperdemandfromenergytransitionvs.5billiontonnesofoil3billiontonnesofgas8billiontonnesofcoalThisisaroundthesameamountofwasterockcurrentlyproducedbyallcoppermining.2billiontonnesofwasterockandtailingsfromcoalminingEnergytransitiondemandformaterialscouldleadtoupto13bntonnesofwasterockeachyear–lessthanthe15bntonnesoffossilfuelsextractedandburnedeachyearEXHIBIT1.10NOTE:Wasterockaccountsforbothoregradeandforadditionalwasterockmoved(e.g.overburden).MaterialrequirementsarebasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.The13billiontonnestotalincludesallmaterialsassessedinthisreport.¹Steeltendstohave>95%ironcontent,somassofsteelrequiredisassumedtobeequivalenttomassofironrequired.²Forlithiumminedfromhardrock.3Assuminglithiumfromhardrockmakesuphalfoftotallithiumsupply.SOURCE:Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.IEA(2023),CO₂emissionsin2022;IEA(2022),Coal2022;IEA(2022),Oilmarketreport–December;IEA(2022),Gasmarketreport,Q4;ICMM(2022),Tailingsreductionroadmap.Annualwasterockmovedtoproducematerialsfortheenergytransition15billiontonnesoffossilfuels(30%ofwhichisinternationallytraded)Upto13billiontonnesofwasterockproducedfromallenergytransitionmaterials(storedon-site)0.3billiontonnesofmaterialsincleanenergytechnologiesAluminium2050:Theenergymaterialssystem2022:ThefossilfuelsystemSteelLithiumCopper100Mtofwasterock1000Mtofwasterock600Mtofwasterock310,000Mtofwasterock7tonnesofrockmovedperaluminium9tonnesofrockmovedpertonofiron/steel¹1,600tonnesofrockmovedpertonoflithium²500tonnesofrockmovedpertonofcopperMax16Mtp.a.ofprimaryaluminiumdemandfromenergytransitionMax110Mtp.a.ofprimarysteeldemandfromenergytransitionMax0.8Mtp.a.ofprimarylithiumdemandfromenergytransitionMax20Mtp.a.ofprimarycopperdemandfromenergytransitionvs.5billiontonnesofoil3billiontonnesofgas8billiontonnesofcoalThisisaroundthesameamountofwasterockcurrentlyproducedbyallcoppermining.2billiontonnesofwasterockandtailingsfromcoalminingEnergytransitiondemandformaterialscouldleadtoupto13bntonnesofwasterockeachyear–lessthanthe15bntonnesoffossilfuelsextractedandburnedeachyearEXHIBIT1.10NOTE:Wasterockaccountsforbothoregradeandforadditionalwasterockmoved(e.g.overburden).MaterialrequirementsarebasedontheETC’sBaselineDecarbonisationscenario,whereanaggressivedeploymentofcleanenergytechnologiesleadstoglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.The13billiontonnestotalincludesallmaterialsassessedinthisreport.¹Steeltendstohave>95%ironcontent,somassofsteelrequiredisassumedtobeequivalenttomassofironrequired.²Forlithiumminedfromhardrock.3Assuminglithiumfromhardrockmakesuphalfoftotallithiumsupply.SOURCE:Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.IEA(2023),CO₂emissionsin2022;IEA(2022),Coal2022;IEA(2022),Oilmarketreport–December;IEA(2022),Gasmarketreport,Q4;ICMM(2022),Tailingsreductionroadmap.Annualwasterockmovedtoproducematerialsfortheenergytransition15billiontonnesoffossilfuels(30%ofwhichisinternationallytraded)Upto13billiontonnesofwasterockproducedfromallenergytransitionmaterials(storedon-site)0.3billiontonnesofmaterialsincleanenergytechnologiesAluminium2050:Theenergymaterialssystem2022:ThefossilfuelsystemSteelLithiumCopper100Mtofwasterock1000Mtofwasterock600Mtofwasterock310,000Mtofwasterock7tonnesofrockmovedperaluminium9tonnesofrockmovedpertonofiron/steel¹1,600tonnesofrockmovedpertonoflithium²500tonnesofrockmovedpertonofcopperMax16Mtp.a.ofprimaryaluminiumdemandfromenergytransitionMax110Mtp.a.ofprimarysteeldemandfromenergytransitionMax0.8Mtp.a.ofprimarylithiumdemandfromenergytransitionMax20Mtp.a.ofprimarycopperdemandfromenergytransitionvs.5billiontonnesofoil3billiontonnesofgas8billiontonnesofcoalThisisaroundthesameamountofwasterockcurrentlyproducedbyallcoppermining.2billiontonnesofwasterockandtailingsfromcoalminingMaterialandResourceRequirementsfortheEnergyTransition27Duringthetransition,theselocalenvironmentalimpactscouldbeonthesameorderofmagnitudeasmaintainingthecurrentfossilfuelbasedsystem,althoughtheywilldifferinseverityandnatureinspecificlocations(seeChapter4foradetaileddiscussion).Thisisbecausewhileacleanenergysystemrequiresatmostaround0.3billiontonnesofmaterialseachyear,extractingthemrequiresmovingupto13billiontonnesofwasterock[Exhibit1.10]–anamountroughlysimilartothecurrentglobalcoppersystem.38However,twopointsshouldbekeptinmind:•Thecurrentfossilfuelsystemreliesontheextractionof15billiontonnesofcoal,oilandgas39–togetherwith2billiontonnesofwasterockandtailingsfromcoalmining.40•Ofthese,around4billiontonnesareinternationallytradedoverthousandsofkilometres41–whereaswasterockandtailingsfromminingaretypicallymovedatmostafewkilometreswithinaminesite.Further,therewillbeaclearenvironmentalbenefitofareductioninairpollutionfromavoidedcombustionoffossilfuels:•Miningandcombustionoffossilfuelsleadstotheemissionofnitrogenoxidesandfineparticulatematterthatresultsinillnessandmillionsofprematuredeathseachyear,predominantlydrivenbycoalminingandcoal-firedpowergeneration.42Combustionofbioenergyalsoleadstoemissionsofnitrogenoxidesandparticulatematter,thoughoverallvolumesofbioenergycombustionwillbesignificantlysmallerthanfossilfuelcombustiontoday.•Lifecycleanalysesshowthatwind,solarandnuclearelectricitygenerationhasanimpactonhumandeathsthatis1000xlowerthancoaland100xlowerthangas.43•Inthecaseofelectricvehicles,thesignificantweightofbatteriesmeansthatnon-exhaustemissions(mainlyfrombrake,tyreandroadwear)fromthedrivingofvehicleswillstillremainevenastheroadtransportfleetiselectrified.44However,thescaleofthisissueismuchsmallerthantheimpactsonhumanhealthfromcombustionoffossilfuels.Inaddition,thekeypointisthattoday’senergysystem,basedonthecontinuousextractionandconsumptionoffossilfuelswouldleadtotheseenvironmentalimpactsoccurringeveryyearinperpetuity.Incomparison,thematerialextractionrequiredtobuildacleanenergysystemwillbe,toalargeextent,one-off.Thematerialsextractedwillbedeployedindurabletechnologieswhich,overthelong-termwillbesignificantlyrecycled,asexplainedinChapter2.Thismeansthatminingneedsfortheenergytransitionwillgreatlyreduceincomingyears.1.4SummaryAnalysisofglobalcumulativeresourcerequirementsshowsthattherearenofundamentallong-termbarrierstobuildingazero-carbonenergysystem,whichcansupportwidespreadglobalprosperityinasustainableway.However,theremayneedtobeshort-termtrade-offsandopendiscussionsaroundlanduseorwaterconsumptioninparticularlyresource-constrainedcountriesorregions.Overthelong-term,anytrade-offsacrosslanduse,waterconsumptionormaterialrequirementsforacleanenergysystemaremorethanmanageablewhencomparedtotheexistingfossilfueloragriculturalsystems[Exhibit1.11]–aswellasreducingemissionstoavoidclimatechangeanditsassociatedimpactsonresourcesandtheenvironment.Thekeyissuesarethereforenotthelong-termfeasibilityordesirabilityofacleanenergysystem,but:•Thechallengeoframpingupmaterialssupplyfastenoughtodecarbonisetheglobaleconomyatthepacerequired.ThisisconsideredinChapters2and3.•Thechallengeofensuringminingforkeymaterialsoccursinasustainableandresponsiblewaywhichmanagesandminimiseslocalenvironmentimpacts.ThisisconsideredinChapter4.38Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.39IEA(2022),Coal2022;IEA(2022),Oilmarketreport–December;IEA(2022),Gasmarketreport,Q4.40ICMM(2022),Tailingsreductionroadmap.41BP(2022),Statisticalreviewofworldenergy.42Thereisarangeofestimatesofglobaldeathsattributabletofossilfuelparticulateemissions,seee.g.,McDuffieetal.(2021),SourcesectorandfuelcontributionstoambientPM2.5andattributablemortalityacrossmultiplespatialscales,whichestimatesapproximately1.1millionprematuredeathsannually,orVohraetal.(2021),Globalmortalityfromoutdoorfineparticlepollutiongeneratedbyfossilfuelcombustion:ResultsfromGEOS-Chem,whichestimatesaround8.7millionprematuredeathsannually.43OurWorldinData(2022),Whatarethesafestandcleanestsourcesofenergy?44OECD(2020),Non-exhaustparticulateemissionsfromroadtransport;Harrisonetal.(2021),Non-exhaustvehicleemissionsofparticulatematterandVOCfromroadtraffic:Areview.MaterialandResourceRequirementsfortheEnergyTransition28Acleanenergysystemwillhavemanageableland,waterandmaterialneeds,anddrasticallyloweremissionsEXHIBIT1.11EnergyandAgriculture,ResourceRequirementsandGHGEmissionsSOURCE:SystemiqanalysisfortheETC;OurWorldinData(2019),LandUse;IEA,Water-EnergyNexus(2016);OurWorldinData(2017),Wateruseandstress;Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.IEA(2023),CO2emissionsin2022;IEA(2022),Coal2022;IEA(2022),Oilmarketreport–December;IEA(2022),Gasmarketreport,Q4;UNFAOSTAT(2023),Cropsandlivestockproducts;IEA(2023),Scope1and2GHGemissionsfromoilandgasoperationsintheNetZeroScenario,2021and2030;IEA(2023),CO2Emissionsin2022;UNEP(2022),Emissionsgapreport2022.LandUse(Total)WaterConsumption(Annual)Materials(Annual)GHGEmissions(Annual)Millionkm²Billionm³BilliontonnesGtCO₂eCleanEnergyFossilFuelsAgricultureCleanEnergyFossilFuelsAgricultureCleanEnergyFossilFuelsCleanEnergyFossilFuelsAgricultureCleanEnergyFossilFuelsAgriculture0.750.35158372,7000.3150.54112~1%ofgloballand<2%ofglobalwaterconsumptionOne-offscale-upthatcanberecycledNeededeveryyearindefinitelyCandecarboniseovercomingdecadesEmittedeveryyearindefinitelyKeyAssumptions:CleanEnergyFossilFuelsAgri-cultureLanduseforelectricitygenerationin2050(notbioenergy),includingforgreenhydrogenandDAC,assumingground-mountedutility-scalesolarandonlydirectlanduseforwind.Estimatedcurrentlanduseforcoalminingandoilandgasextraction.Currentlanduseforagricultureincludingcropsandlivestockformeatanddairy.Waterconsumptionin2050forcleaningsolarpanels,nuclearpower,hydrogenelectrolysis,andCCS.Currentwaterconsumptionforcoalmining,oilandgasextraction,andfossilpowergeneration.Currentwaterconsumptionforallagriculture.Maximumadditionalmaterialneedstobuildcleanenergytechnologiesin2050,includinge.g.steelforwindturbines,lithiuminbatteries,copperincabling.Currentannualextractionofcoal,oilandgasusedinenergysystem.Notapplicablehere–butglobalagriculturalcropproductionin2021was~9.5billiontonnes.Maximumpotentialemissionsassociatedwithproductionofmaterialsforcleanenergytechnologies,assumingcurrentemissionsintensities.Currentemissionsassociatedwithfossilfuelsandenergysystem.Currentemissionsassociatedwithagricultureandland-usechange.MaterialandResourceRequirementsfortheEnergyTransition29Supply-demandbalanceto2030andthepotentialforefficiencyandrecyclingChapter2MaterialandResourceRequirementsfortheEnergyTransition30Currentsupplypipelinesdonotappearsufficienttomeetrapidlygrowingdemandfromtheenergytransition,withsupplygapsandhighpricespossibleforsixkeyenergytransitionmaterials(cobalt,copper,graphite,lithium,neodymiumandnickel).Thereismajorpotentialtoreducefuturedemandforenergytransitionmaterialsviatechnologyandmaterialsefficiencyandrecycling.Thesecanhelpreducecumulativeprimarymaterialsrequirementsfromtheenergytransition,andpotentiallyclosesupplygapsthroughto2030.Actiontoacceleratebothmaterialsefficiencyandrecyclingshouldbestronglysupportedandrequiredbypublicpolicy–especiallyforbatterymaterialsandcopper.Chapter1consideredthebigpictureofwhetherthereareenoughresourcesavailabletomeettherawmaterialdemandsfortheenergytransitionoverthelong-term.Inthischapter,wesetoutthedetailsofourdemandscenarios,andassesshowpotentialdemandgrowthto2030compareswithestimatesofplannedsupply.ThischapterisalsoaccompaniedbyMaterialFactsheets,coveringkeyinformationforsixkeyenergytransitionmaterials(cobalt,copper,graphite,lithium,neodymiumandnickel).Wecoverinturn:➀Thestructureofourdemandmodel–fourscenariosfordecarbonisationandmaterialsdemand.➁Baselinedemandgrowthformetalsfortheenergytransition,relativetoplannedsupply–specificchallengesinthe2020s.➂Thepotentialtoreducedemandandrequiredsupplythroughtechnicalinnovationandrecycling.➃Remainingreserveandsupplygaps.➄Policyactiontodrivetechnicalinnovationandrecycling.2.1Materialsdemandprojectionsfortheenergytransition–fourscenariosChapter1beganbydescribingthekeytechnologicalandinvestmentdriversoftheenergytransition,withcleanelectrificationatthecore.Thestartingpointforourdemandmodelisasetofassumptionswhichtranslatethisintodemandforrawmaterials.Thisrequiresmakingassumptionsabout:•Technicalefficiencyfactors,suchasGWofpowercapacityperGWhofgeneration.•Productdesignfactors,suchaskWhperEVbattery.•Materialintensityfactors,suchaskgofmaterialperkWorperkWh.ThekeydrivingassumptionsforourscenariosareshowninExhibit2.1.Thesearethefundamentaldriversofmaterialsdemand,inlinewithandderivedfromtheETC’sbroaderbodyofwork,andaredesignedtorampupaggressively–achievingrapid,deepdecarbonisationtoreachnet-zeroemissionsbymid-century–andapplyacrossallfourscenariosinthisreport.4545DeploymentofcleanenergytechnologiesisdesignedtobeconsistentwithpreviousETCworkontheenergytransition.SeeETC(2020),MakingMissionPossible;ETC(2021),MakingCleanElectrificationPossible;ETC(2021),MakingtheHydrogenEconomyPossible;ETC(2022),CCUSintheenergytransition:vitalbutlimited.MaterialandResourceRequirementsfortheEnergyTransition31Thesedrivingassumptionsarecombinedwitharangeofinputsacrosstechnologyandmaterialsefficiency,andwastemanagementandrecyclingatendoflife,tocalculatematerialflows[Exhibit2.2].IllustrativecalculationofmaterialrequirementsEXHIBIT2.2NewinstalledcapacitySplitacrosskeysub-technologiesMaterialsintensityofeachsub-technologyScrappageandwasteratesinproductionTotalMaterialsDemandTotalannualmaterialrequirementsincleanenergytechnologiesRecycledvolumes(oncetechnologiesreachend-of-life)Technologiesreachingend-of-lifeCollectionratesfortechnologiesEnd-of-liferecyclingratesformaterialsTechnologyYear20222030204020502022203020402050202220302040205020222030204020501,600TWh6,500TWh20,000TWh40,700TWh2,100TWh7,900TWh25,000TWh50,000TWh2,800TWh3,500TWh4,900TWh4,600TWh28,000TWh35,000TWh56,000TWh78,000TWh20222030204020502022203020402050202220302040205020222030204020500.1TWh2TWh5TWh11TWh<1Mt20Mt290Mt700Mt1TWh75TWh1000TWh2700TWh0.05GtCO21GtCO25GtCO210GtCO2YearProjectionProjectionTechnologyETCassumptionsforcleanenergytechnologydeploymentto2050EXHIBIT2.1TechnologyYearYearProjectionProjection–lightProjection–mid/heavyTechnologySolarPowerGenerationStationaryStorageDACC/CCSHydrogenFuelCellsGreenHydrogenProductionbyElectrolysisWindPowerGeneration2022203020402050202220302040205010million88million97million98million60million450million1.3billion1.5billion0.3million6million16million17.5million1million28million150million270million202220302040205020222030204020500.03million1million4.5million9million0.05million4.5million35million100millionPassengerElectricVehicleSalesCommercialElectricVehicleSalesPassengerElectricVehicleFleetNuclearPowerGenerationTransmissionandDistributionGrid(TotalDirectElectrification)(Energydemandfromaviationandshipping)(Lightvs.Mid/Heavy)CommercialElectricVehicleFleet(Lightvs.Mid/Heavy)EnergyTransportMaterialandResourceRequirementsfortheEnergyTransition32Wethenvarytheassumptionstogeneratefourscenarios:•ABaselineDecarbonisationscenariowhichrampsupthedeploymentofthedifferenttechnologiestoachieveamid-centurynet-zeroeconomyinlinewiththeETC’svision,alongsiderelativelyconservative“business-as-usual”assumptionsontechnologyefficiencyandinnovation,materialsintensity,andrecycling.Giventheveryrapiddeploymentofcleanenergytechnologies,outputscanbeseenasan“upperbound”formaterialrequirementsfortheenergytransition.•AHighEfficiencyandInnovationscenariowithmoreoptimisticassumptionsontechnicalefficiency,materialintensityandapivottolessmaterial-intensivetechnologies(e.g.,highersolarandwindcapacityfactors,smallerbatteryrequirementsforEVs,reducedorchangedmaterialinputsperkWofsolarorwindcapacity,orperkWhofbattery).•AHighRecyclingscenariowithmoreintenseprocessscrapandend-of-liferecycling,whichinsomespecificmineralsachievesrecyclingratesofover90%by2050andincreasesso-called“secondarysupply”.•AMaximumEfficiencyandRecyclingscenariowhichcombinesprogressonbothtechnicalefficiencyandinnovationandrecycling.Foreachofthescenarios,weproduceestimatesofpotentialannualdemandfromtheenergytransitionin2030,2040and2050,basedonbothtotalmaterialsdemandandsecondarysupplyofrecycledmaterials[Exhibit2.3].4646Wealsomakeuseofexternalforecastsfornon-energytransitiondemandthroughto2050,andforprimaryandsecondarysupplyofmaterialsthroughto2030.ThesearedetailedforeachmaterialinExhibits2.4and2.15.FourETCscenariosexploretheimpactthatefficiencyandrecyclingcanhaveontotalmaterialrequirementsandthesecondarysupplyofmaterialsfortheenergytransitionEXHIBIT2.3BaselineDecarbonisationAlignedtoNet-zeroby2050MaxreductionintotalmaterialdemandMaxincreaseinsecondarysupplyHighEfficiencyandInnovationMaximumEfficiencyandRecyclingHighRecyclingMaximumdemandpathwayforamaterial,basedonuptakeofcleanenergytechnologies.Lower,slowerramp-upindemandduetoreducedmaterialrequirements.Smallersecondarysupplyduetolowerthrough-flowofmaterials.Improvedwastemanagement,recycling,reuse-secondarysupplyincreases.Lowermaterialrequirementsandincreasedrecycling.Demandforprimarysupplyofmaterialsismuchlower.EnergytransitiontotaldemandPrimarydemandEnergytransitionsecondarysupply2020203020402050202020302040205020202030204020502020203020402050MaterialandResourceRequirementsfortheEnergyTransition33InChapter1,wecomparedcumulativedemandundertheBaselineDecarbonisationscenariowithcurrentresourcesandreservestoillustratethatthereisnofundamentallong-termproblemofresourceadequacy,evenunderassumptionsthatyieldthehighestmaterialrequirements.InthisChapter,wecomparedemandscenariosoutto2030withestimatesofplannedsupplyoverthatperiod.2.2Balanceofdemandversussupplyto2030intheBaselineDecarbonisationscenarioExhibit2.4showsdemandprojectionsintheBaselineDecarbonisationscenariotogetherwithinitialprojectionsofpotentialsupply,includingbothprimaryminedsupplyandsecondaryrecycledsupply.47Somekeyfeaturesofthedemandpictureare:•Volumesofsteelandaluminiumgrowsignificantly,butprimarilybecauseofgrowthinnon-energyrelateddemands(e.g.,withgreaterurbanisationandindustrialisationdrivingdemandforsteelinlower-incomecountries).•Copper,nickelandcobaltdemandgrowthreflectsbothenergytransitionandnon-energyrelatedfactors.•Energytransitiondrivendemandforlithium,graphiteandcobaltincreasesconsiderablyto2030,butflattensoutthereafterasEVpenetrationreacheshighlevels.Formanyofthematerialsinthesecondandthirdcategories,wheretheenergytransitiondrivesstrongdemand,demandgrowthto2030iswellbeyondhistoricalprecedentinrecentyears.4847Secondarysupplyestimatesarealsoexternal,andETCcalculationsofsecondarysupplyfromcleanenergytechnologiesatend-of-lifeisaddedontototalsupplyestimates.48Oneplausiblecomparatoristhegrowthinsteeldemandduringthecommoditysupercycleoftheearly2000s,whereproductionofironorerosefrom970Mtin2000upto1,870Mtin2010,aspricesnearlyquadrupledoverthesameperiod.USGS(2020),Ironorestatistics;McKinsey&Co.(2022),Theraw-materialschallenge.34MaterialandResourceRequirementsfortheEnergyTransitionSupply-Secondary(fromEnergyTransition)BaselineDecarbonisation:AnnualmaterialdemandandsupplyEXHIBIT2.4EnergyTransitionDemandNon-EnergyTransitionDemandEstimatedsupply-PrimarySupply-SecondaryAluminium1(Millionmetrictonnes)Cobalt2(Thousandmetrictonnes)110110120120135135150123170165Copper3(Millionmetrictonnes)GraphiteAnodes4(Millionmetrictonnes)Lithium5(Thousandmetrictonnes)Neodymium6(Thousandmetrictonnes)Steel11(Billionmetrictonnes)Uranium12(Thousandmetrictonnes)20222050202520302040Nickel7(Millionmetrictonnes)Platinum&Palladium8(Thousandmetrictonnes)Polysilicon9(Millionmetrictonnes)Silver10(Thousandmetrictonnes)165170170260215435260440470485202220502025203020404702022205020252030204024252932403645575753202220502025203020400.51.12.33.47.03.87.16.56.57.520222050202520302040110125290305765510885960945945202220502025203020404050656012590145180190175202220502025203020402.93.33.74.85.84.96.67.87.87.5202220502025203020400.490.460.260.310.390.390.37PalladiumPlatinumSupplyforecastnotavailable0.70.91.42.41.42.41.81233.03.1202220502025203020403.035313832383441484920222050202520302040482.02.02.12.12.22.22.32.52.6202220502025203020402.47065758085908080802022205020252030204095SOURCE:¹Non-energydemandandsecondarysupplyfromMissionPossiblePartnership/InternationalAluminiumInstitute,primarysupplyfromBNEF(2023),Transitionmetalsoutlook;2Non-energydemandfromIEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions,supplyfromBNEF(2022),2HBatteryMetalsOutlook;3Non-energydemandfromBNEF(2022),GlobalCopperOutlook,primarysupplyfromBNEF(2023),Transitionmetalsoutlook,secondarysupplyfromnon-energytransitionisassumedtobe10%ofprimarysupply;4SupplyfromBNEF(2022),2HBatteryMetalsOutlook;5Sameas[2];6Non-energydemandfromIEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions,supplyestimatedassumingCAGRinREOproductionfrom2010-21continuesto2030,withneodymiummakingup17%totalsupply;7Non-energydemandandsupplyfromBNEF(2023),Transitionmetalsoutlook;8Non-energydemandmodelledfromphase-outofICEcars,addingothersectordemand,followingBNEF(2021)2HHydrogenMarketOutlook;9SupplyfromBNEF(2023),1QGlobalPVMarketOutlook;10Non-energydemandandsupplyfromSilverInstitute(2022),WorldSilverSurvey,extrapolatedto2050/30;11Non-energydemandandprimary/secondarysupplyfromMissionPossiblePartnership;12SupplyfromWorldNuclearAssociation(2021),TheNuclearFuelReport:ExpandedSummary.MaterialandResourceRequirementsfortheEnergyTransition35ComparingtheBaselineDecarbonisationscenariowithplannedsupplysuggeststhat:•Steelandaluminiumsupplywillgrowbroadlyinlinewithincreaseddemandto2030,withalargeandgrowingpercentageofthesupplyofbothcomingfrom“secondary”(i.e.,recycledmaterial)–reflectinghighexistingend-of-liferecyclingratesforbothmaterials.49•Recyclingisalsoimportantforcopper,butrecycledsupplyfromcleanenergytechnologiesplaysaminimalrolebefore2030,aswithotherkeybatterymaterials(graphite,lithium,cobalt,nickel),sinceveryfewEVswillhavereachedendoflifebythen.•Althoughplannedsupplyformanymaterialsisexpanding,itstillfallsshortofdemandinsixkeymaterials–copper,graphite,lithium,nickel,cobaltandneodymiumwhicharehighlightedastheenergytransitionmaterialsatgreatestriskinExhibit2.5.50TherewillalsobedemandforspecificchemicalsdrivenbythedeploymentofCCS,bothforindustrialpointsourcesandfordirectaircarboncapture.ThisisdiscussedinBoxB.49Currentend-of-liferecyclingratesforsteelandaluminiumarearound75%and70%.FraunhoferISI(2022),AdynamicmaterialflowmodelfortheEuropeansteelcycle,andMPP(2022),MakingNet-ZeroSteel/AluminiumPossible.50Wedonotincludesilverinthisgroupofmaterialsofconcerngiventheveryhighshareofnon-energytransitiondemandforsilver,fromwhichdemand-shiftingispossible,alongsidepotentialtoincreasesecondarysupply.Theshort-termchallenge:Estimatedsupplygrowthforkeymaterialsisinsufficienttomeetrapidlyrisingdemandby2030EXHIBIT2.5Annualdemandandsupplyin2030(BaselineDecarbonisationscenario)MillionmetrictonnesNOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.1Supplyonlyshownfornaturalgraphite–itislikelythatsyntheticgraphitecouldclosemostoftheremainingsupplygap.SOURCEFORENERGYTRANSITIONDEMAND:SYSTEMIQanalysisfortheETC.SOURCEFORNON-ENERGYTRANSITIONDEMAND:Copper–BNEF(2022),Globalcopperoutlook;Nickel–BNEF(2023),Transitionmetalsoutlook,Lithium,Cobalt,Neodymium–IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.SOURCEFORPRIMARYSUPPLY:Copper,Nickel–BNEF(2023),Transitionmetalsoutlook,andassumingrecycledcopperfromnon-energytransitionsourcesis10%ofprimarysupply;GraphiteAnodes,Lithium,Cobalt–BNEF(2022),2HBatterymetalsoutlook;Neodymium–estimatedassumingcontinuedCAGRinrareearthoxideproductionfrom2010–21,throughto2030,withneodymiummakingup17%oftotalsupply.RecycledsupplyfromenergytransitionEnergyTransitionDemand-BaselineNon-EnergyTransitionDemandEstimatedminesupplySupply-Secondary(fromothersources)203020227.03.81.1-45%203020220.430.250.17-40%203020220.770.510.12-30%203020220.120.090.05-30%203020225.84.63.3-15%20302022403425-10%GraphiteAnodes1CobaltLithiumNeodymiumNickelCopperMaterialandResourceRequirementsfortheEnergyTransition36BOXB:DemandforchemicalsfromcarboncaptureandstorageTheETChasidentifiedtheuseofCCUSintheenergytransitionasvital,butlimited.Atmost7–10GtCO2ofcarboncapturecouldberequiredby2050,acrossawiderangeofapplicationsincludingindustrialpointsourceCCS,BECCSandDACC[Exhibit2.6,LHS].51BothCCSandDACCmakeuseofchemicalsorbents/solventsthatbindtocarbondioxide,toremovethemfromtheairorastreamofgases.Cyclesofcoolingandheatinginthecaptureprocessleadtosomedegradationofthesolvents,meaningthatafairlyconstantthroughputofsolventsisrequiredforeverytonneofCO2thatiscaptured.Wehaveestimatedchemicalsrequirementsintheformofmonoethanolamine,butinreality,arangeofchemicalscouldbeused.Thesearetypicalpetrochemicalsproducedfromhydrocarbons,butproductionusingalternativefeedstockstofossilfuelsshouldbefeasibleincomingdecades(andtherecouldbeashifttoalternativesolid-sorbentormembrane-basedtechnologies).Thescale-upinchemicalsrequirementswouldbefastandsignificant,exceedingcurrentglobalannualproductionbythemid-2030s[Exhibit2.6,RHS].However,overallrequirementsby2050wouldcorrespondtoaneight-foldincreasefromcurrentproductionlevels–notunprecedentedincreaseinthehistoryofchemicals,e.g.volumesofnitrogenfertiliserproductionincreasedmorethanfive-foldbetween1960–80.5251ETC(2022),CCUSintheenergytransition:Vitalbutlimited.52RockyMountainInstitute(2022),Directaircaptureandtheenergytransition.Thescale-upofsolventproductionrequiredforDACCandCCSiswellwithinhistoricalprecedentsforthechemicalsindustryEXHIBIT2.6Potentialfuturescenarios1forCCUSdeploymentin2050GtCO₂perannumChemicalrequirementsforcarboncaptureMillionmetrictonnesofmonoethanolamine21ThetwoscenariosaredesignedtoshowtheplausiblerangeofCCUSrequirementsin2050,dependingontheevolutionoftechnologiesandcostsovertime.The"Base"scenarioisalignedwithpreviousETCpathwaysthatpredominantlyinvolvedsupply-sidedecarbonisationoftheenergysystem–seeETC(2020),Makingmissionpossible;ETC(2022),Carboncapture,utilization&storageintheenergytransition.2Monoethanolamineisachemicalsorbentthatistypicallyusedforcarboncapture,andisusedhereasaproxyfortotaldemandacrossallsorbents.SOURCE:SystemiqanalysisfortheETC;ETC(2022),Carboncapture,utilization&storageintheenergytransition;RMIandThirdDerivative(2022),Directaircaptureandtheenergytransition.Base0246810121416DACCBECCCementBluehydrogenIronandsteelFossilfuelsprocessingFossilpower710DACC-HighDeploymentDACC+CCS-BaselineGlobalamineproductionin2020LowerrequirementsforBasescenarioCCS-HighDeploymentHighDeployment20200.020.2125816202520302035204020452050MaterialandResourceRequirementsfortheEnergyTransition372.3ThepotentialforefficiencyandrecyclingPressureontheprimarysupplyofmaterialscanbesignificantlyreducedoverthelong-termbyincreasingefficiencyandreducingtotalmaterialrequirements,andbyincreasingrecyclingandthustheshareofdemandwhichismetbysecondarysupply.Theimpactsoftheseactionswouldbecomeevidentoverdifferenttimehorizons:•Overtheshortterm,actionstoimprovematerialsandtechnologyefficiencyhavethestrongestimpactonreducingmaterialdemand,helpingtoclosesupplygapsto2030,withpotentialgreatestinbatterymaterials.•Overthemid-to-longterm,shiftingtonext-generationtechnologiesandscalingrecyclingcantogethersignificantlyreduceprimarymaterialrequirements,leadingtofallingprimarydemandfromthemid-2030sonwards.•Secondarysupplywillplayamajorroleinmeetingdemandfromthelate-2030sonwardsforkeymaterialssuchascobalt,graphiteandlithium.Exhibit2.7setsoutthetechnologicaltrendsandactionswhichwillmakeitpossibletoreduceprimarymaterialdemandviaboththetechnicalinnovationandrecyclinglevers.38MaterialandResourceRequirementsfortheEnergyTransitionSOURCE:1NREL(2022),Utility-scalePV;BNEF(2023),Transitionmetalsoutlook2Walzbergetal.(2021),Roleofthesocialfactorsinthesuccessofsolarphotovoltaicreuseandrecyclingprogrammes;3BNEF(2020),35MWWindturbinestolowermaterialdemand;4WindEurope(2020),Acceleratingwindturbinebladecircularity;5ENTSO-ETechnopedia(2023),Dynamiclinerating;6BNEF(2020),Copperandaluminiumcompetetobuildthefuturepowergrid;CanaryMedia(2022),Howtomovemorepowerwiththetransmissionlineswealreadyhave;7Pampeletal.(2022),Asystematiccomparisonofthepackingdensityofbatterycell-to-packconceptsatdifferentdegreesofimplementation;8Bloomberg(2022),Thenextbigbatterymaterialsqueezeisoldbatteries;9IRENA(2020),Greenhydrogencostreduction;10USDepartmentofEnergy(2015),Fuelcellsfactsheet;11Milleretal.(2020),Greenhydrogenfromanionexchangemembranewaterelectrolysis;12BNEF(2022),2HNuclearmarketoutlook;IAEA(2019)France’sefficiencyinthenuclearfuelcycle.Technologytrendsandactionstodriveinnovation,efficiencyandrecyclingEXHIBIT2.7Optimalsiting,reducedinverterlosses,slowerdegradation,drivescapacityaveragefactorsupto17%by2050.1Operatinglifetimesforsolarfarmsgouptoandbeyond35years.Fasterreductionsinmaterialsintensity,especiallyforsilicon,aluminiumandsilver(inmodule)andcopper(onsite),drivenbyefficiencyrisingto30%by2050.1SolarWindTechnologyandMaterialsEfficiencyRecyclingandWasteManagement123By2040/50,over70/90%ofsolarpanelsarecollectedforrecyclingatend-of-life.Initially,thiscouldrequireincentivessuchashigherchargesonlandfill,subsidiesforrecycling,orhigherpaymentsforrecoveryofparticularmaterialstohelpscalerecyclingasitisnotcurrentlyeconomical.212Increasingsizeofturbines,greateruseoffloatingoffshore,helpdrivehighercapacityfactors:upto50/55%by2050foron/offshorewind.3ThisinturndrivesalowermaterialsintensityperTWhofelectricitygenerated.Operatinglifetimesforwindfarmsgouptoandbeyond35years.Ifsupplyconstraintsaresevere,ashiftawayfrompermanent-magnetbasedturbinedesignscanreducerequirementsforrareearthelements.123By2040/50,over70/90%ofwindturbinesarecollectedforrecyclingatend-of-life.Currentlyalmostallthebodyofawindturbine,whichispredominantlysteel,canberecycled;thechallengeisrecyclingbladesmadeofcomplexfibresandcompositematerials.Fundingforcontinuedresearch,developmentanddeploymentwillbecrucialtoenablingrecyclingofcompositematerials.4123PowerGridsConnectionofVREplantsdirectlytodistributionnetworkuseslower-voltagecabling,whichhaslowermaterialsneedsthanhigher-voltage.Powerflowrouting,dynamicline-rating,digitalisation,smartdemandmanagementandothermeasurescanincreaseefficiencyandreduceredundancyingridoperation,reducingrequiredgridbuild-out.5Slowingdownshifttowardsundergroundcablingcanhelp;undergroundcablesaremuchmorematerials-intensivethanoverground.6123Increasingcollectionofcopperfromredundantorend-of-lifecablingetc.–ratesareassumedtoreach80/90%by2040/50.Replacingolder,inefficientcablingcanbothunlockoldstocksofcopperthatcanberecycledandincreasetheefficiencyofthegrid.12BatteriesandElectricVehiclesImproveddesignandpackingcanhelpincreasebatteryenergydensity,makingvehicleslighterandimprovingrange.7ShiftawayfromSUVsalescanhelplimitsizeofbatteriesinpassengerandcommercialvehicles–e.g.averagepassengervehiclehasabatteryof~55kWhthroughto2050.Afastershifttolithiumironphosphate(LFP)batteriescanreducerequirementsfornickelandcobalt;overlongterm(post-2030)sodium-ionbatteriescanreducedependenceonlithium.Increaseddopingofgraphiteanodeswithsiliconcanreduceneedfornaturalorsyntheticgraphite.Improveddesign,efficiencyandintegrationofEVmotorsandbatterycanreducecopper,rareearthcontent.123By2040/50over80/90%ofbatteriesarecollectedforre-useorrecyclingatend-of-life.By2040/50over25/30%ofEVbatteriesarere-usedinstationarystorageapplications.ReducingEVbatterycapacitydegradation:max~15%fallafteroperation,leavingsufficientcapacityforsecondaryuseinstationarystorage.ExistingLi-ionbatteryrecyclingcapacityisbeingbuiltoutrapidly,runningaheadofvolumesofavailablescrap.8124534ElectrolysersandFuelCellsContinuousenergyefficiencyimprovementsforelectrolysis,toreach<45kWh/kgH2by2050.9Continuousenergyefficiencyimprovementsforfuelcells,reaching60%by2050.10Electrolysersarerunathighloadfactors(e.g.60%in2020,fallingonlyto50%by2050),toreducematerialrequirementsfornewcapacity.ContinuousinnovationtoreducePGMcontentofelectrolyserswithoutlosingbenefitsofflexibleloading,e.g.bydevelopinghybridAnionExchangeMembraneelectrolysers.11123By2040/50,over70/90%ofelectrolysersandfuelcellsarecollectedforrecyclingatend-of-life.Recyclingofelectrolysersandfuelcellsdependsstronglyonthevalueofembeddedmaterialcontent.Paradoxically,asinnovationreducesrequirementsforPGMs,thiswouldalsolikelyreducethepotentialmonetaryvalueofrecycledcontent.124NuclearImprovedmanagement,operationandmaintenanceschedulesallowaveragenuclearfleetcapacityfactorstoremainabove85%throughto2050.Thereareawidevarietyofnext-generationandsmallmodularnuclearreactorsindevelopment,whichhavethepotentialtoreducematerialrequirements,especiallyforuraniumfuel.1212Thereispotentialforre-purposing/recyclingofspentnuclearfuel,e.g.intomixed-oxidefuel,whichcanthenbeusedincertaintypesofnuclearreactors.Upto96%ofre-usablematerialinspentfuelcanberecovered.12NuclearfueliscurrentlyextensivelyrecycledandreprocessedinthiswayinFrance.1212MaterialandResourceRequirementsfortheEnergyTransition392.3.1Technologyandmaterialsefficiency–majorpotentialimpactbythe2030sAmongthemostimportantactionstoreducedemandviaimprovedefficiencyandinnovationare[Exhibit2.8]:•Improvedloadfactorsforwindfarms,requiringfewerinstallations,andthereforefewermaterials,togeneratethesameTWhofelectricity.Suchimprovementscouldreducetheinstalledcapacityofwindin2050requiredtomeettheETC’sdecarbonisationpathwayfrom14TWto12TW(15%).•Higherefficiencyofsolar,batteriesandelectrolyserswhichreducesmaterialintensityforcopper,rareearthelements,silicon,andothersineachsolarpanel,batteryorelectrolyser.Forexample,BNEFpredictbatterypackenergydensitycouldrisefrom160kWh/kgcurrentlyuptoaround250kWh/kgby2030–andprovidingthesamevehiclerangewitharound35%lowermaterialrequirements.53Similarly,siliconintensityofsolarpanelsisexpectedtokeepfallingovercomingdecades.54•Technologicalinnovationandsubstitutionforbatteries,whichshiftstocobalt-andnickel-freebatterychemistriesandimprovingbatteryenergydensities,reducingrequirementsforkeybatterymaterials.WeestimatethatahighershareforLithiumIronPhosphate(LFP)andlow-cobaltNMC55batteriescouldseeprojectedcobaltdemandin2030fallfromaround430ktto290kt(over30%).53BNEF(2022),Long-termelectricvehicleoutlook.Variousbatterymanufacturershaveannouncedplanstogomuchfurther–seee.g.,CATL(2023),CATLlaunchescondensedbatterywithanenergydensityofupto500Wh/kg,enableselectrificationofpassengeraircrafts.54BNEF(2023),Transitionmetalsoutlook.55Nickel-Manganese-Cobalt(NMC).Improvingtechnologyperformance,fallingmaterialsintensity,andnewbatterychemistriesdrivedownmaterialrequirementsEXHIBIT2.8Technologyperformance:Windturbinecapacityfactors%Materialsefficiency:Siliconcontentofsolarphotovoltaicsg/WTechnologysubstitution:Passengervehiclebatterymarketsharesbybatterytype1,%1L=Lithium;F=Iron;P=Phsophate;N=Nickel;M=Manganese;O=Oxygen;Na=Sodium;C=Cobalt;A=Aluminium.NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheHighEfficiencyscenarioassumesacceleratedprogressinmaterialsandtechnologyefficiency.SOURCE:SystemiqanalysisfortheETC;BNEF(2021),Newenergyoutlook;FraunhoferISE(2022),PhotovoltaicsReport;BNEF(2022),Long-termelectricvehicleoutlook.0510152025303540455055OnshoreOffshoreHistoricalBaselineHighEfficiencyandInnovation2020202520302035204020452050200416.020107.020202030-402040-503.02.52.02.01.0Improvedcapacityfactorsmeanfewerinstallations(andthereforematerials)forthesameTWhofelectricity.LowermaterialsintensityofsolarmeanslesssiliconisrequiredtoproducethesameTWhofelectricity.Innovationinbatterychemistrieswillseeashifttowardscobalt-andnickel-freebatteries.BaselineHighEfficiencyandInnovation0%25%50%75%100%LFPLN(M)ONa-IonNCANMC(A)2020203020402050HighEfficiency0%25%50%75%100%2020203020402050BaselineMaterialandResourceRequirementsfortheEnergyTransition40These,andotheractionsacrossthefullspectrumofmaterialsandtechnologies,wouldsignificantlyreducematerialrequirements.Inparticular:•Steel:Wherecumulativeenergytransitionrelatedsteeldemandbetween2023–50couldfallfromaround4,900Mtto3,700Mt(a25%reduction),predominantlyasaresultofreducedrequirementsinwindandsolarinstallations.•Aluminium:Cumulativerequirementscouldfallfrom950Mtto730Mt(20%reduction),mainlydrivenbyloweraluminiumuseinoverheadcablingandmountingsforsolarpanels.•Copper:Cumulativedemandcouldfallfrom600Mtto420Mt(30%reduction),drivenbyacombinationofreduceduseingrids,areducedbuild-outofwindandsolarinstallations,andlowercopperintensityinelectricvehicles.Inaddition,andcrucially,theywouldsignificantlyreducethelikelihoodandseverityofsupplygapsthisdecade.Forthekeymaterialswiththebiggestsupplyrisks,improvedtechnologyperformanceandmanagement,fasterdeclinesinmaterialintensity,andsubstitutiontoalternativematerialsandtechnologiesoffersignificantpotential[Exhibit2.9]:•Lithium:Ashifttosodium-ionbatteriesbeyond2030,combinedwithfasterbatteryenergydensityimprovementsandslowergrowthinbatterypacksizesleadstoa40%reductionindemandby2050,withdemandinthatyearcutfromaround940ktto570kt.•Cobaltandnickel:TherapidriseofLFPbatteriesdisplacessignificantdemandfromcobalt-andnickel-richbatterycompositions,reducingfuturematerialsdemandprojections,especiallyovertheshorttermto2030.Fasterbatteryenergydensityimprovementsandslowergrowthinbatterypacksizesalsohelpmitigatedemandincreases.•Copper:Largerwindturbines,moreefficientsolarpanels,andbettersitingandmanagement,canhelpgeneratemoreterawatthoursofelectricitywithlesscopper.Improvementsingridmanagementanddigitalisation,reducingredundancyrequirements,andimprovingsmartdemandmanagementcanalsohelpreducethescaleofthegridbuild-outrequiredanditsdemandforcopper.41MaterialandResourceRequirementsfortheEnergyTransitionDemandfromtheenergytransitioncanbereducedthroughtechnologyandmaterialsefficiencyEXHIBIT2.9AnnualtotaldemandThousandmetrictonnesNOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheHighEfficiencyscenarioassumesacceleratedprogressinmaterialsandtechnologyefficiency.Non-energytransitiondemandisheldconstantacrossallscenarios.Theefficiencyleversareonlyappliedtodemandfortheenergytransition.SOURCEFORENERGYTRANSITIONDEMAND:SystemiqanalysisfortheETC.LFP=Lithium-Iron-Phosphate;NMC=Nickel-Manganese-Cobalt.SOURCESFORNON-ENERGYTRANSITIONDEMAND:Lithium–IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;Cobalt–Ibid.;Nickel–BNEF(2023),Transitionmetalsoutlook;Copper–BNEF(2022),Globalcopperoutlook2022-40.020222030Non-energytransitiondemandDevelopmentofsodium-ionbatteries,growingtotake30%ofmarketby2040.Rapidshifttolow-cobaltNMCandLFPbatteriesin2020sand2030s.RapidshifttoLFPbatteriesin2020sand2030s,>50%ofmarketin2025-35.Lowernickelintensityinelectrolysers.Lowernickel-alloyedsteelintensityofwindturbines.Improvingefficiency,capacityfactorsforwindandsolar,reducesneedforinstallationsandcopperintensity.Shifttoaluminiumincertaincasesforpowercables.Digitalisation,smartdemandmanagement,powerflowroutinghelpreducerequiredsizeofgridbuild-out.BaselineenergytransitiondemandReductionindemandduetoefficiencyandinnovation204020502004006008001000LithiumDriversofefficiencyCobaltNickelCopper0202220302040205010020030040050002022203020402050200040006000800002022203020402050100001000030000400005000060000Improvingbatteryenergydensity,betterpackingefficiency,toachievehigherrangeforsamematerials.SmallerbatteriesinBEVs;averagebatteryinpassengervehiclesstaysat~55kWh,e.g.viataxonSUVsorlargebatteries.Demandfortheenergytransition(BaselineDecarbonisationScenario)Demandfortheenergytransition(HighEfficiencyandInnovationScenario)Non-energytransitiondemandSomeofthesetrendsarealreadytakingplace,drivenbyhighpricesandcontinuousinnovation[Exhibit2.10]:•Theongoingshifttolow-cobaltnickel-manganese-cobalt(NMC)andcobalt-freeLFPbatterieshasdrivendownforecastsoffuturecobaltdemandin2030byover50%.56•Incertaincases,whencopperpricesarehighenoughandprojectspecificationsallowit,switchingtoaluminiumforpowercableshastakenplace–reducingcopperdemandby200–500kteachyearbetween2005–18.57Finally,asanillustrationofthepotentialforaverydifferentstyleoflow-carbonpowergenerationsystem,BoxCoutlinesthetrade-offsbetweenlanduse,materialrequirementsandcostsassociatedwithanincreaseduseofnuclearpower.56BNEF(2022),Long-termelectricvehicleoutlook.57BNEF(2020),Copperandaluminiumcompetetobuildthefuturepowergrid.MaterialandResourceRequirementsfortheEnergyTransition42Technologyandmaterialsubstitutionisalreadyhappening:projecteddemandforcobalthasfallendramatically,andhighcopperpricesincentiviseaswitchtoaluminiumingridsEXHIBIT2.101Ratioofpricesisadjustedtoaccountforhigherconductivity(aratioof1.66:1Cu:Al).Avalueabove1indicatesaluminiumisfavouredovercopper.SOURCE:BNEF(2022),Long-termelectricvehicleoutlook;BNEF(2021),Copperandaluminiumcompetetobuildthefuturepowergrid.ProjectedcobaltdemandThousandmetrictonnes50%reductioninforecastdemandduetotechnologyandmaterialssubstitutionAdjustedaveragecopper-to-aluminiumpriceratio1(LHS)andnetsubstitutionofcopper(RHS)US$/kg(LHS);Thousandmetrictons(RHS)00.00501001502002503003504004505000.51.01.52.02.5Netsubstitutioncopper3.0202020222024202620282030199019952000200520102015202050100150200250300350BNEFforecast,2019BNEFforecast,2020BNEFforecast,2021BNEFforecast,2022CopperpreferredAluminiumpreferredCu/AlRatio43MaterialandResourceRequirementsfortheEnergyTransitionBOXC:Whatifweincreasednuclearpowergeneration10x?Nuclearpowergenerationdoesingeneralhavelowermaterialintensitythansolarandwindpower,58aswellasmuchlowerlanduserequirements(forbothminingofmaterialsandsiting/operation).59However,nuclearpowerisalsoassociatedwithmuchhighercapitalinvestmentrequirementsthanwindandsolar,severaltimeshigherthansolar.60Itwouldalsorequireaexpansionofuraniumextraction,potentiallyreachinglevelsassociatedwithcurrentlyestimatedreservesifextensivespentfuelrecycling,orshiftstoalternativefuels,didnotbecomewidespread.Expandingnuclearcapacitycouldbeanoptiontoreducetherequirementsoflandandrawmaterialsfromthebuild-outofwindandsolarforpowergeneration.Exhibit2.11illustratesascenariowherenuclearpowerplaysamuchlargerrolethanexpected,whichcouldhelpalleviatematerialsrequirementsbutwouldleadtosignificantlyhigherinvestmentrequirementsinpowergeneration.Thesetrade-offswouldneedcarefulconsiderationinordertoweighupthebenefitsofoneparticulartechnologyoveranother.58Seee.g.,IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;IEA(2023),Energytechnologyperspectives.59OurWorldinData(2022),Howdoesthelanduseofdifferentelectricitysourcescompare?60Lazard(2023),Levelisedcostofenergyanalysis–Version15.0;Loveringetal.(2016),Historicalconstructioncostsofglobalnuclearpowerreactors.Scalingtheuseofnuclearpowercouldreducelanduseandcopperneeds–butwouldcomewithhighuraniumdemandandahighercostforthepowergenerationsystemEXHIBIT2.111Assumesthatincreasednucleargenerationdirectlyreplacesonlywindandsolar,split50:50.2Rangedependsonscaleofuraniumrecycling,uraniumfuelloadingofreactorsandtheramp-upinnucleargenerationovercomingdecades.3Calculatedasthedifferenceincapitalinvestmentneedsforwind,solarandnuclearcapacityintheBaselineand10xNuclearscenarios,andusingcapitalinvestmentcostsfromLazard(2023),Levelisedcostofenergyanalysis–Version15.0andfromLoveringetal.(2016),Historicalconstructioncostsofglobalnuclearpowerreactors.Thisdoesnotaccountfordifferencesinstorageorgridinvestments.SOURCE:SystemiqanalysisfortheETC;OurWorldinData(2022),Landuseofenergysourcesperunitofelectricity;UNECE(2021),Lifecycleassessmentofelectricitygenerationoptions.Apowersystemwith10xmorenuclearby2050HalftheamountoflandneededforpowergenerationLowercopperdemandbuthigheruraniumneedsAmoreexpensivepowergenerationsystem$6trillion…Nuclearhaslowerlandandcopperintensity,buthighercostPowergeneration,TWhLandintensity,m2/MWhCumulativecopperenergytransitiondemand,2022–50,Mt20202050-Baseline2050-10xNuclear1281101104.545SolarWindNuclearOther0.3Solar15NuclearCopperintensity,t/MWOffshoreWind11OnshoreWind5Solar3Nuclear1.5Capitalcost,$bn/GWCapacityfactor,%inadditionalcapitalinvestmentrequiredforpowergeneration3Nuclear6OffshoreWind4OnshoreWind1.4Solar1.075-90%40-55%25-40%14-17%Baselinelandforwindandsolar:620,000km210xNuclearlandforwindandsolar:310,000km2Around300,000km2lesslandneededforpowergeneration0200BaselineResources5,60010xNuclear6305502002002005,4005,600-15%Cumulativeuraniumenergytransitiondemand,2022–50,Mt202BaselineResources810xNuclear1-23-84681012x4MaterialandResourceRequirementsfortheEnergyTransition442.3.2Increasedrecycling–smallpotentialto2030butverylargeby2040sBy2050,itsplausiblethatthemajorityofnewdemandrequirementsfromcleanenergytechnologiescouldbemetthroughsecondarysupply.Butovertheshort-termto2030,lessthan10%ofdemandfromtheenergytransitionislikelytobemetthroughrecycling.Thisisbecause:•Existingend-of-liferecyclingratesarecurrentlylowandwilltaketimetoincrease:Currentlevelsofrecyclingvarysignificantlyacrossmaterials,withaluminium,steelandcopperquitewidelyrecycled,aswellascertainhighlyvaluablemetalssuchasplatinum[seeBoxDandExhibit2.12].Manykeybatterymaterials,however,havelowrecyclingrates;thisisespeciallythecaseforlithium,wherelowcollectionandtechnicalchallengesmakerecoveryoflithiumdifficultorprohibitivelyexpensiveandmeanlessthan1%isrecycledatendoflife.61•Timescalesforstockturnoverofcleanenergytechnologies:Secondarysupplycanonlybescaledupascleanenergyproductsreachendoflife.Thismeansthatmuchofthelithium,copperorsiliconinuseinbatteries,gridsandsolarpanelsthatissoldinthecomingyearswillnotbecomeavailablefordecades.Overthelongterm,however,thereissignificantpotentialtoimproverecyclingandwastemanagementratesforarangeofproductsandprocesses,withamajorimpactonthevolumeofprimarysupplyrequired,butonlyfrom2040onwards[Exhibit2.13].Acceleratingrecyclingonitsownwillnotbesufficienttoclosesupplygapsin2030.BOXD:ThecurrentstatusofrecyclingAlthoughmanycomparisonsaremadewithrecyclingfromelectronicwaste,cleanenergytechnologiestendtobelarge,industrialmachinery–makingthepotentialforrecyclingmuchmorecomparabletorecyclingfromheavyindustrywherecollectionratesarehigh,suchasforgridinfrastructureorvehicles.62Twokeyfactorsunderpinhighrecyclinglevels:highvalue/pricesformaterials,andtheexistenceofbusiness-to-businessmodels.Assoonasystemshiftstoconsumer-facingmodelsmoreindividualincentivesneedtobealigned,makingrecyclingmorechallenging.63Copper,aluminiumandsteelarecommonlyrecycled–forexample,secondarysupplyofAluminiumisaround35%oftotalsupplycurrently[Exhibit2.12,LHS].64However,currentrecyclingratesforlithiumandrareearthelements(includingneodymium)areverylow–technicalefficiencyimprovementsareneededalongsideaconcertedefforttoimproveend-of-lifecollection.Forbatteries,threefactorsarekeytorecyclingeffectively:thebatterychemistry(whichdictatesembeddedvalueofmaterials),therecyclingapproach(whichdeterminesrecoveryratesandoperatingcosts),andthelocationofrecycling[Exhibit2.12,RHS].Batteryrecyclingcapacityisalreadyexpandingrapidly–tothepointwhereover-capacityispossible,with750ktp.a.ofrecyclingcapacityexpectedin2030butsupplyofonlyaround320ktp.a.ofscrapavailableasbatterymanufacturerspushtoreducewasteduringproduction.65Thereisalsostrongpotentialtoincreasesecondarysupplyofmaterialsfromnon-energytransitionsourcesofmaterialuse.Thisisespeciallythecaseforcopper,whereapproximately460Mtofcopperarecurrentlyinuseacrossthealready-builtpowersystem,transport,buildings,appliancesandmore.66Forexample,therecouldbeupto30Mtofcopperinexistingpowerplants,67alargefractionofwhichcouldberecoveredascoal-andgas-firedpowerplantsaredecommissioned.Improvementsinthecollectionandrecyclingofcopperatendoflifewithincleanenergytechnologiescouldresultinsecondarysupplygrowingtoreachover7Mtby2050,meetingover40%oftotalenergytransitiondemands.Butifmorecoppercouldberecoveredfromexistingsourcesandrecycledorre-used,incentivisedbyhighpricesand/orregulation,anevenhigherfractionoffuturedemandforcoppercouldbemetfromtheexistingstockofcopperinthewidereconomy.61Landeretal.(2021),Financialviabilityofbatteryrecycling.62Wangetal.(2018),CopperrecyclingflowmodelfortheUnitedStateseconomy;HagelükenandGoldmann(2022),Recyclingandcirculareconomy–towardsaclosedloopformetalsinemergingcleantechnologies.63HagelükenandGoldmann(2022),Recyclingandcirculareconomy–towardsaclosedloopformetalsinemergingcleantechnologies.64MPP(2022),Makingnet-zeroaluminiumpossible.65Bloomberg(2022),Thenextbigbatterymaterialsqueezeisoldbatteries.66CopperAlliance(2022),CopperRecycling.67Kaltetal.(2021),Materialstocksinglobalelectricityinfrastructures–Anempiricalanalysisofthepowersector’sstock-flow-servicenexus.MaterialandResourceRequirementsfortheEnergyTransition45BOXD:ThecurrentstatusofrecyclingCurrentrecyclingratesforsomeenergytransitionmaterialsarelow;recyclingLFPandLMObatteriesfacesstrongestchallengesEXHIBIT2.121Fora240Wh/kgbattery,andincludestransportation(startingintheUK),disassembly,recyclingcostsandrevenuesgeneratedfromresaleofmaterialsfrombothcellsandpacks.NCA=Nickel-Cobalt-Aluminium;NMC=Nickel-Manganese-Cobalt;LFP=Lithium-Iron-Phosphate;LMO=Lithium-Manganese-Oxide.Pyro=pyrometallurgy,aheat-basedextractionandpurificationprocess;Hydro=hydrometallurgy,aprocessthatinvolvesdissolvingandrecoveringmetalsinsolutions;Directbatteryrecyclinginvolvesshreddingabatterytoseparatecomponents,withoutbreakingdownthechemicalstructureofkeyactivematerialsintheanodeandcathode.SOURCE:SystemiqanalysisfortheETC;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;Landeretal.(2021),Financialviabilityofelectricvehiclelithium-ionbatteryrecycling.End-of-liferecyclingrateGlobalaverage,%Netbatteryrecyclingprofit1$/kWh-25-20-15-10-5051015202575SteelAluminiumCopperNickelSilverPlatinumandPalladiumCobaltSiliconGraphiteLithiumRareEarthElements70606060Largepotentialtoincreaserecyclingratesatend-of-life403010111ChinaPyroHydroDirectS.KoreaUSABelgiumUKNCANMC-622NMC-811LMOLFPNCANMC-622NMC-811LMOLFPNCANMC-622NMC-811LMOLFPNCANMC-622NMC-811LMOLFPNCANMC-622NMC-811LMOLFPMaterialandResourceRequirementsfortheEnergyTransition46Bythelate2040s[Exhibit2.14]:68•Over50%ofenergytransitiondemandcouldbemetbyrecycledsupplyforthreekeybatterymaterials:cobalt,graphiteandlithium.Thiswouldfollowfromamajorramp-upinend-of-lifecollection,withover80%ofbatteriesbeingcollectedatendoflifefrom2040onwards,andhighrecyclingratesof90%from2030onwards(85%forlithium).69•Inthecaseofcopperoraluminium,secondarysupplywouldbeabletomeet30–40%ofenergytransitiondemand–somewhatlower,butstillasignificantshare.Forbothmaterials,andespeciallyforcopper,thereisalsostrongpotentialtoexpandrecyclingfromothersourcesofdemand[BoxD].•Forothermaterials,suchassiliconorsteel,longtechnologylifetimes(e.g.,30yearsforasolarorwindfarm)meanthatvolumesofsecondarysupplyfromcleanenergytechnologieswouldremainlowevenin2050–butwithstrongpotentialinsubsequentyears.68Theseestimatesdonotaccountforpotentialsecondarysupplyfromnon-energytransitionsources–whichcouldincreasesignificantlyovercomingdecadesaswellfore.g.,copperoraluminium,butisoutofthescopeofthisreport.69CircularEconomyInitiativeDeutschland(202),Resource-efficiencybatterylifecycles.Improvelithiumrecyclingatend-of-lifefrom~1%currentlyto90%by2040.Improvenickelrecyclingatend-of-lifefrom~60%currentlyto90%by2040.Improvecobaltrecyclingatend-of-lifefrom~30%currentlyto90%by2040.Improvingcollectionatend-of-lifeacrossallcleanenergytechnologies,withaparticularfocusongridsbeingrepaired/replacedandonvehiclesatend-of-life.Increasingcopperrecyclingatend-of-lifefrom~60%currentlyto90%by2040.LithiumDriversofrecyclingCobaltNickelCopperIncreasecollectionofbatteriesatendoflife,reaching80/90%by2040/50.Expandbatteryrecyclingcapacitytohandle>1Mtofbatterymaterialsby2030,>5Mtby2050.Recycledsupplywillremainlowin2030,butcouldbesignificantfrom2040sonwardsEXHIBIT2.13NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheHighRecyclingscenarioassumesacceleratedprogressinrecyclingcleanenergytechnologiesandrecoveringmaterials.Secondarysupplyonlymeasuresthatfromcleanenergytechnologies.SOURCE:SystemiqanalysisfortheETC.AnnualenergytransitiondemandandsecondarysupplyThousandmetrictonnes0202220302040205020222030204020502022203020402050202220302040205020040000050001000015000200002500030000100020003000400050001002003004006008001000BaselineenergytransitiondemandEnergytransitiondemand(BaselineDecarbonisationscenario)AdditionalsecondarysupplyinHighRecyclingSecondarysupplyinbaselineSecondarySupply(BaselineDecarbonisationscenario)SecondarySupply(HighRecyclingscenario)MaterialandResourceRequirementsfortheEnergyTransition47By2050,itsplausiblethatthemajorityofnewdemandrequirementsfromcleanenergytechnologiescouldbemetthroughsecondarysupply[Exhibit2.14].However,strongactionisrequiredthroughoutthe2020stoensurethatpolicy,incentivesandinfrastructureareinplacetoscale-uptheroleofrecyclingsignificantlyincomingdecades–especiallyforbatteries[BoxE].TheseactionsarediscussedinSection2.5below.Withimprovingpolicies,logisticsandinfrastructure,recyclinghasthepotentialtoservelargesharesofkeymaterialrequirementsby2050EXHIBIT2.14NOTE:Uraniumisnotincludedduetothestronguncertaintyaroundscaleoffutureuseofrecycledfuelinnuclearreactorsanduncertaintyaroundrecyclingrates.TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheHighRecyclingscenarioassumesacceleratedprogressinrecyclingcleanenergytechnologiesandrecoveringmaterials.SOURCE:SystemiqanalysisfortheETC.Averageshareofannualmaterialsdemandfortheenergytransitionthatcouldbemetbysecondarysupply(HighRecyclingscenario),2050%Cobalt807060484545403030151010GraphiteLithiumNickelCopperNeodymiumPlatinumAluminiumPalladiumSteelSilverSiliconForsomematerialsover50%ofdemandfromcleanenergytechnologiescouldbemetbyrecycledsecondarysupplyin2050.Forsilver,steel,silicon,materialsareoften‘lockedin’tosolarPVandwindfarmswhichhavelifetimesof>30years.Thuslowvolumesareavailableforrecyclingevenby2050,butmorewouldlikelybeavailableinfollowingyears.CriteriaforpolicyinterventiontosupportrecyclingWheresignificantsupplyshortagesarelikely.Whererecyclingcanreduceenvironmentalimpactssignificantlyrelativetomining.Wherelandfillisnotappropriate(e.g.duetoriskoftoxicwaste).��ActionstoscalerecyclingCreateamarketforsecondarymaterials,viaregulationorincentives.Increaseratesofwastecollectionatend-of-life.Improvedesigntomakerecyclingeasier.Increaseefficiency/yieldofrecyclingprocesses.��MaterialandResourceRequirementsfortheEnergyTransition48BoxE:Theimportanceofrecycling–ofbatteriesinparticularTheimportanceandprevalenceofrecyclingacrosscleanenergytechnologieswilldependonrecoverablematerialvalue,availablelogisticsandinfrastructure,andcosts.Forwindturbinesandsolarpanels,large-scalerecyclingisfeasibleandshouldbestronglyencouraged–butlandfillvolumeswouldbesmallandmanageableevenifwidespreadrecyclingwerenoteconomic:•Inthecaseofwindturbines,upto90%ofawindturbine’smasscanberecycled(excludingtheconcretebase),andthereareestablishedrecyclingsystemsforthefoundation,towerandpartsofthenacelle.70Thekeychallengeremainsrecyclingofturbineblades,butevenhereinnovationistakingplacetousenewadvancedcompositesthatcanbemoreeasilyrecycled.71Similarlyforsolarpanels,over90%ofmaterialscanberecoveredandrecycledorre-usedinothersectors.72•Evenifnorecyclingtookplace,however,themassofsolarpanelmaterialsreachingend-of-lifein2050wouldbearound20milliontonnesofwasteglobally.73Forwind,by2050therewouldbejust100,000tonnesofwindturbinebladesreachingend-of-life.Suchwasteshouldideallyre-usedorrecycled,butifitwasplacedinlandfillthetotalmasswouldbelowandmanageablecomparedwitharound200milliontonnesofmetalsandglasswasteproducedcurrently,andtotalglobalwasteproductionofupto3.4billiontonnesby2050.74Forbatteriesthepictureisdifferent.Theobjectiveshouldbecloseto100%re-useorrecycling,giventhehighcostofprimarymineralinputs,thepotentialforsupplybottleneckstoconstraindemandgrowth,andthesignificantenvironmentalimpactsofmining–challengeswhicharemuchlowerforsolarandwind.Closetototalrecyclingisalreadytechnicallyfeasible,andthehighcostofprimarymineralscreatesstrongeconomicincentivesforittobedeployed.InthecaseofNMCbatteries(whichincludecobaltandnickelaswellaslithium)extensiverecyclingwouldoccurevenwithoutregulation;bycontrastLFPbatteries(whereonlythelithiumishighlyvaluable),mightnotbefullyrecycledwithoutstrongregulation.75StrongpublicpolicyshouldthereforerequirethatEVbatteriesareeitherre-usedinstationarystorageapplicationsoralmostentirelyrecycled.PoliciesalreadyinplaceandneededtoachievethisarediscussedinChapter2,Section2.5.3.2.3.3CombinedeffectofefficiencyandrecyclingCombiningefficiencyandrecyclingcouldseedemandforprimarymaterialsextractionfallby20%(silver)toupto80%insomecases(cobalt).Exhibit2.15setsoutprojecteddemandundertheMaximumEfficiencyandRecyclingscenario.ComparedwiththeBaselineDecarbonisationscenario[Exhibit2.4],thisresultsinreductionsincumulativeprimarydemandfromtheenergytransition,asshowninExhibit2.16,of:•Demandforprimarysteeldownnearly30%,foraluminiumdown25%,andforcopperdown40%.•Forbatterymaterials,shorterbatterylifetimesandalargepotentialincreaseinend-of-liferecycling(fromnear-zerolevels)meanreductionsinprimarydemandcouldbeverylarge:primarycobaltdemandfallsbynearly80%,nickeldemandfallsbynearly60%,lithium55%,andgraphitenearly50%.•Arangeofreductionsfrom20%to60%forotherenergytransitionmaterials.Asanexample,Exhibit2.17setsoutthepotentialprimarydemandreductionfornickelacrossthedifferentefficiencyandrecyclingleversincludedinthisstudy.Cumulativeprimarydemandtosupporttheenergytransitioncouldfallbyover50%,cuttingtotalprimarynickeldemandby30%.Thesereductionsderiveprimarilyfromashifttonickel-freebatterychemistries,smallerbatteries,improvementsinbatteryenergydensity,andincreasedrecycling.(Similaranalysisisavailableforcobalt,copper,graphite,lithiumandneodymiuminouraccompanyingMaterialFactsheets.)70WindEurope(2020),Acceleratingwindturbinebladecircularity.71Ibid.72Heathetal.(2020),Researchanddevelopmentprioritiesforsiliconphotovoltaicmodulerecyclingtosupportacirculareconomy;Engie(2021),Howaresolarpanelsrecycled?73Forwind,assuming100GWreachend-of-life,anaverageturbinecapacityof10MW,andanaveragemassofaround3.5tonnesperwindturbineblades.Forsolar,assumingaround200GWofsolarreachingend-of-life,andamaterialmassintensityofaround100t/MW(excludingconcrete).SystemiqanalysisfortheETC,basedonWindEurope(2020),Acceleratingwindturbinebladecircularity;Heathetal.(2020),Researchanddevelopmentprioritiesforsiliconphotovoltaicmodulerecyclingtosupportacirculareconomy;Carraraetal./EUJRC(2020),RawmaterialsdemandforwindandsolarPVtechnologiesinthetransitiontowardsadecarbonizedenergysystem.74WorldBank(2018),Trendsinsolidwastemanagement.75Landeretal.(2021),Financialviabilityofelectricvehiclelithium-ionbatteryrecycling.MaterialandResourceRequirementsfortheEnergyTransition49Supply-SecondarySupply-Secondary(fromEnergyTransition)MaximumEfficiencyandRecycling:AnnualmaterialdemandandsupplyEXHIBIT2.15Aluminium1(Millionmetrictonnes)Cobalt2(Thousandmetrictonnes)110110120120135135145160155Copper3(Millionmetrictonnes)GraphiteAnodes4(Millionmetrictonnes)Lithium5(Thousandmetrictonnes)Neodymium6(Thousandmetrictonnes)Steel11(Billionmetrictonnes)Uranium12(Thousandmetrictonnes)20222050202520302040Nickel7(Millionmetrictonnes)Platinum&Palladium8(Thousandmetrictonnes)Polysilicon9(Millionmetrictonnes)Silver10(Thousandmetrictonnes)155165170215215275260280305335202220502025203020402702022205020252030204023252631353538454642202220502025203020400.51.12.43.66.64.45.24.24.35.1202220502025203020401101252703206005556055405605452022205020252030204040505565909095100110105202220502025203020402.93.33.34.84.04.74.85.35.35.2202220502025203020400.490.460.260.270.290.290.29PalladiumPlatinumSupplyforecastnotavailable0.70.91.32.41.32.41.41.31.3202220502025203020401.435313832383440444420222050202520302040442.02.02.12.12.22.22.22.42.5202220502025203020402.355656085701007065602022205020252030204080SOURCE:¹Non-energydemandandsecondarysupplyfromMissionPossiblePartnership/InternationalAluminiumInstitute,primarysupplyfromBNEF(2023),Transitionmetalsoutlook;2Non-energydemandfromIEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions,supplyfromBNEF(2022),2HBatteryMetalsOutlook;3Non-energydemandfromBNEF(2022),GlobalCopperOutlook,primarysupplyfromBNEF(2023),Transitionmetalsoutlook,secondarysupplyfromnon-energytransitionisassumedtobe10%ofprimarysupply;4SupplyfromBNEF(2022),2HBatteryMetalsOutlook;5SourcessameasforLithium;6Non-energydemandfromIEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions,supplyestimatedassumingCAGRinREOproductionfrom2010–21continuesto2030,withneodymiummakingup17%totalsupply;7Non-energydemandandsupplyfromBNEF(2023),Transitionmetalsoutlook;8Non-energydemandmodelledfromphase-outofICEcars,addingothersectordemand,followingBNEF(2021),2HHydrogenMarketOutlook;9SupplyfromBNEF(2023),1QGlobalPVMarketOutlook;10Non-energydemandandsupplyfromSilverInstitute(2022),WorldSilverSurvey,extrapolatedto2050/30;11Non-energydemandandprimary/secondarysupplyfromMissionPossiblePartnership;12SupplyfromWorldNuclearAssociation(2021),TheNuclearFuelReport:ExpandedSummary.EnergyTransitionDemandNon-EnergyTransitionDemandEstimatedsupply-PrimaryMaterialandResourceRequirementsfortheEnergyTransition50Efficiencyandrecyclingcanreduceprimarymaterialrequirementssignificantly–butmoreinnovationandpolicyisneededEXHIBIT2.16NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingofcleanenergytechnologies/materials,therebyreducingrequirementsfortheprimary(i.e.,mined)supplyofmaterials.SOURCE:SystemiqanalysisfortheETC.Cumulativeprimarydemandfromtheenergytransition2022–50Millionmetrictonnes(allmaterialsexceptplatinumandpalladium);Thousandmetrictonnes(platinumandpalladium)BaselineDecarbonisationMaximumEfficiencyandRecyclingIndustrialMaterialsBatteryMaterialsOtherEnergyTransitionMaterialsInnovationandefficiencyimprovementsarestrongestdriversofreductionsinsilicon,silverandPGMneedsinsolarandelectrolysers.Innovationtoreducematerialsintensityandstrongpotentialforbatteryrecyclingleadtolargereductionsinprimarymaterials.Highwindandsolarcapacitylowerinstallationsandmaterialrequirements.Mt5,0004,5004,0003,5003,0002,5002,0001,5001,000500Steel3,4006007904,7000Aluminium-30%-25%300525Copper-40%Mt175150125100755025Graphite8040801600Nickel-50%-50%16Cobalt-80%820Lithium-60%kt2,52,01,51,00,5PlatinumandPalladium1.02.40-60%Mt755025Silicon40650-40%NeodymiumUranium1.02.5-60%1.02.0-50%Silver0.290.36-20%51MaterialandResourceRequirementsfortheEnergyTransitionExample:primarydemandfornickelcanbereducedbynewbatterychemistries,reducingnickelintensityofalkalineelectrolysers,andmorerecyclingEXHIBIT2.17NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheHighEfficiencyScenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,whiletheHighRecyclingScenarioassumesmuchgreaterrecyclingofcleanenergytechnologies.TheMaximumEfficiencyandRecyclingscenariobringstheassumptionsinHighEfficiencyandHighRecyclingtogether.SOURCE:SystemiqanalysisfortheETC;USGeologicalSurvey(2023),Mineralcommoditysummaries.Nickelcumulativeprimarydemand2022–50,reductionsduetoefficiencyandrecyclinglevers,andresourcesandreservesMillionmetrictonsHighEfficiencyHighRecyclingBaselineDecarbonisationPrimaryDemand170Non-EnergyTransitionDemand71120126120100300MaterialsEfficiencyandSubstitutionTechPerformanceandManagementTechSubstitutionImprovingscrapmanagementImprovingend-of-liferecyclingratesImprovingrecyclingprocessefficiencyMaximumEfficiencyandRecyclingPrimaryDemandReservesResources-30%MaindriverisafasterswitchtoLFPbatterieswithnonickel.Loweradditionalpotentialforrecyclingduetoreasonablyhighexistingrecyclingrates.Reserveswillstillneedtoexpand,butefficiencyandrecyclingsignificantlyreducebyhowmuch.2.3.4FurtherpotentialdemandreductionsthroughenergyproductivityAdditionally,thereislikelytobesignificantpotentialtofurtherreducefuturematerialdemandsthroughactionswhichgobeyondtechnologicalinnovation,materialefficiencyandrecycling,byimprovingtheefficiencyofenergy(e.g.byreducingelectricitydemandthroughapplianceefficiency)andserviceconsumption(e.g.byshiftingmorejourneystosharedpublictransportation).TheETCarecoveringthisquestionindetailincomingmonths,butearlieranalysissuggestedthatfinalenergydemandin2050couldbereducedbyupto30%.76Someofthebiggestpotentialopportunities,whichtheETCisinvestigatingthisyear,include:•Thepotentialtogreatlyimproveenergyefficiencyofbothexistingbuildingstock(e.g.,retrofitstoimproveinsulationandthereplacementofgasboilerswithheatpumps)andnewbuilds(e.g.,throughmaterialsefficiency).•Shiftsinconsumerbehaviour(e.g.,carsharing,publictransportation)andbetterurbandesigncanlowerindividualpassengervehicleownership.•Variousinvestmentsacrosstheindustrialsectorstoelectrify,developenergy/heatstoragesolutions,andimprovetheenergyefficiencyofmotors,machineryandequipment.76Finalenergydemandcouldrangefromaround495EJin2050,downtoaround355EJifstrongactionsistakentoimproveenergyproductivity.ETC(2020),Makingmissionpossible.TheETC’sdetailedreportonenergyproductivityisforthcominginQ12024.MaterialandResourceRequirementsfortheEnergyTransition52Toillustratethepotentialimpactonmaterials,ifthetotalfleetofEVscouldbereducedbyaround10%in2050(toaround1.3billionvehicles),thiscouldreducecumulativelithiumdemandto2050from22Mtdowntoaround20Mt–havingknock-onimpactsonannualdemand-supplygaps,totallife-cycleemissionsofmaterialextraction,andanylocalenvironmentalimpacts.Clearly,ifsuchactionsweretakentherecouldbefurtherdecreasesinmaterialsdemandfromcleanenergytechnologies,beyondtheefficiencyandrecyclingmeasuresoutlinedhere.ThepotentialforenergyproductivitywillbecoveredinanupcomingETCreport.2.4ReservesandsupplygapswithefficiencyandrecyclingimprovementsIftherawmaterialdemandreductionspotentiallyavailablefromgreatermaterialsandtechnologyefficiencyandincreasedrecyclingcanbeachieved,thiswillimproveboththerelationshipbetween:•Cumulativepotentialdemandandknownreserves.•Thebalancebetweenlikelydemandandplannedsupplyinthenextdecade.Yetevenwithmaximumpotentialdemandreductions,asignificantexpansionofsupplywillbeessentialforsomekeymaterials.2.4.1ImpactonreserveadequacyChapter1comparedcurrentlyassessedreservesandresourcesversuscumulativepotentialdemandundertheBaselineDecarbonisationscenario.Exhibit2.18showstheimpactofachievingtheMaximumEfficiencyandRecyclingscenarioonreservescarcity,andidentifiesthreegroupsofmaterials:•Noreservescarcityconcerns:whereevenundertheBaselineDecarbonisationscenario,cumulativeprimarymaterialsdemandiswellbelowcurrentlyestimatedreserves.Thisgroupincludesaluminium,neodymium,steel,uraniumandothers.•Significantdemandreductiontobelowcurrentreserves:Theseincludelithiumandcobalt,whereundertheBaselineDecarbonisationscenario,cumulativedemandwaseitherclosetoreserves(lithium)orsignificantlyinexcess(cobalt),butwhereimprovedefficiency,materialsubstitution(e.g.,cobalt-freebatteries)andrecyclingcanreduceprimarydemandwellbelowreserves.•Demandreductionbutstillexceedingcurrentreserves:Thisgroupincludescopper,nickelandsilverwherecumulativedemandwouldstillexceedcurrentlyassessedreservesevenwithstrongactiononefficiencyandrecycling.Thisimpliesincreasedexplorationordevelopmentisneededtodriveanexpansioninexploitablereserves–oramajorexpansioninefficiencyandrecyclingbeyondwhatisexpected.53MaterialandResourceRequirementsfortheEnergyTransitionEfficiencyandrecyclingleverscanmitigatetotalresourcerequirementsforlithiumandcobalt,butreserveswouldstillneedtoexpandforcopper,nickelandsilverEXHIBIT2.181Graphitereserves/resourcesrefertonaturalgraphite,donotincludesyntheticgraphite.NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingcleanenergytechnologies,therebyreducingrequirementsfortheprimary(i.e.,mined)supplyofmaterials.Reservesarethecurrentlyeconomicallyandtechnicallyextractablesubsetofestimatedtotalglobalresourcesintheearth’scrust.SOURCE:SystemiqanalysisfortheETC.Cumulativeprimarydemand2022–50,asapercentageofknownreserves%NoreservescarcityconcernsBaselineDecarbonisationEfficiencyandrecyclingreducerequirementstosignificantlybelowreservesEfficiencyandrecyclingarenotenoughtoreduceprimaryrequirements–reserveswillneedtoexpandMaximumEfficiencyandRecyclingAluminium(Bauxite)353050503016142725402080140851301701901801201054025Graphiteanodes1NeodymiumPalladium/PlatinumSteel(Iron)UraniumLithiumCobaltCopperNickelSilverCurrentlyestimatedreserves050100150200250Althoughfuturesilverdemandisverylarge,>80%ofthisisdrivenbynon-energydemand(industry,jewellery,investment)2.4.2Impactonsupplygapsto2030Exhibit2.15showshowtheMaximumEfficiencyandRecyclingscenariocompareswithplannedsupplygrowthto2030forallmaterials.Exhibit2.19focusesonthesupply/demandbalancein2030forthesixkeymaterialswhicharelikelytofacesignificantsupplyconstraintsintheBaselineDecarbonisationscenario.Inthecaseofnickelandcopper,strongactiontoreducetotaldemandformaterials,coupledwithasmallincreaseinsecondarysupplyfromenergytransitiontechnologies,couldleadtoacompleteclosureoftheprojectedsupplygapsin2030.However,theremaystillbeshortagesforsupplyofhigh-puritynickelsulphate,thekeyrefinedinputforbatterycathodes[BoxF].However,supplygapswouldremainforgraphite,lithium,cobaltandneodymium:•Inthecaseofgraphite,therisksassociatedwithsupplygapsissomewhatlower,asproductionofsyntheticgraphite(alongsidenaturalgraphite,whichismined)canrampupquitequickly.