Page 5 - AfrElec Week 18 2021

AfrElec COMMENTARY AfrElec

emissions. transport system, complex and sometimes
Not only is this a massive increase in abso- opaque supply chains and high investment risk.
lute terms, but as the costs of technologies fall, Production and processing of many miner-
mineral inputs will account for an increasingly als such as lithium, cobalt and some rare earth
important part of the value of key components, elements are highly concentrated in a handful of
making their overall costs more vulnerable to countries, with the top three producers account-
potential mineral price swings. ing for more than 75% of supplies.
The commercial importance of these miner- This contrasts with oil, which is produced
als will also grow rapidly: today’s revenue from around the world and is traded in liquid markets.
coal production is ten times larger than from In addition, while there is no shortage of
energy transition minerals. However, in the resources, the quality of available deposits is
IEA’s climate-driven scenarios, these positions declining as the most immediately accessible
will be reversed well before 2040. resources are exploited. Producers also face the
The IEA’s research is based on modelling of necessity of stricter environmental and social
the future mineral requirements of a series of standards.
climate scenarios and different technology evo-
lution pathways. Call for action
Major forecasts include a thirty-fold rise by The IEA put forward six recommendations that
2040 in mineral demand for use in batteries for policymakers can pursue in order to foster stable
EVs and grid storage. supplies of critical minerals.
The rise of low-carbon power generation to The major task is for governments to lay out
meet climate goals also means a tripling of min- their long-term commitments for emission
eral demand from this sector by 2040. reductions, which would provide the confidence
Wind takes the lead, bolstered by materi- needed for suppliers to invest in and expand
al-intensive offshore wind. Solar PV follows mineral production.
closely, due to the sheer volume of capacity that Governments should also promote techno-
is added. The expansion of electricity networks logical advances, scale up recycling to relieve
also requires a huge amount of copper and pressure on primary supplies, maintain high
aluminium. environmental and social standards, and
strengthen international collaboration between
Investment risk producers and consumers.
A key obstacle to overcome is the concentration Put simply, with the energy sector’s needs for
of rare earth metals in certain countries, which minerals rising rise by as much as six times by
are often in the developing world and have 2040, insufficient supplies would risk delays and
poorly developed legal regimes, a non-existent extra costs.™

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