Critical Conundrum: Challenges in Meeting the Demand for Metals in the Energy Transition 

Blog #4 – Our latest blog in the Energy Transition series explores the rising need for critical metals. As we shift towards renewable energy, questions arise about metal supply, extraction challenges, and environmental impacts.

Increasing demand for critical metals

The world’s transition to renewable energy will require a fundamental shift in power generation and end-use sectors towards electrification and energy efficiency. To meet the nearly three-fold increase in electricity demand by 2050⁽¹⁾, critical metals are necessary for the manufacturing of key technologies such as wind turbines, solar panels, and electric vehicle batteries. 

However, there are concerns about the supply of these critical metals keeping up with the increasing demand, as well as environmental and social issues associated with their extraction and processing. Therefore, there is ongoing research and interest in developing alternative materials and technologies that could reduce the reliance on these critical metals. 

The relationship between minerals and technologies 

With the energy transition gaining momentum, ensuring security of mineral supply is becoming a key aspect of the energy security discourse. This shift highlights the distinction between oil security and mineral security: an oil supply crisis leads to higher prices for all consumers using gasoline or diesel vehicles, while a mineral shortage only affects the manufacture of new EVs or solar plants.

Additionally, although renewable technologies require more metals during production than traditional technologies, these critical materials become a part of the infrastructure. In contrast, fossil-based technologies rely on continuous fuel consumption and produce significantly higher greenhouse gas emissions throughout their lifespan. 

What materials are critical

Certain minerals and metals have garnered significant attention due to the challenges associated with their extraction, concentrated production, declining resource quality, and price fluctuations resulting from supply-demand imbalances. Certain critical materials, such as lithium, cobalt, and nickel, have limited applications, mainly in lithium-ion batteries, while others, like neodymium and dysprosium, are used in permanent magnets for electric motors and generators. Copper, on the other hand, is widely used in renewable power technologies, electricity grids, and end-use applications, as seen in Figure 1.  

Figure 1: Minerals used in selected clean energy technologies. All rights reserved to IEA (International Energy Agency)⁽²⁾. 

By 2050, the global demand for critical materials such as copper and nickel is projected to double, with rare earth metals like neodymium facing a more than tenfold increase⁽¹⁾. However, the sufficiency of known reserves to meet this escalating demand remains a topic of debate, as factors such as demand scale, extraction feasibility, geopolitical considerations, and environmental impacts influence resource availability and accessibility. 

Highly concentrated supply and long scale-up times

The production of many minerals essential for the energy transition is highly concentrated geographically, making the global supply of these minerals vulnerable to physical disruptions and trade restrictions. In some cases, a single country is responsible for around half of worldwide extraction, and the concentration level is even higher for processing operations, as seen in Figure 2.  

Figure 2: Share of the top three producing countries in the global production of selected minerals and fossil fuels in 2019. All rights reserved to IEA (International Energy Agency)⁽²⁾ 

Ore quality continues to decline across several commodities. For example, Chile’s average copper ore grade fell by 30% in the past 15 years, resulting in higher energy requirements, production costs, greenhouse gas emissions, and waste generation⁽²⁾. Even if new reserves are found or existing ones can be expanded, IEA studies show that mining projects take an average of 16 years to move from discovery to first production, raising concerns about suppliers’ ability to meet sudden demand⁽²⁾. Delayed response to surging demand could lead to extended market tightness and price volatility, further slowing down the development of renewable energy technologies. 

Subsea resources and climate-related risks 

One way to increase and distribute the supply of critical metals could be to focus on the extraction of subsea resources. Deep-sea polymetallic nodules, crusts and sulphides may present commercial interest for the production of many critical metals, but there are many concerns and backlash about the potential environmental impacts. At the current state, most countries are claiming the resources and performing exploratory activities, but there are no active mining operations.

On the other side, mineral extraction is not only causing negative environmental and social impacts but is also vulnerable to climate-related risks. For instance, copper and lithium require high amounts of water for mining and processing, and over 50% of current global production for both commodities is located in areas with high levels of water stress, while major producing regions like Australia, China, and Africa also face extreme heat or flooding, making it more challenging to ensure sustainable and stable supplies⁽²⁾.  

Consumers and investors demand sustainably and responsibly sourced minerals. However, without sustained efforts to improve environmental and social performance, it may be hard to distinguish responsible sources from those with poor standards, particularly if demand continues to outpace supply.

