Spending on the global transition to carbon-free forms of energy totalled USD1.1 trillion in 2022, according to data out last week. This is the first time that such funding – including tech for renewables, electric vehicles and charging stations – topped the USD1 trillion mark for one year.
The green transition is hugely important in the battle against climate change and has been defined by the UN Environment Programme as “an economy that results in improved human well-being and reduced inequalities over the long term, while not exposing future generations to significant environmental risks and ecological scarcities.”
Australia has the potential to benefit enormously from this transition – not only by providing many of the metals and minerals necessary, but by promoting alternatives to fossil fuels, becoming a leader in green hydrogen, and even by developing and commercialising smart animal nutrition products which reduce methane emissions. To date, Australia has lagged – it could play a far more ambitious role.
An energy system powered by clean energy technologies differs profoundly from one fuelled by traditional hydrocarbon resources. Solar photovoltaic plants, wind farms and electric vehicles generally require far more minerals to build than their fossil fuel-based counterparts. A typical electric car requires around 6x the mineral inputs of a conventional car, and onshore wind plants require around 9x more mineral resources than a gas-fired 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 in new investment 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 are essential for permanent magnets that are vital for wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies.
The shift to a clean energy system is set to drive a huge increase in the requirements for these minerals, meaning that the energy sector is emerging as a major force in mineral markets. Until the mid-2010s, for most minerals, the energy sector represented a small part of total demand. However, as energy transitions gather pace, clean energy technologies are becoming the fastest-growing segment of demand. In a model produced by the IEA Sustainable Development Scenario, their 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. EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040.
Australia is a significant producer of all these resources but needs to move a lot faster to both take advantage of the opportunities and to assist this crucial green energy transition.
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