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Why Supplies of Elements Like Lithium, Cobalt, and Rare Earths Are Essential to Reducing Power Grid and Vehicle Emissions

Critical Minerals, Part 1:

Decarbonizing energy and transport systems will not be possible without a larger and more-sustainable supply chain for critical minerals

Decarbonization of global electrical grids and transport systems is an important initiative in the fight against climate change. Broad replacement of fossil-fueled power plants and vehicles with solar panels, wind turbines, electric vehicles (EVs), fuel cells, and battery-based energy storage are essential to meeting societal goals for reduced CO2 emissions.

But large-scale advancement faces a significant challenge: many clean-energy technologies rely on specialized materials that are derived from scarce minerals and obtained through channels that pose high financial and environmental costs and often social concerns as well.

The availability, affordability, and sustainability of these “critical minerals,” which are also vital for electronic equipment, high-efficiency lighting, and many other key sectors, are coming under increasing scrutiny from academic researchers, governments, and companies — including a number of EarthShift Global’s clients. The key questions: will supply chains be adequate to meet surging demand in coming years, and how can health and safety (both personal and planetary) be protected as production volumes increase?

With this in mind, we’ll be taking a two-part look at critical minerals. In this Part 1, we’ll outline the overall situation, while in Part 2 we dig into the sustainability aspects of critical minerals and some ways they might be addressed.

What are critical minerals and why are they so important? It’s fundamentally a matter of supply and demand. Most of the materials in question are only known to exist in limited quantities and locations, many of them in nations that may not be ideal trading partners due to adversarial relationships and/or lax environmental and labor standards. The evolving dynamics of the demand side are summarized in a special report of the International Energy Agency (IEA), The Role of Critical Minerals in Clean Energy Transitions: 

“A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a gas-fired power plant. Since 2010, the average amount of minerals needed for a new unit of power generation capacity has increased by 50% as the share of renewables has risen.

“The types of mineral resources used vary by technology. Lithium, nickel, cobalt, manganese, and graphite are crucial to battery performance, longevity, and energy density. Rare earth elements [REEs] are essential for permanent magnets that are vital for wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminum, with copper being a cornerstone for all electricity-related technologies” (See Figure 1).

Figure 1. Mineral usage in clean transport and energy generation. Source: International Energy Agency, The Role of Critical Minerals in Clean Energy Transitions

The IEA report notes that EVs and battery storage have already overtaken consumer electronics as the largest users of lithium. It adds, “In a scenario that meets the Paris Agreement goals, clean energy technologies’ share of total demand rises significantly over the next two decades to over 40% for copper and rare earth elements, 60-70% for nickel and cobalt, and almost 90% for lithium.” As seen in Figure 2, growth through 2040 for several clean-energy technologies will increase overall demand for minerals by 4-6x, with EVs and battery storage accounting for the lion’s share.

Figure 2. Estimated Clean Energy Mineral Demand, 2040. Source: International Energy Agency, The Role of Critical Minerals in Clean Energy Transitions.  SDS refers to Sustainable Development Scenario under the Paris Accord.

Figure 3 depicts a European Commission assessment of supply risk and economic importance; the upper right quadrant is well populated with materials needed for clean-energy technologies and electronics.

Figure 3. EU Criticality Assessment of Raw Materials.  Source: Study on the EU's list of Critical Raw Materials (2020) Final Report 

With similar concerns in mind, in January 2021 the U.S. Department of Energy launched a Division of Minerals Sustainability under its Office of Fossil Energy and Carbon Management. In its multi-year program plan, the Division states, “Supply chain security for the minerals and metals needed for clean energy technology has become a strategic issue, relevant not only to climate change but to economic and national security.”

It goes on to say that “much higher demand growth [is] expected for some minerals, such as lithium (42x), graphite (25x), cobalt (21x), nickel (19x), and REEs (7x). However, existing domestic supplies and production for many of the minerals and metals (e.g., Co, Li, Ni, graphite, and Mn) necessary for these technologies are currently scarce to non-existent. Presently, the United States is import dependent (greater than 50% net import reliance) on 32 of the 35 critical minerals and metals, and 100% import reliant for at least 14 of these critical minerals. The number of critical minerals and metals for which the U.S. mostly or entirely relies on foreign sources for is steadily increasing.” (See Figure 4.)

Figure 4. U.S. Net Import Reliance of Selected Critical Mineral Commodities. Source: U.S. Geological Survey via Department of Energy Division of Minerals Sustainability

An important consideration about this increasingly globalized supply chain is called out in a factsheet from the University of Michigan’s Center for Sustainable Systems: “Demand for Energy Critical Elements (ECEs), coupled with rising mining standards in many countries, has caused production to shift to countries with low costs and lax environmental regulations, thus increasing the impacts of ECE extraction. Nevertheless, it is worth noting that developing nations naturally contain greater quantities of ECE ore deposits.”

Another factor is the high geographical concentration of critical mineral extraction (with the Democratic Republic of the Congo dominating cobalt production and China REEs), and the even greater concentration of processing in China, as seen in Figure 5. As the IEA report notes, critical minerals are more narrowly distributed than fossil fuel resources.

Figure 5. Share of top three producing countries of selected minerals and fossil fuels, 2019. Source: International Energy Agency, The Role of Critical Minerals in Clean Energy Transitions 

The success of energy and transport decarbonization is dependent on critical minerals, and thus on solving the multidimensional challenges of building an adequate and sustainable worldwide supply chain. This is particularly difficult in a sector based on mining; as the University of Michigan factsheet notes, it’s an environmentally disruptive activity that can adversely impact workers, nearby residents, air, and water.

In Part 2, we dig deeper into the environmental and social impacts of critical minerals and how life cycle assessment (LCA) can be used to guide better choices.