Det nye kapløb efter mineraler til ren energi

One way to think of the green transition is as a shift away from fuel-intensive systems – running on oil, gas and coal – and towards materials-intensive systems.

Take cars, for instance: the average electric car needs more than 200 kg of minerals and metals, in addition to steel and aluminium. In comparison, a conventional car needs less than 40 kg, most of which is copper. The main difference is the electric vehicle’s battery, which is made from large amounts of lithium, graphite, nickel and cobalt.

When prices for these minerals surge, so does the cost of making EVs. Which is why some market-watchers were spooked, when the price of lithium soared more than 700% earlier this year. The same general trend is seen for other renewable technologies like wind and solar.

The worry, in the words of the International Energy Agency, is that a lack of materials could ultimately mean “less affordable and delayed clean energy transitions.”

We caught up with Hannes Reuter, Managing Director, Ramboll Energy, to understand where this trend is headed.

Why are commodity prices rising?

“There are a few reasons for the high volatility. First, global supply chains have been disrupted by the war in Ukraine and the rebound from the Covid pandemic, which has pushed up the price of shipping. But you also have the positive trend that the green transition is really picking up, which is creating more demand and competition. But that also leads to higher demand of critical raw materials and hence higher prices.”

“The second factor is availability, where geopolitics is beginning to play a major role. Today, most materials are mined and refined in a handful of countries, notable among them China, which refines around 90% of the world’s rare earth minerals. Another minerals exporter is Russia, which has been sanctioned. As global tensions rise, governments in the EU, USA and elsewhere are seeing the risk of losing supply in a new and much more serious light. The challenge is that the lead time to bring new mineral production online – from identifying the resource, mining it and bringing it to market – is around 16 years.”

Are there any indications that the rise in prices is slowing the transition?

“Yes and no. The need to diversify from Russian energy supplies triggered an increased strong push for the green transition, and a lot of continued government support. But higher energy and material prices impact the business cases for green transition

projects, where we see in some cases that final investment decisions are being put on hold due to market volatility and uncertainty. That could be in green hydrogen, for example, where 70% of the cost is down to the price of electricity.”

“That doesn’t mean development of green investments will slow down, as short-term price hikes will not substantially change the investment quality of projects with +20-year horizons. But it may mean that some projects are delayed for six months or a year, which is critical as time is of the essence in this transition.”

What can businesses and governments do to navigate this new challenge?

“We have to avoid making the same mistake as with natural gas, where European countries made themselves extremely vulnerable and dependent on e.g. Russian supply. Many of the critical raw materials needed for the energy transition can be found naturally in Europe, for instance in the Nordics^[1], but so far there is a complete absence on mining these. And as the lead times are so long, we have to begin building the supply chain today.”

“Governments should simplify and speed up permitting processes. Another important lever is the circular economy. If we recycled more critical materials, we could alleviate some of the supply chain pains.”

Many renewable technologies have high-risk supply chains^[2], and the EU Commission recently proposed a ban on products using forced labour. Is it even possible for governments to pursue the green transition and source the materials from other suppliers?

“In the short run it is an uphill battle due to lack of alternative supply chains. In that light it is important to start now paving the way for alternatives. And once alternatives are available, it is much easier to impose better conditions on e.g. forced labour. In the long run the outlook is positive. Relying more on energy sources like sun or wind makes us less vulnerable to the cartel of oil producers.”

“Last but not least, we should not forget that although we are seeing price inflation for renewable technologies, the same is very much true for fossil fuels. Despite the price volatility, the cheapest form of new energy capacity will continue to be renewables.

^1. A report from the Nordic Council of Ministers has recently concluded the region can supply almost all of the critical raw materials defined by the EU, including rare earths. Source.

^2. Roughly 70% of the world’s cobalt is mined in the Democratic Republic of Congo, which is notorious for labour violations, according to the IEA, and where children have been identified at 30% of the country’s artisanal- and small scall mines. Source.