A worker labels copper products at the Truong Phu cable factory in northern Hai Duong province, near Hanoi, Vietnam August 11, 2017.
An all-electric future relies heavily on copper, and impending supply shortages could make it difficult for countries to achieve net-zero emissions by 2050, according to a new S&P Global report.
Until significant new supply becomes available, the climate targets will be “shorter and out of reach”.
Electric vehicles, solar and wind energy and energy storage batteries are powered by copper. According to S&P Global, an electric vehicle requires 2.5 times more copper than a vehicle with an internal combustion engine. Meanwhile, solar and offshore wind power, respectively, require 2 and 5 times more copper per megawatt of installed capacity than electricity produced from natural gas or coal.
Copper is also critical to renewable energy transport infrastructure, thanks in part to its electrical conductivity and low reactivity. Its applications include cables, transistors, and inverters.
“The energy transition will depend much more on copper than our current energy system,” said Daniel Yergin, vice president, S&P Global, to CNBC. “It was just assumed there would be copper and other minerals … Copper is an electrification metal, and electrification is a lot of what the energy transition is all about.”
The report predicts that copper demand will almost double over the next decade to 50 million metric tons by 2035. By 2050, demand will reach over 53 million metric tons. To put this figure in perspective, S&P Global noted that this is “more than all the copper used in the world between 1900 and 2021”.
The deployment of renewable energy will account for a significant part of the surge in demand. S&P Global predicts that by the middle of the next decade, the copper needed to produce electric, wind, solar and battery vehicles will triple. This will happen along with an increase in demand from other areas, pushing the demand for copper to an unprecedented level.
It is not as simple as building new mines. According to the International Energy Agency, a new copper mine takes an average of 16 years to take off from the ground.
For now, increasing use in existing mines and increasing recycling may satisfy some of the higher requirements.
S&P Global offers two future scenarios to predict how short the market will be. As part of the “Rocky Road Scenario” – where production continues largely unchanged – the annual supply shortage will reach almost 10 million tonnes by 2035.
In a more optimistic “high ambition scenario” – where mines increase use and increase recycling – the market will still be in deficit for most of the 1930s.
“In both scenarios, there would not be enough supply to meet the need for net zero emissions by 2050.” – summarizes the report.
A new geopolitical order
Demand for the metals and minerals that fuel our future will eventually create new world orders as countries seek to secure supplies of copper, lithium, nickel and other vital raw materials. See the article : San diego solar pool heating.
“There will be a new geopolitical order around minerals like copper,” said Yergin. He noted that the copper supply chain is much more concentrated than other raw materials, including crude oil.
“China has focused more on establishing a central position in the supply chains of the minerals that will be necessary to achieve net zero carbon, and copper is an excellent example of its core position. Meanwhile, US copper production has dropped by almost half in the past quarter-century, ”CNBC told CNBC.
The S&P Global report comes as copper prices have come under pressure. Commodities overall fell as fears of a recession increased, triggering fears of a slowing demand.
On Wednesday, copper hit its lowest level since November 2020, following a grueling second quarter, which was its worst three-month period for the metal in more than a decade.
– CNBC’s Patti Domm contributed to the report.