Opportunities for new technologies and redesign 

In order to alleviate strains on critical material supplies in the energy transition, a shift in focus from increasing production to reducing demand is crucial. Innovation, substitution, and redesign strategies offer potential solutions. Technological advancements have already resulted in significant reductions in material intensity and costs, as seen in the solar industry with a 40-50% decrease in silver and silicon usage in cells. Optimizing energy system and device designs can minimize overall material requirements by improving energy efficiency, utilizing lightweight components, and employing higher performance-to-weight ratio materials.

Battery optimization, alternative chemistries (e.g., LFP), and new architectures (e.g., BYD’s blade battery) also contribute to reducing critical material reliance. Material substitution involves using less critical materials in battery cathodes, while product redesign explores alternatives to permanent magnets in wind turbines and electric vehicles or combining batteries with ultracapacitors for reduced battery needs. Continued research and development efforts can accelerate these solutions, easing pressures on critical material supplies in the energy transition. 

The role of recycling 

Recycling plays a crucial role in achieving supply chain resilience and sustainability in the energy transition. While recycling is well-established for bulk metals like steel and aluminium, it is less mature for minerals essential to the energy transition, such as lithium and rare earth elements. However, the increasing waste streams from clean energy technologies present an opportunity for change. Recycling can provide short-term relief by reducing the pressure on primary supply sources. It has the potential to significantly decrease the primary supply requirements for minerals like copper, lithium, nickel, and cobalt by up to 10% by 2040⁽²⁾.

This reduction is particularly significant in regions with extensive clean energy technology deployment, thanks to economies of scale. Promoting recycling technologies and infrastructure for critical metals contributes to a sustainable and circular resource management approach, minimizing environmental impacts and reducing dependence on primary resource extraction. 

Catalyze can support your innovation

The type of support that is best suited for your plans depends on several factors, such as type and size of organization, location, budget or scope. In fact, there are so many options that it can be difficult to know where to start. Together we can ensure the optimal path for your specific case. We can help with the right funding strategy, application procedures, partnering, and project management. We can even optimize your business case or take a temporary position in your team.

Contact us to discuss the best funding options for your next stage of development.

Funding programmes & open calls

• (TRL 1-4) EIC Pathfinder (Challenges: solar power harvesting space, responsible electronic, cooling, etc.) Funding rate: 100%.  Deadline: October 18, 2023. Expected deadlines in 2024: Open Call, March 2024; Challenges, October 2024.  (Learn more)
• (TRL4-6) Eurostars Funding rate varies per country, in general 40%-60%. Deadlines: 14 September 2023, 13 March 2024. If you are early in your technological roadmap and looking for international partners to organise collaborative R&D, Eureka Eurostars fits in well. (Learn more)
• (TRL 5-9) EIC Accelerator Funding rate: 70% +equity investment. Deadline: 19 October 2023. Expected deadlines in 2024: January (Open only), March, June, October. If your technology is mature enough and needs further optimization or validation in a relevant environment, EIC Accelerator can be the target. The proposal can either be submitted under the open programme, or the Energy Storage challenge that might be more relevant. (Learn more)
• (All stages) Horizon Europe calls: your R&D focuses on specific objectives, and benefits from pan-Europe partnerships, there are several opportunities available under the Horizon Europe 2023-2024 work programme (Learn more about Horizon Europe).
  • HORIZON-CL5-2024-D2-01-03: Development of technical and business solutions to optimise the circularity, resilience, and sustainability of the European battery value chain (Batt4EU Partnership). Deadline: 18 April 2024 (Call overview)
  • HORIZON-CL5-2024-D3-01-08: Demonstration of sustainable wave energy farms. Deadline: 16 January 2024 (Call overview) 
  • HORIZON-CL5-2024-D5-01-10: Towards a flying testbed for European leadership in aviation. Deadline: 18 April 2024 (Call overview)
• EFRO: Just Transition Fund: The aim of the Just Transition Fund is to support regions and territories where the economy and employment are strongly dependent on fossil fuels. Deadline full proposal: 31 January 2024. (Learn more)

References

1. Gielen, D. Critical Materials for the Energy Transition. Int. Renew. Energy Agency (2021).
2. IEA. The Role of Critical Minerals in Clean Energy Transitions – Analysis. IEA https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions.