As renewable energy technologies and electric vehicles look set to dominate the market in an effort to achieve a low-carbon economy, the metals market could be slated for significant growth. These changes could manifest in a number of ways as a result of how various factors come together in the race toward a carbon neutral society, with implications difficult to predict.
Because FEECO provides a wide range of offerings to the metals and minerals industry, from initial feasibility and pilot testing for process development, to custom processing equipment and even parts and service support, we are tracking these changes closely. Here is what we know so far.
The Shift to a Low-Carbon Economy
As the effects of climate change become more pressing, the pressure to de-carbonize societies has never been greater. According to a recent report by a group from the Grantham Research Institute on Climate Change and the Environment, 1,200 climate change or climate change-relevant laws now exist worldwide – a twentyfold increase compared to the 60 laws in place in 1997.
This can be seen in headlines around the globe, as countries look for ways to reduce emissions and beat the clock on impending climate change. China, the world’s largest CO2 polluter, has emerged as a leader in mitigating climate change, through aggressive efforts to curb emissions. The European Union has also been at the forefront in the fight against emissions, as they look to reach their 20% renewable energy goal by 2020 and cut GHG emissions to 80% below 1990 levels by 2050.
The two primary sectors that have been in the spotlight for their role in achieving a low-carbon economy are renewable energies and electric vehicles. And as many are beginning to voice, both sectors stand to have a substantial impact on the metals markets.
Renewable Energy Technologies Pushing Metal Demand
A recent report from World Bank looked at three primary renewable energy technologies (wind, photovoltaics, and energy storage) to determine the potential impact of widespread use to achieve a low-carbon economy could have on metals and minerals.
While metal demand is difficult to accurately predict due to its reliance on future technology market share as well as intra-technology choices, the report notes that contrary to popular belief, renewable energy technologies are actually significantly more material intensive than currently employed fossil fuel-based energy systems.
Although a number of metals are expected to be impacted, the study recognized the following as the most relevant in regard to the examined technologies:
- Aluminum
- Chromium
- Copper
- Indium (Rare Earth)
- Iron
- Lithium
- Lead
- Manganese
- Molybdenum
- Silver
- Steel
- Zinc
Note: The study focused only on the metals needed to manufacture the given technologies, and did not consider related transmission and energy distribution requirements.
Three climate scenarios, as recognized by the International Energy Agency’s Energy Technology Perspectives 2016, were reviewed in the study:
- Six Degree Scenario (6DS): The 6DS is a projection of current trends, in which the global temperature is likely to rise nearly 5.5°C in the long-term if emissions increased around 60% by 2050 (compared to 2013 levels).
- Four Degree Scenario (4DS): The 4DS incorporates recent commitments to reducing emissions. The pledges would help to limit the rise in temperature to 4°C, though additional efforts to reduce emissions after 2050 would be required to maintain no more than a 4°C increase.
- Two Degree Scenario (2DS): The 2DS represents the least harmful impact on the ecosphere and therefore, the most optimistic outlook examined. In this scenario, emissions have been cut to the point that at least a 50% chance of limiting the rise in temperature to a 2°C increase is possible. In this setting, emissions would decrease nearly 60% by 2050 (in comparison with 2013 levels) and would further decline after that until carbon neutrality has been achieved.
The study broke down each of the focus technologies to examine their potential impact on metal and mineral demand. Here’s what they found.
Wind
Wind power comes from both onshore and offshore wind turbines, with various technologies available within the sector.
In a 4 degree scenario, the study estimates relevant metals demand to increase over 150%. In a 2 degree scenario, demand for metals relevant to wind is estimated to increase by 250%. These metals include:
- Aluminum
- Chromium
- Copper
- Iron
- Lead
- Manganese
- Molybdenum
- Neodymium
- Nickel
- Zinc
Solar Photovoltaics
Solar photovoltaics transform sunlight into electricity. Again, varying technologies within this field are available, each with a significantly different impact on metal demand. Metals important in the solar photovoltaics sector include:
- Aluminum
- Copper
- Indium
- Iron
- Lead
- Molybdenum
- Nickel
- Silver
- Zinc
Similar to wind power, a 4 degree scenario for photovoltaics could see an increase in metals demand around 150%. In a 2 degree scenario, demand for metals relevant to photovoltaics could increase by more than 300%.
Energy Storage (Batteries)
Energy storage technologies refer to the ability to store energy as it’s produced, for use later when it is needed.
While demand resulting from energy storage is especially difficult to predict, the report demonstrates that in limiting the average global temperature rise to 2 degrees, the demand for some metals utilized in energy storage applications could rise as much as a staggering 1000%.
This would include:
- Aluminum
- Cobalt
- Iron
- Lead
- Lithium
- Manganese
- Nickel
Electric Vehicles & Metal Demand
While electric vehicles fall largely under energy storage applications due to their reliance on batteries, the explosive growth the electric vehicle market has seen and its resulting implications on metals merits its own discussion.
Headlines have been littered with news on the rapidly changing vehicle market; according to the International Energy Agency, 2016 saw a record year for electric vehicle registrations. The agency anticipates probable mass market adoption within 10-20 years. Car companies such as Volvo and Tesla have already demonstrated an aggressive commitment in moving toward electric vehicles.
Most recently, the UK announced their intent to outright ban fossil-fueled cars by 2040, following in the footsteps of France and Norway, which have enacted similar plans.
Metals associated with electric vehicles include:
- Cobalt
- Lithium
- Copper
- Aluminum
- Nickel
According to Bloomberg, the battery boom resulting from the surging electric vehicle market is expected to increase demand for cobalt 30-fold by 2030, with many experts predicting a shortage of cobalt beginning this year. Cobalt is a key component in lithium-ion batteries, the battery type of choice in electric vehicles.
Another Bloomberg analyst anticipates demand for nickel could more than double by 2050, largely due to the extent to which it is used in lithium-ion batteries for electric vehicles. This has prompted mining giant BHP Billiton to approve a $43 million nickel sulfate project in Australia for its Nickel West unit.
In addition to the batteries in electric vehicles pushing metal demand, electric motors and charging station infrastructure will also require more metals on behalf of the industry.
The Impact of a Shifting Metals Market
While the implications of such a shift are dependent on a number of factors, making them difficult to estimate, it is clear that the shifting metals market has the potential for widespread changes in numerous forms.
In looking toward the future, many have questions on what such a shift would mean in terms of environmental implications. Similarly, others are concerned about potential constraints in supply and the resulting effects.
The shift could also see a downturn for some materials such as lead, which is widely used in the types of batteries used to power fossil fueled cars.
Analyst Bernard Dahdah at Natixis SA in London is quoted by Mining Weekly as saying:
“A lot of commodities that are in demand right now, like oil and platinum, may not be in demand in the future. It’s not that commodities overall will become less relevant, but we will see a reshuffling in terms of what is important in the next 15 years.”
The World Bank report also discusses how the shifting market could be a catalyst for developing nations to take advantage of their rich resources, noting that countries in the Latin America region, such as Chile, Brazil, Peru, and Argentina are especially well-positioned to host a strong metals supply sector in a carbon-constrained future. Similar opportunity exists for Africa.
Such change could also mean a boost for the metal recycling industry, as the demand for various metals skyrockets. Further, scarcities in some metals have the potential to prompt the development of alternative technologies less reliant on key metals.
Related industries such as extraction, heap leaching, material handling equipment and other sectors could also see a boost.
SOURCES
The Growing Role of Minerals and Metals for a Low Carbon Future. Rep. Washington, DC: The World Bank Group, 2017. PDF.