Presentation of IRENA Activities on Critical Materials for the Energy Transition

Energy transition in line with the IRENA 1.5°C pathway can substantially raise demand for certain minerals and metals used in batteries, electric motors, wind turbines, or solar PV panels. The prices of these materials have increased substantially in recent months. This in turn has affected the prices of these goods. The reasons for these price increases are manifold and include hikes in energy and transportation costs, but scarcity and investor stockpiling also play a role. Critical materials have therefore emerged as an important topic in the energy transition and a better understanding of the market dynamics is becoming a priority.

To assure that the energy transition can continue apace, it is urgent to grow the supply. While innovation is key to reducing critical materials intensity of technologies and circular economy concepts can help to reuse and recycle materials after use, the primary supply of critical materials (from ores) remains a priority and needs to increase substantially. Mining, therefore, needs to expand fast. The mining and processing industry is still dominated by start-ups that lack the financial means for a speedy ramp-up. There are also significant concerns regarding the sustainability of additional mining activity including environmental aspects, impact on local communities, and sharing of revenues and costs among stakeholders.

Equally important is to enhance transparency along the supply chain, while suppliers ask for demand certainty. A few countries dominate the supply of some of these critical materials, with a special role of China. The COVID crisis has again shown the risks associated with long international supply chains and the recent gas price hike has emphasised the volatility of commodity prices. In response, a large number of consumer countries and companies are developing strategies to reduce this import dependency and to develop stable long-term supply arrangements.

To better understand the market dynamics, IRENA presented its current and upcoming activities on minerals criticality for the energy transition and present key takeaways from recent reports ‘Critical materials for the energy transition’, a joint IRENA-ENEL Foundation's Materials for the energy transition, as well as from the upcoming reports ‘Critical materials for the energy transition: Outlook for lithium’ and ‘Critical materials for the energy transition: Outlook for rare earth minerals.’

This event was by invitation only.