•Forneodymium,thepotentialsupplygapissmallandthereisincreasedpotentialforelectricvehiclesandwindturbinestoshifttoentirelyrare-earthfreemotors,althoughthesewouldrequireaccelerateddevelopment.7777Seee.g.USDepartmentofEnergy(2019),Advancedwindturbinedrivetraintrendsandopportunities;AdamasIntelligence(2023),Implications:Teslaannouncesnextgenerationrare-earth-freePMSM.MaterialandResourceRequirementsfortheEnergyTransition54•Forcobalt,thereremainsomeuncertaintiesaroundfuturesupplyfromtheDRC,whichhasledtodownwardrevisionsinsupplyprojectionsoverthepastyear.78However,thereisalsostrongpotentialsupplyexpansionfromIndonesiawhichcouldhelpclosesupplygapsfurther,andthereisstrongpotentialtoreducefuturedemandbyshiftingtolow-cobaltandcobalt-freebatterychemistries–potentiallygoingevenfurtherthanillustratedhere.79•Forlithium,substitutionanddemandreduction(frome.g.,shiftingtosmallerbatteriesandthegrowthofsodium-ion(Na-ion)chemistries)beyondthelevelsintheMaximumEfficiencyandRecyclingscenariowillbechallenging.Existingminedsupplypipelineswillneedtoexpandevenfurtherthancurrentlevelsofupto510ktperannumby2030,80withagreaternumberofprojectsneedingtoreachfinalinvestmentdecisionsinthecomingyears.Therecouldalsobeshortagesofrefinedlithiumhydroxide/carbonate[BoxF].78BNEF(2022),2HBatterymetalsoutlook.79Mining.com(2023),Indonesiaemergesasacobaltpowerhouseamidsurgeindemand.80BNEF(2022),2HBatterymetalsoutlook.Strongactiononinnovation,efficiencyandrecyclingtogethercanclosesupplygapsentirelyfornickelandcopper–butrisksremainforseveralenergytransitionmetalsEXHIBIT2.19Annualdemandandsupplyin2030(BaselineDecarbonisationvs.MaximumEfficiencyandRecyclingscenarios)MillionmetrictonnesNOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingcleanenergytechnologies,therebyreducingrequirementsforprimarymaterials.1Supplyonlyshownfornaturalgraphite–itislikelythatsyntheticgraphitecouldclosemostoftheremainingsupplygap.SOURCEFORENERGYTRANSITIONDEMAND:SYSTEMIQanalysisfortheETC.SOURCEFORNON-ENERGYTRANSITIONDEMAND:Copper–BNEF(2022),Globalcopperoutlook;Nickel–BNEF(2023),Transitionmetalsoutlook,Lithium,Cobalt,Neodymium–IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.SOURCEFORPRIMARYSUPPLY:Copper,Nickel–BNEF(2023),Transitionmetalsoutlook,andassumingrecycledcopperfromnon-energytransitionsourcesis10%ofprimarysupply;GraphiteAnodes,Lithium,Cobalt–BNEF(2022),2HBatterymetalsoutlook;Neodymium–estimatedassumingcontinuedCAGRinrareearthoxideproductionfrom2010–21,throughto2030,withneodymiummakingup17%oftotalsupply.RecycledsupplyfromenergytransitionEnergyTransitionDemand–BaselineNon-EnergyTransitionDemandEstimatedminesupplySupply–Secondary(fromothersources)EnergyTransitionDemand–MaximumEfficiencyandRecyclingGraphiteAnodes1CobaltLithiumNeodymiumNickelCopperProjectedsupplygapsclosed20222030ReductionintotaldemandduetoefficiencyIncreaseinrecycling,reducingprimarydemand1.17.06.63.8-40%202220300.170.430.270.25-5%202220300.120.770.600.51-10%202220303.35.84.04.6+20%2022203025403534+1%202220300.050.120.090.09-5%MaterialandResourceRequirementsfortheEnergyTransition55BOXF:Supplyofrefinedvs.minedmaterialsThischapterhasdiscussedend-usematerialrequirementsforcleanenergytechnologiesandcomparedthemtoexpectedsupplyoftherelevantmaterials.Typicallysomeamountofprocessingand/orrefiningisrequiredtogofromminedproductstoend-usematerials.Forexample:•Steel:Inmostcases,ironoreisminedandconvertedintopigironinablastfurnace(insomecases,spongeironisproduced);therearethenvariousstagesofprimaryandsecondarysteelmaking,whereimpuritiesareremovedfromtheironandotherelementsareaddedtocreatesteelofthedesiredcomposition.Typically,twotonnesofironoreareneededtoproduceoronetonneofironorsteel.Inthisreportwecomparedemandandsupplyforsteel,notironore.•Aluminium:Bauxiteismined;thisisthenrefinedintoalumina(Al2O3),whichisthensmeltedtoproducealuminium.Typically,fourtonnesofbauxitecontaintwotonnesofalumina,neededtoproduceonetonneofaluminium.Inthisreportwecomparedemandandsupplyofaluminium,notbauxite.•Lithium:Lithiumcanbeextractedfrombrinesorminedinhardrockores.Dependingontheextractionmethod,variousstagesoftreatmentandpurificationarecarriedout,withlithiumrefineriescreatingveryhigh-puritylithiumhydroxideorlithiumcarbonateforuseinbatteries.Whenminedfromhardrocksuchasspodumene,around170tonnesofspodumeneareneededtoproduceonetonneoflithium,andlithiumcarbonatecontainsaround19%purelithium.Inthisreportwecomparedemandofpurelithiumcontainedinend-products(batteries)withminedsupplyoflithium.•NickelorCobalt:Bothnickelandcobaltareminedinaspartofores,withcobaltbeingco-producedalongsideeithercopperornickel.Applicationofbothmetalsinsteelalloyscanmakeuseoftheirmetallicforms,butbothmaterialsneedtoberefinedintohigh-puritycobalt/nickelsulphatetothenbeusedinbatterycathodes.Inthisreportwecomparedemandofpurenickel/cobaltcontainedinend-products(batteries,windturbines)withminedsupplyofnickel/cobalt.Therearenoconcernsaroundintermediatesupplyfore.g.,steeloraluminium,wherecapacityissignificantandtheenergytransitionwilldriveasmallshareofdemand.However,thereareconcernsthatcapacityforrefinedsupplyofbothlithiumcarbonate/hydroxideandnickelsulphatecould,ontopofminedsupply,alsobeinsufficienttomeetrapidlygrowingdemandfrombatteries[Exhibit2.20].However,themuchfastertimescalesinvolvedinexpandingrefiningcapacity[discussedbelow,seeExhibit3.4]meanthatclosingsupplygapsforrefinedmaterialsshouldbemorefeasiblethangapsinminedsupply.56MaterialandResourceRequirementsfortheEnergyTransitionGlobalcapacitytoproducerefined,high-puritynickelcouldbeaconcernbeyondprimaryminedsupply;forlithiumandcobaltbottlenecksaremorelikelyatminesiteEXHIBIT2.20NOTE:theETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingcleanenergytechnologies,therebyreducingrequirementsforprimarymaterials.SOURCEFORENERGYTRANSITIONDEMAND:SYSTEMIQanalysisfortheETC.SOURCEFORNON-ENERGYTRANSITIONDEMAND:Nickel–BNEF(2023),Transitionmetalsoutlook,Lithium,Cobalt–IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.SOURCEFORPRIMARYSUPPLY:Nickel–BNEF(2023),Transitionmetalsoutlook;Lithium,Cobalt–BNEF(2022),2HBatterymetalsoutlook.SOURCEFORREFINEDSUPPLY:BNEF(2022),2HBatterymetalsoutlook,forlithiumcarbonate/hydroxide,cobaltsulphate,andnickelsulphate.Minedvs.refinedsupplyforkeybatterymaterialsin2030ThousandmetrictonnesofcontainedmetalLithium:BottlenecksforbothminedandrefinedsupplyNickel:RefinedsupplycouldbeinsufficientCobalt:RefinedsupplycapacityeasilyexceedsminedsupplyNon-EnergyTransitionDemandPrimaryDemand-UpperBound7605605105354202602453355,5003,8504,6001,300PrimaryDemand-LowerBoundEstimatedMinedSupplyRefinedSupplyCapacityPrimaryDemand-UpperBoundPrimaryDemand-LowerBoundEstimatedMinedSupplyRefinedSupplyCapacityCobaltSulphateLithiumCarbonateNickelSulphateLithiumHydroxidePrimaryDemand-UpperBoundPrimaryDemand-LowerBoundEstimatedMinedSupplyRefinedSupplyCapacityEnergyTransitionDemand-BaselineEnergyTransitionDemand–Max.EfficiencyandRecyclingSupplyDemandfornickelspansbothhigh-purityrefinednickelforbatteries(blue),andmetallicnickelfore.g.steelalloys(grey).RefinedsupplyofnickelsulphatecouldbewellbelowdemandforrefinednickelinEVbatteries.MaterialandResourceRequirementsfortheEnergyTransition572.4.3Thesupplyscale-upchallengeEvenwithMaximumEfficiencyandRecycling,therewillbeagapbetween2030demandandcurrentlyplannedsupplyforsomematerials,andifMaximumEfficiencyandRecyclingisnotachieved,thesegapswillbelargerandmorewidespread.Significantincreasesinprimarysupplyarethereforeessential–theenergytransitionwillrequireanexpansioninmetalsmining.Together,theanalysissuggeststhatsixkeymaterialsposethegreatestriskstotheenergytransitionbecauseofpossibleshortagesofsupply[Exhibit2.21]:•Copper:Minedoutputwouldneedtorisefromaround22Mtuptoatleast30Mtin2030.Therearearangeofprojectsthathavecompletedearlierdevelopmentstagesandcouldbeginproductionsoon(e.g.,LaGranja,Resolution)butmorearelikelytoberequired.81Achievingsuchanincreasewillbechallengingdueto:longtimescalesforminestocomeonline,decliningproductionfromexistingmines,decliningoregrades,anddisruptedsupplyfromdroughtandlocalunrestinSouthAmerica.82Furtherrisksexistduetothewidespreadneedforcopper,whichmeansthatstrongactiononefficiencyandrecyclingwouldneedtotakeplaceacrossallcleanenergysectorsinordertohavethesignificantimpactsinourMaximumEfficiencyandRecyclingscenario.However,theremayalsobefurtherpotentialforthrifting,efficiencyandexpandedrecycledsupplyfromnon-energytransitionsectors–reducingpotentialsupplygaps.•Lithium:Minedoutputwouldneedtoincreasefrom120ktuptopotentiallyover750ktatmostin2030.Currentsupplyforecastsreach510kt,83soafurtherexpansionbeyondwhatiscurrentlyplannedwouldberequired–likelyfrombothhardrockmininginAustraliaandChina,frombrinesinSouthAmerica,andmaybenewdirectlithiumextractionapproaches.Newminingprojectshavetendedtobeginproductionfasterthanothercommodities,84raisingsomehopethatthisexpansioncantakeplacerapidly.Supplyofhigh-purityrefinedlithiumcarbonate/hydroxidecouldalsobeaconcern[BoxF].•Nickel:Minedoutputwouldneedtoincreasefrom3.3Mttoatleast3.5Mtby2030,butpotentiallyuptoover5Mt.Suchanincreaseshouldbefeasible,especiallygiventherapidexpansioninsupplyfromIndonesiainrecentyears.Therecouldalsobepotentialtoshiftdemandawayfromthesteelsector,easingpotentialsupplyconstraints.However,supplyofhigherqualityrefinedclass1nickel,andbattery-gradenickelsulphate,couldbechallenging[BoxF].85•Cobalt:Supplymayonlyneedtoexpandslightly,from220ktupto260kt,althoughthereisawiderangeofpotentialdemandin2030.MostfuturesupplywouldcomefromDRC,whichposesrisksduetoongoingdisruptionsineasternregions,althoughadditionalsupplymayalsocomefromAustralia,CanadaandIndonesia.•Graphite:Supplyofnaturalgraphitemayneedtoexpandfrom1.1Mtuptoover4Mt.MostexistingsupplyofnaturalgraphitecomesfromChina,buttherearealargenumberofnewprojectsplannedacrosstheUSAandEastAfrica.86However,thereisalsostrongpotentialtoexpandsyntheticgraphiteproductionquiterapidly,helpingtoclosethesupplygapsoutlinedhere–andprovidingsomeuncertaintyaroundthescaleofexpansionrequiredfornaturalgraphite.•Neodymium:Supplyofneodymiummayneedtoexpandfromcurrentlevelsofaround50ktupto90ktin2030.Thisshouldbefeasible,withlargeexpansionsinsupplyexpectedinChina(thelargestcurrentsupplier),aswellasMyanmar,AustraliaandtheUSA.Fornickel,neodymium,cobaltandgraphite,thereisbothscopeforasignificantincreaseinsupply,andalsofordemandtoshiftawayfromthesematerials,incentivisedbyhighprices.However,inthecaseofcopperandlithium,thereisarealriskthatrapidgrowthindemandoutpacesprojectedincreasesinsupply–whichwouldleadtotightmarketsandhighpricesthroughto2030.81Seee.g.,BNEF(2022),Globalcopperoutlook2022-40;S&PGlobal(2022),Thefutureofcopper.82Ibid.83BNEF(2022),2HBatterymetalsoutlook.84IEA(2023),Energytechnologyperspectives;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.85BNEF(2022),2HBatterymetalsoutlook.86S&PGlobal(2022),Feature:Moreprojectsneededgloballytocombatfuturegraphitedeficit.MaterialandResourceRequirementsfortheEnergyTransition58Markettightnessislikelythroughto2030formanymaterials;Lithiumposesbiggestchallengeforscale-up;StrongactiononefficiencyandrecyclingcanreducerisksEXHIBIT2.21SOURCE:SYSTEMIQanalysisfortheETC.NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingcleanenergytechnologies/materials.LowriskLow-MidriskMid-HighriskHighriskMaterialAluminiumCobaltCopperGraphiteAnodesLithiumNeodymium(REEs)NickelPalladiumandPlatinumPolysiliconSilverSteelUraniumBaselineDecarbonisationHighEfficiencyandRecyclingShort-termscale-upriskShort-termscale-upriskLong-termscale-upriskKeyConsiderations•Expansionindemandandsupplythroughto2030isinlinewithexpansioninlastdecade.•Requiredsupplyexpansionislarge,uncertaintyoversupplyfromDRC(supplies~70%ofmarket).•Demandmitigationrequiresfastshiftawayfromcobalt-richbatteries–seenasplausible.•Innovationlevershavelessimpactduetowidespreadneedforcopper–hardtosubstituteawaydemand,butpotentialtoexpandroleofrecyclingfromenergytechnologiesandnon-energysectors.•Verylongtimescalesfornewprojectstocomeonline(upto20years),increasingexistingpipelineischallenging.•Verylargeshort-termrampupduetoBEVs,andcompetitionwithelectrodesforsteelassectordecarbonises.•Syntheticgraphiteproductioncanrampupquicklytoclosesupplygaps,butrequiresfossilfuelinputs.•VerylargedemandriseduetoBEVs;lithiumisverydifficulttosubstitute(Na-ionanoptionoverlong-term).•Largesupplyexpansionrequiredbeyondexistingpipelinebutnewprojectshavebegunproductionfasterthanforothercommodities,newminingtechnologiesindevelopment.•LargedemandrisefromBEVsandwindturbines,butlargereductionsinmaterialintensitypossible.•SupplyexpansionlikelytobeheavilyconcentratedinChina,butsupplygrowthalsoinUSA,Australia,Myanmar.•ProductionhasexpandedquicklyinIndonesiainrecentyears,butClass1nickelsupplyischallenging.•Demandmitigationrequiresfastshiftawayfromnickel-richbatteries.•Mid-streamsupplygapforrefinednickelsulphateisalsoaconcern.•RiseindemandfromelectrolysersandfuelcellsismorethanoffsetbyfallingdemandfromICEcatalysts.•ReducingrequirementsfromelectrolyserswouldneedfastadoptionofAlkaline/AEMelectrolysers.•Productioncapacityrespondstopricesignalsandexpandsveryquickly(1–2years).•Largeshareofcurrentpolysiliconproductionplantswillneedreplacingincomingyears,butthisisseenasfeasible.•DemandfromsolarPVmakesup>10%ofmarket,butlong-termdemandisfromindustry,jewellery,investments.•Potentialtoshiftdemandawayfromothersectorsand/orincreasesilverrecycling.•Expansionovernextdecadeissignificantlylessthanduringcommoditysuper-cycleofearly2000s.•Demandishighlydependentontypeofnuclearpowerplantsbeingdeveloped,andabilitytorecycleandre-usespenturaniumnuclearfuelrods.Long-termscale-upriskMaterialandResourceRequirementsfortheEnergyTransition59Productionfromindividualmineswilldependonarangeoffactors,withthreekeydeterminantsbeingcommodityprices,87costsofoperations,andlocalexogenousfactorssuchasdroughtorsocialunrest.88Expandingsupplycancomefromavarietyofsources,dependingonthematerial:•Investinginnewgreenfieldprojectstoaccessnewresources,potentiallymakinguseofnewtechnologiesandinnovations.•Increasedproductionfromexistingminesthroughhigherutilisationrates.•Brownfieldexpansionsonexistingmineleases.•Re-processingoftailingstoextractpreviouslyun-economicalresourcesordevelopingnewtechnologiesforextraction–asdiscussedinChapter3.Butifalladditionalsupplyweresourcedfromnewmineprojects,thiswouldrequireabout145–245newminesacrossthefivekeyenergytransitionmaterials[Exhibit2.22].89Chapters3discussesthechallengesinvolvedinscalingsupplyandconsiderstheimplicationsofsecurityofsupplyconcerns.Chapter4thenconsiderslocalenvironmentalimpactsarisingfrommining.87Seee.g.,CharteredInstituteofProcurementandSupply(2023),Plummetingcobaltpricesshows‘disconnectbetweensupplychainplannersandbuyers’.88Seee.g.,FinancialTimes(2023),Peruunrestthreatenscoppersupply.89Estimatedbasedonincreaseinprimarydemandto2030andaveragemineoutputsof:Copper–300ktp.a.;Nickel–40ktp.a.;Lithium–10ktp.a.;Cobalt–10ktp.a.;NaturalGraphite–50ktp.a.Thescale-upinresourceusecouldmeanincreasedoutputsequivalenttohundredsofadditionalminesby2030EXHIBIT2.221Estimatedbasedonincreaseinprimarydemandto2030andaveragemineoutputsof:Copper–300ktp.a.;Nickel–40ktp.a.;Lithium–10ktp.a.;Cobalt–10ktp.a.;NaturalGraphite–50ktp.a.2Onlyminedsupplyshownforcopper,toenablecomparisonwithprimarycopperdemand.3Cobaltistypicallyminedasaby-productofcopperornickel,sothisfigureispurelyillustrative.NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingcleanenergytechnologies.SOURCE:SystemiqanalysisfortheETC.Requiredscale-upindemandandminesby20301ThousandmetrictonnesCopper222,00034,00030,0003,3003,8501207605601704202601,1007,0006,0005,500NickelLithiumCobalt3GraphiteIfalladditional2030supplyofkeymaterialscamefromnewsites……Thescale-upcouldrequirethismanynewmines:15–552022Supply2030PrimaryDemand-BaselineDecarbonisation2030PrimaryDemand-MaximumEfficiencyandRecycling45–6550–6010–2525–40MaterialandResourceRequirementsfortheEnergyTransition602.5ActionstoimproveefficiencyandincreaserecyclingThischapterhasoutlinedhowtechnologyandmaterialefficiencyandrecyclingcansignificantlyalleviatepressureontheprimaryminedsupplyofkeymaterialsfortheenergytransition.Developingthiscircularsystemreliesontheprivatesectorachievingsixkeyoutcomes,assetoutinExhibit2.23.Doingsorequiresbusinessestoinvestin:•Infrastructure:investmentisrequiredinboththephysical(e.g.,recyclingplants,manufacturingequipment)anddigital(e.g.,onlineplatformsandsoftwaretoimproveproductionefficiencies,trackproductlifecyclesandend-of-lifemanagement)infrastructure.•Logistics:developingtheend-of-lifecollectionsystemandtransportandstoragenetworkrequiredtoaccessprimarysupplyanddistributesecondarysupply.•R&D:innovationisrequiredtoreachnewpotentialefficienciesandtoimprovethequalityandlowerthecostofrecyclingprocesses.KeyoutcomesofinvestmentsintechnologyandmaterialsefficiencyandrecyclingEXHIBIT2.23Improvingtechnicalandoperatingefficienciesoftechnologies:forexample,improvedbatteryenergydensity,highersolarpanelandelectrolyserefficiency,improvedsitingandmanagementofwindfarms.Reducingscrappageandwasteduringproduction:thishelpsdecreasethevolumeofrawmaterialsrequiredtomakeanend-product.Reducingorsubstitutingmaterialcontent:thishasalreadybeenseeninthefallingsiliconandsilvercontentofsolarpanelsorexpectedreductionsinPGMuseinelectrolysers.Improvingend-of-lifemanagementandcollection:toavoidcleanenergytechnologiesandtheirembeddedvaluablerawmaterialsfrombeingsenttolandfill.Transitiontolessmaterials-intensivetechnologies:shiftingawayfromcobalt-richbatterychemistriesormovingfromProtonExchangeMembrane(PEM)toAlkalineelectrolysers.Increasingrecyclingqualityandyield:toincreasetheamountandqualityofmaterialsrecoveredthroughend-of-liferecyclingprocesses.TechnologyandmaterialsefficiencyRecycling61MaterialandResourceRequirementsfortheEnergyTransitionDevelopingthescaleofthecircularsystemrequiredwillnothappenwithoutwell-designedrealeconomypolicesandregulations,whichincentivisetheprivatesectortomakesuchinvestments,accelerateprogressandovercomekeybarriers–buttherearekeydifferencesintheextentofpolicyactionrequired:•Technologyandmaterialsefficiency:theseimprovementswilllargelybedrivenbypricesandcompetitionintheprivatesector.Companiesconstantlyseektolowercosts(e.g.,byreducingmaterialintensity)andrespondtomarketsignalssuchassupplyshortagesandhighpricesforcertainmaterialinputs.However,thereisaroleforpolicymakerstoacceleratetheseimprovementsincertaincasesandtosupportwithresearchanddevelopment.•Recycling:realisingthepotentialforsignificantlygreaterrecyclingwillrequirealargerroleforpolicymakerstoovercomespecificchallengesandbarrierstoinvestmentbyplayingacoordinationandmarketorientationrole.Thissectiondiscusseschallengesandactionstoovercomethese.2.5.1ChallengestoefficiencyandrecyclingimprovementsTherearecurrentlyanumberofchallengeswhichpreventtheprivatesectorfromdrivingfastenoughprogress–thesearemostprevalentwithregardstorecycling.Themaincross-cuttingchallengeforbothefficiencyandrecyclingistheuncertaintyregardingthepaceandscaleofthetransitionandthereforedemandformaterialsforcleanenergytechnologies.Thisuncertainty,orinsomecases,lowconfidence,reflectsvaryingorlackingambitioningovernmentcommitmentsandanabsenceofsupportingpolicies.Forexample,manydevelopedcountrieshavesettargetsforthephaseoutofICEcars,butthesearenotsupportedbycrediblepoliciestoscale-upcharginginfrastructureordevelopsufficientbatterysupplychains.Thisreducesincentivestoinvestinefficiencyandrecycling,astheprivatesectordoesnotplaceahighlikelihoodonsupplygapsmaterialising.Forefficiencyimprovements,otherchallengesrelatetofinancingacceleratedresearchanddevelopment,coordinatingthisresearchacrossthevaluechain,andde-riskingnewsolutionsandfirst-of-a-kindprojectstodeploytheseatscale.Inaddition,commoditymarketsarenotperfect,withoftenvolatileandunpredictableshiftsinsupplyandprices(seeChapter3.1)whichdilutemarketsignalsforinvestmentinefficiency.Forrecyclingimprovements,thechallengesaremoreprohibitive.Thesevaryacrossdifferenttechnologiesandmaterials,butincludethreemajorthemes:•Complexandfragmentedvaluechains,withalackofcoordinationbetweenthevariousplayers(e.g.,miningcompanies,manufacturers,retailers,consumers,andwaste/recyclingcompanies).◦Thiscandilutemarketsignalswhichincentiviseinvestmentinrecycling.Forexample,inthecaseofcopper,itswidespreaduseacrossmultiplesectors(e.g.,power,consumerelectronics,transportandconstruction)cancreatechallengesforcoordinationandcollectionofscrap.◦Thiscanalsoincludefragmentedtradearoundsecondarygoods,scrap,andwaste,withexportrestrictionsorimbalancesinenvironmentalandsocialregulationsleadingtounevenplayingfields.90◦Akeydistinctionisbetweensystemsdominatedbybusiness-to-businessinteractions,whereoftenitiseasiertoalignincentivestoencouragerecycling,andsystemsthatrelyonconsumersforcrucialsteps(i.e.returnofvehiclesorproductsatendoflife).91•Thecomplexityoftherecyclingprocessformanycleanenergytechnologies,duetothenatureoftheirmaterialcompositionandthewidevarietyofdifferentdesigns.Keychallengesinclude:◦EVbatterypacksvaryconsiderablyindesign,includingdifferentchemistriesandnickelandcobaltcontent,andeaseofdisassembly.Thisaddscomplexityandcosttotherecyclingprocess.Further,thevaryingmaterialscontentofdifferentbatterychemistries,andthedivergentapproachesofhydrometallurgyandpyrometallurgycanleadtoawiderangeofbreak-evencostsforrecyclingofdifferentbatterychemistries.9290Seee.g.,ChathamHouse(2022),Theroleofinternationaltradeinrealizinganinclusivecirculareconomy.91HagelükenandGoldmann(2022),Recyclingandcirculareconomy–towardsaclosedloopformetalsinemergingcleantechnologies.92Landeretal.(2021),Financialviabilityofelectricvehiclelithium-ionbatteryrecycling.MaterialandResourceRequirementsfortheEnergyTransition62◦Windturbinebladesaremadefrommostlycomposites,suchascarbonfibreandresins,makingseparationintherecyclingprocessdifficultandexpensive.93◦Mostcleanenergytechnologiesaredevelopingrapidly,withcontinuousinnovationtoimprovedesign(and,inmanycases,reducematerialcontent).Thiscreatesachallengeforrecyclerstoadaptquicklyenoughtonewtechnologydevelopmentswhilststillturningaprofit.•Insomecases,recyclingissimplynotcurrentlycost-effective.Inadditiontothefactorsabove,thiscanalsoreflect:◦Alackofvolumeintheinitialstagesoftheenergytransition–asdiscussedinChapter2.2,itwilltaketimefortoday’scleanenergytechnologiestoreachtheirendoflifeandenterintoasecondarymarket.Lowvolumesmeanhighercosts,butthesewillfallovertimeduetoeconomiesofscaleandlearningeffects.◦Recoverablematerialsmayhavelowresalevalues,whichdonotoffsetthecostsofrecycling.Forexample,inthecaseofsolarpanels,silveraccountsforhalfofthematerialvaluebutrepresentslessthan1%ofthemodulemass.942.5.2RecommendationstodriveinvestmentinefficiencyandrecyclingPolicymakersandregulatorsmuststartbycreatingconfidencethatdemandforcleanenergytechnologiesandtheirkeyinputswillmaterialise.TheinvestmentsinrecyclingandefficiencywillonlybeprofitableiftheprivatesectorjudgesthattherapidgrowthindemandoutlinedinthisChapterislikelytooccur.Policymakerscandothatthroughwell-designedrealeconomypolicies,suchascleartargetsforpowersectordecarbonisationandappropriatepowermarketdesign;seeChapter5formoredetail.Toovercomethemorespecificbarriersdiscussedabove,policymakersalsoneedto:•Accelerateimprovementsinmaterialsandtechnologyefficiencythroughtargetedincentivesandresearchanddevelopment.•Createeconomicincentivesforscalingrecyclingandre-useandthesecondarysupplyofcriticalmaterials.Itisimportanttonotethattheaimisnotnecessarilytoachievea100%recycledsupplyofallmaterials–thiswouldbeeconomicallyandenergeticallyinefficient.95Instead,actionshouldbefocusedonthemostcriticalmaterialswhereexpandingrecycledsupplycanmakesense,forexamplewhere:•Demandisrisingveryrapidly,forexamplelithiumforEVbatteries.•Therearelikelytobeminedsupplyshortages,forexampleforlithiumorcopper.•Safeandsustainableend-of-lifewasteisachallenge,forexampledisposingofmaterialsorcleanenergytechnologiesthatcouldbehighlypollutingifnotlandfilledappropriately(e.g.,leadinsolderusedinsolarpanels).•Miningofprimarysupplyhassignificantnegativeimpacts,forexample,cobaltintheDRCorrareearthelementmininginnorthernChina.93Iberdrola(2021),Windbladerecycling,anewchallengeforwindenergy.94IRENAandIEA(2016),End-of-LifeManagement:SolarPhotovoltaicPanelsReport.95WellmerandHagelüken(2015),Thefeedbackcontrolcycleofmineralsupply,increaseofrawmaterialefficiency,andsustainabledevelopment.MaterialandResourceRequirementsfortheEnergyTransition63Therearefivekeyactions,outlinedbelowalongwiththeprioritymaterialsandtechnologiesthattheseactionsshouldtargetthisdecade:➀Increasedinvestmentinresearchanddevelopment,includingpublictargetsandprizesPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsInnovationisrequiredtoraisetheceilingforpotentialmaterialandtechnologyefficiency,andtoimprovetheeffectivenessandlowerthecostofrecyclingprocesses.Approachestoachievingthiscaninclude:•Financialincentivesformanufacturersanduniversities(e.g.,taxbreaks,targetedsubsidiesandgrantsforR&D).•Developingindustrialandresearchclusters.•Prizesandtargetsfromuniversities,researchfundersorphilanthropiststodriveinnovationinaspecificarea.•Atthedeploymentstage,publicinvestmentoradvancemarketcommitmentsforthefirstlarge-scaleprojects,e.g.recyclingplantsormanufacturingfornewtechnologies.Keyprioritiesformaterialsandtechnologyefficiency:•IncreasedinvestmentandincentivestodriveimprovementsinenergydensityandpackingefficiencyofEVbatteries.•Incentivisingafastershifttolithium-ironphosphate(LFP)batterieswhichuselessnickelandcobalt.•Rapiddevelopmentanddeploymentofnext-generationbatteries,e.g.,Na-ion,solid-state,Li-metal.•Fundinguniversity-levelresearchintonext-generationsolarPV,windandelectrolysers–toachievetheimprovementsoutlinedinExhibit2.7.Keyprioritiesforrecycling:•DrivingR&Dforbetterdisassemblyofbatterypacksandmodules,andimprovedsortingtechnologiesforelectrodematerials.•Researchintoappropriaterecyclablematerialsforwindturbineblades,orrecyclingapproachesthatenabletheseparationofcomposites.•Drivinghigherqualityofrecycledmaterialoutputs–enablingsecondarymaterialsfromcleanenergytechnologiestobere-usedinthesameapplications.➁RegulatorystandardsandmandatesPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsIntroducingstrongregulatoryrequirementsonbothdomestically-producedandimportedproductscanhelpaccelerateandtargetprogressonbothefficiencyandrecycling.Keyprioritiesformaterialsandtechnologyefficiency:•Materialsefficiencystandardsthatsetagraduallydecreasingmaximummaterialintensitylevel(e.g.,onlithiumcontentperkWhofbatterycapacity),akintoexistingfuelefficiencystandardsinCalifornia.•Performancestandardsfornewcleanenergytechnologies,e.g.,forbatteryenergydensity,solarefficiency,electrolyserefficiency.Responsibleactors:LeadingactorsSupportingactorsMaterialandResourceRequirementsfortheEnergyTransition64Keyprioritiesforrecycling:•Regulationsonthelevelofrecycledcontentinendproducts,andonfinalrecoveryratesformaterialsatendoflife.•Strongregulationsontheminimumenvironmentalimpactsassociatedwithrecycling–toavoid“leakage”ofrecyclingprocessestocountrieswithlowerstandards.•Bansontheuseoflandfillforparticulartechnologiestoincentiviserecoveryandrecycling.•Publictargetse.g.,fornumbersofrecyclingplantsorrecyclingcapacityforEVbatteries.➂CreateeconomicincentivesforefficiencyandrecyclingmeasuresPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsPolicymakerscanuseavarietyoffiscaltoolstocreateamarketforparticulartechnologieswithincreasedefficiencyorhighrecycledmaterialscontent–helpingovercomeshort-termcostbarriers.Keyprioritiesacrossbothmaterialsandtechnologyefficiencyandrecycling:•Publicprocurementorofftakeagreementstocreateearlydemandforcutting-edgetechnologieswithlowermaterialsintensity,orforlargevolumesofsecondarysupplyofkeymaterials.◦Forexample,publicprocurementofend-of-lifeEVbatteriesfordeploymentasstationarygridstorage,orforlarge-scaleproductionofnext-generationbatteries.•Fiscalmeasuressuchas:◦TaxationofSUVs/oversizebatteriesoveracertainweighttoincentivisegreatermaterialsandperformanceefficiency.◦VATreductionsforcircularproductsandservicescancreateeconomicincentives,includinglower-carbonintensityproducts,remanufacturedandrefurbishedtechnologiesandspareparts,orproductswithhighrecycledcontent.◦Fiscalpolicycanalsobeusedtocreatedisincentivesforwaste,forexample,landfilldisposalfees.•Carbonpricingorotherpricingofexternalitiescancreatefurtherincentivesforcircularbusinessmodelswheretheemissionsofrecycledmaterialsaresubstantiallylowerthanprimarymaterials.◦Inexceptionalcases,taxationonprimarymaterialsoroutrightsubsidiesforsecondarymaterialscouldbeconsidered(forexample,ifsupplyofprimarycopperwereexceptionallytight).However,thesemightleadtoperverseeconomicincentivesaroundtheuseofexistingmaterialsinstock.96•Targetedsubsidisingofrecyclingprocesseswhereitisnotcurrentlycost-effectiveto,reducingtheseovertimeastechnologiesarescaledupandlearningeffectslowercosts.◦Forexample,researchsuggeststhataninitialsubsidyofaround$18/panelcouldhelpgetarecyclingindustryoffthegroundandtobreakevenbythemid-2030s.97◦RecyclingofLFPbatteriesmayrequireasubsidyof5–20$/kWh,dependingonlocationandapproach,toinitiallyscalerecycling[Exhibit2.12].9896SoderholmandEkvall(2020),Metalmarketsandrecyclingpolicies:impactsandchallenges.97Walzberg,J.,etal.(2021),Roleofthesocialfactorsinsuccessofsolarphotovoltaicreuseandrecycleprogrammes.98Landeretal.(2021),Financialviabilityofelectricvehiclelithium-ionbatteryrecycling.MaterialandResourceRequirementsfortheEnergyTransition65➃Incentiviseoptimisationforlowlife-cycleimpactsoftechnologies,includingendoflifePolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsForwardplanningisneededtodaytodesigncleanenergytechnologiesforlongerlife,easydisassemblyandrecycling,andwhichminimisematerialsintensity.Regulationtoreducelife-cycleimpactscanhelpdrivemanufacturerstoimprovethematerialsintensity,technicalefficiency,andrecyclabilityofproducts.Keyprioritiesacrossbothmaterialsandtechnologyefficiencyandrecycling:•Regulationwhichmandatesreductionsinembodiedemissionsforcleanenergytechnologies.◦Forexample,theFrenchgovernmenthasintroduceda“SimplifiedCarbonAssessment”thatincludesthelifecyclecarbonintensityofnewsolarPVfarmsinevaluatingbidsfornewprojects.99•Consideringwell-designedregulationforextendedproducerresponsibility,wherebymanufacturersareresponsibleforaproductinthepost-consumerstage,tointernalisecostsassociatedwithrecyclingorend-of-lifemanagementandreflecttheseinupfrontconsumerprices.•Enablingdiscussionsbetweenmanufacturersandrecyclingcompaniestosharebestpracticesandidentifyareasforimprovementindesignandcollection.•Developingstandardsandguidanceonextendingproductlifetimes(e.g.,identifyingusesforsecondlifebatteries).•Encouragingstandardisationandsimplificationofkeycomponentsincleanenergytechnologies,e.g.,batterypacksorEVchargers,toaiddisassembly.➄ImprovedataavailabilitythroughoutthelifecycleoftechnologiesPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsMeasuringandmonitoringinformationonembeddedmaterialsincleanenergytechnologieswillenableoptimaldecisionsinthedesignstagesandatendoflife.Keydatapointsinclude:•Materialinputsandintensities(e.g.,breakdownsacrosscomponents,hazardoussubstances,primaryvssecondarymaterial).•Repairanddismantlinginformation.•Dynamicinformation,forexample,onbatterywhereaboutsandproduct/componentcondition.Keyprioritiesacrossbothmaterialsefficiencyandrecycling:•Establishingframeworksandstandardiseddatabasesfordatacollection,reportingandsharingacrosscompaniesandcountries.Internationalconferences,suchastheUNFCCC’sCOPmeetingsorUNEPgatherings,couldprovideanopportunitytoestablishaglobaldatagovernanceframework.99UltraLow-CarbonSolarAlliance(2021),Reducingthecarbonfootprintofsolar:theFrenchmodel.MaterialandResourceRequirementsfortheEnergyTransition66•Regulationshouldbeusedtoenforcedatacollection,trackingandtransparency.◦Thisincludesmeasurestomakerelevantinformationcommerciallyavailable,includingensuringdataprotectionandencouragingcollaborativedataexchangebetweencompanies(e.g.,initiateandprovidefundingfordigitalsystemsincludingproductpassports).◦TheongoingdevelopmentofaEuropeanbatterypassportisleadingthewayindrivingastep-changeindatatransparencyacrosstheindustry,100whichcouldserveasabenchmarkforimplementationinothercountries.•Standardisationofdefinitionsandstandardsforsecondarymaterials,includinghowtoclassifythestatusofsecondarycontentandqualitystandardsforremanufacturedproductsandrecycledmaterials.•Public-privatecollaborationstounderstandandpromotebestpracticesandsetbenchmarks.Theseactions,whilstpredominantlydrivenbypolicy,willrequireconcertedcollaborationwithindustryinspecificareassuchasdrivingR&D,collaborationstoimprovedatasharingandavailability,andcreatingsmartincentivesaroundlifecycleoptimisation.Onekeyriskthatwillneedcarefulmanagementaspoliciesaredeveloped,isthepotentialforstrongtrade-offsincertaincasesbetweenimprovingtechnologyandmaterialsefficiencyandenablingincreasedrecycling.Forexample,shiftingtoLFPbatteriescanhelpsignificantlyreducedemandforcobaltandnickel–reducingbatterycostandtheassociatedimpactsfromprimarysupplyofthesetwomaterials.However,LFPbatteriesarecurrentlymuchlesseconomicallyprofitabletorecycle.101Similarly,effortstoimprovebatteryenergydensityandpackingcouldworkagainstadesiretoimprovedesign-for-recyclingandeasydisassemblyatendoflife.Thesechallengesarefarfrominsurmountable,butwell-designedpolicyandpotentiallyfiscalsupportwillbeneededinordertosecureprogressonbothfrontssimultaneously.2.5.3OngoingpolicydevelopmentstoscalerecyclinginkeyregionsMeasurestopromoterecycling,especiallyofEVbatteries,havedevelopedrapidlyoverthepastfewyears:•InEurope,theCriticalRawMaterialsActincludesatargetfor15%ofdemandin2030forcertainmetalstobemetbyrecycledsupply,102andproposalsfortheEuropeanBatteryRegulationincludetargetsforcollectionofbatteriesatendoflife(73%in2030)andrecoveryratesforspecificmaterials(e.g.,80%oflithiumin2030).103•InChina,theMinistryofIndustryandInformationTechnologyhasoutlinedrequirementsforendoflifeforbatteriesthroughaseriesofdirectivesinrecentyears,aimingtoexpandre-useandrecycling.104Theseincludepilotprojectsforbatterylifecycletraceability,andadoptinganend-of-lifehierarchywherebatteriesfirstarere-usedinlower-capabilityapplications(e.g.,stationarystorageorlightelectricvehicles)beforeeventuallybeingrecycled.•TheInflationReductionAct,passedintheUSAin2022,includesEVtaxcreditswithdomesticproductionrequirementsthatalsoincludematerialsrecycledinNorthAmerica.Itfurtherincludestaxcreditsforenergyprojectsassociatedwith“industrialormanufacturingfacilitiesforproductionorrecycling”–providingsomeincentivesforscalingrecyclingcapacity.105However,outrighttargetsforcollectionatendoflifeorrecyclingrecoveryratesaremissingfromtheact.Thesemeasuresprovideastrongbasisforoptimisminthecaseofbatterymaterials,potentiallybringingfuturetrajectoriesclosertotheHighRecyclingscenariooutlinedhere,andothercleanenergysectorsshouldaimtofollowsuitinordertodevelopmorecircularcleanenergysupplychains.100Batterypass(2023),About.101Landeretal.(2021),Financialviabilityofelectricvehiclelithium-ionbatteryrecycling.102EUCommission(2023),Criticalrawmaterialsact.103EUCommission(2022),GreenDeal:EUagreesnewlawonmoresustainableandcircularbatteriestosupportEU’senergytransitionandcompetitiveindustry.104Electrive(2022),Batteryreuse&recyclingexpandtoscaleinChina.105BipartisanPolicyCenter(2022),InflationReductionActSummary:EnergyandClimateProvisions.MaterialandResourceRequirementsfortheEnergyTransition67EnsuringadequateandsecuresupplyChapter3MaterialandResourceRequirementsfortheEnergyTransition68Scalingprimarysupplywillbecrucialtomeetingrapidlygrowingdemand.Toachievethis,fourkeychallengesneedtobeovercome:difficultiesprojectingfuturedemand,longminingtimescales,alackofinvestment,andchallengesinincreasingcurrentminingoutput.Concertedactionfrompolicymakers,minersandinvestorswillbeneededinordertocreatecertaintyoffuturedemand,accelerateminedevelopmenttimescales,increasecurrentcapitalexpenditurefrom$45bneachyearupto$70bnthroughto2030,andincreaseminingproductivity.Chapter2describedhowactiontodrivetechnologyandmaterialsefficiency,andtomaximiserecycling,canhelpalleviatepressureonprimarydemandandsupply.Butevenwithambitiousimprovementsinefficiencyandrecycling,theenergytransitionwillstillrequireasignificantexpansioninmining,especiallyoverthenextdecade.Thisismostnotableforcopper,nickel,graphite,cobaltandlithium.Thatexpansionwillbedrivenprimarilybyprivateinvestmentinanticipationoffuturedemand.Butcoordinatedpublicpolicyandindustryactioncanalsoplayanimportantroleinensuringadequatesupply,bothgloballyandwithinspecificregionsorcountries.Thischapterthereforeexploresthechallengeswhichmightpreventadequatelyfastsupplyexpansionandtheactionswhichcanmitigatethisrisk.Itcoversinturn:➀Theprimaryroleofinherentlyimperfectmarkets➁Challengestoasmoothtransition➂Actionstoovercomethesechallenges➃Geographicalconcentrationandsecurityofsupplyconcerns➄Actionstobuildsecuresupplyandtheneedforabalancedapproach3.1TheprimaryroleofimperfectmarketsThesupplygapsidentifiedinChapter2will,inmanycases,beclosedbecauseprivatebusinesswillinvesttobuildsupplyinanticipationoffuturehighdemandand/orprices.Thiswillinevitablybeanimperfect,andattimeshighlyvolatile,process;commoditymarketshavealwaysbeencharacterisedbyperiodsofover-andunder-investment,andpricesurgesandcollapses,longbeforeanyonetalkedabouttheneedforthetransitiontoanet-zeroeconomy.106Thisprocesscanbeseenatworkintwokeymarketsoverlastfewyears:•Polysilicon,wherethelastthreeyearshaveseen[Exhibit3.1]:◦Afivefoldincreaseinpricesbetween2021–22,whichresultedfromasurgeindemandcombinedwithCOVID19-inducedsupplyshortages.◦Adramaticincreaseincapacityinresponsetothesehighprices,whichwaspossiblesincepolysiliconplantscanbebuiltinonly1–2years.◦Aresultantemergingsupplyglutandpricecollapse.106Seee.g.,WorldBank(2022),Commoditypricecyclesinthreecharts.MaterialandResourceRequirementsfortheEnergyTransition69Similarpolysiliconpricevolatility,resultinginfluctuationsinsolarpanelpricesaroundastronglydeclininglong-termtrend,willalmostcertainlybeseeninthefuture,butwillnotcreateanyseriousimpedimenttotheenergytransition.•Lithium,whereawarenessthatEVdemandwastakingoffledtoadramaticsurgeinlithiumcarbonatepricesbetween2020–22[Exhibit3.2].◦Alongsidepricespikesfornickelandcobalt,togethertheseledtoa7%increaseinbatterypricesin2022.107◦However,thisyear,slightlyreducedexpectationsofshort-termdemand,togetherwithsignificantnewsupply,haveledtoafallinpricesofnearly70%sincethepeakin2022.Fluctuationsinpricesare,toadegree,inevitableoverthenextdecadeandbeyond,andnopublicpolicyorimprovedindustrycoordinationcanentirelyeliminatethem.Butanalysisofthefactorswhichdrivethisbehaviourcansuggestactionstoatleastmitigatesomevolatilityandtoreducetheriskthatsupplyconstraintscouldseriouslyslowthepaceoftheenergytransition.107Pricesrosefrom$141/kWhin2021to$151/kWhin2022.BNEF(2022),Lithium-ionbatterypricesurvey.ThemostrecentpolysiliconpricecyclelastedlessthantwoyearsandhadaminimalimpactonsolarpricesanddeploymentEXHIBIT3.1SOURCE:BNEF(2023),SolarSpotPriceIndex;BNEF(2023),1QGlobalPVmarketoutlook;PVMagazine(2021),Polysiliconshortagewillcontinuethrough2021;BNEF(2022),Solarfactoriesreadyingtosupplyterawatt-scalemarket.Surgeindemandcoupledwith……Shortageofsupplyforpolysilicon……Leadstocommoditypricerises…Supplythenexpandstotakeadvantageofhighprices/anticipatefuturedemand……Bringingaboutoversupply/supplyglutandpricecollapseSolarInstallations,GWPolysiliconPrice,$/kg002019202020212022102030405020102015202050100200300250150+25%p.a.5xPolysiliconPrice,$/kg0Oct2237282510Feb23Apr23Jan241020304050-75%“Polysiliconshortagewillcontinuethrough2021”“SolarFactoriesReadyingtoSupplyTerawatt-ScaleMarket”MaterialandResourceRequirementsfortheEnergyTransition703.2Challengestoasmoothscale-upinprimarysupplyFourchallengesincreasetheriskofavolatileandinsufficientlyrapidtransition:•Inherentdifficultiesinprojectingdemandgrowth.•Lengthytimelinestodevelopnewmines.•Inadequateinvestmentinresponsetothefirsttwofactors.•Fallingmineproductivityandchallengestoincreasingmineoutput.3.2.1InherentdifficultiesinprojectingdemandgrowthAsChapter2described,itiscertainthatdemandformultiplemineralswillincreaseverysignificantlyoverthenext10years.Buttheprecisescaleandtimingofdemandgrowthforanyonemineralisstillhighlyuncertain.Thiswouldbetrueeveniftheoverallpaceoftheenergytransitionwerefairlypredictable.AllfourofthedemandscenariospresentedinChapter2assumedthesamepaceofdevelopmentofrenewableelectricitygeneration,greenhydrogenproduction,andEVsales,butwithvaryingassumptionsrelatingtotechnicalefficiency,specificmaterialchoicesandtheextentofrecycling.Thisisillustratedintheverylargevariationinpotentialdemandin2030inExhibit2.19,withlithiumdemandpotentially20%lowerthanintheBaselineDecarbonisationscenario,andnickelpotentially30%lowerifmaximumLithiumcarbonatehasseenmultiplepricecyclesastheEVmarkethasdevelopedEXHIBIT3.2NOTE:1LCE=Lithiumcarbonateequivalent.Lithiumcarbonateisthecommonlytradedformoflithiumproduct(alongsidelithiumhydroxide),andisakeyrefinedmaterialneededtoproducebatterycathodes.LCEcontainsapproximately19%purelithiumcontent.PriceisforChinalithiumcarbonate99.5%DELcontract.SOURCE:BNEF(2023),Interactivedatatool–Batterymetalprices;BNEF(April2023),Batterymetalsmonthly.LithiumcarbonatepriceUS$pertonneLCE102010201520202025100002000030000400005000060000700008000090000Pricesspikedin2016alongsidecobaltandnickel,duetoinitialgrowthofelectricandhybridvehicles.Surgeinpricesthrough2021–22,followingwidercommodityinflationafterCOVID-19pandemic,alongsiderapidgrowthinEVsales.Pricecollapsethroughearly2023asexpandedrefinedsupplyfloodedmarket,andEVsalesgrowthforQ1waslowerthanexpected.MaterialandResourceRequirementsfortheEnergyTransition71technicalefficiencyandrecyclingcouldbeachieved.Inrealityhowever,therangeofpossibleresultsisincreasedstillfurtherbyuncertaintiesabouttheoverallpaceoftheenergytransition,108withprojectionsforvolumesofrelevantactivityvaryingsignificantlyovertimeandbetweendifferentexpertgroups.Thusforinstance:•IEAprojectionsfortotalgrowthinsolarPVhavedramaticallyincreasedinrecentyears,withmajorrevisionssometimesmadefromoneyeartothenext[Exhibit3.3,LHS].•Asimilarpatternisnowbeingseenwithelectricvehicles,wherethemarketisatanearlierstageinitsdeploymentjourney:forecastsofEVsaleskeepgettingrevisedupwards[Exhibit3.3,Centre].•PublishedprojectionsforthetotalglobalnumberofpassengerEVsalesin2030alsovarysignificantlydependingonscenarios,rangingfrom33millionupto72million[Exhibit3.3,RHS].•Newunanticipatedpolicydevelopments,suchastheUSInflationReductionAct,canproducelargeandsuddenmovementsinreasonableanticipationoffuturedemandgrowthforEVs,windturbines,solarpanels,electricgridequipment,orelectrolysers.Importantly,hereinnovationcanplayaroleindrivinguncertaintyineitherdirection:innovationcanrapidlyreduceexpecteddemandforcertainmaterialsbutalsoleadtosharpincreasesindemandfornewalternatives–asiscurrentlyhappeningforcobaltandnickel,whereprojecteddemandfortheformerhasfallensharply[Exhibit2.10]butattheexpenseoffastergrowthinnickeldemand.108Seee.g.,theETC’sanalysesonprogress:ETC(2021),Keeping1.5oCalive;ETC(2022),Degreeofurgency.Cleanenergydeploymentishardtopredict,makingfuturematerialdemandforecastsandinvestmentdecisionsuncertainEXHIBIT3.3NOTES:ETS=EconomicTransitionScenario;STEPS=StatedPoliciesScenario;APS=AnnouncedPledgesScenario.SOURCE:AukeHoekstra/IEAWorldEnergyOutlooks;Hoekstraetal.(2017),CreatingAgent-BasedEnergyTransitionManagementModelsThatCanUncoverProfitablePathwaystoClimateChangeMitigation;BNEF(2023),Interactivedatatool–Globalinstalledcapacity;HannahRitchie/IEAElectricVehicleOutlooks;BNEF(2022),Long-termelectricvehicleoutlook;GoldmanSachs(2023),Theecosystemofelectricvehicles;IEA(2023),GlobalEVoutlook;McKinsey&Co.(2023),WhatisanEV?AnnualsolarPVinstallationscomparedtoIEAforecastsIEAforecastshaveconsistentlyunderestimatedthepaceofsolarPVinstallations.ExpectationsofEVsalesthisyeararehigherthanBNEF’sprojectionsfor2030madeonlytwoyearsago.ForecastsofpassengerEVsvaryconsiderably.GWForecastsofelectricvehicle’sshareofpassengervehiclesales%oftotalsalesForecastsofpassengerelectricvehiclesalesin2030Millionvehicles0051015202530354001020304050607080200020232025projections2030projectionsGoldmanSachs33404041455972BNEF-ETSIEA-STEPSIEA-APSBNEF-NetZeroIEA-NetZeroMcKinsey18%23%36%200520102015202020252030203550100150200250300Historical2002YearofIEAforecasts2006201020142017YearofIEAforecasts20192020202120222023Net-ZeroalignedscenarioScenarionotalignedwithNet-ZeroRangeMaterialandResourceRequirementsfortheEnergyTransition723.2.2LongleadtimesforminedevelopmentRapidchangesinexpecteddemandandshort-termpricemovementscansometimesproducerapidsupplyresponses–asExhibit3.1illustratedforpolysilicon.Somekeyelementsinsupplychains–forinstance,solarPVmanufacturing,refiningcapacity,andEVbatteryplants,canbebuiltrelativelyquickly.Buttimescalesforthedevelopmentofminesareusuallymuchlonger,thoughtheyvarydependingonmaterial[Exhibit3.4]:•Copperandnickelprojectshistoricallyhaverequiredatleast7–8yearstogofromfeasibilitytoproduction,andonceearlierexplorationanddevelopmentstagesareincluded,cantakeover20yearsincertaincases.109◦However,recentnewnickelprojectsinIndonesiahavebeengrantedveryrapidapprovalandpermits,andhavebeenabletobeginproductionmuchmorequickly.110◦Timescalestogofromdiscoverytoproductionhavealsobeenfallingforcopper,111thereforetheremightbescopeforalargenumberofprojectsthathavealreadycarriedoutexplorationtocarryoutfeasibilityandconstructionquitequickly,rampingupproductionwithinthenextdecade.112◦Brownfieldprojectdevelopmentscanalsobedevelopedmorequickly:GoldmanSachsestimatebrownfieldcopperprojectshaveleadtimesthatare4–6yearsfasterthanfornewgreenfieldprojects.113•Lithiumprojectscanoftenbedevelopedoverafaster4–7years,inpartduetothesmallerscaleoftypicaloperations.114109Heijlenetal.(2021),Assessingtheadequacyofthegloballand-basedminedevelopmentpipelineinthelightoffuturehigh-demandscenarios:Thecaseofthebattery-metalsnickel(Ni)andcobalt(Co);IEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions.110IEA(2023),EnergyTechnologyPerspectives;CarnegieEndowmentforInternationalPeace(2023),HowIndonesiausedChineseindustrialinvestmenttoturnnickelintothenewgold.111WorldBank(2016),Fromcommoditydiscoverytoproduction:VulnerabilitiesandpoliciesinLICs.112Ibid.113GoldmanSachs(2021),Copperisthenewoil.114IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.Timescalesforminingprojectsarelong,reducingtheabilityofthesectortorespondtosupplyshortagesandhighpricesEXHIBIT3.41Forminingthisincludesdiscoveryandexploration,andfeasibilityandconstructionthroughtoproduction.SOURCE:IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;PetavratziandGunn(2022),Decarbonisingtheautomotivesector:aprimaryrawmaterialperspectiveontargetsandtimescales;IEA(2023),Energytechnologyperspectives.Averageobservedleadtime1Years0Globalaverageof35largestminingprojects2010–19Refinery(e.g.LithiumCarbonate)LithiumNickelEVassemblyplantSolarPVmoduleproductionplantCopper24617years13–19years17years2–5years1–3years0.5–2years4–7years8101214161820Buildingnewrefiningcapacityisquickerthannewmines,butcanalsobealimitingstepinsupplychains.FeasibilitytoproductionDiscoveryandexplorationMaterialandResourceRequirementsfortheEnergyTransition73Acrossmostprojects,earlystagesofdiscoveryandexplorationtakethelongest,andobtainingpermitsandaddressinglegalchallengesandenvironmentalimpactassessmentscanalsodelayprojects[Exhibit3.5].Brownfieldprojects,i.e.expansionsonexistingmineleases,canoccurmuchquickerasthesemakeuseofexistingequipment,infrastructure,knowledgeandcapacity.Thelongerthetimescaleinvolved,thegreaterthedangerthattheinteractionbetweenrapidlychangingexpectationsofmedium-termdemandversusshort-termfixedsupplywillgenerateextremepricevolatility,andthedangerofserioussupplyconstraints.Timescaleforlargenewminingprojectscanbenearly20years;projectscanoftenbeconstrainedbyslowplanningandpermittingEXHIBIT3.5SOURCE:InternationalResourcePanel(2020),MineralResourceGovernanceinthe21stCentury;Heijlenetal.(2021),Assessingtheadequacyofthegloballand-basedminedevelopmentpipelineinthelightoffuturehigh-demandscenarios:Thecaseofthebattery-metalsnickel(Ni)andcobalt(Co);IEA(2021),TheRoleofCriticalMineralsinCleanEnergyTransitions;GlobalArbitrationReview(2021),ConstructionintheMiningSector;PetavratziandGunn(2022),Decarbonisingtheautomotivesector:aprimaryrawmaterialperspectiveontargetsandtimescales;WorldBank(2016),Fromcommoditydiscoverytoproduction;Roskill/EUJointResearchCentre(2021),Studyonfuturedemandandsupplysecurityofnickelforelectricvehiclebatteries.ProjectStageStageLengthYears-505101520253035ContinuouslydecreasingriskinordertounlocknexttranchesoffinanceEarly-stageexplorationOperationandProductionClosureandPost-ClosureManagementStakeholderandcommunityengagementPlanningandpermittingDevelopmentPre-feasibilityassessmentFinancing,energyaccessFeasibilityassessment,reservedeclarationPre-developmentSiteevaluation,conceptual/scopingstudySecureleaseConstructionConstruction(plan+build)ProjectstagedurationVariablestagedurationPotentialfordelaysSecuringminesiteleasetomoveontofeasibilityassessmentscantake3yearsDelaysinsecuringenergyaccesscaninfluenceprojectfinancingOperationscantakeseveralyearstorampuptofullutilisationManagementofdis-usedsitecancontinuefordecadesCommunityengagementandpermittinggohand-in-hand.Ifnotdonepro-activelyandresponsibly,projectscansufferlongdelays.VariousroundsoffeasibilityassessmentsmaybeneededMedianof~4yearsformineplanningandbuildingUpto10yearsofprospecting/explorationbyspecialistcompaniesbeforePre-Developmentstage3.2.3Inadequateinvestment[Exhibit3.6]presentsanestimateoftheinvestmentsinmining,refiningandrecyclingplantsrequiredtoprovideadequatesupplyoffivekeymaterials.Dependingonthedemandscenario,cumulativeinvestmentneedsforcobalt,copper,graphite,lithiumandnickelfrom2021–50couldrangefrom$1.1trillionto$1.7trillion,ofwhich$480–750billionrelatestomining.115Aroundthree-quartersofthisinvestmentisneededinthenextdecadetosupportthelargerampupimpliedbyallthedemandscenariospresentedinChapter2.Thereafter,investmentneeds,especiallyformining,couldfalloffrapidlyiftechnicalefficiencytrendsarestrongandmaximumrecyclingisachieved.115Notethatthesesumsincludebothbusiness-as-usualinvestmentandadditionalinvestmentrequiredtomeetextraenergytransitiondemand.SystemiqanalysisfortheETC;seealsoIEA(2023),Energytechnologyperspectives;BenchmarkMineralIntelligence(2023),Tesla’sMasterPlanmayunderestimatescaleofmininginvestment;Tesla(2023),Masterplanpart3.MaterialandResourceRequirementsfortheEnergyTransition74Relativetothenextdecaderequirement,ofaround$70billioneachyear[Exhibit3.7],thereisacapitalinvestmentgapofaround$25billionperannumfromaveragelevelsofthelastdecade,withexplorationinvestmentsfornonferrous116metalsotherthangoldalsolowandnotonaclearrisingtrend.117Thiscomparestoanannualaverageinvestmentrequirementofaround$3.5trillioneachyearidentifiedbytheETCforthewiderenergytransition,withinwhichsomeoftheseminingandrefininginvestmentswouldfall.118Thispotentiallyinadequateinvestment,inparticulararound2015to2017,reflected,inpart,lowcommoditypricesaftertheendofthepre-2008“super-cycle”.119Thisillustratesthedangerthatinvestmentneededtomeetlong-termsupplyrequirementscanbecurtailedbyshort-termpricefluctuationsandfinancingconstraints.116Nonferrousreferstometalsotherthanironorsteel.117S&PGlobalMarketIntelligence(2022),Worldexplorationtrends.118ETC(2023),Financingthetransition.119SeealsoMcKinsey&Co.(2022),Howtonavigatemining’scash-flowconundrum.Upto$1.7trnofinvestmentcouldbeneededtoexpandmining,refiningandrecyclingplants,75%ofwhichmustbefrontloadedthisdecade–unlockingatotalmarketopportunityof$10trnEXHIBIT3.6NOTES:1Investmentrequirementsarebasedonmaterialdemandonlyfromtheenergytransition,andusinghistoricalaveragecapitalexpendituresformining,refiningandrecyclingprojects.2Marketsizebasedoncumulativematerialsdemandonlyfromtheenergytransition(Copper=600Mt,Lithium=20Mt,Nickel=100Mt,Graphite170Mt,Cobalt=6Mt),andestimatedaveragepricesbasedonhistoricaldata(Copper=$8,500pertonne,Lithium=$100,000pertonne,Nickel=$26,000pertonne,Graphite=$2,000pertonne,Cobalt=$65,000pertonne).SOURCE:SystemiqanalysisfortheETC,estimatedbasedonaveragecapitalcostsofexistingprojectsandhistoricalpriceaverages.Investmentrequirements2022–501$billionPotentialenergytransitionrevenues2022–502$billionRecycling~1,7001,300~1,100RefiningMiningCopperNickelLithiumCobaltandGraphiteCopperrecyclingBatteryrecyclingTotal-upperboundTotal-LowerboundMiningandRefiningRecycling1103013015012090500420808575%wouldneedtobeinvestedby203055%requiredforcopperminingandrefiningCopper,5,000Lithium,2,000Nickel,2,600Graphite,340Cobalt,390MaterialandResourceRequirementsfortheEnergyTransition75Spendingbyminersremainstoolow:annualminingcapexneedstoincreaseby$25bnperyearthroughto2030EXHIBIT3.7SOURCE:SystemiqanalysisfortheETC;Globaldata(2022);S&PGlobalMarketIntelligence(2022),Worldexplorationtrends;S&PGlobal(2022),Plannedminingcapitalspendingtofall$11Bin2023.Nonferrousexplorationspending$billionCapitalspending(excludingironoreandgold)$billion020102015202020225101520Average:$11.5bnp.a.~$6.2bnforgoldexplorationin202225Strongfall-offinspendingandfiscalretrenchmentacrossminingindustryfrom2012,followingendoflastcommoditysupercycle.2010201520202022Averagerequired2023–30$50bn$70bnAverage:$47bnp.a.80706050403020100Cobalt,SilverandOtherMetalsLithiumNickelCopper+40%Manymarketsforcriticalrawmaterialsaresmallandilliquid,insteadbeingdrivenbyprivatedealsbetweenindividualcompanies,asopposedtobeingtradedonfuturesmarkets(e.g.,theLondonMetalsExchange).Thismeanscompaniesandfinancialinstitutionsdonothaveaccesstotransparentinformationonmarket-widedemand,supplyandpricestoinfluencetheirdecisions,contributingtoinsufficientinvestment.120Thisisnowbeingcompoundedasfinancialinstitutionslooktoensuretheirinvestmentportfoliosare“Paris-aligned”andcomplywithvariousESGconsiderations.Investingintheminingsectorisoftenassociatedwithreputationrisksduetothepotentialforadverseenvironmentalandsocialimpacts(seeChapter4),contributingtoreducedinvestment.121Formanyfinancialinstitutionstranslationofthesepoliciesintopracticesimplyexcludespracticeslikemining,despiteitsnecessitytothetransition,infavourofless-riskyassets(suchasbattery“gigafactories”).Inaddition,thesectorisveryearlyoninitstransitiontonet-zero,creatingdisincentivesforinvestmentiffinancialinstitutionshavetargetstoreducetheirfinancedemissions.Achallengeistheconflationofcoalmining(whichshouldberapidlyphasedoutthisdecade)andminingforcriticalrawmaterials(whichisacriticalenableroftheenergytransitionandmustberapidlyscaledupthisdecade).122Awarenessandacknowledgementofthefundamentalneedforcriticalrawmaterialminingtoenabletheenergytransitionislowacrossthefinancialandprivatesectors,andwiththegeneralpublic(asthisreportaimstoaddress).Thisisreflected,forexample,inthelackofeffortstodefinetheroleofminingintheEU’ssustainablefinancetaxonomy.Muchgreatereffortsarerequiredbypolicymakersandtheprivatesectortochangethenarrativearoundminingfortheenergytransition.Thiscanensurethatprogressbyfinancialinstitutionstoimplementtransitionplansdoesnothavethecounter-intuitiveconsequenceofrestrictinginvestmentinthematerialswhichwillenableit.120IRENA(2023),Geopoliticsoftheenergytransition:Criticalmaterials.121Seee.g.,Reuters(2020),Minersfacefundingsqueezeasgreeninvestingsurges.122Seee.g.,IIGCC(2023–forthcoming),Netzerostandardfordiversifiedmining.MaterialandResourceRequirementsfortheEnergyTransition763.2.4DecliningminingproductivityandcostandskillchallengesThreetrendsposeachallengetoraisingexistingminingoutputquicklyandcost-effectively:•Thepasttwodecadeshaveseenadropinminingproductivity[Exhibit3.8],asemployment,capitalandoperatingexpenditureshaveallgrownatamuchfasterpacethanusefulminingoutputs,partlyduetoacombinationofdecliningoregradesandveryrapidexpendituregrowthduringtheearly-2000scommodityboom.123Althoughthistrendhasreversedsomewhatsince2010,overallproductivityremainslowerthanin2004.•Minersarestrugglingtoattractsufficienthigh-qualitytalent,withawidespreadshortageofskilledengineersacrosskeyminingcountries,posingchallengeswhencombinedwithhighaverageagesfortheexistingworkforce.124•Overtheshorterterm,recentrisesininterestratesaremakingfinancingmoreexpensive,especiallyinsomelower-incomecountrieswhereminingisprevalentandthecostofcapitalishigh.Higherinput,shippingandfreightcoststhroughout2021–23alsoposeshorter-termchallengestominingcompaniescurrentlyattemptingtoscaleproduction.125123McKinsey&Co.(2020),Hasglobalminingproductivityreversedcourse?;Calvoetal.(2016),Decreasingoregradesinglobalmetallicmining:Atheoreticalissueoraglobalreality?124McKinsey&Co.(2023),Hasmininglostitsluster?;WallStreetJournal(2023),A‘dirty’jobthatfewwant:miningcompaniesstruggletohirefortheenergytransition.125S&PGlobal(2022),Miningcompaniespressuredbyinflationin1sthalfof2022.Miningproductivityremainswellbelowlevelsseeninearly2000sEXHIBIT3.81AsdefinedbyMcKinsey’sMineLensProductivityIndex,whichaccountsforphysicalminingoutput(totalmaterialmoved),employmentatminesites,valueofassetsonsite,andnon-labourcosts.SOURCE:McKinsey&Co.(2020),Hasglobalminingproductivityreversedcourse?Relativeminingproductivity12004=100200401020304050607080901002006200820102012201420162018Near-flatcapitalandoperatingexpendituresfrom2014onwardshaveenabledsteadyproductivitygrowthfrom2013onwards.Employment,capitalandoperatingexpenditureallgrewatfasterpacethanproductionbetween2004–12,leadingtoasharpfallinproductivity.-25%77MaterialandResourceRequirementsfortheEnergyTransition3.3ActionstoaddresssupplysidechallengesThechallengesdescribedinsection3.2are,toadegree,inherent.Butpublicpolicyandindustryactioncanmitigatetheirseverityby:➀Creatingmaximumpossibleclarityaboutfuturedemandtrends.➁Reducingminedevelopmentplanstimescales.➂Ensuringadequatefinanceforhighprioritydevelopments.➃Enhancingminingproductivityviatechnicalinnovation.➄Improveddatasharingonaninternationalbasiscanalsohelpachievealloftheseobjectives.3.3.1CreatingmaximumpossibleclarityonfuturedemandFuturedemandforspecificmineralsisinherentlyuncertain,butpublicpolicycanatleastreducetherangeofuncertaintyandprovidestrongindicatorsoflikelyareasofrapidgrowthbysettingcleartargetsandmandatesforkeyenergytransitiondevelopments,including:•Targetsforthescaleofwindandsolarcapacitytobeinplacebyspecificdates,supportedbyappropriatepowermarketdesignandplanningandpermittingsystemswhichcanmakethosetargetscredible.•Clearstrategiesforthedevelopmentofelectricitytransmissionanddistributiongrids,supportedbyregulatoryregimeswhichallowinvestmentaheadofdemand.•Strategiesforthedevelopmentofgreenhydrogen,whichincludebothtargetsforelectrolyserdeploymentandpoliciestosupportearlydemandofftakefromhigh-potentialsectors.•Definedandlegislateddatesforbanningthesaleoflight-dutytransportICEvehicles,(andsubsequentlyheavy-goodsICEvehicles)126togetherwithplanstoensuretherapidsubsequentexitofexistingICEsfromthevehiclefleet.3.3.2ReducingminedevelopmenttimescalesLengthytimescalesinvolvedinthedevelopmentofmanymines–inparticularcopperandnickelmines–reflectthemultiplestepsinvolved,manyofwhichcanbedelayedbyslowplanningandpermittingprocesses.Inthecaseofnickelforinstance,longerprojecttimescalesoverthepastdecadehavebeencausedpredominantlybyadoublingofthetimerequiredforfeasibilityassessments,fromfourtoeightyears.Minersthemselvescantakemanyactionstoreducethesetimescales,through,forinstance,optimisingtestingandcommissioningprocessestoaccelerateproductionrampup.127Inaddition,publicpolicyinbothhigh-andlower-incomecountriesshouldfocusonopportunitiestostreamlineandaccelerateprojectapprovalprocesses,whilepreservinghighenvironmentalstandards.Keyareasoffocusshouldbe:•Reducingtimescalestoobtainpermitsandachieveregulatorycompliance(e.g.,environmentalpermits,mininglicenses)throughthedigitalisationofprocesses,parallelratherthansequentialprocessingwherepossible,andclearspecificationofmaximumtimescalesforeachprocessstep.Akeypartofthiswillbeensuringlocalregulators/governmentdepartmentsareadequatelyfundedandstaffed.Thefocusshouldbetoensurethatapro-activeapproachtosustainableandresponsiblemining,asoutlinedinChapter4,isrewardedwithclearstage-gatingandacceleratedtimescalesfromrelevantgovernment/regulatorybodies.126Inthecaseofheavy-goodsvehicles,thereisastrongcaseforlimitingtheICEbantoengineswhichburnanyformofhydrocarbonfuel,butforallowingapotentialfutureroleforhydrogenICEs.127PetavratziandGunn(2022),Decarbonisingtheautomotivesector:aprimaryrawmaterialperspectiveontargetsandtimescales;Heijlenetal.(2021),Assessingtheadequacyofthegloballand-basedminedevelopmentpipelineinthelightoffuturehigh-demandscenarios:Thecaseofthebattery-metalsnickel(Ni)andcobalt(Co).MaterialandResourceRequirementsfortheEnergyTransition78•Facilitatingearlycontactbetweenminersandlocalelectricityproviderstoagreepowerpurchaseagreementsforlow-carbonelectricity.•Designatingpreferentialdevelopmentzones,withacceleratedapprovaltimescalesinareaswiththeleastbiodiversityandnaturerisks.•Encouragingdevelopmentinlocationswithastronghistoryofhigh-qualityminingtoallowacceleratedconstruction,procurementofequipmentandbuild-outoffacilitatinginfrastructure(e.g.roads,railways,ports).Together,suchactionscouldsignificantlyreducethetimerequiredtobringnewsupplyonline.Roskill,amineralsandminingconsultancy,estimatethatfast-trackednickelprojectscouldbespedupbyuptosevenyears,withthegreatestpotentialaccelerationacrossexploration,feasibilityandfinancingstages.128Suchacceleratedprojecttimelinesshouldnothowevercomeattheexpenseofessentialsocialandenvironmentalstandards.Indeed,extensivecommunityengagementandstrongcommitmentstoassess,minimiseandmonitorlocalenvironmentalimpactsshouldbeapriorityforallminingcompanies,andrequiredbyregulation.Chapter4considersthedetailsofmining’slocalenvironmentalimpactsandhowtheycanbereduced.3.3.3EnsuringincreasedpublicandprivatefinanceforhighprioritydevelopmentsThevastmajorityoffinancefornewminingdevelopmentscan,andshould,comefromtheprivatesector:around$70billionofcapitalexpenditurewillberequiredeachyearbetween2023–30acrosscopper,lithium,cobalt,nickelandgraphite[Exhibit3.7]–a$25billionupliftfromcurrentannualspending.Indeed,manyprivatesectorcompaniesarealreadytakingactionswhichreduceminedevelopmentrisks,andminersarebeginningtoinvestgreateramountsinenergytransitionmetals.129Beyondthis,manyautomotiveOEMsandbatterymanufacturersnowhavestrategiestoinvestdirectlyinrawmaterialsupplies,orarecommittingtolong-termsupplydealsin“buyersclubs”.However,asdiscussedinChapter3.2,whilethesecanprovideimportantfuturecertaintyforminersandrefinerstoencourageinvestment(andsimultaneouslyreducinginputcostvolatilityformanufacturers),theyareunlikelytobeascalablesolutiontodrivethesignificantincreaseininvestmentrequiredacrossthewholesectorglobally.Themostcriticalactiontounderpingreaterfinancingisforcollaborativeworkfromgovernments,financialinstitutionsandtheminingsectortoproactivelyandclearlycommunicatetheimportanceofsustainableandresponsiblemetalsminingforthewiderenergytransition.130Theycandothisbydevelopingandpromotingnationalcriticalrawmaterialsstrategies(e.g.,asintheUK),makingitakeyagendaitemininternationalforums(e.g.,atG7/G20meetingsandUNFCCCCOPdiscussions),andensuringithasregulatorybacking(e.g.,ingreentaxonomies).Actionsfromthefinancialsectorinclude:•Ensuringfinancingactivitiesreflectthenecessarypathwaytoanet-zeroeconomy,recognisingthecriticalneedformuchgreaterinvestmentinminingforenergytransitionmetals.AsoutlinedinmoredetailintheETC’sFinancingtheTransitionreport,thisshouldentail:131◦Developinganunderstandingofwhattransitionpathwaysfortheminingandaluminium/steelsectorsshouldlooklikeandwhatthismeansforinvestmentalongthistransition.◦Focusingonabroadarrayofmetrics(e.g.,ratioofcleantofossilfuelinvestment),topreventasolefocusonfinancedemissionstargets,whichcouldincentivisefinancialinstitutionstowithdrawcapitalawayfromhigh-emittingminingsectors,asopposedtofinancingasustainablescale-upduringthetransition.•Toaddresshighcostofcapitalandlowerrisks,financialinstitutionsandinvestorsshoulddevelopspecificin-houseexpertiseonsustainableandresponsiblemining,includingestablishingon-the-groundteamsinkeyminingcountries,partneringwithlocalgovernments,anddevelopingclearcriteriaforsustainableresponsiblemining(seeChapter4,Section4.6).128Roskill/EUJointResearchCentre(2021),Studyonfuturedemandandsupplysecurityofnickelforelectricvehiclebatteries.129Spendingbyminersspecialisinginlithium,copper,nickelandcobaltrosefromaround$13bnto$18bnbetween2021–22.IEA(2023),WorldEnergyInvestment.130Seee.g.,IIGCC(2023–Forthcoming),NetZeroStandardforDiversifiedMining.131ETC(2023),FinancingtheTransition:HowtoMaketheMoneyFlowforaNet-ZeroEconomy.MaterialandResourceRequirementsfortheEnergyTransition79•Financialinstitutionsshouldbemoreproactiveatpartneringwithdevelopmentfinanceinstitutionswheregreaterde-riskingisrequired,forexamplefinancingjuniorminorsintheirexplorationanddevelopmentofnewmines.•Thefinancialsector,incollaborationwiththemininganddownstreamvaluechain,shouldexplorethedevelopmentofnewfuturesmarketsacrossawiderrangeofcriticalmineralstohelpdevelopliquidityanddeepenaccesstofinance.TheLondonMetalsExchangeintroducedafuturescontractforlithiumhydroxidein2021,132andfurthersuchstepsshouldbeencouraged.Inaddition,actionfrompolicymakersandpublicfinancialinstitutionsisalsorequiredtoaccelerateprogressandtoaddressrisksthattheprivatesectorisunabletoabsorbontheirown.•Governmentscan,andinsomecasesshould,carryoutdirectinvestmentsinspecificminingorrefiningdevelopmentswhicharealmostcertaintoplayacrucialroleintheenergytransition,particularlyinthosecaseswherethereareconcernsaboutsecurityofsupply[seeSection3.4].◦Nationalinfrastructurebankscanalsosupportthedevelopmentofdomesticminingandrefiningcapacity,eveninhigh-incomecountries(e.g.,fundingexplorationintheriskierstagesofprojectdevelopment).◦Incertaincases,government-ledprocurementcanalsoplayamajorroleinprovidingcertaintyoflarge-scaledemandforparticularmaterialsorprojects–typicallybeyondthescalethatprivate-sectorbuyers’clubscanreach.•Multilateraldevelopmentbanksanddevelopmentfinanceinstitutionsshouldplayamajorroleinde-riskingminingprojectsinlow-incomecountries,whereinvestmentscanbeheldbackbyhighcostofcapitalandpoliticaluncertainty.MultilateralDevelopmentBanks(MDBs)willneedtoplayacriticalroleinfinancingthetransitiontonet-zeroacrossthedevelopingworld,anditisimperativethattheirstrategiesrecogniseandwidelycommunicatethatgreaterinvestmentinminingforrawmaterialswillplayanimportantpartofthis.133Inparticular,attentionshouldbepaidtode-riskprojectswherethereisstronguncertainty:eitheraroundfuturedemandtrajectories,orwheretherecouldbearapidscale-upinsupplyofrecycledsecondarymaterials,bothofwhichcouldmakeprojecteconomicslessfavourableoverthelong-term.3.3.4IncreasingmineoutputthroughincreasedefficiencyandinnovationGiventhelongleadtimesfornewminingprojects,bridgingsupplygapsthroughto2030willrequireexpandedproductionatmanyexistingmines.Achievingthistoalargeextentdependsuponprivatecompanyactiontoimprovethedetailsofmineoperations,investingtoincreasefeasibleextractionrates,automatingtoimproveoperationalefficiencyandlowerenergyconsumptionandcosts,andimprovingtheanticipationandplanningofmaintenancerelateddowntimeinordertoincreaseutilisationrates.Beyondthis,thedevelopmentofnewtechnologiesandprocessescanalsoplayamajorrole.Threeexamplesare:•Directlithiumextraction(DLE)fromgeothermalbrines:amethodusedtoremovelithiumfrombrinesbybondingittoanextractionmaterial,followedbyuseofa“polishingsolution”toobtainlithiumcarbonateorhydroxideasanend-product.Thisapproachcouldhavefasterproductiontimescalesandlowerwaterconsumptionthancurrentextractionmethods(fromsalarsorhardrock),butisstillatanearlystagewithavarietyofcompaniesattemptingtoscaleproduction.134•Adoptinginnovativeandlower-carbonapproachesformining,processingandrefining–asbeingattemptedbyLifezoneMetals,whoaredevelopingahydrometallurgyapproachforanickelprojectinTanzania,135orbyCeibo,acompanyaimingtounlockdeep-lyingresourcesofcoppersulphidedepositsthroughnewleachingmethods.136•Novelapproachestothereprocessingoftailingsandwastecanalsoplayamajorrole.Freeport-McMoRanestimatetheyhaveupto17Mtofresidualcopperthatcouldbeextractedthroughnewsolventsandreagentsorthroughre-processing(e.g.,flotation),andgloballythiscouldreacharound57Mt.137Inthecaseofdeep-seamining,theimpactsofthisformofextraction(includingoncarbonintensityandbiodiversity)shouldbecarefullyconsidered,andweighedupagainsttheequivalenttrade-offsforland-basedapproachestomining[BoxG].Anyfuturedeep-seaminingshouldproceedwithstrongcautionandhighstandardsforenvironmentalimpacts.132LondonMetalExchange(2023),EVmetals.133SeeChapter4inETC(2023),FinancingtheTransitionforadetaileddiscussionofhowMDBscanexpandtheirfinancialcapacityforthetransition,de-riskinvestmentsandmobilisegreaterprivateinvestment.134McKinsey&Co.(2022),Lithiummining:HownewproductiontechnologiescouldfueltheglobalEVrevolution;Veraetal.(2023),Environmentalimpactsofdirectlithiumextractionfrombrines.135Seee.g.,Bloomberg(2022),BHP-backedLifezonetakesoverGoGreeninmetalsclimatepush.136Ceibo(2023),Leaching.137TheEconomist(2023),Copperisthemissingingredientoftheenergytransition;Hann(2022),Coppertailingsreprocessing.MaterialandResourceRequirementsfortheEnergyTransition80Governmentsshouldbewillingtosupportindustryinvestmentsinthesenewtechnologies,increaseinvestmentinuniversity-levelresearchandencouragelinksbetweenindustry,universitiesandnationallaboratories.ThisactionshouldbuildonstrengthsalreadypresentincountriessuchasCanada,Chile,Australia,SwedenandtheUSA,andextendthemtoothercountrieswithmineralresources.BOXG:Trade-offsfordeep-seaminingshouldbecarefullyconsideredifexplorationandproductionproceedsThisreportfocusesonthepotentialsupplyofland-basedmaterials,alongwithassociatedchallengestotheirscale-up.Withregardstothepotentialfordeep-seamining,thefollowingpointsarekeytounderstandingthetrade-offsaroundtheexploitationofdeepsearesources:•Theresourcesofnickel,copperandcobaltavailableinthedeepseaarelargerthanland-basedresources,138andpotentiallylower-costthancertainexistingsourcesofland-basedproduction.139•Althoughthesupplyscale-upchallengeissignificantovertheshortterm,land-basedresourcesaremorethansufficienttomeetcumulativefuturedemandforcriticalrawmaterialsfromtheenergytransition140–exploitingdeepsearesourcesinfuturewouldbeachoice(withassociatedtrade-offs),notanobligation.•Somelowlevelofexploitationofdeepsearesourcesislikelytobeginwithinthenextfewyears,pendingthefinalisationofregulationsforcommercialdeep-seaminingbytheInternationalSeabedAuthority(ISA).However,initialproductionamountsarelikelytobelowandnotabletosignificantlyclosesupplygapsthatmightemergebythelate-2020s–largeamountsofannualsupplywouldlikelycomelater.•Plausibleestimatessuggestthatinsomecasesthebiodiversityandcarbonlife-cycleimpactsofdeep-seamining141couldbefarlowerthancurrentland-basedapproachestomininginthecaseofnickel,wherearound50%ofproductionisfromIndonesia,whereproductionisbothcarbon-intensiveandleadstodeforestationinhigh-biodiversityregions.142•Thekeypointtounderstandisthattherearetrade-offsassociatedwithbothexistingapproachestoland-basedmining,andpotentialfuturedeep-seamining:◦Inthecaseoftheformer,Chapter4setsouttheexistingenvironmentalandsocialimpactsofmining,andhowthesecouldbereducedinordertoachievemoresustainableandresponsiblemining.◦Forthelatter,thereispotentialtointroducestringentregulationbeforestartinganycommercialdeep-seamining,settingahighbarforpotentialproductionandrestrictingittowell-understood,low-biodiversityareasofthedeepsea.TheISA’sregulationsshouldbedevelopedassoonaspossibleinordertoprovidecertaintyandensurehighstandardsforsustainableandresponsibledeep-seamining–andanyfuturedevelopmentofdeepsearesourcesshouldproceedcautiouslyandwithstrongmonitoringandoversightofimpacts.3.3.5ImprovedinternationaldatasharingandcollaborationBetterinformation,mademorewidelyavailable,wouldimprovethequalityofinvestmentdecisionmaking.Currently,manyforecastsofdemandandsupplyforenergytransitionmaterialsarepaywalledorproprietary–preventingbothinvestorsandpolicymakersfromaccessingtrustedpublicsourcesoftimely,high-qualityinformation.Keyactionsshouldinclude:•Publishingopendemandandsupplyforecastsandexpandingaccesstodata,spanningarangeofplausiblefuturepathways/scenariosandincludingregionalanalysis,shouldbeapriority.ThisshouldfollowtheworkdonebytheInternationalEnergyAgencyandtheInternationalRenewableEnergyAgencyinthepastfewyearswithregardstotheenergysystemandtheroleofrenewableenergyandfossilfuelswithinthis,143andtheCriticalMineralTrackerdevelopedbyEnergyMonitorrepresentsagoodstartingpoint.144138RoyalSociety(2020),Futureoceanresources;BritishGeologicalSurvey(2022),Deep-seaminingevidencereview.139BritishGeologicalSurvey(2022),Deep-seaminingevidencereview;TheEconomist(2023),Deep-seaminingmaysooneasetheworld’sbattery-metalshortage.140SeeChapter1,Exhibit1.6,orBritishGeologicalSurvey(2022),Deep-seaminingevidencereview.141Specificallyforminingofpolymetallicnodules,ametal-denseclusterofrock,intheClarion-ClippertonZone–oneoftheregionsdesignatedforinitialenvironmentalimpactassessmentsandfeasibilitystudiesfordeepseamining.142TheEconomist(2023),Theworldneedsmorebatterymetals.Timetominetheseabed;TheEconomist(2023),Deep-seaminingmaysooneasetheworld’sbattery-metalshortage;Tempo(2023),Illegalnickellaundering.143Seee.g.IEA(2021),Netzeroby2050:Aroadmapfortheglobalenergysector;IRENA(2022),Worldenergytransitionsoutlook.144EnergyMonitor(2023),EnergyMonitor'sCriticalMineralTracker.MaterialandResourceRequirementsfortheEnergyTransition81•Conveningministerialmeetingsandindustry-governmentconversationscouldalsohelpdevelopunderstandingandshapesmartpolicymakingacrossdifferentcountries.Forexample,constructivediscussionsbetweenconsumerandproducercountries,alongsidekeyminingcompanies,couldhelpdevelopnewprojectsfaster,whilstmeetinghigherenvironmentalandsocialstandardsandguaranteeingfuturestabilityofdemandorpricesforcompanies.145•Governmentfundingfornewandupdatedgeologicalsurveys–forexample,inlowerincomecountrieswheredataislacking,orinhigherincomecountriesthatarelookingtodevelopnewminingcapacity–andexplorepublic-privatepartnershipstoimprovetheuseofsatelliteimaging,geophysicalmappingandenableearly-stageexplorationtotakeplacefaster.3.4GeographicconcentrationandsecurityofsupplyconcernsEconomicallyviablerawmaterialresourcesareoftenconcentratedinspecificcountries.Rawmaterialsupplychainshavethereforedevelopedonaglobalbasiswithextensiveinternationaltradeandmajorcompaniesactiveinmanylocations.Sections1to3ofthischapterhavethereforefocusedonthechallengeofbalancingsupplyanddemandatthegloballevel.Butthereisheightenedconcerninmanycountriesaboutthedegreeofgeographicconcentrationwhichhasemergedboth[Exhibit3.9]:•Attheminingstage,whereafewcountriesdominatetheproductionofspecificcommodities.Forexample,70%ofcobaltsupplyisfromtheDRC,and70%ofrareearthsareminedinChina.•Evenmoresoattherefiningandprocessingstages,whereChinaplaysadominantroleacrossfivekeyenergytransitionmaterials.Thisdominancereflectsacombinationof:China’slowercapital,landandlabourcosts,whichmakeitalowcostproducerofmanyprocessedandmanufacturedgoods;China’slong-standinggovernmentsupportforcleanenergyindustries,whichhavedrivenadramaticriseofdomesticsolarPVandbatteryproduction;andlooserenvironmentalstandardsimposed(atleastinthepast)onsomerefiningprocesses.146Suchhighlevelsofconcentrationincreasetheriskofsupplyshortagesrelativetodemand.Geopoliticaltensioncouldgeneratepolicyresponseswhichrestrictthesupplyandincreasethepriceofspecificcommodities.Politicalinstabilityandresourcenationalismcandisruptsupply.Andlocalisedissues,rangingfromdroughttounstablepowersupply,canknockoutsupplyfromaparticularregionorcountry.147145FinancialTimes(2023),Nocountrycansolvecriticalmineralshortagesalone.146ETC(2023),Better,faster,cleaner:Securingcleanenergysupplychains.147IRENA(2023),Geopoliticsoftheenergytransition:Criticalmaterials.Miningandrefiningofkeyrawmaterialsishighlyconcentrated,exposingglobalmarketstosupplydisruptionrisksEXHIBIT3.9SOURCE:USGeologicalSurvey(2023),MineralCommoditySummaries;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;BNEF(2022),Localisingcleanenergysupplychainscomesatacost.Shareofglobalminingandrefiningproductionbycountry,2022%MiningRefining020406080100DRCChilePeruAustraliaChinaSouthAfricaRussiaOtherIndonesiaCobaltCopperLithiumNickelRareEarthsPlatinumGraphite(Natural)RareEarthsNickelCopperCobaltSulphateLithiumCarbonate68%24%65%47%48%74%70%73%74%25%40%35%87%15%10%11%30%15%10%10%9%MaterialandResourceRequirementsfortheEnergyTransition82Fourexamplesofsuchdisruptionsfromrecentyearsare:•Russia’sinvasionofUkraine,whichproducedalargespikeinnickelpricessinceRussiaistheworld’sthird-largestproducer,witharound10%ofglobalproduction.148•DroughtacrossnorthernChilethrough2021–22whichcontributedtolowerthanexpectedoutputfrommanymines,restrictingglobalcoppersupply.149•Aten-foldincreaseinpricesofneodymiumandotherrareearthelementsin2010followingalargereductioninexportquotasbytheChinesegovernment.150•Protectionistmeasuresbyavarietyofgovernments,mostrecentlyincludingtheIndonesiangovernmentbanningexportofnickelores,151theUSInflationReductionActlocalcontentrequirementsforbatterysupplychains[BoxH],theGovernmentofBoliviaforcingtheinclusionofthestatelithiumcompanyinresourcedevelopment,152ortheGovernmentofZimbabwebanningexportofunprocessedlithium.153Todate,suchdisruptionshavetendedtoproduceimpactsonthemarketforspecificminerals,sometimesonlyonanational/regionallevel,andforonlyashorttime.Butasdemandforkeyenergytransitionmaterialsrisesrapidlyinthecomingdecade,thereisarealriskthathighlyconcentratedsupply,combinedwithrisingtradetensions,couldleadtomajorsupplyshortagesaffectingseveralcommoditiesatthesametime,disruptinganddelayingtheenergytransition.1543.5ActionstobuildresilientandsecuresupplychainsInrecentyears,severalfactorshaveincreasedgovernmentandcompanyfocusonthedangerscreatedbythegeographicalconcentrationofsupply.Theseinclude:•TheCOVID-19pandemicandassociatedsupplychaindisruptions,whichhighlightedthefragilityofsupplychainsacrossawiderangeofgoods.155•HeightenedgeopoliticaltensionsbetweentheUSAandChina.156•Russia’sinvasionofUkraineandtheresultinghighenergypricesinEuropeandelsewhere,whichhaveledtoadesiretodevelopmoresecureenergysupplies.157Inresponse,manygovernmentsarenowintroducingpolicieswhichattempttocreatemore“resilient”and“secure”supplychains,includingviaprotectionistmeasures,formanycategoriesofproductsandtechnologies,includingsemiconductorsandenergyrelatedfinalproducts(e.g.,solarPVpanelsandelectricvehicles)aswellasmaterials:•TheInflationReductionActwaspassedintheUSAinAugust2022,includingtaxcreditsforlow-carbonelectricitygenerationanddomesticminingandmanufacturing[seeBoxH].Thisispartofawidersuiteofpolicies,includingtheInfrastructure,InvestmentandJobsActandtheCHIPS&ScienceAct,whichareaimedatsecuringsupplychainsandincreasingindustrialcompetitiveness.158•TheEUCommission’sGreenDealIndustrialPlan,whichincludesboththeCriticalRawMaterialsActandtheNet-ZeroIndustryAct–bothofwhichcontainrequirementsforincreasingdomesticproductionandmanufacturing.159Thesetargetsdonotaimforfulldomesticself-sufficiency,andifachievedwouldbeagoodstepforwardintermsofdiversificationandreductioninriskfromconcentratedsupply.148ThiswasalsocausedinpartbytradingabnormalitiesontheLondonMetalsExchange.IEA(2022),ShareofglobalproductionandrankforselectedmineralsandmetalsinRussia;Bloomberg(2022),The18minutesoftradingchaosthatbrokethenickelmarket;S&PGlobal(2022),NickelpricespikeduringRussia-UkraineconflictcoulddriveupEVcosts.149Seee.g.,Mining.com(2023),GiantChileminesarestrugglingjustasworldneedsmorecopper;Antofagasta(2023),Quarterlyproductionreport–Q42022.150Shenetal.(2020),China’spublicpoliciestowardrareearths,1975-2018.151NationalBureauofAsianResearch(2022),Indonesia’snickelexportban.152TheEconomist(2021),HowBolivianlithiumcouldhelpfightclimatechange.153AfricaNews(2023),Zimbabwebansalllithiumexports.154Forexample,astudyofdifferentkindsofdisruptionstorareearthelementsupplycouldleadtoincreasedpricesandreducedproductionofhigh-strengthmagnetsforseveralyears,potentiallyinfluencingwindturbineandEVdeployment.Riddleetal.(2021),Agent-basedmodellingofsupplydisruptionsintheglobalrareearthsmarket.155ETC(2023),Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains;JPMorgan(2022),What’sbehindtheglobalsupplychaincrisis.156BipartisanPolicyCenter(2022),Inflationreductionactsummary:Energyandclimateprovisions.157ETC(2022),Buildingenergysecuritythroughacceleratedenergytransition.158KayaAdvisory/InevitablePolicyResponse(2022),TheUSdiscoversitsclimatepolicy:Aholisticassessmentandimplications.159TheCriticalRawMaterialsActrequiresdomesticproductiontomeet10%oftotalsupplyformining,40%oftotalsupplyforrefining,andforrecyclingtomeet15%ofmetalssupplyin2030.TheNet-ZeroIndustryActrequiresdomesticmanufacturingtomeet40%ofrequirementsin2030.SeealsoETC(2023),Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains–EUPolicyToolkit.MaterialandResourceRequirementsfortheEnergyTransition83•TheGovernmentofIndiahasintroducedaProductionLinkedIncentiveschemetoboostdomesticmanufacturing,includingforelectricvehiclesandsolarPVmodules(whereithasalsointroducedtariffsonmodulesimportedfromChina).160•ThegovernmentofSouthKoreahasintroducedacriticalmineralsstrategywiththeaimofreducingimportdependencefromkeycountries,especiallyChina,downto50%by2030(from80%currently),andincreasetheshareofrecycledsupplyupto20%bythesamedate(from2%).161Suchstepsarepositiveintermsofdiversificationandriskmanagementofsupply.BOXH:TheUSInflationReductionActThepassageoftheUSInflationReductionAct(IRA)in2022,aspartofawidersuiteofenergytransitionandinfrastructurespending,hasbeenoneofthemostsignificantannouncementsofrecentyearstoaccelerateclimateandenergypolicy.Togetherwithwiderfederalandstateprograms,thisamountstoatrillion-dollarpublicinvestmentintheenergytransition[Exhibit3.10,LHS].Specificallyrelatingtocriticalrawmaterialsfortheenergytransition,theactprovidesasubsidytocover10%ofproductioncostsforarangeofcriticalrawmaterials,andalsoprovidesupto$7,500inconsumersubsidiesforthepurchaseofelectricvehicles,providedthesupplychainsforcriticalminerals,batteriesandvehiclesmeetcertainlocalcontentorfreetradepartneragreements[Exhibit3.10,RHS].162TheUShasrecentlybeeninvolvedindiscussionwiththeEuropeanUnioninordertoclarifywhethercertainIRAsubsidieswouldbeavailabletoEuropeancompaniesortosupplyfromEurope,underthespecificationthattheseareavailabletocountrieswithfree-tradeagreementswiththeUS.163160MinistryofHeavyIndustries,GovernmentofIndia(2022);PVMagazine(2022),Indiangovernmentapprovessecondphaseofsolarmanufacturingincentivescheme.161MinistryofTrade,IndustryandEnergy(2023),Koreaannouncesmeasuresforsecuringcriticalmineralssupply.162Thefullcreditissplitintwohalves:EVmanufacturersmustmeetathresholdforsourcingcriticalmineralsfromNorthAmericaandfree-tradeagreementcountriesforhalfofthecredit(requirementrisesfrom40%in2024to80%in2026),andmustmeetathresholdforsourcingbatterycomponentsonlyinNorthAmericafortheotherhalf(requirementrisesfrom50%in2024to100%in2028).163Seee.g.,AmericanEnterpriseInstitute(2023),TheUS-EUInflationReductionActpatch-up.TheUSInflationReductionActoffersgeneroussubsidiesfordomesticmining,refiningandmanufacturingprojectsEXHIBIT3.10NOTE:IRA=InflationReductionAct;IIJ=Infrastructure,InvestmentandJobs;CHIPS=CreatingHelpfulIncentivestoProduceSemiconductors;LPO=LoanProgramsOffice.SOURCE:KayaAdvisory/InevitablePolicyResponse(2022),TheUSdiscoversitsclimatepolicy:Aholisticassessmentandimplications;BNEF(2023),Solarpricesfinallyfall;BNEF(2022),Lithium-ionbatterypricesurvey;BNEF(2022),Localizingcleanenergysupplychainscomesatacost.Stateandfederalclimateandenergyspendingcapacity$billionUSInflationReductionActsubsidiesforsolarPVandbatteriesAveragepricein2022andUSIRAsubsidyavailableAveragepricein2022USIRASubsidySolarPVBatteries/EVs$0.26/WModule($/W)Polysilicon($/kg)$36/kgMiningandRefining(%ofcost)100%BatteryPack($/kWh)$151/kWhElectricVehicle(Saleprice)$66,00030.0710457500Totalof~$1trillioninspendingcapacityavailable357IRADirectSpending80IIJAct67CHIPS&ScienceAct54CaliforniaStateBudget39LPOExistingLoanandLoanGuaranteeAuthority350IRANewLoanandLoanGuaranteeAuthorityMaterialandResourceRequirementsfortheEnergyTransition84Thesepoliciesseektobuildsupplycapacityeitherdomesticallyorincountriesdeemedtobeclosegeopoliticalallies(“nearshoring”or“friend-shoring”).Inmanycases,thesepoliciesarefocusedonemploymentcreationandtherebuildingofcompetitivemanufacturingcapacity,aswellasonmakingsupplychainsmore“secure”.Insomecases,thesepoliciesareboundinitiallytoincreasethecostofsomeinputstotheenergytransition,sincetheylimittheabilitytosourceproducts,componentsormaterialsfromthelowest-costlocation–andcouldleadtotradetensionsacrosskeyregions.164However,inthelong-termtheycouldincreasethepaceoftheenergytransitionbyincreasingthetotalamountofinvestmentdevotedtoinnovationinkeytechnologies.Theobjectiveindetailedpolicydesignshouldthereforebetomaximisethebenefitswhileminimisingadverseshort-termcosteffects.TheETC’srecentreportoncleanenergytechnologysupplychainssetsoutguidelinesforhowtoachievethis.165Inrelationtorawmaterialsupplies,theprioritiesshouldbeto:•Developcompanyandcountrystrategiestosecureanddiversifymineralsupplies.•Wheredeemedstrategicallybeneficial,developdomesticcapacityandnearshoringstrategieswhichachievemaximumbenefitswhilereducingorminimisingcosts.3.5.1StrategiestosecureanddiversifysupplychainsDifferentcountriesaremoreorlessendowedwithparticularmaterials,makingsomegeographicalconcentrationofsupplyinevitable.However,companiesandcountriescanacttosecurefuturemineralsupplies,andshouldviewdiversificationfirstandforemostthroughthelensofriskmanagement:•Globalreservesformanymineralsaremuchmorewidelydistributedthancurrentmineproduction[Exhibit3.11]–indicatingpotentialfordiversification.However,twochallengesmustbeovercome:◦Geographicdistributionofproductionistypicallygovernedbyeconomics;least-costlocationswillalwaysbefavoured,makingdiversificationpotentiallyreliantonadditionalgovernmentsupport,asoutlinedabove.◦Longtimescalesinvolvedinexplorationanddevelopmentofnewminesiteslimitthefeasiblepaceofdiversification.Forsomematerialsinparticular(e.g.,copperandnickel),actioncanhaveonlyalimitedimpactonthedistributionofmineproductionbefore2030.•Thepotentialtodiversifyrefiningishigher.Timescalestobuildarefineryareshorter,soincreasedcapacitycouldeasilybebuilteitheratminesitesinproducingcountries(e.g.,toincreaseoverallvalueofendproductsforminers),orincountrieswheredemandforrefinedmaterialsishigh(e.g.,closetobatteryandelectricvehiclemanufacturingplants).•Thefocusthusfar,however,hasbeenondownstreammanufacturing,especiallyofbatteries.Forexample,onestudyestimatesthatbasedoncurrentplansboththeEUandUScouldmeetdomesticdeploymenttargetsforelectricvehiclesandbatteries-butwouldstillbereliantonimportsforbothminedandespeciallyrefinedmaterials.166Thishighlightstheimportanceofinvestingindiversifyingtheentirevaluechain:miningandrefiningaswellasgigafactories.164IMF(2023),Greentradetensions.165ETC(2023),Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains.166ChathamHouse/ResourceTrade.Earth(2023),CobaltrefiningpowergivesChinaanadvantageintheraceforEVbatterydominance.85MaterialandResourceRequirementsfortheEnergyTransitionItisclearlyfeasibleforcompaniestoseektosecureanddiversifytheirsourcesofmineralsupply.Thiswillentailusingthesuppliermanagementtechniquesincludingdirectverticalintegrationandlong-termfixedpricecontracts,butwithadeliberatefocusonachievingamoregeographicallydiversesupply.Threestrategiesinclude:•Jointventures:Twoormoreminingcompaniesjoinforcestoexploitaparticularresource,potentiallycombiningcomplementarybackgrounds,expertiseorfinancingcapabilities.Forexample,TianqiLithiumCorporationandIGOLtd.haveformedajointventuretodevelopandoperatenewlithiumassets.167•Directinvestmentsandverticalintegration:Severalmanufacturershavemadeinvestmentsinspecificminesorminingcompanies,inordertocontrolfuturesupplymoredirectly.Forexample,theautomanufacturerGeneralMotorsisplanningtospend$650millionforastakeinLithiumAmericas,acompanythatisdevelopingalargelithiumminingprojectinNevada.168•Off-takeragreements:Manufacturerssigndirectagreementswithindividualcompaniesinordertosecurelargevolumesofsupplyatafixedpriceoveragivenperiod.Forexample,Teslahassignedoff-takeragreementsforcobaltwithGlencore,andfornickelwithVale,twooftheworld’slargestminingcompanies.169Incertaincases,thesecanbetiedtoparticularrequirementsaroundsustainableandresponsiblesupplyofmaterials,forexample,byrequiringparticularthird-partyauditsandcertifications.•Incertaincases,governmentsorcompaniescouldconsiderformsofpriceinsurance,providingguaranteesorminimumlevelsofpricetosecuresupply–providingstabilityandcertaintytoproducercompaniesorcountries,unlockingsupplythatotherwisemaynotbeavailable.Governmentscanalsoencourageandsupporttheseobjectives–criticalmineralssupplyhastakengatheredincreasedpoliticalattentionrecently.Initiativesinclude:•TheUKandCanadiangovernmentssignedanagreementtoincreasecooperation,accelerateresearchandinnovation,increaseinformationsharingandcreatestrongerlinksacrossindustriesandcompanies.170167Seeigo.com.au(2020),LithiumjointventurewithTianqiLithiumCorporation.168Techcrunch(2023),GMinvests$650MinlithiumminingtolockdownEVrawmaterials.169Mining.com(2022),Teslainkssecretmulti-yearnickelsupplydealwithVale;FinancialTimes(2020),TeslatobuycobaltfromGlencorefornewcarplants.170UKDepartmentforBusinessandTrade(2023),UKandCanadasignagreementtoboostgreentechsupplychains.Thereisanopportunitytodiversifyfuturemining,withawideglobaldistributionofmineralreservesEXHIBIT3.11SOURCE:USGeologicalSurvey(2023),MineralCommoditySummaries.Globaldistributionofmineralreserves%CobaltCopperLithiumNickelRareEarthsGraphite(Natural)AustraliaChinaChileBrazilDRCRussiaIndonesiaTanzaniaVietnamUnitedStatesArgentinaPeruPhilippinesMexicoMyanmarOther46%18%11%23%23%22%17%35%17%17%18%22%41%25%22%10%28%MaterialandResourceRequirementsfortheEnergyTransition86•Fromamoregeo-strategictradeperspective,theUSDepartmentofStateisdevelopingaMineralsSecurityPartnershipthataimstoincreasemining,processingandrecyclingcapabilitiesinstrategically-alignedcountries–mainlybycatalysinginvestmentthroughoutmineralssupplychainsfromgovernmentsandtheprivatesector.171•TheEUCriticalRawMaterialsActincludesprovisionsfora“CriticalRawMaterialsClub”tobringtogethercountriestoscaleproductionofkeyenergytransitionmetals,includingpotentiallyupto€20billionofinvestmentsby2030.172•TherecentG7summitinJapanincludedafive-pointplanforcriticalmineralssecurity,coveringsupply-demandforecasts,sustainablesupplychains,increasinginnovationandrecycling,andpreparingforsupplydisruptions–aswellasapledgeof$13billionofinvestmentsincriticalmineralssupplybyG7governments.173Withsucharangeofinitiatives,andwithupcomingG7/G20meetingsprovidingfurtheropportunitiesfordiscussion,therecouldbefurtherscopetoaligngovernmentinitiativesandscalesustainablecriticalmineralssupply.3.5.2MaximisingthebenefitsofnearshoringNearshoringinvolvestheexpansionofdomesticproductionacrosssupplychains,includingupstreamminingandrefiningforcriticalminerals.Whereasdiversificationofsupplyishighlylikelytobebeneficialwheneverpossible,nearshoringmayinsomecasesinvolveatrade-offbetweenincreasedcostsandthebenefitsofincreasedsupplysecurityandemploymentcreation.174Thus,wherenearshoringisdeemedstrategicallybeneficial,governmentsandcountriesmustcarryoutrigorousassessmentsofwhatisfeasibleandhowtomanagethetrade-offsinvolved.Thiswillrequire:•Astrongfocusonmaximisingrecycling,increasingthefutureuseofsecondarymaterialsandreducingfuturedependenceonimportedprimarymaterials.ThechangesneededtoachievethiswerediscussedinChapter2.5.•Governmentsupportfordetailedassessmentofmineralresourceswithinthecountryandoftheirtechnicalandeconomicfeasibilityofextraction.Manydevelopedcountriesdohavesignificantreservesofcurrentlyunderexploitedminerals–inparticularlithium–butinsomecasescomprehensiveinformationonresourceavailabilityisstilllacking.•Governmentandindustryfinanceofresearchintonewextractiontechnologieswhichcanwidentherangeofresourcesavailable,andreducelocalenvironmentalimpacts(seealsoSection3.3.4–manyoftheseinnovationsarejudgedtohavelowerlifecycleimpactsforresourceextraction).•Settingtargetsforlocalsourcing,butintroducedgraduallyandonthebasisofrealisticassessmentsofsupplyavailability,avoidingtheriskthatunrealisticobligationswillcreatesupplyshortagesandrapidpriceincreasesonalocallevel.•Realisticassessmentofthepotentialtobuildrefiningcapacityasmuchasminingcapacity,giventhiscanbedoneonmuchshortertimescalesthannewminingcapacity.•Acceleratedplanningandpermittingpolicies,combinedwithtightandwellenforcedenvironmentalstandards,whichcanmakepossiblerapiddevelopmentofbothminingandrefiningprojectsinareaswithpromisingresources.◦Forexample,theSaltonSeaintheUSAhasanestimated2Mtoftotallithiumresource(enoughforover300millionelectricvehicles),175ortheyet-to-startRönnbäckennickel-cobaltprojectinSweden,whichcouldsupply23ktofnickeleachyear(enoughfor640,000electricvehicles).176•Inextremecases,governmentsseekingtoensuresecurityofsupplycanalsoconsiderholdingstockpilesofthemostcriticalrawmaterials,althoughthisisafar-from-optimalsolutionthattendstointroduceartificialscarcityintomarkets.Evenwithpoliciesofthistypeinplace,therewillstillbemajorinternationaltradeinrawmaterialsandsignificantconcentrationofsupplyforsomeofthem.Butwell-designedpoliciescouldoveranumberofyearssignificantlyreducetoday’sveryhighlevelsofconcentration.171USDepartmentofState(2022),MineralsSecurityPartnership.172EENews(2023),EUtoform€20bncriticalmaterialsclub.173JapanMinistryofEconomy,TradeandIndustry(2023),AnnextotheClimate,EnergyandEnvironmentMinisters’Communiqué–Five-pointplanforcriticalmineralssecurity;S&PGlobal(2023),INTERVIEW:JapantoboostcriticalmineralssecuritywithG7,‘like-mindedcountries’.174Thetrade-offsinvolvedinnearshoringarediscussedfurtherinETC(2023),Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains.175Assuming60kWhbatteriesandalithiumintensityof0.1kg/kWh.McKibbenetal.(2020),LithiumandothergeothermalmineralandenergyresourcesbeneaththeSaltonSea.176Assuming60kWhbatteriesandanickelintensityof0.6kg/kWh.BluelakeMineral(2022),BluelakeMineralannouncespositivePEAfortheRönnbäckennickel-cobaltproject.MaterialandResourceRequirementsfortheEnergyTransition87MinimisingandmanagingenvironmentalimpactsofmaterialssupplyChapter4MaterialandResourceRequirementsfortheEnergyTransition88Thetransitiontoalow-carbon,highlyelectrifiedenergysystemwillmeanashiftawayfromconsumablefossilfuels,whichhavetobeminedcontinuouslytooperatetheenergysystemeverysingleyear,toasystembasedondurablemetals,whichcanandshouldbere-usedandrecycledatendoflife.Byreducingtheamountofprimarymaterialsweneed,andbyimprovingthewayinwhichwesupplyminedmaterials,environmentalimpactscanbereducedovercomingdecades.AsChapter1outlined,thelongtermenvironmentalimpactofrawmaterialextractiontosupporttheenergytransitionwillbefarlessthanthatimposedbythefossilfuel-basedsystem.Inessencethetransitiontoanet-zero,highlyelectrifiedenergysystemwillmeanashiftawayfromconsumablefossilfuels,whichhavetobeminedcontinuouslytooperatetheenergysystemeverysingleyear,toasystembasedondurablemetals,whichcanandshouldbere-usedandrecycledatendoflife.Butgrowingdemandforenergytransitionmaterialswillhavesignificantlocalenvironmentalandsocialimpacts.Thescaleofsuchimpactswilldependonarangeoffactors:•Thetypeofmineralore,whichdictatesthechemistryoftherockandtherefiningandprocessingrequiredtoextractvaluablecommoditiesfromit.•Theoregrade,whichdefinestheproportionofcommerciallyvaluablematerialwithinavolumeofrock.◦Forexample,copperorestendtocontainroughly0.6%elementalcopper,whereasbauxitecontainsaround50%alumina(or,25%elementalaluminium)–leadingtoverydifferentvolumesoforeandmaterialthatneedtobemovedandprocessedforeverytonofmetal.177◦Asoregradesdecrease,theenergy,emissionsandwaterintensityrequiredtoobtainonetonofmetalwillincrease.178•Localgeography,forexample,proximitytoinhabitedareas,areasofhighbiodiversity,orlocationsinwater-scarceregions.Proximityofminingtoindigenouspeoplecanhavesignificantsocialimplications.•Siteoperations–forexample,iftheminingapproachisopen-pitorunderground,thecarbonintensityofthesourceofpowerusedtorunoperations,andfactorsrelatingtoworkerhealthandsafety,workingconditionsandhumanrights.•Politicalfactorsandthestrengthofinstitutionsandgovernanceinminingcountries,whichcandeterminethestrengthofenvironmentalandsocialregulations(e.g.,humanrightslawsorenforcementofenvironmentalstandards).Intotal,thelocalenvironmentalimpactscouldbelargeandinsomecasessignificantlyadverseifnotwellmanaged.Further,theseimpactscanposearisktotherequiredscale-upinminingfortheenergytransitionforseveralreasons:•Downstreamdemandpressures:OEMs,consumersandinvestorscanrefusetoacceptsuppliesofhigh-impactmaterials,ifimpactsarenotmanagedormitigatedasfaraspossible.•Regulationcanalsoexcludematerialswithhighenvironmentalorsocialimpacts.Forexample,theUSDodd-FrankActpassedin2010containsaprovisiononsupplychainrisksforcertainconflictminerals(tungsten,tantalum,tinandgold),andtheupcomingEuropeanBatteryRegulationwillrequirecarbonfootprintandsupplychainduediligencemonitoringforelectricvehiclebatteries.•Localcommunitiescanalsodelay,orevenstop,prospectiveminingprojectsduetolocalenvironmentalconcerns,ashashappenedrecentlyfortheThackerPasslithiummineinNevada,179andtheJadarlithiumprojectinSerbia.180Thekeytomeetingmaterialrequirementsfortheenergytransitionatthepacerequiredis,therefore,toexpandsupplyassustainablyaspossibleinordertounlocknew,high-qualityprojectsquicklyandresponsibly,withthebuy-inofbothlocalminingcommunitiesandwidersociety.ItisthereforeessentialtoreducetherequiredextractionbymaximisingtechnicalefficiencyandrecyclinginthewaydescribedinChapter2,andthenbyminimisingenvironmentalandsocialimpactspertonofeachmaterialextracted.Thischapteridentifiesthedifferentcategoriesofpotentialenvironmentalimpacts,andtheactionswhichcompaniesandgovernmentscantaketoreducethem.177Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.178Calvoetal.(2016),Decreasingoregradesinglobalmetallicmining:atheoreticalissueoraglobalreality?;IEA(2023),Energytechnologyperspectives.179InsideClimateNews(2021),PlanstodigthebiggestlithiummineintheUSfacemountingopposition.180FinancialTimes(2022),RioTintowarnsofdelaytoSerbialithiumproject.MaterialandResourceRequirementsfortheEnergyTransition89Itcoversinturn:➀Theimpactofmaterialssupplyongreenhousegasemissions➁Impactsofminingonlanduseandbiodiversity➂Localpollutioneffects–toxiceffluentsandairquality➃Waterconsumptionformining➄Impactsonlocalcommunitiesandsociety➅Fivepriorityareasforsustainableandresponsiblematerialsfortheenergytransition➆Actionscompanies,governments,andthewidermaterialssupplychainmusttaketomeasure,manageandreduceimpacts4.1GreenhousegasemissionsfrommaterialsproductionTotalemissionsfromminingoperationstoday,includingfornon-cleanenergypurposes,contributeabout0.5GtofCO2eperannum,whilethedownstreamproductionofsteelandaluminiumandotherend-usematerialscontributesanadditional5.4GtCO2[Exhibit4.1].Thiscompareswithabout6.8GtCO2eofscopeoneandtwoemissionsresultingfromfossilfuelproduction,andanother34GtCO2eperannumresultingfromfossilfuelcombustionandindustrialapplications.Expandinguseofmaterialstosupporttheenergytransitionwillresultinsignificantone-offadditionalemissions.Exhibit4.2setsoutourestimateoftheseemissionsforproductionofmaterials,notingthepotentialtoreducecumulativeemissionsbymorethanhalfbydecarbonisingsupplychainsandreducingmaterialsuse.Forcompleteness,theseestimatesarebasedonemissionsfrombothminingandprocessing/refining–thelatterprocessoftenbeingveryenergy-andemissions-intensiveforcertainmaterials,notablybatterymaterialsandpolysilicon.181181Forexample,theproductionofnickelfromlaterites,typicallydoneviahighpressureacidleachingorvianickelpigiron,isveryelectricity-intensiveandcanemit15–60tCO2epertonnenickel,inpartduetoheavyuseofcoalpowerinIndonesia,thedominantglobalproducerofnickel.IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;Minviro(2021),Shiftingthelens;PorizioandScown(2021),Life-cycleassessmentconsiderationsforbatteriesandbatterymaterials.Emissionsfrommetalsminingandproductionare~10%ofglobalGHGemissionsanddominatedbydownstreamproductionEXHIBIT4.1NOTE:AFOLU=Agriculture,ForestryandOtherLand-Use.1Includingelectricityconsumption;2UsingaGWP100valueof30formethane;3CoalproductionandtransportCO2emissionsareestimatedas~1.4%oflife-cycleemissions,basedonUSCongressionalResearchService(2015),Life-cycleGHGassessmentofcoalandnaturalgasinthepowersectorandusingtotalcoalemissionsof15.5GtCO2fromIEA(2023),CO2Emissionsin2022;CoalminingmethaneemissionsaretakenseparatelyfromMcKinsey&Co.(2020),Climateriskanddecarbonisation:WhateveryminingCEOneedstoknow;4TotalglobalGHGemissionsof52.8GtCO2earefrom2021.Totalenergy-relatedGHGemissionsin2022were41.3GtCO2e.SOURCE:SystemiqanalysisfortheETC;MPP(2022),PathwaystoNetZero(Aluminium,Steel);Azadietal.(2020),TransparencyonGHGemissionsfromminingtoenableclimatechangemitigation;IEA(2023),Scope1and2GHGemissionsfromoilandgasoperationsintheNetZeroScenario,2021and2030;IEA(2023),GlobalMethaneTracker;IEA(2023),CO2Emissionsin2022;UNEP(2022),Emissionsgapreport2022;McKinsey&Co.