Will e-Mobility Be Challenged by the Scarcity of Natural Resources?
May 17, 2023
During the first Freedom of Mobility Forum debate on March 29, 2023, panelist Carlos Tavares warned of the potential scarcity of resources to support the energy transition of the mobility sector: “The scarcity of resources and the fragmentation of the world with regional regulations, which are not global regulations, may have an impact on cost inflation of raw materials. And that is going to bring us back to the question of the affordability of mobility.”
The demand for minerals and raw materials needed to support the energy transition in mobility ecosystems is set to increase significantly. Which materials? Is the Earth able to provide sufficient supply to meet the boom in demand? What promising sustainable solutions can we count on to deal with limited resources?
Let’s look at the data to better understand the challenges ahead!
Electric batteries are a key enabler for the energy transition in the mobility ecosystem
The objective is carbon neutrality by 2050 for the signatory countries of the Paris Agreement. The Industrial and Construction sector is the third highest contributor to greenhouse gas emissions globally, so it can be a powerful game changer in the ecological and energy transition.(1)
This transition clearly relies on an increasing use of electric batteries. The global battery market was valued at USD 104.3 billion in 2022 and is expected to grow at a compound annual rate of 15.8% from 2023 to 2030.(2)
The electronics, automotive, energy storage, aerospace, and military and defense sectors are all competing for the available battery supply. In 2022, the Automobiles sector was the largest end-use segment, accounting for a 32.4% share of the global market.
The world is facing an unprecedented and accelerating demand for minerals. Competing demand leads to pressure on prices
In 2021, Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA), warned of “a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions.”(3)
According to the IEA’s “Sustainable Development Scenario” (SDS), which charts a pathway to fully address the goals set out in the Paris Agreement, the total demand for minerals to support use of decarbonized energy is set to quadruple between 2020 and 2040.(4)
Note: includes all minerals, such as chromium, copper, major battery metals (lithium, nickel, cobalt, manganese and graphite), molybdenum, platinum group metals, zinc, REEs and others, but excludes steel and aluminum.
The IEA’s forecasts based on the SDS climate scenario show that mineral demand is expected to:
- nearly triple for low-carbon energy production (notably due to material intensive offshore wind energy generation) by 2040
- increase by at least 30 times for electric vehicles (EVs) and battery storage (from 0.4 million metric tons in 2020 to 12.7 million metric tons in 2040)
In a more demanding scenario (Net Zero 2050), demand would be even higher (21.5 million metric tons in 2040) for EVs and battery storage, which clearly challenges the earth’s ability to support such demand.
EVs and battery storage, in particular, are expected to account for about half of the mineral demand growth from clean energy technologies over the next two decades, according to the IEA.
EVs require six times more minerals than internal combustion powered vehicles.
The cells in a typical lithium-ion battery with a 50 kilowatt-hour (kWh) capacity generally contain about 150kg of minerals and metals, including lithium, cobalt, nickel, manganese, graphite, aluminum, copper.... Depending on the battery chemistry, the amount of minerals used can be reduced, but overall demand for those key materials will, in any event, remain high.
According to the IEA’s “Stated Policies Scenario” (STEPS), which reflects the impact of the current stated policy ambitions of countries, the global fleet of electric cars could be around 125 million units in 2030 (and up to 220 million in the “EV30@30” scenario that aims to increase the market share of electric mobility to 30% worldwide). As such, the demand for and strategic importance of these key materials can only continue to accelerate.(5)
Total demand for battery metals is estimated to have jumped 50% in 2022 to 4.8 million metric tons and is forecast to balloon to over 17.5 million tons by the end of the decade. Demand for lithium is set to grow the fastest, surging more than sevenfold between 2021 and 2030.(6)
Projection of Worldwide Lithium Demand from 2020 to 2030
(in thousands of metric tons of lithium carbonate equivalent)
|
2020
|
2025
|
2030
|
|---|---|---|
|
327
|
1,003
|
2,114
|
Source: World Economic Forum
Is the Earth able to provide sufficient supply to meet the booming demand?
The battery metals markets came under pressure in 2022, as rising demand coincided with inflationary pressures and supply chain constraints. Lithium, nickel and manganese all experienced technical supply deficits, according to BloombergNEF’s latest Battery Metals Outlook.(6) Lithium is one of the key components in EV batteries, but global supplies are under strain because of rising EV demand. The world could already face lithium shortages by 2025 according to the IEA, with an estimated 2 billion EVs needed on the road by 2050 for the world to hit net zero. In 2021, however, worldwide sales of EVs totaled less than 7 million units.
The mineral resources needed for batteries are not evenly distributed geographically. The Democratic Republic of Congo currently dominates the supply of cobalt, China the supply of graphite and the Andean Basin in South America the supply of lithium. Therefore, the risk of geopolitical tensions associated with these essential materials is significant. Environmental risks such as droughts, floods and fires are also to be considered.
