Green Energy Popularization Soars Up Rare Earth and Lithium Demand

The International Energy Agency (IEA) said that countries around the world are actively promoting green energy policies. Supplies of critical minerals such as lithium and rare earth which are essential for key clean energy technologies like electric vehicles and wind turbines need to pick up sharply over the coming decades to meet the global climate goals, creating potential energy security hazards that governments must act now to address.

The IEA said that by 2040, the overall demand for critical minerals such as nickel, cobalt, lithium, copper, and rare earth elements (REEs) may increase as much as six times. The growth rate of demand depends on how fast the government takes action to reduce carbon emissions.

IEA stated that governments of all countries are formulating or promoting carbon reduction policies and increasing the establishment of renewable energy. Some governments even plan to use wind power and solar energy to replace traditional fossil fuels. However, for many countries, large-scale transformation is a huge challenge and requires a lot of reforms.

There has been slow progress. The US Department of Energy announced at the end of April that it had provided US$19 million in funding to 13 producers focusing on REEs and critical minerals. The US stated that REEs and important minerals are vital to the economic development of renewable energy such as batteries. IEA stated that the mineral demand for onshore wind power plants is 9 times that of thermal power plants of the same scale.

In addition to the increase in demand for raw materials, IEA said that the promotion of green energy in various countries also faces the following potential challenges, for example, the mineral supply chain is complex and opaque. It is highly concentrated in a few countries. And producers are expected to face stricter environmental and social standards, as well as the decline of the quality of available mineral stocks.

IEA executive director Fatih Birol said that these challenges are not insurmountable, but governments must indicate how they plan to put climate commitments into action. In this way, the risk of price fluctuations and supply disruptions can be greatly reduced.

Green energy popularization gradually soars up rare earth and lithium demand, but if the potential challenges are not addressed, Birol warns that the global energy transition may be slower and more costly, which will hinder the global response to climate change. The IEA recommends that we should now expand recycling, promote technological innovation, strengthen supply chain flexibility and market transparency, and ensure adequate investment in diversified supply sources.

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