(2020),Climateriskanddecarbonization:WhateveryminingCEOneedstoknow.AnnualGHGemissionsfrommetalsandminingcomparedtofossilfuelproductionGtCO₂ePowerConsumptionforMiningOtherMiningEmissions(e.g.Fuels)AluminiumandSteelProduction1OtherMetals1TotalEmissionsfromMineSitesTotalMetalsandMiningEmissionsMiningandMetals0.40.21.22.72.46.552.80.10.55.9GlobalEmissions2CoalMiningScope1&2CO2Emissions3CoalMiningScope1&2MethaneEmissionsOilandGasScope1&2CO2EmissionsOilandGasScope1&2MethaneEmissionsFossilFuelScope3TotalGlobalEmissions4Waste,BioenergyandIndustrialProcessEmissionsOtherEmissions(AFOLU,NOx,F-gasesetc.)TotalFossilFuelScope1&2Emissions4.21.2MineSiteFossilFuelsScope1&2Downstream31.33.211.8MaterialandResourceRequirementsfortheEnergyTransition90Innovation,recyclinganddecarbonisationwouldleadtocumulativeemissionsfromproducingcleanenergymaterialsthatarehalfofannualfossilfuelemissionsEXHIBIT4.21Emissionsintensityisbasedonlife-cycleemissionsforproductionofend-usematerial,i.e.includesbothminingandprocessing/refining.Foraluminium,steelandcopper,carbonintensitiesforbothprimaryandsecondarysupplyareusedincombinationwithassumptionsaboutthevolumeofcumulativedemand2022–50thatwillbemetbysecondarysupply.NOTE:TheETC’sBaselineDecarbonisationscenarioassumesanaggressivedeploymentofcleanenergytechnologiesforglobaldecarbonisationbymid-century,butmaterialsintensityandrecyclingtrendsfollowrecentpatterns.TheMaximumEfficiencyandRecyclingscenarioassumesacceleratedprogressinmaterialandtechnologyefficiency,andrecyclingcleanenergytechnologies/materials.SOURCE:SystemiqanalysisfortheETC;MPP(2022),MakingNet-ZeroSteel/AluminiumPossible;IFC(2023),Netzeroroadmapto2050forcopperandnickelminingvaluechains;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;Minviro/Livent(2022),Growingresponsibly–2021SustainabilityReport;IEA(2023),CO2emissionsin2022.Emissionsforproductionofenergytransitionmaterials2022–501GtCO2e50403020100AluminiumCumulativeAnnualSteelLithiumCopperCarbonintensityof15.7tCO₂e/tonofaluminium(0.6tCO₂e/tonforrecycledsupply)8.5GtCO2eofcumulativeemissionsAluminiumSteelSiliconConcreteNickelCopperOtherBaselineDecarbonisation–currentcarbonintensitiesMaxEfficiencyandRecycling–currentcarbonintensitiesMaxEfficiencyandRecycling–withmaterialsproductiondecarbonisationAvg.annualemissionfromcleanenergymaterialsproduction2022Fossil-fuelrelatedGHGemissionsLoweringtotaldemandformaterialsandscalingsecondarysupplycouldreduceemissionsby~10GtCO2Decarbonisingproductionofaluminium,steelandpolysiliconwouldavoidanextra9GtCO2Carbonintensityof2.1tCO2e/tonofsteel(0.5tCO2e/tonforrecycledsupply)Carbonintensityof50tCO2e/tonoflithiumCarbonintensityof3.9tCO2e/tonofcopper(1.5tCO2e/tonforrecycledsupply)6.9GtCO2eofcumulativeemissions0.9GtCO2eofcumulativeemissions2.2GtCO2eofcumulativeemissions950Mtofaluminiumdemandfromenergytransition(45%suppliedbyrecycling)Fractionsuppliedbyrecycling5,000Mtofsteeldemandfromenergytransition(45%suppliedbyrecycling)18Mtofprimarylithiumdemandfromenergytransition650Mtofcopperdemandfromenergytransition(20%metbyrecycling)4115.90.524.56.97.84.02.82.835.02.28.5MaterialandResourceRequirementsfortheEnergyTransition91Asanupperbound,ifthecurrentemissionsintensityofmaterialsproductionremainedthesameto2050,thetotalcumulativeadditionalemissionsamounttoatmost35GtCO2ebetweennowand2050[Exhibit4.2]:•Amajorpartofthisderivesfromtheadditionalproductionofaluminium(8.5GtCO2e),steel(6.9GtCO2e)andconcrete182(4GtCO2e)whichwillbeneededtobuildalow-carbonenergysystem.Forallthreematerials,theseareasmallsubsetoftotalemissionsfromthesesectorswhicharedominatedbynon-energyrelatedapplications.•Polysiliconproduction,amajorinputtosolarpanels,currentlydominatedbycoal-poweredsupplychainsinChina,wouldalsogeneratesignificantcumulativeemissionsofaround8GtCO2e.•Copperandnickelproductionisthenextmostsignificantfactor,eachwitharound2and3GtCO2eofcumulativeemissions,respectively,whilealltheothermaterialstogetherproducearound3GtCO2–evenaccountingforcarbon-intensivematerialssuchaslithiumorneodymium.Therelativelysmallemissionsofmanyofthematerialsreflectsthesmalltotalvolumesconsumed,whichoffsetsoftenhighemissionspertonneproduced–asillustratedinExhibit4.2inthecaseoflithium.Theseadditionalemissionswilltoasignificantextentbe“one-off”innatureasthecleanenergysystemisbuilt,andwoulddeclineovertimeastheworld’senergysystemreducesitsemissionsintensity–andastheshareofrecyclingincreases.183Thus,oncethelarge-scaleexpansionofacleanpowersystemhasbeenachieved,thematerialextractedtobuildcleanenergytechnologieswillremaininuseformanydecadesandcanberecycledatend-of-life;andwhilethefirstgenerationofbatteriesisinsomecasesbeingmanufacturedusingelectricitywithhighcarbonintensity,aselectricitysystemscontinuetodecarbonise,themanufactureofbatteries,electrolysers,solarpanelsandotherproductswillbecomeanear-zerocarbonactivity.However,35GtCO2eofadditionalcumulativeemissionsisstillsignificantinaworldwhereIPCCestimatessuggestthatweonlyhaveabout400GtCO2ofcumulativecarbonbudgetleftifwearetohavea50:50chanceoflimitingglobalwarmingto1.5°C.184Itisthereforeessentialtominimisethiscumulativeemissionsimpactvia:•Improvementsintechnicalefficiencyandrecyclingwhichreducesthedemandforprimarymaterialsasmuchaspossible.TheseactionswereconsideredinChapter2,andcouldreducetotalcumulativeemissionsby30%from35GtCO2etoaround25GtCO2e(atcurrentemissionsintensities).•Actionstoreducethecarbonintensityofproduction,andinparticularofthebigcontributorstocumulativeemissions–steel,aluminium,concreteandpolysilicon.◦TheMissionPossiblePartnership(MPP)hassetoutclearpathwaysforsteelandaluminiumproductiontodecarboniseby2050,185whichtogetherwithreductionsindemandforprimarymaterials,couldreducecumulativeemissionsfromsteelandaluminiumby60%,fromaround15.5GtCO2eto5.5GtCO2e.◦Forpolysilicon,thedriversofemissionsaretheheavyuseofelectricity(typicallyabout160kWhperkgofpolysilicon)andcarbonintensityoftheelectricityused.186Productioniscurrentlydominatedbycoal-heavyregionsinChina,leadingtoemissionsofover800gCO2perkWh.However,thiswillfallastheChinesegriddecarbonisesandcouldberapidlyreducedifpolysiliconmanufacturersusededicatedrenewableelectricityresources,potentiallycuttingtheemissionsintensityofpolysiliconproductionfrom200tCO2epertonneofpolysilicontobelow5tCO2e.Suchactionstogether,couldreducecumulativeemissionstoaround16GtCO2ebetween2022-50.Onanannualbasis,thiswouldbearound0.5GtCO2eascomparedto41GtCO2eeachyearfromtoday’sfossilfuel-basedenergysystem.Evenwithoutstrongpolicy,thecumulativeemissionsrequiredtobuildanet-zeroemissionseconomywillbeminimalcomparedwiththeannualemissionsproducedfromtoday’sfossilfuel-basedsystem(atmost35GtCO2ecumulativelyto2050,versusover41GtCO2eeachyear).182ConcretewasnotincludedintheanalysisinChapters1and2,asoveralldemandfromtheenergytransitionwouldbetrivialwhencomparedtodemandfromconstruction.However,forcompletenessemissionsfromcementandconcreteproductionareincludedhere,giventhevolumesofconcreterequiredforwind,nuclearandhydropower.183Secondarymaterialstypicallyhavemuchloweremissionsintensitythanprimarymaterials:forexample,recycledaluminiumhasanemissionsintensityofaround0.6tCO2e/tonneofaluminium,vs.around15.7tCO2eforprimaryaluminium.184Theremainingcarbonbudgetfromthestartof2020onwards,tohavea50%chanceofremainingunder1.5oCofwarming,was500GtCO2.Removingtwo-and-a-halfyear’sworthofcarbondioxideemissionsofaround40GtCO2p.a.yieldstheremaining400GtCO2.SeeTableSPM.2inIPCC(2021),SummaryforPolicymakers.In:ClimateChange2021:ThePhysicalScienceBasis.ContributionofWorkingGroupItotheSixthAssessmentReport.185MissionPossiblePartnership(2022),Makingnet-zerosteel/aluminiumpossible.186Hallametal.(2022),Apolysiliconlearningcurveandthematerialrequirementsforbroaderelectrificationwithphotovoltaicsby2050.MaterialandResourceRequirementsfortheEnergyTransition92Butacombinationofvoluntarycommitments,carbonpricing,greenprocurementandstrongregulationshouldalsobeusedtodrivedramaticandrapidemissionsreductionsandarelikelytoresultincumulativeemissionsfarbelowthosebasedontoday’semissionsintensities.4.2Materialquantities,landuse,andbiodiversityLandusechangeisakeycomponentoflocalimpactsfrommining.Extractionofmineraloresleadstochangesinlocallanduse,themovementoflargeamountsofrockandtheproductionoflargevolumesoftailings,andthereforehasknock-onimpactsonlocalecosystemsandbiodiversity.Producingmineralsandmaterialswillrequiremovinglargeamountsofearthandrocktoextractoresfromwhichrefinedmineralsandmaterialscanbeproduced.Thetotalamountofthismaterialmovementdependson:•Thetotalvolumeofeachfinalproductormineraltobeused–forexample,theenergytransitioncouldneedaround5,000Mtofsteelbetween2022–50,whichis250timesthecumulative20Mtofpurelithiumrequiredforbatteries.•Theamountoforerequiredpertonneofpuremineral,where,forinstance,copperoresproduceonlyabout0.6%ofelementalcoppercomparedwith25%ofelementalaluminiuminbauxite[Exhibit4.3].•Theamountofrock/earthwhichmightneedtobeshiftedtoextractatonneofore,whichvarieshugelybetweenmaterialsbutalsobetweenspecificsitesanddependsontheapproachtomining(namely,undergroundasopposedtoopen-pitmining).OregradesandwasterockproductiondrivedifferencesinenvironmentalimpactsfromthematerialsproductionprocessEXHIBIT4.31Forhard-rockminingoflithium.SOURCE:Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.MaterialsandassociatedoregradesandtotalmaterialmovedSteel(IronOre)CopperCobaltSilverAluminium(Bauxite)Lithium1NickelPlatinum1kgofcommodityTotaloreminedTotalmaterialmoved2x9x4x7x170x1600x120x250x670,000x160x480x510x860x100,000xMaterialandResourceRequirementsfortheEnergyTransition93Thetotalresultingrequirementforearth/rockmovement,atupto13billiontonneseachyear,isthesameorderofmagnitudeasthematerialmovementrequiredforthefossilfuel-basedsystem[Exhibit1.10].However,thisamountcouldbesignificantlysmallerbyreducingprimarymaterialrequirementsthroughtechnicalefficiencyandrecycling,oradoptinglesswaste-generatingextractionapproaches,187andwoulddeclinesignificantlyaftermid-centuryoncethenewenergysystemhasbeenbuiltandhighlevelsofrecyclingarereachedacrossmostmaterials.Movementofearthandrockinitselfhasonlyaminimaleffectoncarbonemissions:wasterockandtailingsproducedbyminingdonotmoveveryfar–atmostafewkilometres–andthereforeataglobalscale,associatedemissionsarelow.Thecrucialconcernisthelocalimpactoftailingsandminingwasteonlanduseandbiodiversity,andwhetherithasadverseeffectsonlocalecosystems–especiallywhennotstoredandmanagedresponsibly.Thetotallanduseassociatedwithtoday’sminingoperationsisquitesmall.Bestestimatesusingsatelliteimageryattributetotallandareaof101,600km²tomining–anarearoughlythesizeofIcelandandlessthan0.1%ofglobalhabitableland.188Thislandrequirementisasimilarorderofmagnitudetothatrequiredforfossilfuelextraction,withoilandgasproductioninNorthAmericaestimatedtorequireabout90,000km2ofland.189Increasedrequirementsforironore,bauxiteandcopperoresincomingdecades(fromboththeenergytransitionandothersourcesofdemand)arelikelytoaccountforthevastmajorityoffuturelandrequirements,andcouldincreasemininglanduseby5,500–12,000km²infutureby2050,190a5–12%increaseabovecurrentlevels.Buteventoday’stotallandmininglandfootprintisonly1/500thofthelanddevotedtoagriculture,andtheadditionallandrequiredtosupportminingincomingdecadeswouldbeabout1/5000thofagriculturalland.Notsurprisingly,therefore,miningplaysonlyaverylimitedroleindrivingdirectdeforestationandotherformsofbiodiversityloss:•InternationalResourcePanelestimatessuggestthatthedirectimpactofmetalextractionaccountsforlessthan1%ofglobalbiodiversityloss,withthevastmajorityoflossbeingdrivenbyagriculturalcropsandpasture[Exhibit4.4,LHS].191•Anotherrecentstudyestimatesthatbetween2005–2013annualdeforestationassociatedwithcattlefarmingforbeefaveraged2millionkm2perannum,192comparedwithestimatedannualdeforestationofaround700km²perannumderivingfrommining,withcoalandgoldmining(bothunrelatedtoenergytransitionmetals)thebiggestdriversofthisloss.193187Seee.g.,Valentaetal.(2023),Decarbonisationtodrivedramaticincreaseinminingwaste–Optionsforreduction.188Notallofthislandareaisformetalsmining:coalminingactivitiesaccountfor5,000minesoutofthe35,000consideredinthisanalysis.Mausetal.(2022),Anupdateonglobalmininglanduse.189Asof2012.Calculatedbasedonanaveragerateof2,000km2oflanduseforevery50,000wellsdrilledbetween2000–2012inNorthAmerica.Allredetal.(2015),EcosystemserviceslosttooilandgasinNorthAmerica.190Murguía(2015),Globalareadisturbedandpressuresonbiodiversitybylarge-scalemetalmining.191InternationalResourcePanel(2019),Globalresourceuse.192ETC(2023),Financingthetransition:Supplementaryreportonthecostsofavoidingdeforestation;Pendrilletal.(2019),Deforestationdisplaced:tradeinforest-riskcommoditiesandtheprospectsforaglobalforesttransition.193WWF(2023),Extractedforests.94MaterialandResourceRequirementsfortheEnergyTransitionItisimportanttorecognisehoweverthattheexpansionofminingcanhavesignificantindirecteffectsondeforestationandbiodiversitylossifthedevelopmentofaminesiteinaforestrequirestheconstructionofroadandotherinfrastructurewhichopensupforestsforfurthereconomicactivityanddeforestation.194AstudyoftheBrazilianAmazonrainforestestimatesthatmining-inducedindirectdeforestationoccursataratetwelvetimeslargerthanthatoccurringpurelyonmininglandleasesalone[Exhibit4.4,RHS].195Ataglobalscale,estimatessuggestthatminingcouldhaveledtoinduceddeforestationoverupto760,000km2throughindirectorinduceddeforestation,orroughly38,000km2eachyear(comparedwithtotalglobaldeforestationofaround100,000km2eachyear).196,197However,thevastmajority(>70%)ofminingdeforestationisdrivenbycoal,whereimpactsshoulddecreaseincomingdecades,andgold,whichisnotrelevanttotheenergytransition.198Further,thevastmajorityofaluminiumandsteeldemandisfromnon-energytransitionsources,andthesetwomaterialsaccountforanother15%ofdeforestation.Demandformetalsfromtheenergytransitionisunlikelytobethedominantdriverofadditionaldeforestation-butactiontoreducedeforestationandbiodiversitylossfromminingisstillvitallyimportant.Inthecontextofpotentialfutureexpansionofminingforenergytransitionmaterials,alargeproportionofglobalreservesforcopper,nickelandotherkeymaterialsarelocatedinsensitiveecosystemsandareasofhighbiodiversity.199194Illegalminingisalsoaconcern:incaseswherepropertyrightsarenotwelldocumentedandenforced,deforestationcanalsotakeplaceasillegalminesitesareexpanded.195Sonteretal.(2017),MiningdrivesextensivedeforestationintheBrazilianAmazon;Sonteretal.(2018),Miningandbiodiversity:keyissuesandresearchneedsinconservationscience.196OurWorldinData(2021),Forestsanddeforestation;UNFoodandAgricultureOrganisation(2020),Globalforestresourcesassessment.197WWF(2023),ExtractedForests.198Ibid.199Giljumetal.(2022),Apantropicalassessmentofdeforestationcausedbyindustrialmining;Sonteretal.(2018),Miningandbiodiversity:keyissuesandresearchneedsinconservationscience;Sonteretal.(2020),Renewableenergyproductionwillexacerbateminingthreatstobiodiversity.Directbiodiversityimpactsfromminingareonamuchsmallerscalerelativetootherexistingsystems,butindirectimpactsondeforestationareacauseforconcernEXHIBIT4.4Globalbiodiversitylossduetolanduseofresourceextraction1AreasofAmazonrainforestsurroundingmineleasesaremostimpactedbyindirectdeforestationIntotal,indirectmining-induceddeforestationinbufferzoneshasbeen12timesgreaterthanthatoccurringexclusivelywithinlandleasedformining,andcaused9%ofalldeforestationwithinBrazil’sAmazonrainforestbetween2005–15.19700%2%4%6%8%10%19801990200020101Doesnotincludeindirectimpactsonlanduse,forexamplethedevelopmentofroadsforminingsiteswhichthenleadtoothereconomicactivitiesrequiringdeforestation.SOURCE:InternationalResourcePanel(2017),AssessingGlobalResourceUse;Sonteretal.(2017),MiningdrivesextensivedeforestationintheBrazilianAmazon(re-usedandadaptedwithpermissionundertheCCBY4.0license);Sonteretal.(2018),Miningandbiodiversity:keyissuesandresearchneedsinconservationscience.%ofglobalspecieslossMetaloreextractionAgriculturalcropsPasture(grazedbiomass)WoodextractionMetaloreextractionCarajas:LargestironoremineintheworldTrombetas:LargestbauxiteproducerinBrasilForests(in2015)70kmbufferzonessurroundingmineleases,wheremajorityofdeforestationoccursMaterialandResourceRequirementsfortheEnergyTransition95InresponseitisimportantbothtofocusstronglyontheactionsdescribedinChapter2,whichcanreducedemandforprimarymaterials,andonanypotentialtosourcemineralsfromlesssensitivelocations.4.3LocaltoxicityandpollutionimpactsWhilethemovementofmaterials,eveninthelargequantitiesshowninExhibit1.10,doesnotinitselfhavenecessarilylargeenvironmentalimpacts,miningcanalsoproducelargelocalpollution–especiallyifwasteproductsarenotmanagedanddisposedofsafely.Theminingprocesscanleadtopollutionacrossmultiplestages,fromexcavationtotransportandfinalprocessing.Thiscanleadtoarangeofimpacts,suchas:•Effluentsdischarge,whichcanpollutelocallandandwaterbodies.•Generationoflargevolumesofparticulatematter,worseninglocalairquality.•Eutrophicationandecotoxicityimpactsinwaterbodies,reducingtheavailabilityofcleanwaterandreducingtheviabilityoflocalecosystems.•Leakageorcollapsefromtailingsstorage,whichcanleadtoveryhighconcentrationsoftoxicreagentsorheavymetalsinlocallandandwater.Theenergytransitionmaterial,whichtendstoraisethemostsignificantconcernsfromanecotoxicityandpollutionperspective,iscopper–wherefutureminingproductioncouldnearlydoublefromcurrentlevels.200AnalysisbytheInternationalResourcePanelshowsthateventhoughcoppermadeuplessthan5%ofglobalmetalsproductionbetween2000–2015,copperminingandprocessingmadeupthemajorityofecotoxicityimpactsandalargeshareofhumantoxicityimpactsoverthisperiod[Exhibit4.5].200Theimpactsofgoldminingarealsoverysignificant,butgoldhasverylittlerelevancetotheenergytransition.Copperproductioncouldreachover40Mtperannum,seeS&PGlobal(2022),Thefutureofcopper;BNEF(2022),Globalcopperoutlook2022-40.CopperproductionhasadisproportionatelylargeimpactonpollutionrelativetoitsshareoftotalmaterialproductionEXHIBIT4.5MetalproductionamountsandtoxicityimpactsofmetalminingandprocessingSOURCE:InternationalResourcePanel(2019),Globalresourcesoutlook.Normalisedsuchthat2000=10,020002005201020150,51,01,52,0ProductionamountsEcotoxicityimpactsHumantoxicityimpactsIronandSteelAluminiumCopperZinc,Lead,Tin,NickelGold,Platinum,Silver20002005201020152000200520102015MaterialandResourceRequirementsfortheEnergyTransition96Muchofthiscanbelinkedtotwokeyfactors:•Copperoregradeshavefallentoverylowlevels(about0.6%globallyonaverage),201leadingtolargevolumesofrockmovedforeverytonofcopperextracted–copperproducesaroundone-thirdofallminingtailingscurrently.202•Copperminingproducesverylargevolumesofsulphidicminingtailings:◦SulphidicminingtailingsleadtothekeyissueofAcidMineDrainage,wherebysulphidemineralsareexposedtowaterandoxygen,formingsulphuricacid.◦Thesulphuricacidthendissolvesheavymetals(presentinthetailingsfromthewiderminingprocess),andleakageofthesecanleadtocontaminatedwater,deathofaquaticlife,andrenderslocalwatersourcesunusableforhumanconsumptionoragriculture.Therearealsootherlocalenvironmentalimpactconcernsforminingofothermaterials,suchastoxicwasteproductioninrareearthelementmining,203orgenerationofverylargevolumesofhighly-alkalinebauxiteresidues(knownas“redmud”)duringprocessingofbauxiteintoalumina.Miningdisasters,notablytailingsdamcollapses,whichoftentakeplaceincaseswheretherearepoorenvironmentalstandardsandalackofinvestmentandcaretakenforappropriatewastemanagement,canexacerbatelocalpollutionsignificantly.204Beyondmining,processingandrefiningcanalsoyieldsubstantiallocalpollutionimpactsifnotcarriedoutresponsibly.Smeltingandrefiningofcopperreleaseslargeamountsofsulphurdioxide,leadingtoacidrainwhichdamageslocaltrees,cropsandbuildings.205Useofacidsinhydrometallurgical(waterandsolvent-basedapproaches)processing/refiningofrareearthelements,orintheproductionofcobaltornickelsulphate,alsoleadstolargevolumesofchemicalwaste,whichcanhavesignificantlocalpollutionimpactsifnotdisposedofappropriately.206Finally,pyrometallurgy(heat-basedapproaches)incopperornickelrefiningcanalsoleadtolocalparticulateemissionsifnotappropriatelymanaged,impactinglocalairquality.207Giventhedisproportionatelocalpollutionimpactsarisingfromcoppermining,particularattentionshouldfocuson:•Reducingprimarymaterialrequirementsforcopper.Reducingprimarycopperdemandbyincreasingcircularitycouldleadto100billiontonneslesstailingsandwasterockproducedbetween2022–50.208Thiswouldsaveonmaterialprocessing,alongwithitsassociatedemissionsandwateruse,andwouldavoidmovingthisvolumeofrockintotailingpondsforstorage,alongwithanypotentiallocalenvironmentalimpactsfrom,e.g.,tailingsstorageoracidminedrainage.•Reducinglocalpollutionimpactsforeverytonneofminedcopper,byfocusingonhighest-qualityresourcesanddrivingproductivityimprovementsatminesites,andensuringappropriatewastemanagement.201Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.202Ibid.;ICMM(2022),Tailingsreductionroadmap.203Ali(2014),Socialandenvironmentalimpactoftherareearthindustries;BBCFuture/TimMaughan(2015),Thedystopianlakefilledbytheworld’stechlust.204Seee.g.,NewYorkTimes(2019),Brumadinhodamcollapse:Atidalwaveofmud.205Izydorczyketal.(2021),Potentialenvironmentalpollutionfromcoppermetallurgyandmethodsofmanagement.206Zappetal.(2022),Environmentalimpactsofrareearthproduction;Mistryetal.(2016),Lifecycleassessmentofnickelproducts;Rinneetal.(2021),Lifecycleassessmentandprocesssimulationofprospectivebattery-gradecobaltsulfateproductionfromCo-AuoresinFinland.207Izydorczyketal.(2021),Potentialenvironmentalpollutionfromcoppermetallurgyandmethodsofmanagement;NickelInstitute/NickelMagazine(2014),Thelifecycleofnickel.208Efficiencyandrecyclingmeasurescouldreducecumulativeprimarycopperdemandfromtheenergytransitionbetween2022-2050from525Mtdownto315Mt.Assumingawasterockandtailingsproductionofaround500tonnespertonneofcopper,thiswouldamounttoroughly100billiontonnesofwasterockthatwouldnotbeproduced.Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes.MaterialandResourceRequirementsfortheEnergyTransition97Miningformetalsconsumesaround4billionm3ofwatereachyear–aroundhalfofwhatisconsumedbycoalmining[Exhibit4.6],andabout0.1%ofglobalagriculturalwaterconsumption.Waterusetominemetalsfortheenergytransitioncouldreachasimilarlevel(around4.5billionm3)by2050,reflectingthehighwaterintensityrequirementsforsomeproductionmaterials–notablycopper,nickelandlithium.209Evenwiththisincrease,newwateruseformaterialsminingwillstillbeaminuteproportionoftotalagriculturalwateruse.However,itisimportanttonotethatminingoftentakesplaceinveryaridorwater-stressedareas.Forexample,coppermininginnorthernChile,ortheminingofironoreinPilbarainnorth-westernAustralia–inbothcases,localwaterconsumptionfromminingissignificantandcanexacerbatelocalwaterstress[Exhibit4.7].210Onestudyfindsthatthereareseveralregions,mainlyinAustraliaandSouthAmerica,whereminingwaterconsumptionexceedsnaturalwateravailabilityforaregionalriverbasin.211209Waterintensityoflithiumextractionvariesdependingonwhetheritisproducedfrombrinesorhardrockmining,butcanbeupto1000m3pertonneofcontainedlithiuminthecaseofbrines.IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;Minviro/Livent(2022),Growingresponsibly–2021SustainabilityReport.210Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities.211Ibid.4.4TheimpactofwaterconsumptioninminingWaterconsumptionformetalsminingcouldriseinfuture,drivenbyenergytransition–butscaleisfarbelowagricultureEXHIBIT4.6Annualwaterconsumption1frommetalsminingBillionm3Waterconsumption–AllmetalsWaterconsumptionin2050–OnlymetalsforenergytransitionIronOre(Steel)CopperNickelGoldUraniumBauxite(Aluminium)OthermaterialsCurrentmetalsminingwaterconsumptionEstimatedfuturewaterconsumptionforenergytransitionmaterialsCurrentcoalminingAgriculture4.04.5102,8001.4m3/t100m3/t200m3/t4m3/t265,000m3/t2750m3/tNOTE:1Waterconsumptioniswaterthatistakenfromasourceandisnotreturnedtothesource.2Atcurrentwaterintensities.SOURCE:SystemiqanalysisfortheETC;Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities–AGIS-basedwaterimpactassessment;OurWorldinData(2017),Wateruseandstress;IEA(2016),Water-EnergyNexus.Waterintensityofmining:MaterialandResourceRequirementsfortheEnergyTransition98Climatechangeitself,moreover,mayexacerbatewaterstressinmanyregionsand/orincreasetheneedforeffectivewatermanagementasprecipitationbecomesmorevariableeveninregionswhennetprecipitationincreases.Itisimportant,therefore,fortheminingindustryandgovernmentstofocusonactionswhichwillminimiseadverseeffectsonwatersupply,boththroughwatermanagementstrategiesandinnovationtoreducewaterneeds(e.g.,throughnewextractionmethodssuchasDirectLithiumExtraction).2124.5ImpactsonlocalcommunitiesandsocietyMiningcanoftenhavestrongpositiveimpactsoneconomicgrowth,exportopportunities,andtaxrevenues.Miningprojectscanbringlocalemploymentopportunities,bothduringconstructionandoperation,andwell-designedprojectswithpositivecommunityengagementcanleavestrong,lastingdevelopmentbenefitsatalocalandnationallevel.213Theincreaseinmaterialdemandfortheenergytransitionthereforepresentssignificantopportunitiesforlowerincomecountries,whichaccountforalargeshareofglobalmaterialresources.214212GovernmentofWesternAustralia/DepartmentofWater(2013),Pilbararegionalwatersupplystrategy;ComisionChilenadelCobre/MinisteriodeMineria(2017),Waterconsumptionforecastincoppermining2017-28.213Asacrudemeasure,miningcontributiontoGDPcanbe10%–WorldBank(2023),Mineralrents(%ofGDP).SeealsoICMM(2022),Miningcontributionindex.214Seee.g.,WorldBank(2019),Climate-smartmininginitiative;NaturalResourceGovernanceInstitute(2022),TripleWin:HowminingcanbenefitAfrica’scitizens,theirenvironmentandtheenergytransition.SeealsoChapter3,Exhibit3.6ofthisreportforestimatedrevenuesfromfivekeyenergytransitionmaterials.MiningcanexacerbatewaterstressandneedscarefulmanagementonalocallevelEXHIBIT4.7Waterscarcityfootprintofmining,byriverbasinMillionm3p.a.0–25Mm325–50Mm350–100Mm3100–250Mm3250–500Mm3>500Mm3NorthernChina(YellowRiverbasin)supplieslargevolumesofREEsandisveryarid.Productionofplatinum-groupmetalsinLimpopo,SouthAfrica.Brineextractionin“LithiumTriangle”inSouthAmericaisveryexposedtowaterstress.LoariverbasininnorthernChileexperienceshighwaterscarcityduetocoppermining,likelytobeexacerbatedbyfutureexpansion.NOTE:Waterscarcityfootprintisameasureofwaterusethatweightswaterconsumptionusingaregion-specificwaterscarcityindex.SOURCE:Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities(re-usedandadaptedwithpermissionundertheCCBY4.0license).IronoreminingneartheAshburtonriverbasininAustraliahastheworld’shighestwaterscarcityfootprintfrommetalsandminingindustry.MaterialandResourceRequirementsfortheEnergyTransition99However,incertaincases,historicallymanyofthebenefitsofmininghavebeendistributedunequallybetweencompanies,governmentsandcommunities,andacrossregionsandincomegroups,withfarfewerincreasesinincomeandwellbeingaccruingtolocalpopulationsinminingtowns.215ThisisespeciallythecaseforIndigenouspeoples–estimatessuggestalargeproportionoffutureresourcesofenergytransitionmetalsarelocatednearoronIndigenouslands,216highlightingtheneedforstrongandappropriateengagementandrespectforcommunityrights[seealsoBoxI].Further,thereareawiderangeofissuesthatcanarisefrompoorlyregulatedandinformalmining,withstrongcostsforminingcommunities:217•Localair,waterandlandqualityisdegraded,negativelyimpactinglocalecosystemsandthehealthofthepopulation.218•Workerscanbemadetoworkinverypoorconditionswithhumanrightsabuses,lowstandardsforhealthandsafety,andinsomecasesuseofchildlabour.219•Corruptionandtaxavoidancecanbecomemajorconcerns,preventingtheeconomicbenefitsfromminingfromaccruingtolegitimaterecipients.220Thedisruptiveimpactsofresourceextractiononlocalpopulations,whennotmanagedinasustainableandresponsiblemanner,arevariedandsubstantial.Inordertoaddresstheseimpactsonlocalcommunities,aswellastheenvironmentalimpactsoutlinedabove,theremustbeaconcertedeffortacrosstheentireminingindustrytobecomemoresustainableandresponsible.221Further,whenthinkingabouttheimpactsofminingonnaturalresourcesandtheenvironment,itisimportanttoconsiderthatwhilstonaglobalscaleimpactsmaybesmallrelativetoothersectorsandsystems(e.g.,thelandrequirementsforminingcomparedtotheagriculturalsystem),miningcanhaveveryconcentratedimpactsonlocalcommunitiesandecosystems.Thecostofmanyoftheseimpactswouldfallalmostexclusivelyonlocalcommunitiesimpactedbymining,alongsideotherconsiderationsaroundcorruption,workingconditions,consentandmore.Ifnotmanagedwell,therecouldbeasignificantimbalancebetweentheglobalbenefitsofdecarbonisation,tradedoffagainsthighly-concentratedlocalcostsofincreasedmining.Onlybymakingprogressonthesefrontscantheminingindustrybuildtrustandmaintainthesociallicensetooperaterequiredtorapidlyexpandproductionovercomingyears.4.6KeyareasoffocustoensuresustainableandresponsiblematerialsfortheenergytransitionLookingacrosstheenvironmentalandsocialchallengesoutlinedthroughoutChapter4,fivekeypriorityareasstandout:•Emissionsintensityofsteelandaluminium:Thecombinationofwidespreaduseandtheemissions-intensiveproductionleadstothesetwomaterialsdominatingtheglobalwarmingimpactsofmaterialsforcleanenergytechnologies[seealsoExhibit4.2].However,thereisstrongpotentialforthesetwomaterialstodecarbonisebymid-centuryprovidednecessaryactionsaretakenbyindustry,policymakersandinvestors.222•Reducinguseofprimarycopper:Miningforcopperfacescontinuousdeclinesinoregrades,whichhavefallenfromover2%intheearly1900sdowntoaround0.6%currently–andcouldfallbelow0.5%incomingdecades.223Thisleadstohigherenergyandwaterconsumptionforeverytonneofcopperproduced,alongwithgreatervolumesofwaste215LoayzaandRigolini(2016),Thelocalimpactofminingonpovertyandinequality:EvidencefromthecommodityboominPeru;OECD(2019),Enhancingwell-beinginminingregions:Keyissuesandlessonsfordevelopingindicators.216Owenetal.(2023),Energytransitionmineralsandtheirintersectionwithland-connectedpeoples.217IEA(2022),WhyisESGsoimportanttocriticalmineralsupplies,andwhatcanwedoaboutit?218OECD(2019),Enhancingwell-beinginminingregions:Keyissuesandlessonsfordevelopingindicators.219Business&HumanRightsResourceCentre(2021),TransitionMineralsTracker:2021Analysis;Mancinietal.(2018),Socialimpactassessmentintheminingsector:Reviewandcomparisonofindicatorsframeworks.220WEF/HelenClark(2023),Doesthepotentialforcorruptionintheminingsectorthreatenajustenergytransition?;InternationalMonetaryFund(2021),Taxavoidanceinsub-SaharanAfrica’sminingsector.221Twoexamplesofbest-in-classperformancecouldbethenewQuellavecocoppermine(discussedinBoxH),orAngloAmerican’sUnkliplatinummine–theonlyminetohavecurrentlysuccessfullycompletedanindependentauditmeetingtheInitiativeforResponsibleMiningAssurance’sIRMA75achievementlevel.222MissionPossiblePartnership(2022),Makingnet-zerosteelpossible/Makingnet-zeroaluminiumpossible.223Nassaretal.(2022),Rock-to-metalratio:Afoundationalmetricforunderstandingminewastes;S&PGlobal(2022),Thefutureofcopper;BNEF(2023),Transitionmetalsoutlook.MaterialandResourceRequirementsfortheEnergyTransition100rockandtailings.Reducingprimarycopperusethroughsubstitutionorrecycling,andmakingcopperminingmoreefficientandproductive,toreducewaste,emissionsandwaterpertonproducediskey.•Emissionsintensityofbatterymaterials:Highembeddedcarbonemissionsareamajorriskforthesupplyoflithiumandnickel–especiallyasfutureminingandprocessingapproachescouldbemoreemissions-intensivethanthecurrentstandard.224Herethefocusshouldbeondecarbonisingminingandmanufacturingincomingyears,whetherthroughrenewablepower-purchaseagreementsorbywidergriddecarbonisation,orbyfocusingonlower-carbonextractionmethods(e.g.DLE).•ThesupplyofcobaltfromtheDRChasbeenassociatedwithhighlevelsofconflictandarmedviolence,partlylinkedtocontrolofnaturalresourcesinthemining-heavyeasternregionsofthecountry.225Amajorareaoffocusofsuchconcernsistheartisanalandsmall-scalemining(ASM)sector.Theseminesoftenoperatewithmuchlowerhealthandsafetystandards,makeuseofforcedorchildlabour,andtakelittleornomeasurestomitigateimpactsonworkersorthelocalenvironment.226Innovationtoshiftawayfromcobalt,ashasalreadyhappenedinrecentyears[Exhibit2.10],canhelpreducedemandandmitigaterisksassociatedwithsupplyfromtheDRC,whilstimprovedsupplychaintransparencyandtraceabilitycanprovidestrongerconsumerconfidenceinresponsiblecobaltsupply.•SolarPVandpolysiliconproduction:PolysiliconproductionacrossChinaispredominantlyreliantoncoal-firedpowerstations,leadingtohighlyemissions-intensiveproduction–roughlydoublewhatdomesticproductionintheUSAorGermanywouldbe.227Inaddition,around30%ofglobalpolysiliconproductiontakesplaceintheChineseregionofXinjiang,whereconcernshavebeenraisedabouthumanrightsissuesbothcoalminingandpolysiliconproduction.228Diversifyingproductionofpolysiliconcanhelpbothreducethecarbonintensityofproductionandavoidsupplylinkedtohumanrightsissues.229Strongersupplychaintraceabilitycanalsohelpmonitorimpactsthroughoutsolarsupplychains.4.7ActionsrequiredtomakematerialsupplymoresustainableandresponsibleSustainableandresponsiblematerialssupplyrequiresminingcompaniestotakeactiontominimiseadverseimpactsacrossthreedimensions:•Reducingthelife-cycleemissionsassociatedwithbothextractionandprocessingofmaterials.•Managingandmitigatinglocalenvironmentalimpacts.•Avoidingnegativesocial,politicalandeconomicexternalities.Minersmuststriveforoperationalexcellenceacrossallofthethreeareasofaction.Manyminingcompaniesalreadyexhibitbest-in-classapproachestomanageandmitigateenvironmentalandsocialimpacts.However,inmanycasesparticularminesitesorcompaniesperformwellbelowaverage,letalonetoahighlevel.Companiesshouldprioritiselearningandimplementingpractisesfromtopperformersacrossthetopicsoutlinedbelow.Theseimpactscanbereducedbyfirst,reducingtheamountofprimarymaterialsrequiredfortheenergytransitionthroughcircularlevers(asoutlinedinChapter2),andthenbyreducingimpactsforeverytonofprimarymaterialthatneedstobeproduced–thefocusofthischapter.224IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;EITRawMaterials/Minviro(2021),ExploringtheenvironmentalimpactofbatteriesandEVmotorsusingLCA.225Seee.g.,TheEconomist(2022),TheworldshouldnotignorethehorrorsofeasternCongo.226Ibid.;AmnestyInternational/AfreWatch(2016),Thisiswhatwediefor:HumanrightsabusesintheDRCpowertheglobaltradeincobalt;WorldEconomicForum(2020),Makingminingsafeandfair:ArtisanalcobaltextractionintheDRC.227IEA(2022),SpecialreportonsolarPVglobalsupplychains.228TheBreakthroughInstitute(2022),Sinsofasolarempire;MurphyandElimä/SheffieldHallamUniversity(2021),Inbroaddaylight.229Seee.g.,IEA(2022),SpecialreportonsolarPVglobalsupplychains.MaterialandResourceRequirementsfortheEnergyTransition101Importantly,actionstoreduceenvironmentalimpactsmustaddressbothsupplyroutes:whilstscalingrecycledsupplycaneasilyhelpaddress,forexample,lowercarbonintensityrequirements,thereisalimittohowfarsecondarysupplycango(asoutlinedinChapter2).Itisthusimperativetoalsoensurethatprimarysupplyofmaterialsismadeassustainableaspossible,andthatbothroutesareincentivisedaseffectivelyaspossible.Chapter2setsouthowtoincentiviseincreasedrecycling;thischapterfocusesonensuringsustainableandresponsibleprimarysupply.Asignificantbodyofworkandinitiativesexists,fromacrossthepublicandprivatesector,topromoteandimplementsustainableandresponsibleminingandmaterialssupplychains.Thisincludes:•TheExtractivesIndustriesTransparencyInitiative(EITI):membershiprequirescountriestocommittodisclosinginformationregardingtheirextractiveindustryvaluechains,includinghowextractionrightsareawarded,howrevenuesmaketheirwaythroughgovernment,andhowtheybenefitthepublic.230Todate,morethan50countrieshaveagreedtoacommonsetofrules,aimedatpromotingtransparencyandreducingcorruptioninthesector.•TheWorldBank’sClimateSmartMiningInitiative:aimstohelpresource-richlowerincomecountriesbenefitfromtheincreasingdemandformineralsandmetals,whileensuringtheminingsectorminimisesenvironmentalandclimatefootprints.231Theinitiativeincludesstronggovernanceandregulatoryframeworks,multi-stakeholderengagement,andalignstotheSustainableDevelopmentGoalsandtheParisAgreement.•TheInternationalCouncilonMiningandMetals(ICMM):anindustrybodywhichaimstoenhancethecontributionofminingandmetalstosustainabledevelopmentandsocialprogresswithinlocalcommunitiesandentirecountries.232ICMM’sMiningPrinciplesdefinethegoodpracticeenvironmental,socialandgovernancerequirementsofcompanymembersthrough39standards.•TowardsSustainableMining(TSM):AninitiativeestablishedbytheMiningAssociationofCanadaandadoptedbyawiderangeofothercountryminingassociations,TSMrequiresmemberstoundergoassessmentandindependentvalidationacross30indicatorsofenvironmentalandsocialperformance.233•TheInitiativeforResponsibleMiningAssurance(IRMA):acoalitionofNGOs,miningcompanies,industrialconsumers,localcommunityandlabourrepresentatives.IRMAhaslaunchedaStandardforResponsibleMining,aglobalcertificationprogramforindustrial-scaleminingsites,coveringfourcoreprinciplesofbusinessintegrity,socialresponsibility,environmentalresponsibility,andplanningforpositivelegacies.234Inresponsetogrowingmomentumacrossthewholevaluechainforsustainableandresponsiblemining,alargenumberofvoluntarystandardsorganisationshavealsobeenestablished,developingcriteriaforminingcompaniesandsitestoadhereto.235Thisreportprovidesahigh-levelsummaryoftheactionsandinvestmentsneededbyminingcompaniesforsustainableandresponsiblemining,butdoesnotgointodetailonthespecifictechnologiesorcriteria,recognisingthatthesearecoveredextensivelybyvariousotherorganisations.Instead,itprovidesdiscussionofhowpolicymakers,regulators,theprivatesector,andfinancialinstitutionscancreatetherightfoundationstoenableandaccelerateprogressinsustainableandresponsiblemining.Mineralsupplychainsarelongandcomplex,coveringnotjustminingcompaniesbutalsomanyimportantdownstreamplayers,notablysmeltersandrefiners,andend-purchasersofproductsthatcontainmaterials[Exhibit4.8].Therearealsoarangeofimportantcross-cuttingactors:governments,civilsociety,voluntarystandardsandcertificationbodies,andinvestors.230EITI(2023),Ourmission.231WorldBank,Climate-SmartMiningFacility(2020),MineralsforClimateAction:TheMineralIntensityoftheCleanEnergyTransition.232ICMM(2023),Whoweare.233TowardsSustainableMining(2023),About.234IRMA(2018),Standardforresponsiblemining.235Seee.g.,CopperMark,AluminiumStewardshipInitiative,ResponsibleSteel,orSBTiinitiatives.MaterialandResourceRequirementsfortheEnergyTransition102KeyactorsacrossmineralandcleanenergytechnologysupplychainsEXHIBIT4.81.Miners2.Traders,Exporters3.Smeltersandrefiners4.Manufacturers5.Purchasers6.Recyclers7.Keycross-cuttingplayers•Carryoutextractionofmineraloreandsomeinitialprocessing.•Responsibleforoperationsatminesite,energyuse,labourrights,workingconditionsetc.•Canbelargeestablishedinternationalminers,mid-sizecompaniesorartisanalminers(whereoperationshavelessmechanisation,oftenhighlylabour-intensive).•Tradersandexporterspurchasecommoditiesinreturnforcash.Localtradinghousesandexporterstypicallyservesmall-scaleoperations(large-scaleminersoftengodirecttosmeltersandrefiners).•Responsibleforprovidingproofofpaymentsandtaxes,mineralorigins,andimport/exportinformation.•Largeinternationalcommoditytraderscarryouttransportationandtransformationofcommoditiesacrosscountries.•Consumers,installers,operators,governmentsallmakepurchasingdecisionsforcleanenergytechnologies.•Purchasingpowercanbeusedtopressuresupplierstodrivehigherstandards.•Refinedandprocessedmineralsenterconsumermarketassmallpartsofspecificcomponents(e.g.batteries).•Manufacturerscanusepurchasingpowertopressuresupplierstodrivehigherstandards.•Processend-of-lifeproducts,scrapintorecycledsecondarysupplyofmaterials.•Cancoverlogisticsofrecycling,andown/operatesmeltingandrefiningcapacity.•Pointoftransformation,wheremineralorcommodityisprocessedtoreachcommercial-marketqualityproduct.•Highlikelihoodofpurchasedminerals/commoditiesbeingphysicallymixedatthisstage,causingproblemsfortraceabilityandimpactmonitoring.CivilSocietyKeystakeholderfornewmining,manufacturingandrenewablesprojects–civilsocietyconsentwillenabletheenergytransitiontoproceedatpaceandscale.Governments•Imposedomesticand/orinternationalregulationsthatminersandmanufacturersmustadhereto.•Lawscancoverenvironmentalandsocialstandardsforoperations,duediligencereportingrequirements,localcontentrequirementsandmore.•Someinternationalcollaborationinitiativesviae.g.theOECDDueDiligenceGuidanceforResponsibleSupplyortheExtractiveIndustriesTransparencyInitiative.Voluntarystandardsandcertificationbodies•Verywiderangeofstandardscurrentlyexisting,coveringdifferentminesites,miningcompanies,commoditiesandindustries.•Setoutrequirementsforadherence,carryoutauditsanddue-diligenceastrustedthirdparties.InvestorsandMarkets•Investorsprovidecapitaltominers,smeltersandmanufacturers.Marketsservetoconnectphysicalproducerswithfinancialplayers,providingpricing,optionsandfuturescontractsandotherservices–including,forexample,proposed“passports”thatprovidetransparencyaroundkeysustainableandresponsiblesourcingcriteria.•Canactasenforcementmechanismforcompaniestoadheretoregulationand/orvoluntarystandardsandreportingmechanisms.•Multilateraldevelopmentbanksoftenplayakeyrolein:a)de-riskingfinanceforprojectsinlower-incomecountries;b)drivingadoptionofnewregulationsandstandards.Creatingaconcertedandwidespreadshifttowardssustainableandresponsibleminingrequirestheincentivesandsignalsfromallpartsoftheminingsupplychaintobealigned.Acrucialaspectofensuringenvironmentalandsocialimpactsareminimisedisthroughregulationsinkeyminingjurisdictions:thesemustbebothrobustandwellenforced,withlocalregulatorshavingthesufficientexpertise,capacityandfundingtoverifysustainableandresponsibleminingoperations.MaterialandResourceRequirementsfortheEnergyTransition103Thissectioncovers:•Actionsminingcompaniescantaketomakeminingmoresustainableandresponsible,drawingonexistinginitiatives.•Recommendationsforpolicymakers,regulators,andtheprivatesectortoenableandpromotesustainableandresponsiblemining.•Adeep-diveonvoluntarystandardswithinminingandrecommendationsforimprovement.4.7.1Actionsforminingcompaniestomakeminingmoresustainableandresponsible➀DecarbonisingtheminingsectorandvaluechainAsoutlinedinSection4.1,mine-siteanddownstreamemissionstogetheraccountforaround11%ofglobalGHGemissions.Inadditiontotheemissionsthatwillbeavoidedfromagradualeliminationoffossilfuelextraction,itisalsopossibletoreachnet-zerowithinthemininganddownstreamsectors(i.e.,steelandaluminiumproduction,twoofthekey“hard-to-abate”heavyindustrysectors)–butthiswillrequirestrongactionfrombothgovernmentsandbusinesses.236Thissectionsummarisessomeofthekeyleversfordecarbonisationwithinmining;separately,seetheMissionPossiblePartnership’ssectortransitionstrategiesforindustry-backednet-zeropathwaysforsomeofthehard-to-abatesectorsreliantonmining,includingsteelandaluminium.237Keyactionstodecarbonisetheminingsector:•Transitiontocleanelectricity:fortheaverageminesite,aroundhalfofenergyconsumptioniselectricity.238Miningcompaniescanensuretheyareusingcleanpowerbydevelopingon-siterenewableenergygenerationcapacity,andthroughcorporaterenewablepowerpurchaseagreements.•Focusonhighest-qualitydeposits:miningoregradesthatareonlyfractionallyhigherinabsoluteterms(e.g.,goingfrom1%to1.05%oregradeforcopper)candeliverdisproportionatebenefitsinreducinglife-cycleemissionsforend-products.•Switchtocleanheavyvehicles:dieselminingvehicleshavetypicallybeentheonlyoptionfortransportingthesizeandweightofmaterialsaroundminesites,andcanaccountforanywherebetween30%and80%ofdirectemissions.239Dieselfleetscanbereplacedwithbattery-electricandhydrogentruckswhich,whencombinedwithcleanelectrification,canreducedirectminesiteemissions.Mosturbanzero-emissionstrucksareexpectedtoreachtotalcostofownershipparitybetween2025–34,withlonghaulfollowingshortlyafter.240MiningcompaniescandevelopstrategicallianceswithOEMsofsuchvehiclesandshouldinvestaheadoftimeintheenablingon-sitecharginginfrastructure.•Investinenergyefficiency:thereareanumberofinnovations,includingdigitalisation,dataandanalytics,andtechnologicalimprovementswhicharedrivingmorepreciseandefficientminingoperations,thereforereducingenergyuseaswellaslocalenvironmentalimpacts.Forexample,newapproachestotheextractionandpurificationofnaturalgraphite,usinglowertemperaturesandlesscorrosiveacids,canhelpreduceitsembeddedcarbonemissionsby95%relativetosyntheticgraphite,whichismadefromfossilfuels.241•Neutraliseresidualemissions:foranyremainingresidualorhard-to-abateemissions,miningcompaniesshouldneutralisetheseusinghigh-qualitycarbonremovaloffsetstoachievenet-zeroemissions.242Crucially,thisshouldnotbeasubstitutefordeepdecarbonisationeffortsandany“beyondvaluechainmitigation”shouldbeadditional,notinsteadof,absoluteemissionsreductionswhicharetechnicallyandeconomicallyfeasible(asperthepointsabove).236Seee.g.,ETC(2022),AustralianIndustryETI–Phase2:Settingupindustrialregionsfornetzero;IFC(2023),Net-ZeroRoadmapforCopperandNickel;CEFC/MRIWA(2023),Mininginalowemissionseconomy.237MissionPossiblePartnership(2022),Makingnet-zerosteelpossible/Makingnet-zeroaluminiumpossible.238ICMM(2023),MitigatingGHGemissionsandbuildingresilience.239ICMM(2022),Collaborationforinnovation:Acceleratingtheimplementationofzeroemissionsvehiclesfortheminingandmetalsindustry.240MissionPossiblePartnership(2022),MakingZero-EmissionsTruckingPossible.241Seee.g.,TheEconomist(2023),FirmssearchforgreenersuppliesofgraphiteforEVbatteries.242Seee.g.,ETC(2021),MindtheGapforadetaileddiscussionontheneedforremovalsandconditionsfortheirusebycompanies.MaterialandResourceRequirementsfortheEnergyTransition104Miningoperationsareoftenlocatedinclimate-vulnerableareas,makinginfrastructureexposedtophysicalrisks(e.g.,floodsandstorms),andbusinessoperationsvulnerabletotheeffectsofclimatechange(e.g.,waterscarcity,transportandlogisticsdisruptions).243Miningcompanieswillthusdirectlybenefitfromcontributingtoglobaldecarbonisationeffortswhichlimitwarmingtoascloseto1.5°Caspossible–andshouldsimultaneouslyinvestinlocaladaptationmeasures,tofuture-proofsupplyoperations.➁MitigatinglocalenvironmentalandnatureimpactsBettermitigationandmanagementoflocalenvironmentalandbiodiversityimpactsiscriticaltothescale-upinminingforthetransitionoccurringinasustainableandresponsiblemanner.Keyactionsforminingcompaniestomitigatelocalenvironmentalimpactsinclude,butarenotlimitedto:Precisionmining:focusingonhighest-qualityresourcesandinvestingintechnologicalinnovationscanoffersignificantopportunitiestoreducelocalenvironmentalimpacts(e.g.,waste,pollution,wateruse).Thiscanincludeprecisiontargetingofhigh-graderesourcesandincreasingtheuseofdatasciencetooptimiseoperationsandtraceimpactsinreal-time.Improvedtailingsmanagement:miningcompaniesneedtoadoptacomprehensive,holisticapproachacrossthelifecycleforthesafeandresponsiblemanagementoftailings,includinggovernanceoftailingsmanagement(e.g.,accountabilityfordecisions,riskmanagement),andgoodengineeringpracticeswhichcanhelpreducehumanerrors.244TheInternationalCouncilonMetalsandMininghasrecentlypublishedacomprehensivestrategytohelpminingcompaniesreducethevolumesoftailingsproducedbymining.245Thisincludesarangeofshort-andlong-termsolutions:•Advancedsensingandparticlesorting,tobetteridentifywhichrockfragmentsshouldbekeptandrecovered,orrejected.•Increaseduseofin-situextraction–currentlymainlyusedforuraniummining,butpotentiallyalsoapplicableto,e.g.,rareearthelements,copperornickel(althoughimpactsonlocalwatersupplywouldneedcarefulmonitoring).246•Preferentialfracturingtechniques,toensuremoretargetedfracturingclosetomineralgrainboundaries.Beyondthis,exploringoptionstore-processtailingsandwasterockinordertoextractfurthervaluableresourcesshouldalsobeexploredwheretechnicallyandeconomicallyfeasible–asoutlinedforcopperinChapter3.Reducingfreshwaterconsumption:Thereareexistingeffortstoreducewaterconsumptionatminesites,improvingminesiteefficiencyofwateruse,247increasere-useandrecyclingofwater,andensurethatminingcompaniesmakeuseofdistinctwaterresourcesfromlocalpopulations.248Sucheffortsrequireclosecollaborationbetweencompanies,localcommunitiesandgovernmentstounderstandthedifferentusesandneedsforwaterinaparticularbasinorcatchmentarea–andstrongeruseofmonitoringandreportingofwaterconsumptionshouldbecentraltothis.Thedevelopmentofwaterusestrategiesatnationalorregionallevelsfortheminingsectorandbeyond,ashasbeendoneinPilbarainnorth-westernAustraliaandbytheChileanCopperCommission,canbehighlyeffective.243IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;McKinsey&Co.(2020),Climateriskanddecarbonisation:WhateveryminingCEOneedstoknow.244ICMM(2021),TailingsManagement:GoodPracticeGuide.245ICMM(2022),Tailingsreductionroadmap.246Seee.g.,CSAGlobal/MaximSeredkin(2019),Overviewofin-siturecoveryfornon-uraniummetals.247Gunsonetal.(2012),Reducingminewaterrequirements.248McKinsey&Company(2020),DesalinationisnottheonlyanswertoChile’swaterproblems;TheEconomist(2022),Atestofwhetherbigminingissociallysustainable.MaterialandResourceRequirementsfortheEnergyTransition105Attheminesite,moreeffectivewatermanagementcaninclude:249•Usingdesalinatedwatersupplies.250•Re-routingexistingwatersources,toavoidcontaminationand/oravoiddisruptingexistingusesbylocalcommunities.•Usingwaterfromsourcesnotsuitableforlocalconsumptionbutwhichareappropriateforcertainminingprocesses.•Ensuringquantityandqualityofwaterdischargesarecloselycontrolledtominimiseimpacts.•InvestinginR&Dandinnovationtoreducewaterrequirementsacrossminingandprocessing.Strongernaturestewardship:miningoftenoccursinecologicallysensitiveareasandhasaresponsibilitytoprotectlocalenvironments,giventhesectorisentirelydependentonnaturetooperate.Keyactionsshouldinclude:•CommitmentnottomineinWorldHeritageSites,regardlessofhowrichthereservesare.251•Sharingbiodiversitydataatminesitestosupportspeciesconservationandenableongoingmonitoring.252•Becoming“stewardsofnature”,andhelpingtoprotectandnurturelocalecosystems.Restoringdegradedlandinbiodiversityhotspots,committingtoprotectforestinsideoradjacenttominingleases,andimplementingclearstepstomitigatebiodiversityloss.253Acrucialaspectofthisisensuringthatimpactsaremonitoredandmitigatedbothonandoff-siteforminingprojects.254•EngagewithTaskforceonNature-relatedFinancialDisclosures(TNFD)pilotstodevelopanature-relatedriskmanagementanddisclosureframework,whichaimstointegratenatureintodecision-making.255•Currently,mostenvironmentalimpactassessmentsdonotincludeestimatesforindirectdeforestationcausedbynewprojects.Researchandtrialsshouldbeencouragedinordertobetterunderstandhowtheseindirectimpactscanbequantified,andinfutureaccountedforinassessments.Beyondthesespecificactions,therealsoexistsanopportunityforminingcompaniestodeveloppotentialnewbusinessstrategiesinamorecircularworld,buildingastrategyandcompanyidentifynotjustaroundsustainableandresponsiblemining,butaroundhowtheyoperateinacirculareconomy.Thiscouldinvolve:•Developingcircularbusinessmodelstobecoming“resourcemanagers”,whereprovisionofresources/metalsisdoneinamoreservice-orientedway.Thiswouldexpandoperatingmodelsbeyondsimplyminingprimarymaterials,butcouldextendtotheprovisionofsecondaryrecycledsupply,providingtracingandmonitoringcapabilitiesthroughoutmateriallife-cycles,orbecomingeffectivemanagersofdisusedminingsitesandwaste.Byshiftingtosuch“metals-as-a-service”andotherbusinessmodelsthereisthepotentialtoexpandtherangeofrevenuestreamsavailabletocompanies–asisalreadybeingdoneforcertainpreciousmetals.256249FormoredetailseeIRMA(2018),StandardforResponsibleMining–Chapter4.2;ICMM(2014),Waterstewardshipframework.250Althoughenergyrequirementsarequitehigh(upto16kWh/m3),costshavefallentobelow$2/m3,providinganopportunityforexpandeduseofdesalinationwherelocalenergy,costs,andmanagementofbrinedischargepermit.Ekeetal.(2020),Theglobalstatusofdesalination:Anassessmentofcurrentdesalinationtechnologies,plantsandcapacity;ShokriandFard(2022),Techno-economicassessmentofwaterdesalination:Futureoutlooksandchallenges.251Forexample,ICMMmembershavecommittednottoexploreormineinWorldHeritageSites.252AngloAmerican,forexample,hascommittedtoshareitsdataintheeBioAtlas,aninitiativefromtheIUCNandNatureMetricsmeasureandtrackfillgapsinknowledgearoundconservationandbiodiversity.Mining.com(2021),AnglocommitstoprovideeDNAdatatoprotectbiodiversity.253Forexample,ValeisrestoringdegradedareasoftheCarajásNationalForestanditssurroundingareasinBraziltore-establishconnectionsbetweenfragmentedareasofforestandtoprotectthehomeofendangeredspecies.Itisplantingmorethan500,000seedlingstoexpandthenativevegetation,creatingnewmicro-habitatsforwildlifeandincreasingthediversityofspecies.WorldBank(2019),Forest-smartmining;ProteusPartnersorICMM(2015),Across-sectorguideforimplementingthemitigationhierarchy.254Seee.g.,Giljumetal.(2022),Apantropicalassessmentofdeforestationcausedbyindustrialmining;Sonteretal.(2020),Renewableenergyproductionwillexacerbateminingthreatstobiodiversity.255TNFD(2023),TNFDPilots.256Seee.g.,Systemiq(2021),Everything-as-a-Service;Evonik(2023),Preciousmetalmanagement&recycling;BASF(2023),PreciousandBaseMetals.MaterialandResourceRequirementsfortheEnergyTransition106➂Managingsocial,politicalandeconomicexternalitiesTheenergytransitionisnotjustanecessaryroutetoachievenet-zero,butanecessarypathtosustainableandinclusivegrowthanddevelopmentformiddleandlowincomecountries.Achievingajustenergytransitionrequiresaddressingclimatechangeatthesametimeaspovertyandinequality.Ifdoneright,developingasustainableandresponsibleminingsectorcanplayakeyroleinthis–andcanhelpachievethesocietalbuy-inrequiredforminingofmetalsfortheenergytransition.Therearemanyfactorsbeyondthecontrolofminingcompanieswhichcaninfluencehowminingbenefitsorimpactslocalcommunitiesandeconomies,includingpoliticalandmacroeconomicinstability,thestrengthofacountry’sinstitutionsandgovernanceframeworks,andtherelianceongovernmentrevenuesandGDPfrommining.InitiativesliketheEITI,theworkofMultilateralDevelopmentBanks(e.g.,theWorldBank),andregulationinimportingcountriescanplayaroleininfluencingthesefactors(discussedinSection4.7.2).Therearealsoseveralkeyactionsthatminingcompaniesshouldprioritise:Strongcorporategovernance:achievingsustainableandresponsiblematerialssupplyshouldbeakeypriorityofcorporatestrategyandacrossallbusinessfunctionsanddecision-making.Measurementandmanagementofimpacts:thereareanumberofstepsthatminingcompaniescantaketoimprovehowrisksandimpactsareaddressed:•Betteridentificationandtrackingofimpacts,fromannualcarbonemissionsandwateruse,tolocallandsubsistenceorrespiratorydiseasesamongstworkers.•Proactivelyandopenlydiscussingthetrade-offsbetweendifferentenvironmentalandsocialobjectiveswithlocalcommunitiesandpolicymakers,forexampleopenpitmininghaslowerenergyrequirementsbutalsoresultsinmorelandchange.•Integratingenvironmentalandsocialimpactassessmentswithintheearlystagesofprojectplanning,monitoring,andcommunityengagement.Issuesmustbeidentifiedandaddressedbeforeprojectsareapproved.•Developcontinuousapproachestoriskmanagement,whereproceduresareimprovedonanongoingbasisinresponsetoimpactsandrisks.Communitypartnerships:investinginstrongstakeholderrelationshipsandbuildingtrustwithlocalcommunitiesisahugeopportunityforminingcompanies,whichinturnenablesminingcompaniestobuildtrustwithinvestorsandpolicymakers.Analysisofcasestudies,suchastheQuellavecomineinPeru[seeBoxI],suggeststhatfeaturesofsuccessfulpartnershipsinclude:•Acleardefinitionofthecommonvisionandagreementonhowtosharelocalnaturalresources(e.g.,howwaterfromareservoirwillbeallocatedtominingversusfarming).•Localcommunitiesmustbeabletoreceiveashareinthebenefitsgeneratedfromminingrevenues,forexamplethroughinvestmentbyminingcompaniesincommunitydevelopment,infrastructure,andskillsandtraining.•Fairrepresentationofthelocalcommunityinofficialengagementand,crucially,fromtheveryinitialstagesofprojectplanning.MaterialandResourceRequirementsfortheEnergyTransition107BoxI:Quellaveco,a21st-centurycoppermineAngloAmerican’s$5.5billioncoppermineinPeruillustrateshowaminecanbedevelopedwithsustainableeconomicdevelopmentofthelocalareaatitscore.257Tosecureitsenvironmentalandsociallicensetooperate,AngloAmericanagreedtoinvestinthefollowing:•Thedevelopmentofanewwaterreservoir,builtbyAngloAmerican.Ofthereservoir’s60millionm3ofwater,only4millionm3areusedbythemine,withtherestgoingtothelocalcommunityandfarmers.Tosupplementthiswateruse,theminewillrelyonwaterfromaseparateriverwhichisnaturallysuffusedwithheavymetalsandisthereforeunsuitableforlocalhumanoragriculturaluse.•Thechannellingofalocalrivertoflowpastthemine,toensureitswaterisuntouched.•A$1billiondevelopmentfundoverthe30yearlifeoftheminetopayforcommunityprojects.•Tohireandtrainlocalpeopleandgiveopportunitiestolocalsuppliers.AccordingtoAngloAmerican,70%ofworkersarefromthelocalareaandalmost30%arewomen(comparedto10%inotherminesinPeru).CriticaltothesuccessofthislicensewasextensivedialogueandengagementbetweenAngloAmerican,policymakers,localgovernors,andrepresentativesfromacrossthelocalcommunitythrough18monthsofdialogue.4.7.2Recommendationsforpolicymakers,regulators,andtheprivatesectortoenableandpromotesustainableandresponsibleminingTosomeextent,miningcompanieswillinvestintheactionsandsolutionsdiscussedintheprevioussectiontomaketheiroperationsresponsibleandsustainablebecausethereisastrongbusinessimperativetodoso.Threekeydriversofthishavebeen:•Regulators,investors,manufacturersandconsumersareincreasinglydemandingevidenceofsustainableandresponsiblemining.•Miningcompanieshavemadenet-zeroemissionsandwiderenvironmentalcommitments.•Thebenefitsoutweighthecostsofsuchinvestments(e.g.,protectingnaturalresourcesandcommunityengagementincreasebusinessresilienceandreducedownsiderisks).However,becausetheretypicallyisanupfrontcostassociatedwithsuchactions(bothfinancialandatimecost),andbecausethereturnsmaytaketimetomaterialise,businessactionaloneisunlikelytobesufficientonitsowntogeneratethesystemchangeneededacrossthesectorglobally.257AngloAmerican(2023),Quellavecomine;CopperAlliance(2021),FuturesmartMiningTMatAngloAmerican’sQuellavecomine:Smart,safeandsustainable;TheEconomist(2022),Atestofwhetherbigminingissociallysustainable.108MaterialandResourceRequirementsfortheEnergyTransitionTherearethereforeanumberofactionswhichpolicymakersandregulators,thedownstreamvaluechain,andfinancialinstitutionscantaketomandateorincentivisesuchchange:➀Strengthenenvironmentalregulationsforminingandcleanenergytechnologysupplychains,startingwithcarbonintensity.Policymakers&regulatorsDownstreamvaluechainFinancialinstitutionsRegulationshouldstartwithstrongrequirementstoreducecarbonemissions,forexamplebyintroducingcarbontaxationformaterialssupply,orrequirementsformaterialsorcleanenergytechnologiestohavelife-cycleemissionsbelowacertainthreshold–asisbeingdiscussedforupcomingEUregulationonbatteriesandwillbeimplementedthroughtheEU’sCarbonBorderAdjustmentMechanism.258Akeypartofthiswillbeensuringtherearesupportingreal-economypoliciesincentivising,e.g.,thedeploymentofcleanenergytechnologies.Overtimeandasawiderrangeofimpactsareincludedinmonitoringandtransparencyefforts,regulationshouldexpandtocoveradditionalimpactssuchaswaterintensity,localecotoxicity,deforestationorbiodiversity.Regulationsonenvironmentalimpactscanapplyatbothendsofthevaluechain:•Regulationswithinminingcountries,whichdirectlyregulateminingoperationsanddeterminethestandardsthataminesitemustadhereto.Insuchcases,aprioritymustbetoensurethatregulationshavecleartargetsandstandards,andthatregulatorsarewell-fundedandhavethecapacityforstrongenforcement.◦Forexample,localgovernmentscouldrequireminingcompaniestoincludeindirectdeforestationinenvironmentalimpactassessments,andincertaincasespayformonitoringandprotectiontoensurethisdoesnottakeplace.•Regulationsincountriesorjurisdictionswhichimportmaterialsorfinalgoodsandwhichsetcriteriathatmustbemetforimportation/sale.Themorecountriesorjurisdictionswhichadoptstrongregulations–andthemorethatthesearebroadlyalignedandconsistentacrosseachother–themoreeffectiveregulationwillbeininfluencingbusinessdecisions,asthereislessopportunityforleakagetootherlessregulatedmarkets.Astwooftheworld’slargestconsumermarkets,regulationsintheEUandtheUSAalonehavethepotentialtoactasastrongsignaltominingcompaniesanddownstreammanufacturers,andcollaborationthroughbodiessuchastheG7,G20andtheOECDcanhelpdrivethisevenfurther.➁UsepurchasingpowertodriveprojectswithhighenvironmentalandsocialstandardsPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsGovernmentsshouldusetheirpurchasingpowertocreateasignificantdemandsignalforproductsmanufacturedusingsustainableandresponsiblematerials.Theycandothisthroughclearpublicprocurementstandardsforcarbonemissionsandenvironmentalandsocialimpacts.Thiscouldextendbeyondcleanenergytechnologiesintoothersectors(e.g.,defence,construction).ArecentexampleisFrance’slow-carbonregulationforsolarmodules.259Undertherules,anysolarprojectsunderpublictendersmustbebelowathresholdlevellevelofcarbonintensity.SimilarproposalsarepartoftheEU’sNetZeroIndustryAct,wheresustainabilityandresiliencerequirementscanmakeup15–30%ofawardingcriteriafornewcleanenergytechnologies.260258EUCommission(2022),GreenDeal:EUagreesnewlawonmoresustainableandcircularbatteriestosupportEU’senergytransitionandcompetitiveindustry;EUCommission(2023),CarbonBorderAdjustmentMechanism.259PVMagazine(2019),Theweekendread:Playingbythecarbonfootprintrules.260Theserequirementswould,however,bewaivediftheyaddover10%totechnologycosts.BNEF(2023),Europe’sbidtoreshorecleantechpullsitspunches.Responsibleactors:LeadingactorsSupportingactorsMaterialandResourceRequirementsfortheEnergyTransition109Governmentpurchasingpowercanalsoextendtobuyingcriticalrawmaterials,wheregovernmentsestablishstrategictradedeals,advancepurchaseagreements,andso-called“buyer’sclubs”.Thereisanopportunityforgovernmentstodrivesustainableandresponsibleminingthroughthesedeals,tyingpurchasestoclearenvironmentalcriteriaandregulations–asisbeingproposedbytheUSMineralsSecurityPartnership,andintheEU'sproposedCriticalRawMaterialsClub.261Incertaincases,outrightprocurementmandatesoradvancepurchaseagreementsmightbeneededtospecificallyincentivisesustainableprimarysupply.Thiscanhelpavoidleakageofimpactstootherjurisdictions,oravoidsstrongerenvironmentalandsocialstandardssimplybeingmetbyrecycledsupply.Companiesinthedownstreamvaluechain,namelymanufacturersandretailers,canalsosendsignificantdemandsignalstotheminingsector,forexamplethroughofftakeagreementsandbyrequiringcompaniestomeetcertainvoluntarystandards.Forexample,BHPhavesignedanagreementwithFordtosupplylow-carbonnickelforEVbatteries,262andApplehavepartneredwithELYSIStomakeuseoflow-carbonaluminiuminsomeiPhoneproduction.263➂FinancialinstitutionscansendastrongsignaltotheminingsectorifinvestmentdecisionsdependonsustainableandresponsibleproductionPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsWhilegovernmentsandmanufacturerscansendstrongdemandsignalstotheminingsectorforsustainableandresponsibleproduction,financialinstitutionscanexertsignificantpressureifinvestmentisdependentonsustainableandresponsiblemining.Thereareseveralreasonswhyfinancialinstitutionswouldprioritisefinancingforsustainableandresponsibleminingprojects:•Expectedreturnscouldbehigher,forexampleduetogreaterdemandfromgovernments,manufacturersandultimatelyend-consumers.•Downsiderisksarelikelytobelower,forexamplebecauseofexpectationsoftighterregulationinkeymarkets,ordelaysandadditionalcostsduetooppositionfromlocalcommunities.•Net-zeroorotherESG-relatedcommitments,whichrequirefinanciers’portfolioofinvestmentstobeincreasinglysustainableandresponsible.Giventhededicatedexpertiseofvoluntarystandardsorganisationsinauditingandappraisingminingsitesandcompanies,financialinstitutions–bothprivateandmultilateraldevelopmentbanks–shouldalsoincreaseeffortstoleveragethisexpertiseininformingtheirownassessmentsofminingprojectsandexplorewaystotieinvestmentdecisionstosustainabilityandresponsibilitycriteria.ThisisdiscussedinmoredetailinSection4.7.3.➃Driveadoptionofsupplychaintraceabilityandcommoditydifferentiationthroughindustry-wideengagementandtrustedthird-partyauditorsPolicymakers&regulatorsDownstreamvaluechainFinancialinstitutionsThecurrentminingindustryconsistsofahighlyfragmentedmarketwithregardtoenvironmentalandsocialstandards.Theriskisthatrapidlygrowingdemand,inpartdrivenbytheenergytransition,exacerbatessuchasituation.Supplychaintraceabilityoffersanopportunitytobringtransparencytosuchimpacts,andmanageandreducethem.Miningvaluechainsareoftencomplex,requiringlotsofstepsbetweenmaterialsbeingminedandbeingsoldaspartofatechnology[Exhibit4.9].Theblendingandmixingthatarisesfromthesestepsmeansitishardtodifferentiatespecificmaterialsastheymovedownthevaluechain,withinformationonoriginsgettinglost(unlikeforconsumablecommodities,e.g.,chocolateorcoffee).264261USDepartmentofState(2022),MineralsSecurityPartnership;EENews(2023),EUtoform€20bncriticalmaterialsclub.262BHP(2022),BHPsignsMOUfornickelsupplywithFordMotorCompany.263ELYSIS(2022),ELYSISstrengthensitstieswithApple.264RMI(2022),SupplyChainTraceability:LookingBeyondGreenhouseGases.MaterialandResourceRequirementsfortheEnergyTransition110Asminedmaterialsaretradedasundifferentiated,marketdemandsignalsforsustainableandresponsiblegoodsarelost.However,momentumisbuildingfromvariousplayersinminingsupplychainsforcommoditydifferentiation:•CopperMark,avoluntarystandardsorganisation,hasdevelopeda“ChainofCustody”standard,whichaimstocreatetransparencyinhowcopper-containingproductsmovethroughasupplychain.265,266•STARTResponsibleAluminiumusesblockchaintechnologytocollectdataonandcreateadigitalchainofeverymajoreventinamaterial’slifespan.267RioTintoandBMWGrouphaverecentlyannouncedapartnershiptodeploySTARTandsupplyBMW’sproductionplantswithresponsiblysourcedaluminium.268•TheEU’supcomingbatteryregulationrepresentsastep-changeinthepotentialforsupplychaintraceabilityandtransparencywithinthesector.Thiswillincluderequirementsfora“digitalbatterypassport”,enablinglife-cycletracingofabattery’scarbonfootprint,recycledcontentandsupplychainduediligenceobligationsincludingenvironmentalrisks.ThisregulationisintendedtocreatealevelplayingfieldforallbatteriessoldintheEU,regardlessofthelocationofproduction,andwillsendastrongglobaldemandsignalforsustainableandresponsiblesourcingofkeymaterials.269265CopperMark(2023),Chainofcustodystandard.266Chainofcustodyreferstotheflowofmaterialsandgoodsfromoneendofthesupplychaintotheother.Variousdifferentmodelsexist,includingsegregationmodelswherethemixingofcertifiedcommoditiesiskeptseparatefromnoncertifiedproducts,andcontrolledblendingmodelswherearatioofcertifiedtononcertifiedproductsisspecified.RMI(2022),SupplyChainTraceability:LookingBeyondGreenhouseGases.267StartResponsible(2021),RioTintolaunchesSTART.268RioTinto(2023),Roadtoagreenerfuture:RioTintopartnerswithBMWGrouponpremiumaluminiumcarparts.269EUCommission(2022),Batteries:dealonnewEUrulesfordesign,productionandwastetreatment;Circulor(2022),BreakingdowntheglobalrelevanceoftheEUBatteryRegulation.SupplychaintraceabilitycanenablematerialstobedifferentiallytradedbasedonhowtheyhavebeenproducedEXHIBIT4.9Materialmarketstoday–identicalgoodsregardlessofproductionDifferentiatedmarket–“how”it’sproducedmattersMaterialSitesMinersSmeltersRefinersManufacturersConsumersCertifiedsustainableandresponsibleUncertifiedMaterialSitesMinersSmeltersRefinersManufacturersConsumersUncertifiedCertifiedsustainableandresponsibleVoluntarystandardsandsupplychaintraceabilitycanhelpkeeptrackofmaterialsofdifferentoriginsproducedtodifferentstandardsofsustainableandresponsiblemining.Materialsaregraduallymixedthroughoutsupplychain,andinabilitytodifferentiateleadstosamepriceand“quality”acrossallend-products.Materialsremaindifferentiatedthroughout,allowingmaterialsandend-productstobedifferentiatedaccordingtohigher/lowerstandards,andthereforesoldatdifferentprices.SOURCE:SystemiqanalysisfortheETC.MaterialandResourceRequirementsfortheEnergyTransition111Actionstobuilduponthismomentumforsupplychaintraceabilityandcommoditydifferentiationinclude:•PolicymakersandregulatorsincountriesoutsidetheEUshoulddevelopsimilarregulationtotheEUBatteryRegulation,includingrequirementsfor“digitalbatterypassports”,whichcanamplifyglobaldemandsignalsforsustainableandresponsibleproduction.Regulationshouldstartwitheasy-to-quantifymetrics(e.g.,carbonintensity,wateruse),andscaletoencompassqualitativemeasureson,e.g.,labourconditions,humanrights.•Miningcompaniesandmanufacturersshouldexplorestrategicpartnershipstosourcesustainablyandresponsiblyproducedmaterials,deployinganddevelopingapproachesandtechnologiesfortracingandauditingmaterialsthroughoutsupplychains.◦Aspartofthis,large-scaletrialsoftraceabilityforsustainablematerialsandcleanenergytechnologiesshouldbecarriedoutby2030.Forexample,deployingawindfarmorproducinganEVwheremostorallmaterialsandimpactshavebeentracedfromminetodeployment.