The world lacks time, not minerals, for climate-friendly technology

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The world is not reducing greenhouse gas emissions at nearly the rate needed to avoid the most dangerous effects of climate change, the United Nations’ latest climate report released this month confirms. Still, warning that we’re in danger of speeding has become something of a trope.

The intersecting drivers and impacts of the Russian invasion of Ukraine, the supply chain disruptions caused by Covid, and rising inflation have all fueled a range of arbitrary narratives that the clean energy transition will be highly inflationary – or, alternatively, that it is faltering is advised.

Concerns are usually centered on the impact of rising demand for commodities such as cobalt, lithium, nickel and copper used in electric vehicles, solar cells, wind turbines and power grids. Isabel Schnabel of the Deutsche Bundesbank spoke in January about the inflationary effects of green energy; although she later conceded that this had to be seen alongside the inflationary effects of fossil fuels and climate change itself.

These warnings usually cite a fact about the resources required to build new energy infrastructure. For example, the IEA highlights that an electric vehicle uses six times as much metal as a fossil-fueled car and that wind farms use nine times as much as a gas-powered plant. The shock value of this analysis does not quite stand up to close scrutiny. For one thing, the absence of fuel in the equation is not acknowledged; An internal combustion engine pickup truck uses $25,000 in fuel over a decade, according to the Energy Information Agency’s Low Gasoline Price Scenario.

It also has to deal with economics 101: more demand and higher prices lead to more supply. Running out of raw materials is a common fear, but over the past few hundred years people have come up with increasingly efficient ways to find things we want underground and pull them out.

Examples abound. Consider the US shale oil boom of the past decade: The country’s oil production more than doubled between 2008 and 2018. Peak oil supply — or at least a long-term shift to higher-priced crude — was a credible threat just over a decade ago. Both the “resources” and economically recoverable “reserves” of transitional minerals have tended to increase over time, even as production continues. “Economically viable reserves have grown despite sustained production growth,” notes the IEA. Data from the United States Geological Survey proves this:

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Innovation also helps on the demand side. Electric car batteries now use far less cobalt than they did a decade ago, and researchers are confident it’s possible to eliminate this rare mineral altogether.

You should also think about recycling. Australian researchers forecast demand for minerals in a scenario to meet the Paris Agreement goals of a 100% renewable energy system. They found that plausible improvements in both technology and recycling can reduce cobalt demand by two-thirds, putting it well within current resource range and not too far above current reserves.

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It’s true that some mines for metals and minerals used in zero-emission energy systems will take years to come online. The IEA estimates four to seven years for lithium, depending on whether it’s in Australia or South America. Copper mines can last well over a decade. It’s easy to see that this could be a problem if demand increases at an unexpectedly rapid rate.

Even so, the results were not as dramatic when IMF officials attempted to model the price effects of booming mineral demand. Looking at the requirements for copper, lithium, cobalt and nickel to reach net-zero emissions by mid-century, they found that real prices would mostly not exceed previous spike levels, although they may remain at high levels for longer level would remain.

Finally, as the IEA notes, there are “significant differences” in oil and mineral supply shortages: an oil supply disruption affects everyone driving passenger cars, diesel-powered trucks, etc., while a mineral supply crisis only affects the supply of new electric vehicles – not those who already use them.

The pitfalls of reducing emissions need to be viewed in a broader context. A rush for minerals to build the new energy infrastructure is only a temporary problem. The IMF estimates 15 years of scarcity of raw materials; the IEA estimates it will take closer to a decade. The hotter climate, in contrast, is likely to be irreversible on any timescale humans can plan for.

Transitioning to a world that isn’t getting warmer means making a bet that human ingenuity can tweak the relatively familiar challenges of extracting things from the ground, using and reusing them, and spreading the benefits. The modern economy is very familiar with such challenges.

Ignoring the transition means embracing the descent into an increasingly unstable climate. This is something our modern society has very limited experience with – but what we do know is terrible.

(ET RISE, the one-stop shop for MSME, provides news, views and analysis on GST, exports, finance, policies and small business administration.)

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