Asia (China, Japan and South Korea) supplies 86% of the processed materials and components for lithium-ion batteries globally, with China alone providing 48%. Europe has a relatively small share of the supply at 7-8%.(7)
As demand for EV batteries grows, countries are racing to become more self-sufficient and build their own domestic supply chains. China currently dominates the global battery industry. It controls over 50% of refining capacity for battery-grade metals, across all key materials, and Chinese companies have invested heavily in mining assets globally. China is also a battery manufacturing powerhouse, accounting for almost 75% of total commissioned capacity. Even with Europe and the U.S. set to make inroads, China is likely to remain dominant in this area for the foreseeable future.(7)
For raw materials used in EV drivetrains and electronics, China is also the most significant actor, accounting for 70% of the global supply of critical minerals.
In 2018, China already provided 62% of the total supply of critical minerals for Europe.(8)
In 2020, China provided more than 98% of rare earth materials for Europe (European Commission) and 74% for the U.S. (Statista).
Chile provided 78% of lithium for Europe in 2020 (EC) and 40% for the U.S. in 2021 (USGS.gov).
With such concentration of key resources, geopolitical tensions could also push material prices to levels which compromise the affordability of mobility devices and solutions.
Promising sustainable solutions for dealing with limited Earth resources
With strong and growing demand for minerals and raw materials driven by the energy transition and finite reserves, it is imperative for industry to focus on the sustainable use of natural resources. A balance is needed between maintaining the long-term supply of resources, while maximizing social benefits and minimizing environmental impacts.
New chemistries for batteries
With the current intensity of research efforts, the chemistry of battery cells for EVs can be expected to evolve significantly over the next few years. The EV battery market is still in its infancy with significant growth on the horizon. Battery chemistries are constantly evolving and, as automakers develop new models with new characteristics, it will be interesting to see what new types of cathodes come to market.
An interesting example comes from Factorial Energy: they have developed breakthrough solid-state batteries that offer 20% to 50% longer range per charge, increased safety, and cost parity with conventional lithium-ion batteries with high-capacity cathode and anode materials.
High commodity costs could spur manufacturers of electric mobility devices to adjust their battery strategies and opt for cheaper compositions. One such avenue is to substitute cobalt with nickel.
The switch to higher nickel content, as well as the rapid adoption of lithium iron phosphate cells, means less cobalt will be used in batteries than previously anticipated. BloombergNEF’s latest forecast is that cobalt demand will grow by 28% between 2022 and the end of the decade to over 150,000 tons. However, this is less than half what was estimated in 2019.(6)
Production of lithium from geothermal water
This process allows the extraction of lithium from geothermal brines. The benefit is to extract lithium from the groundwater before reinjecting it, while exploiting the geothermal resource. The extraction process utilizes an adsorbent system that selectively captures lithium from the brine.
Current experiments, such as Vulcan’s Zero Carbon Lithium™ and the Control Thermal Resources projects, aim to produce both renewable geothermal energy and lithium from the same deep brine source. This helps meet the requirements of the lithium market, while reducing the high carbon and water use footprint of production.(9)
Recycling batteries
The advantage of recycling batteries is that it makes the most of the strategic resources used to produce them and helps preserve the environment.
With the expected pace of substitution of internal combustion vehicles, the IEA expects that nearly 77 million hybrid and electric cars could be sold by 2025 (IAE Global EV Outlook 2022).
These numbers will continue to grow over the long term and therefore battery recycling is a necessity to limit the pressure on reserves of certain metals and preserve natural resources, limit the carbon and environmental footprints of mining, and minimize the environmental impacts of end-of-life batteries. However, recycling cannot be the one and only solution for two reasons:
- It is not effective immediately: the 15-year lifespan of EV batteries pushes the horizon of full benefit further out
- In the long-term, recycling may only cover around 10% of the total need.(10)
Nevertheless, recycling has a game changing role to play and merits evaluation for its medium-term potential.
The “Just Necessary” challenge
The “Just Necessary” challenge means rethinking mobility, changing the paradigm and better aligning current and future mobility devices to our real needs. This approach includes challenging the size, speed and power of mobility devices to respond to the real needs of users and to the natural limits of the planet.(11)
Research and innovation are the pillars to solving the natural resource scarcity issue. The appetite of engineers to protect freedom of mobility, while reducing climate impact and protecting affordability, already looks huge.
New and disruptive mobility devices will undoubtedly emerge, and the Freedom of Mobility Forum will continue to explore the opportunities they present.
Stay tuned!
(1) 2022 French Ministry for Ecological Transition
(2) 2022 Grand View Research - Global Battery Market
(3) 2021 IEA - Clean energy demand for critical minerals set to soar as the world pursues net zero goals
(4) 2021 IEA - The Role of Critical Minerals in Clean Energy Transitions
(5) 2022 IEA - Global Energy and Climate Model
(6) 2022 BloombergNEF - Race to Zero: The Pressures of the Battery Boom in Five Charts
(7) Roland Berger - How to manage supply chain risk for lithium-ion batteries
(8) European Environment Agency Report - Electric vehicles from life cycle and circular economy perspectives
(9) 2022 BRGM - Combining lithium production and geothermal energy: a successful completion to the EuGeLi project
(10) 2021 OpenEdition Journals - Recycling electric vehicle batteries: ecological transformation and preserving resources
(11) 2022 Polytechnique Insights - IPCC report: three things you need to know