•Miningcompaniesandvoluntarystandardsorganisationsshouldcollaboratetodevelopandstrengthenproduct-levelstandards,whicharecurrentlymuchweakerthansite-levelorcompany-levelstandards(seenextsection).270Takingsuchactionswouldallowminingcompaniestobedirectlyrewardedforsustainableandresponsiblyproducedproductsintheformofhigherprices.4.7.3MakingvoluntarystandardsandcertificationsmoreeffectiveindrivingsustainableandresponsibleminingpracticesRegulationsetsoutthemandatoryrequirementsthatminingorimportedgoodsmustadheretowithinacertainjurisdiction,ineffectsettingafloorofminimumstandards.Voluntarystandardsandcertificationsaimtogoabovethis,bysettingambitious,globally-applicablecriteriathatminingsitesandcompanieshavetoadheretoinordertobecertified.Inthisway,theycanincentivisecompaniestoadoptbestpracticesandconvergetowardssustainableandresponsiblemining,whilealsoencouragingtransparencyandreportingofimpactsacrossthesector.Certificationprovidesminingcompanieswithreputationalbenefits,enablingthemtosell(potentiallyatahigherprice)tomoreofthemarket.Therehasbeenaproliferationofvoluntarystandardsoverthepastdecade.AsoutlinedinBoxJ,thesevaryintermsofcoverage(e.g.,somearefocusedonjustonematerial,whileotherscoverabreadthofmaterials),thestringencyandlevelofprescriptivenessoftheircriteria,andtheauditprocess(e.g.,boots-on-the-groundassessment,regularityofchecks).Thegrowthofnewvoluntarystandardorganisationshaslargelybeendrivenbydownstreampressurefrompurchasersofmaterials,forexampletheautomotiveindustrydemandingtoknowmoreaboutthematerialsandresourcestheyuse.Thispressureis,inturn,partlydrivenbyincreasingdemandsfromconsumersandregulatorstoknowwhereandhowmaterialshavebeenproduced.Thereisalsogrowinginterestinvoluntarystandardsfrominvestors(e.g.,responsiblepensionfunds),butthisisrelativelysmall-scaletodate.270RMI(2022),SupplyChainTraceability:LookingBeyondGreenhouseGases.112MaterialandResourceRequirementsfortheEnergyTransitionBoxJ:VoluntarystandardsVoluntaryminingstandardstypicallycoverawiderangeofissuestopromotesustainableandresponsiblemining.Theseinclude:271•Environmentalresponsibility:howminingcompaniesmanageandlimittheirwasteandtailings,wateruse,emissions,andpollution.•Socialresponsibility:howminingcompaniesensurefairlabour,promotehealthandsafety,andcontributepositivelytolocalcommunitiesandeconomies,includingleavingapositivelegacywhenaminingcompaniesvacatesalocation.•Businessresponsibility:howminingcompaniesensurelegalandregulatorycompliance,robustduediligenceandriskmanagementprocesses(e.g.,humanrights),engagewithstakeholders(e.g.,inthelocalcommunity),andensurerevenueandpaymentstransparency.Standardscanapplyatvariousdifferentlevels:•Company-level:anentirecompany’soperationscanbecertified,coveringmanydifferentminesitesandmaterials.•Site-level:individualminingsitescanbecertified.•Product-level:thesestandardscanapplywhereminingsitescanproducedifferentqualityoutputs.Thesestandardsarelesswelldevelopedwithinthecriticalrawmaterialssector,butarewellestablishedwithingold,othermetals,andfairtradecommodities.Theycanbeapowerfultoolforproductdifferentiationifusedwidely.271Forexample,seetheInitiativeforResponsibleMiningAssurance(IRMA)’s(2018),StandardforResponsibleMining.Voluntarystandardscanapplytoproducts,sitesandcompanies,andcanbematerial-specificorcovermultiplematerialsEXHIBIT4.10Miningcompany-levelSite-levelProduct-levelMaterial-specificMulti-materialFIRAgoldcertificationFairtradeLondonMetalExchangepassportResponsibleJewelleryCouncilMaterial-specificMulti-materialCopperMarkResponsibleSteelAluminiumStewardshipInitiativeIRMAMaterial-specificMulti-materialAluminiumStewardshipInitiativeEITIICMMAllianceforResponsibleMiningTowardsSustainableMiningCopperMark:JointDueDiligenceStandardforCopper,Lead,Molybdenum,NickelandZinc��SOURCE:SystemiqanalysisfortheETC.NOTE:Listedvoluntarystandardorganisationsareexamples;thislistisnotexhaustive.EITI=ExtractivesIndustriesTransparencyInitiative;ICMM=InternationalCouncilonMiningandMetals.��MaterialandResourceRequirementsfortheEnergyTransition113Thereareanumberofchallengeswhichcurrentlylimittheeffectivenessofthevoluntarystandardsmarket:•Therearetoomanystandards:Theproliferationofdifferentstandardsdilutesthemarketsignalsthatcertificationcanprovidetopurchasers,financialinstitutionsandconsumers,whilealsoreducingconfidenceinanyonestandard.Inaddition,itincreasestheburdenoncompaniestonavigatewhichstandardstoadoptandtounderstandhowdifferentstandardsmapagainsteachother.•Manystandardslackrobustness:Insomecases,thereareissueswiththestandardsthemselves,includingalackofambitionandclarityintermsofrequirements,andincertaincasesstandardscanlackdecision-makinginfluencewithinindustry.Inaddition,thereareoftenlongtimelagsbetweenauditsandinsufficientfundingforsufficient“bootsontheground”.•Standardsdon’tspeaktoinvestorsandconsumers:Data,evidenceandresultsarenotcommunicatedinameaningfulwaytopurchasersorconsumers,duetodifficultiesincross-comparingdifferentstandardswithdifferentformats,ormappingthemontoregulations.Inaddition,thereisuncertaintyaroundwhichstandardsare“best”ormostrelevanttoaninvestor’sorconsumer’sconcerns,makingitchallengingtounderstandhowperformanceondifferentcriteriamightimpactdecision-making.•Standardsdon’treachthebottomofthemarket:Typically,onlytop-performingorpublicly-exposedcompaniesadoptvoluntarystandards,leavingalargepartofthemarketbehindandsubjectonlytocountry-specificregulationswhichcanvarywidelyinstrengthandenforcement.Thereisthereforealimittowhatvoluntarystandardscanachieveincountrieswithpoorgovernance,humanrightsorregulatoryframeworks.Thereisstrongpotentialtoimprovethevoluntarystandardssystemthroughconsolidation,alignmentandbettersignalling.Severalactionscouldhelptoachievethis:•Internationalorganisationsorforums(e.g.,theOECD,orthroughtheUNFCCC’sClimateChangeConferences)shouldfacilitateadialoguebetweenvoluntarystandardsorganisations,miningcompanies,buyerstoidentifytheopportunitiesforupwardsharmonisationofglobalstandards.◦Thisshouldbuilduponcomprehensivemappingofhowdifferentvoluntarystandardscompareandrelatetoeachother–ashasalreadybeendone,toadegree,byorganisationssuchasSecuringAmerica'sFutureEnergyandtheGermanFederalInstituteforGeosciencesandNaturalResources,andintheequivalenceprinciplesdevelopedbyICMM.272•NationalgovernmentsandMDBscansetoutclearprinciplesorbaselinesthatallstandardsmustmeet.Thiswouldsendastrongsignaltothemininganddownstreamsectorstofocusonthesetofvoluntarystandardsthatmeetthislevel,andcoulddriveconsolidation.•Financialinstitutionsandvoluntarystandardsorganisationsshouldproactivelyengagewitheachothertoidentifywaysthatstandardsandtheresultsofassessmentscanmoreusefullyinforminvestordecision-making.Alternatively,oradditionally,industrybodies(suchastheInstitutionalInvestorsGrouponClimateChange)273candeveloptheirownframeworksandcriteriatoincorporatesustainableandresponsibleminingconsiderationsintoinvestmentdecisions.272SecuringAmerica’sFutureEnergy(2023),Aglobalracetothetopforcriticalminerals;BGR(2022),Sustainabilitystandardsystemsformineralresources;ICMM(2020),ICMMannouncesequivalencybenchmarkswithotherresponsiblesourcingstandards.273TheIIGCCisaEuropeanmembershipbodywhichworkswithbusiness,policymakersandfellowinvestorstohelpdefinetheinvestmentpractices,policiesandcorporatebehavioursrequiredtoaddressclimatechange.114MaterialandResourceRequirementsfortheEnergyTransitionImplicationsforcleanenergytechnologiesandkeyactionsforthe2020sChapter5MaterialandResourceRequirementsfortheEnergyTransition115Batteriesandelectricvehiclesfacethegreatestchallengestoscalingsupplyofcriticalmaterialsquicklyandsustainably.Supplyblockagescouldleadtohighprices,potentiallyslowingpricedeclinesforbatteries,delayingEVadoptionandthedecarbonisationofroadtransport.Toavoidtheserisksactionmustbetakenonfourfronts:reducingthepressureonprimarysupply,increasingminedsupply,makingfuturesupplyresilientandsecure,andensuringsustainableandresponsibleproduction.Thisreporthassetoutthreekeychallengesfacingmaterialrequirementsfortheenergytransition:supplystrugglingtokeeppacewithrapidlygrowingdemand,concernsaroundgeopoliticsandconcentrationofsupply,andtheenvironmentalandsocialimpactsofscalingsupply.Giventheneedforrapidongoingdeploymentofcleanenergytechnologies,strongactionsfromindustryandpolicymakerswillbeneededtoaddressthesechallengesandensureassmoothascale-upaspossible.Thischapterprovidesasummaryofcross-cuttingrisksforcleanenergytechnologies,outlinespotentialimplicationsforbatteriesandelectricvehicles,andsetsoutpriorityactionsfortheremainderofthisdecade.5.1Summaryofkeyrisksandpotentialshort-termimplicationsAcross-cuttingassessmentoftherisksforrapiddeploymentofcleanenergytechnologies,includingthechallengesoutlinedabove,leadstotheconclusionthatrisksfrommaterialssupplyarehighestforbatteriesandelectricvehicles[Exhibit5.1]:•BatteriesandEVsarethetechnologymostatriskduetothepotentialforsupplybottlenecksandgapsin2030forlithium,nickel,graphite,cobalt,neodymiumandcopper.Theserisksareamplifiedbyrisksofthestrongconcentrationofsupplychainsandvariousenvironmentalandsocialrisks,rangingfromtheminingofcobaltintheDRC,towater-intensivelithiumproductionoremissions-intensivenickelsupply.•SolarPVdoesnotfaceanymajormaterialconstraints;however,theproductionofpolysiliconforsolarpanelsfaceschallengesduetothehighconcentrationinChinaandassociatedsocialandenvironmentalrisks.Moresignificantchallengestosolardeployment,however,aremorelikelytoappeararoundplanningandpermittingrequirementsandgridconnectionqueues.274•Thebuild-outoftransmissionanddistributiongridscouldfacechallengesfromhighcopperprices–althoughthereissomepotentialforthriftingandsubstitution,asoutlinedinChapter2.Challengestogridscale-uparemorelikelytomanifestintermsofgridbuild-outtimescales.275•Othercleanenergytechnologiesmayfacemoreminor,specificchallengestomaterialsupplybuttheseareunlikelytosignificantlydelaydeployment.274ETC(2023),Streamliningplanningandpermittingtoacceleratewindandsolardeployment.275ThistopicwillbecoveredindetailinanupcomingETCreport.Seee.g.,FinancialTimes(2023),Gridbottlenecksdelaytransitiontocleanenergy.MaterialandResourceRequirementsfortheEnergyTransition116BatteriesandElectricVehiclesImplicationsofcriticalmineralssupplychallengesforcleanenergytechnologiesEXHIBIT5.1KeyMaterialsMaterialsAvailabilityRiskSupplyconcentration,environmentalandsocialimpactsRiskLithiumNickelCobaltGraphiteCopperNeodymium•BatteriesandEVsfacestrongestpotentialsupplybottlenecksforrawmaterials.•Potentialsupplygapsin2030forlithium,nickel,cobalt,graphite,neodymiumandcopper.•Alsodownstreamsupplygapsforrefinedproducts(e.g.nickelsulphate,lithiumcarbonate/hydroxide).•Strongconcentrationofsupplychains,especiallyforrefiningofkeybatterymaterialsinChina.•CobaltproductioninDRCassociatedwithpoorworkingconditionsandchildlabour,andhighbiodiversityimpacts.•Lithiumproductionishighlywaterandcarbonintensive.•FuturenickelproductionfromlateritesinIndonesiaisveryemissionsintensive–highuseofcoalpoweringrid.SolarPolysiliconSilverCopperAluminium•Polysiliconsupplyrespondstopriceanddemandveryrapidly,andisnotconstrained.•Silveruseissignificantbutexpectedtofallastechnologyandmaterialefficiencydevelop.•Supplyofcopperforwiringandlocalgridconnectionmaybeexpensiveorsomewhatconstrained.•PolysiliconsupplyanddownstreamsolarPVsupplychainhighlyconcentratedinChina.•HumanrightsconcernsforpolysiliconsupplyinXinjiang.•Polysiliconproductioniscurrentlyhighlyenergy-andemissions-intensiveandneedsdecarbonisingrapidly.PowerGridsCopperAluminium•Gridexpansionwilldriveverylargeriseindemandforcopperandaluminium.•Forcopper,therearelikelytobehighpricesand/orsupplyconstraints.•Swappingcopperwithaluminium,increaseduseofHVDC,thriftingetc.ispossibleinsomecasesbutwillnotsolvecopperconstraintsentirely.•Aluminiumproductionishighlydistributed,copperfairlydistributed,bothmarketshighlycommoditised.•Copperproductionfacesfallingoregrades,drivingupenergyandwaterintensityandgeneratinglargevolumesofwasterock/tailings.WindSteelNeodymium•Over90%oftotalmaterialrequirementsforwindturbinesaresteelandconcrete,forwhichtherearenoavailabilityconcerns.•Scale-upinsupplyofrareearthelementsmightbeaconcern,butcanshifttolessREE-intensivemodels.•Supplyofcopperforwiringandlocalgridconnectionmaybeexpensiveorsomewhatconstrained.•MiningandrefiningofREEsisheavilyconcentratedinChina.•REEminingproducessignificanttoxicwasteandpollutionatlocalscale.•Productionofsteelandconcreteiscurrentlyemissions-intensiveandneedsdecarbonisingrapidly.CopperConcreteElectrolysersandFuelCellsPlatinumPalladium•RapidinnovationisreducingrequirementsforPGMs.•DemandforPGMsinanycasewillbewellbelowvolumescurrentlyusedinautocatalysts.•NickelrequirementsaresignificantbutfarsmallerthandemandfromBEVs.•MiningofPGMsisstronglyconcentratedinSouthAfrica,withRussiaalsoproducinglargeproportionofPalladium.•DuetoveryloworegradesforPGMs,miningisstronglywater,energy-andemissions-intensiveandproduceslargeamountsoftailingsandwasterockperton.NickelCCUSSteelConcrete•CCUS/DACrequireslowamountsofstructuralsteel,concreteetc.•CCUSreliesonchemicals(e.g.,monoethanolamine)assorbentstoremovecarbondioxide.Largeramp-upinsupplyrequired,butthisshouldiswithinhistoricalprecedentofindustry.•ProductionofchemicalsorbentsforCCUScurrentlyreliesonpetrochemicals/fossilfuelindustry–butpotentialtoswitchtosyntheticfeedstocksincomingdecades,orswaptoothersorbent-freeapproaches.ChemicalSorbentsNuclearSteelConcrete•Nuclearpowerhaslowersteel,concrete,copperrequirementsperGWofcapacitythanwindandsolar,andsupplyisnotaconcern.•Uraniumfuelsupplywouldneedtoexpandtomeetdemand,butnewerreactorshavelowerfuelrequirements.•Recyclingofspenturaniumfuelrodscanbedoneandislikelytoincrease.•Uraniumminingisfairlygeographicallyconcentrated,(Kazakhstan~40%,Australia,NamibiaandCanada~10%).•Uraniumminingleadstoradioactivecontaminationofwasteandproductionofradioactivedust–butvolumesareverylow.•Spenturaniumfuelneedscarefulstorageoververylong-term.Uranium3Mid/High4High4High2Low/Mid3Mid/High2Low/Mid2Low/Mid2Low/Mid2Low/Mid2Low/Mid2Low/Mid2Low/Mid2Low/Mid1LowMaterialandResourceRequirementsfortheEnergyTransition117Theimplicationsofsuchrisksforelectricvehiclescouldbesignificant.BNEFestimatethataveragelithium-ionbatterypackpricesrose7%between2021–22,slowinglong-termcostdeclines(knownas“learningrates”)fromaround18%eachyearto17%eachyear,predominantlyduetotheexceptionallyhighbattery-materialpricesseenthroughoutthatperiod[Exhibit5.2].276Ifhighbatterymaterialpricespersistthroughto2030,slowinglearningratesto16%perannum,weestimatethatthiscouldleadtopricesbeingaround45%higherthaniftheycontinueddecreasingby18%eachyear.Smallbutsustainedincreaseinpricescanhavealargecumulativeimpactonthepriceofcleanenergytechnologies,delayingdeployment.Forexample,givenbatteriesmakeup20–30%ofupfrontvehiclecosts,thiscoulddelayelectricvehicle“cost-parity”bytwotothreeyearsacrosstheUS,EuropeandChina[Exhibit5.2].Thelong-termconsequencesofsuchadelaywouldbesignificant:hundredsofmillionsofinternalcombustionenginevehiclesremainingontheroadformanymoreyears,leadingtoaround6GtCO2ofadditionalemissionsbetweennowand2050.AlthoughthisexamplefocusesonbatteriesandEVs,ifsignificantandsustainedmarkettightnessandlackofsupplyisseenforcopper,asimilarpatterncouldbeseenintheincreasedcostandslowerdeploymentofsolar,windandpowergrids–delayingthetransitionandleadingtohigherfutureemissions.276BNEF(2022),Lithium-ionbatterypricesurvey.118MaterialandResourceRequirementsfortheEnergyTransitionHighmaterialpricescanslowcostdeclinesforbatteries,delayingEVuptakeandleadingtohigheremissionsfrompassengervehiclesEXHIBIT5.2CathodematerialpricesJan31st2021=10002021202220232004006008001000LithiumcarbonateLithiumhydroxideNickelLi-ionbatteryprice2022US$/kWhLi-ionbatterycostcurves12022$/kWhCobaltPriceShareofCathodeMaterialsPackPriceCellprice02013202520040060080020152017201920212023010152025Forecast5140150+7%730102010202020301001,00010,000Observedprices16%learningrate17%learningrate18%learningrate20152025+45%Keybatterymaterialpricesspikedsharplythroughout2021–22.Spikeincathodematerialpricesledtoa7%increaseinaveragebatterypricesin2022.Ifmaterialpricesremainhigh,thiscouldlimitthepaceofpricedeclinesincomingyears.Upfrontpassengercarprices$ICEBEV-LowerBatteryPricesGlobalpassengervehiclefleetMillionsofvehiclesBEV-HighBatteryPricesBEV-EuropeBEV-USBEV-China50,000010,00020,00030,00040,000Example:EUpassengercarpricesBreakevenmovesfrom2026⟶2028202020302022202420262028BEV-RoWICE2,0001,5001,000500020222050203020402,0001,5001,00050002022205020302040AlignedwithBaselineDecarbonisationDelayedEVuptakeduetohigherpricesAround200madditionalICEvehiclesontheroadbetween2030–35duetoslowBEVuptakeOngoinguseofICEvehiclescouldmeanadditionalemissionsof~6GtCO₂between2020–5021A“learningrate”isthepaceatwhichtechnologiesexperiencecostdeclinesasmanufacturingandcapacityincreasesovertime–thesearetypicallyplottedonso-called“costcurves”.Learningratesforlithium-ionbatterieshaveseen16–17%perannumcostdeclinesoverthepastdecade.2Assumesaverageannualdistancetravelof~15,000kmpervehicleatanemissionsintensityof100gCO2/km.SOURCE:SystemiqanalysisfortheETCbasedonTransport&Environment(2021),HittingtheEVinflectionpoint;InternationalCouncilonCleanTransportation(2019),UpdateonelectricvehiclecostsintheUnitedStatesthroughto2030;InternationalCouncilonCleanTransportation(2021),EvaluatingelectricvehiclecostsandbenefitsinChinainthe2020-2035timeframe;BNEF(2022)Long-termelectricvehicleoutlook;BNEF(2022),Lithium-ionbatterypricesurvey.MaterialandResourceRequirementsfortheEnergyTransition119Whilsttheserisksaresignificantovertheshort-to-mid-term,theydonotposeafundamentalobstaclefortheenergytransitionforthreekeyreasons:•Whatevertheshort-termpricetrends,thelong-termdriversforcostdeclines(i.e.learningcurves,economiesofscale)forcleanenergytechnologiesremaininplaceandareexpectedtocontinue.•Asthisreporthasoutlined,therearemanyactionsthatpolicymakers,theprivatesector,andfinancialinstitutionscantaketoalleviatepressureonminingsupply,reducepricevolatilityandscalesupplyquicklyandsustainably.•Miningandmaterialmarketshavealwaysbeencharacterisedbyvolatileprices;andit’shigh/volatilepriceswhichcanactuallyactasanincentivetoinvestandinnovate.AsoutlinedinChapter2,continuousinnovationintechnologyperformance,newtechnologyoptions,andreductionorsubstitutioninmaterialsintensitycansignificantlyreducetotaldemandforenergytransitionmetals.Thishelpsnotonlyreducesupply-demandimbalances,butalsodrivesdownrisksassociatedwithconcentrationofsupplyandtheenvironmentalandsocialimpactsofmaterialssupply.Thus,drivingfurtherinnovationacrosscleantechnologiese.g.,batteryenergydensity,windturbinecapacity,orsolarPVmoduleefficiencieswillbecrucialincomingdecades[Exhibit5.3].InnovationincleanenergytechnologiesneedstokeepprogressingincomingyearsEXHIBIT5.31Gravimetricenergydensity,definedasavailablestoredenergyperunitmass.NOTE:ClassI/II/IIIreferstothewindspeedthatturbinesaredesignedtooperatein.ClassIturbinesaredesignedforhigherwindspeeds,andwouldhavesmallerblades,shortertowersandmorerobustdesigns.SOURCE:BNEF(2022),Long-termelectricvehicleoutlook;BNEF(2020),35MWWindturbinestolowermaterialdemand;BNEF(2023),Transitionmetalsoutlook.Li-ionbatterypackenergydensity1Wh/kgHistoricalandforecastwindturbinecapacityMWPVmoduleefficiencyforecastPowerconversionefficiency,%Newchemistriesandinnovativecellsandpackshelpdrivehigherbatteryenergydensities.LargerwindturbineshelpreducematerialsintensityforeveryMWhofcleanelectricitygenerated.Solarefficiencieswillkeeprisingsteadily,reducingmaterialsandlandneededforeveryGWinstalled.0202020203020402050335101520253035+70%0201020152020202520301990201020302050501001502002503000510152025Li-IonTrendNCALFPNMCClassIClassIClassIIClassIIINa-lonForecastForecastForecastOffshoreOnshore1990201020302050051015ForecastMaterialandResourceRequirementsfortheEnergyTransition1205.2Keyactionsforthe2020sNoneoftherisksandchallengesoutlinedinthisreportareinsurmountable.Actionsbypolicymakersandregulators,combinedwithstrongprivatesectorleadershiptoinnovateandpromotesustainableandresponsiblemining,canreducetherisksofadelayedormoreexpensivetransition.Addressingchallengestomaterialssupplyrequiresactiononfourfronts:•Alleviatingpressureonprimarysupply,byacceleratingtechnologyandmaterialsefficiencyandscalingrecyclingacrosscleanenergytechnologiesandmaterials.ThiswascoveredinChapter2.•Expandingminedsupplybycreatingclarityonfuturedemand,reducingminedevelopmenttimescales,increasingfinancingformining,boostingmineproduction,andimprovinginternationalcollaborationanddata-sharing.ThiswascoveredinthefirsthalfofChapter3.•Diversifyingandsecuringsourcesofsupplyovertheshort-to-mid-term,toreducerisksfromconcentrationofsupply,andcarefullyweighingupthecostsandpotentialbenefitsofnear-shoringofsupply.ThiswascoveredinthesecondhalfofChapter3.•Mitigatingenvironmentalandsocialimpactsthroughstrongregulation,backedbywidespreaduseofvoluntarystandardsandsupplychaintraceability–drivenbybest-in-classactorsintheminingsector.Actionsforminingcompanies,andforpolicymakersandfinancialinstitutions,wereoutlinedinChapter4,andfiveareasofprioritywerehighlightedabove.Tobringfocustosuchactions,keytargetsforindustryandpolicymakersby2030couldinclude:ScalingPrimarySupplyMoreRecyclingDrivingEfficiencyIncreasedInvestmentScalingprimarysupplyofmaterialsto:>550ktp.a.oflithium(120ktin2022)>30Mtp.a.ofcopper(22Mtin2022)>4Mtp.a.ofnickel(3.3Mtin2022)>6Mtp.a.ofnaturalandsyntheticgraphite(1Mtin2022)>250ktp.a.ofcobalt(150ktin2022)Scalingsecondarysupplyofmaterialsto:>5Mtp.a.ofsecondarysupplyofcopper(3Mtin2022)Recyclingcapacityfor>1Mtofbatterymaterials.(0.1Mtin2022)End-of-liferecyclingratesofover70%forcopperandbatterymaterials.MaterialsandTechnologyShifts:RapidshifttoLFPbatteriestoover40%ofmarket,andfastgrowthofNa-ionto>5%marketshare.Highersubstitutionofcopperingrids,reduceduseofREEsinwindturbinesandEVs.Technologyperformance:Batterypackenergydensities>250Wh/kg(vs.180Wh/kgin2022)SolarPVefficienciesreach>24%conversionefficiency(vs.20%in2022).Electrolyserefficienciesbelow50kWh/kgH2(vs.53kWh/kgH2in2022).On/Offshorewindcapacityfactorsabove30/45%(vs.25/40%in2022).$70bnp.a.inminingofcopper,lithium,nickel,cobaltandgraphite(vs.$45bnin2022).$70-100bnp.a.inrefiningofcopper,lithium,nickel,cobaltandgraphite.$3-4bnp.a.inrecyclingofcopperandbatteries.MaterialandResourceRequirementsfortheEnergyTransition121MATERIALSANDRESOURCESFourpriorityactionsFundamentaldriver:astrategicvisionfortheenergytransition,supportedbywell-designedpolicieswhichsendclearsignalsonthepaceandscaleofthetransitionandremovebarrierstodeployingcleanenergytechnologies.REDUCEPRESSUREONPRIMARYSUPPLYKEYACTORSMININGCOMPANIESDOWNSTREAMVALUECHAINOTHERACTORSPOLICY-MAKERS/REGULATORSLEADINGACTORSDemand:Accelerateimprovementsinmaterialsandtechnologyefficiency,e.g.throughincreasedR&D,public‘moonshot’targets,andmorecirculardesign.Supply:Scalingrecycling,re-useandsecondarysupply,drivenbyregulationandeconomicincentives.Expandsupplyfromtheminesiteby:reducingminedevelopmenttimescales,increasinginvestment,raisingmineoutput,andimprovinginternationalcollaborationanddata-sharing.Adoptstrategiestodiversifyandsecuresupplyovertheshort-to-midtermtoreducerisksfromconcentratedsupply.Wherenear-shoringisstrategicallybeneficial,ensurebenefitsaremaximisedbye.g.,aligningwithdomesticgrowthsectors.ACTIONSREQUIREDFORASUSTAINABLEANDRESPONSIBLEMATERIALSCALE--UP2030TARGETSPRIMARYSUPPLYRECYCLEDSUPPLYEFFICIENCYINVESTMENTEnergyTransitionsCommission-July2023Strongregulationsoncarbonintensityofmaterialsproduction.Reducelocalenvironmentalimpactsofmaterialssupplyandengagewithlocalcommunitiestosecuretrustandconsent.Usepurchasingpowertodriveprojectswithhighenvironmentalandsocialstandards.Defineandadopthigh-qualityvoluntarystandards,andimproveandrequiresupplychaintraceability.EXPANDMINEDSUPPLYBUILDRESILIENTANDSECURESUPPLYDRIVESUSTAINABLEANDRESPONSIBLESUPPLYCHAINSAnnuallithiumproduction(from125kt)Annualcopperproduction(from22Mt)Batterymaterials(from0.1Mt)Secondarycopper(from4Mt)Batterypackenergydensity(from160Wh/kg)Solarpanelefficiency(from20%)Miningforcopper,lithium,nickel,cobalt,graphite(from$45bn)Refiningforcopper,lithium,nickel,cobalt,graphiteOn/Offshorewindcapacityfactors(from25/40%)Recyclingforcopperandbatteries550kt30Mt>1Mt>5Mt250Wh/kg24%$70bnp.a.$70-100bnp.a.30/45%$3-4bnp.a.RECYCLERSINVESTORSCIVILSOCIETYINVESTORS,DEVELOPMENTFINANCEVOLUNTARY-STANDARDSORGANISAITONSSUPPORTINGACTORS$1234MaterialandResourceRequirementsfortheEnergyTransition122AppendixOverviewofkeymodelassumptions,groupedbytechnology(notexhaustive)TechnologyBaselineDecarbonisationKeyAssumptionsHighEfficiencyKeyAssumptionsHighRecyclingKeyAssumptionsSolarLifetime30yearsCapacityFactor(GlobalAvg.)14%risingto15.5%by2050.MarketShares95%silicon-basedthroughto2050.MaterialsIntensity•Aluminium:15t/MW,fallingto12t/MWby2050.•Copper:3.2t/MW,fallingto2.6t/MWby2050.•Silicon:3t/MW,fallingto2t/MWby2050.•Silver:17kg/MW,fallingto11kg/MWby2050.•Capacityfactorsriseto17%by2050(vs.15.5%).•Siliconintensityfallsto2/1kg/MWin2040/50(vs.2.5/2).•Silverintensityfallsto13/9kg/MW(vs.14/11).•70/90%ofsolarpanelscollectedatendoflifein2040/50.•Siliconendofliferecyclingratereaches90%by2040.•Silverendofliferecyclingratereaches80/90%by2040/50.WindLifetime30yearsCapacityFactor(GlobalAvg.)•Onshore:25%risingto37%by2050.•Offshore:40%risingto50%by2050.MarketShares•90%Onshore,shiftingto60%by2050.•Onshore:72:5:18:5splitacrossGB-DFIG/GB-PMSG/DD-PMSG/DD-EESG,shiftingto65:15:15:5by2050.277•Offshore:5:20:75:0splitacrossGB-DFIG/GB-PMSG/DD-PMSG/DD-EESG,shiftingto0:10:90:0by2050.MaterialsIntensityGB-Based:•Concrete:500t/MW,fallingto400t/MWby2050.•Steel:140t/MW,fallingto110t/MWby2050.•Neodymium:12/50kg/MW,fallingto7/28kg/MWby2050.DD-Based:•Concrete:800t/MW,fallingto625t/MWby2050.•Steel:400t/MW,fallingto320t/MWby2050.•Neodymium:180/28kg/MW,fallingto100/15kg/MWby2050.•On/Offshorecapacityfactorsriseto41/55%by2050(vs.37/50%).•Onshore:Offshoresplitreaches50:50by2050(vs.60:40).•Highershareofmarketforlow-REEturbinedesigns(awayfromGB-PMSG).•SteelandcopperintensityperMWfallsby15/30%by2040/50.•70/90%ofwindturbinescollectedatendoflifein2040/50.•Steelreaches90%end-of-liferecyclingrateby2040.277GB=Gearbox,DD=Direct-Drive,DFIG=Double-FedInductionGenerator,PMSG=Permanent-MagnetSynchronousGenerator,EESG=Electrically-ExcitedSynchronousGenerator.MaterialandResourceRequirementsfortheEnergyTransition123NuclearPowerLifetime50YearsCapacityFactor80%MaterialsIntensity•Concrete:640t/MW,fallingto510t/MWby2050.•Copper:1.5t/MW,fallingto1.2t/MWby2050.•Steel:90t/MW,fallingto72t/MWby2050.•Uranium:24t/TWh,fallingto17t/TWhby2050.•Nuclearcapacityfactorsreach88%by2040(vs.80%).•Lowerandfallingnuclearfuelrequirementsof16/13kg/GWhin2040/50(vs.19/17).•Uraniumreachesend-of-liferecyclingrateof80/90%by2040/50(vs.50%).TransmissionandDistributionGridLifetime60YearsCapacityFactor•Transmission:4150TWh/millionkm,risingto4300TWh/millionkmby2050.•Distribution:430TWh/millionkm,fallingto410TWh/millionkmby2050.MarketShares•Transmission:75:20:5Overhead/Underground/Submarine,shiftingto65:28:7by2050.•Distribution:75:25Overhead/Underground,shiftingto65:35by2050.MaterialsIntensityTransmission–Overhead•Aluminium:5t/km,fallingto4t/kmby2050.Transmission–Underground•Aluminium:5t/km,fallingto4t/kmby2050.•Copper:8t/km,fallingto6.5t/kmby2050.Transmission–Submarine•Aluminium:1t/km,fallingto0.8t/kmby2050.•Copper:8t/km,fallingto6.5t/kmby2050.Distribution–Overhead•Aluminium:2t/km,fallingto1.5t/kmby2050.Distribution–Underground•Aluminium:1.5t/km,fallingto1.2t/kmby2050.•Copper:2.5t/km,fallingto2t/kmby2050.•Moreefficientgridbuild-outandmanagementleadstosmallergrid:13.5/16.5millionkmin2040/50fortransmission(vs.15/18),135/170millionkmfordistribution(vs.150/190).•Highershareofovergroundcables,whicharelessmaterials-intensive.•Increasedsubstitutionofcopperforaluminiuminundergroundcables.•80/90%ofgridequipmentcollectedforrecyclingatendoflifein2040/50.•Copperend-of-liferecyclingratereaches90%by2030.•Aluminiumend-of-liferecyclingratereaches90%by2040.MaterialandResourceRequirementsfortheEnergyTransition124ElectricVehiclesLifetimePassenger:15yearsCommercial:18yearsBatterySize(GlobalAvg.)•Passenger:55kWh,risingto70kWhby2050.•Commercial–Light-Duty:45kWh,risingto70kWhby2050.•Commercial–Heavy-Duty:250kWh,risingto450kWhby2050.BatteryMarketShares•Passenger:30:50:20splitLFP/NMC/Other,shiftingto30:10:60by2050.278•Commercial:30:35:35splitLFP/NMC/Other,shiftingto20:15:65by2050.279BatteryMaterialsIntensityVariablebybatterychemistry,acrosslithium,cobalt,nickel,graphite.280VehicleMaterialsIntensityPassenger:•Copper:60kg/vehicle,fallingto48kg/vehicleby2050.•Neodymium:0.36kg/vehicle,fallingto0.29kg/vehicleby2050.Commercial–Light-Duty:•Copper:120kg/vehicle,fallingto95kg/vehicleby2050.•Neodymium:0.72kg/vehicle,fallingto0.58kg/vehicleby2050.Commercial–Heavy-Duty:•Copper:300kg/vehicle,fallingto240kg/vehicleby2050.•Neodymium:1.8kg/vehicle,fallingto1.4kg/vehicleby2050.•Smallerbatteries:totalfleetrequiresbatterycapacityof30/95/130TWh(vs.30/110/160).•Highermarketsharesfornewchemistries(especiallyLFPandNa-ion).•Fasterandgreaterreductionsinmaterialsintensity.•Lessdegradationofbatteriesforre-useinstationarystorageatend-of-life.•80/90%ofbatteriescollectedforre-useorrecyclingatendoflifein2040/50.•Recyclingratesforcobalt,nickelandgraphitereach90%by2040(85%forlithium).StationaryStorageLifetime12yearsMarketShares50:30:15:5splitLFP/NMC/NCA/Other,shiftingto20:10:70splitLFP/Vanadium/Na-Ionby2050.MaterialsIntensityVariablebybatterychemistry,acrosslithium,cobalt,nickel,graphite.281•Highermarketshareearlieronforvanadiumredox-flowandNa-ionbatteries.•Fasterandgreaterreductionsinmaterialsintensity.•25/30%ofEVbatteriesre-usedforstationarystorage,providingupto0.5/1.5TWhby2040/50.278LFPincludesLFPandLMFP;NMCincludesNMC-622andNMC-811;OtherincludesLMR-NMC,LNO,LNMO,NCA,Na-Ion,NCA.BasedonBNEF(2022),Long-termelectricvehicleoutlook.279Ibid.280BasedonBNEF(2022),Long-termelectricvehicleoutlook;ArgonneNationalLaboratory(2022),BatPaCsoftware.281Ibid.MaterialandResourceRequirementsfortheEnergyTransition125HydrogenElectrolysersLifetime20YearsLoadFactor60%fallingto45%by2050.Efficiency53kWh/kgH2,fallingto48kWh/kgH2by2050.MarketShares80:20constantsplitAlkaline:PEM.MaterialsIntensityPEM•Platinum:0.3kg/MW,fallingto0.1kg/MWby2050.•Palladium:2.5kg/MW,fallingto1kg/MWby2050.Alkaline•Nickel:3.2t/MW,fallingto2.6t/MWby2050.•Electrolyserefficiencyreaches43kWh/kgH2by2050(vs.48).•Electrolyserloadfactorsdecreasemoreslowly,reaching53/50%by2040/50(vs.50/45).•HighermarketshareforSOECelectrolysers:5/12.5/15%in2030/40/50(vs.noshare).•Fasterandgreaterreductionsinmaterialsintensityofnickel,platinum,palladium.•70/90%ofelectrolyserscollectedforrecyclingatendoflifeby2040/50.•Platinumandpalladiumend-of-liferecyclingratereaches75/90%by2040/50.HydrogenFuelCellsLifetime15YearsEfficiency40%risingto55%by2050.MarketShares100%PEM,shiftingto90:10PEM/Alkalineby2050.MaterialsIntensityPEM•Platinum:0.3kg/MW,fallingto0.1kg/MWby2050.Alkaline•Nickel:3.2t/MW,fallingto2.6t/MWby2050.•Fuelcellefficiencyreaches55/60%by2040/50(vs.50/55%).•Alkalinemarketsharerisesto30%by2050(vs.10%).•Fasterandgreaterreductionsinmaterialsintensityofnickel,platinum,palladium.•70/90%ofelectrolyserscollectedforrecyclingatendoflifeby2040/50.•Platinumend-of-liferecyclingratereaches75/90%by2040/50.CCS/DACSorbentRequirements•DAC:7.5kgofMEA/tCO2captured,fallingto3kg/tCO2by2050.•CCS:0.5kgofMEA/tCO2captured,fallingto0.4kg/tCO2by2050.•N/A•N/AMaterialandResourceRequirementsfortheEnergyTransition126127MaterialandResourceRequirementsfortheEnergyTransitionAcknowledgementsLordAdairTurner(Chair),FaustineDelasalle(Vice-Chair),ItaKettleborough(Director),MikeHemsley(DeputyDirector),LeonardoBuizza(Leadauthor)andHannahAudino,withsupportfromLaureneAubert,BenDixon,JakobFranke,ApoorvaHasija,CarlKühl,PhilipLake,ElizabethLam,HugoLiabeuf,TommasoMazzanti,DanNima,RebeccaNohl,ShaneO’Connor,JuliaOkatz,ViktoriiaPetriv,JanezPotočnik,ElenaPravettoni,CarolineRandle,AchimTeuber,TilmannVahle(SYSTEMIQ).RomainSvartzman(BanquedeFrance);DanielQuiggin(ChathamHouse);DougJohnson-Poensgen(Circulor);HillaryAmster(CopperMark);SebastianSahla(EITI);BryonyClearHillandChristianSpano(ICMM);SamCornishandDanGardiner(IIGCC);ThijsvandeGraaf,BenGibson,MartinaLyonsandElizabethPress(IRENA);KristiBruckner(IRMA);DavidClaydon(KayaAdvisory);SimonDikau(LondonSchoolofEconomics);RashadAbelson,BenjaminKatzandHughMiller(OECD);SimonHolt(P66);ChristianHagelüken(Umicore).CliveTurton(ACWAPower);ElkePfeiffer(Allianz);NicolaDavidsonandMalcolmShang(ArcelorMittal);AbydKarmaliOBE(BankofAmerica);AlbertCheung(BNEF);GarethRamsay(bp);DavidMazaira(CreditSuisse);TanishaBeebee(DRAX);AdilHanif(EBRD);RebeccaCollyerandMelissaZill(EuropeanClimateFoundation);EleonoreSoubeyran(GranthamInstitute,LondonSchoolofEconomics);MattGorman(HeathrowAirport);AbhishekJoseph(HSBC);FranciscoLaveron(Iberdrola);ChrisDodwell(ImpaxAssetManagement);BenMurphy(IPGroup);GaiadeBattista(JustClimate);JaekilRyu(KoreaZinc);FreyaBurton(LanzaTech);SimonGadd(L&G);KhangzhenLeow(LombardOdier);SteveSmith(NationalGrid);RachelFletcher(OctopusEnergy);EmilDamgaardGann(Ørsted);RahimMahmood(Petronas);VivienCaiandSummerXia(PrimaveraCapital);JamesSchofield(Rabobank);ManyaRanjan(ReNewPower);ChristianLynch,JonathanGrantandEdSpencer(RioTinto);KingsmillBond,SamButler-Sloss,ValentinaGuido,CateHight,GregHopkins,StephenLezak,LachlanWright(RMI);EmmetWalsh(Rothschild&Co.);DanielWegen(RoyalDutchShell);EmmanuelNormant(SaintGobain);VincentMinier,ThomasKwanandVincentPetit(SchneiderElectric);BrianDean(SEforAll);MartinPei(SSAB);AlistairMcGirr(SSE);AbhishekGoyal(TataGroup);SomeshBiswas(TataSteel);AKSaxena(TERI);ReidDetchon(UnitedNationsFoundation);MikaelNordlander(Vattenfall);NiklasGustafsson(Volvo);RasmusValanko(WeMeanBusiness);RowanDouglas(WillisTowersWatson);JenniferLaykeandKeWang(WorldResourcesInstitute);PaulEbertandDaveOudenijeweme(Worley).Theteamthatdevelopedthisreportcomprised:TheteamwouldalsoliketothanktheETC’sbroadernetworkofexpertsfortheirinput:TheteamwouldalsoliketothanktheETCmembersandexpertsfortheiractiveparticipation:MaterialandResourceRequirementsfortheEnergyTransition128MaterialandResourceRequirementsfortheEnergyTransition129MaterialandResourceRequirementsfortheEnergyTransitionJuly2023Version1.0www.energy-transitions.orgTheBarrierstoCleanElectrificationSeries

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