High metal prices could thwart energy transition – institute

Rising metal prices could slow the shift towards a low-emission energy system, the German Institute for Economic Research (DIW) said in a report. "If we assume that demand continues to grow strongly, the prices for copper, lithium, nickel and cobalt are likely to peak around 2030 and remain there for years," DIW economist Lukas Boer said following a scenario analysis. "This would make them an obstacle to the energy transition." Large amounts of copper will be needed for making wind turbines and solar arrays, while e-mobility will require a lot of cobalt, lithium and nickel. The additional demand is set to push up prices significantly because the supply can't be easily increased. "It can take up to two decades before new mines are developed," the DIW said. "As a result, prices will rise." According to the scenario, copper prices could rise by almost 70 percent in 2030 compared to 2020, and lithium prices by almost 180 percent. "If this development actually occurs, the metals studied would significantly influence inflation, trade and global economic performance in the future," Boer said. "In the scenario, the energy transition could lead to a fourfold increase in the production value of the four metals in the period from 2021 to 2040, making the expansion of renewable energies more expensive." He added uncertain perspectives for renewables and electric cars currently prevent investments in metal extraction. "We need a globally coordinated climate policy that gives producers more planning security."

The resource demand of low-emission technologies is much more diversified than that of fossil fuels, meaning that questions regarding the sourcing and recycling of raw materials are set to become more and more pressing, as e-cars, renewable power installations or power battery systems become more widespread. Industry representatives have urged EU states to seriously explore possibilities for sourcing key raw materials for more climate-friendly technologies domestically instead of relying on imports.