An upcoming copper shortage could derail the energy transition

July 18, 2022: -An all-electric hereafter depends heavily on copper, and threatening supply shortfalls could hamper nations’ goals of reaching net-zero emissions by 2050, according to a new report from S&P Global.

Climate goals will be “short-circuited and remain out of reach without substantial new supply.”

Electric vehicles, solar and wind power, and batteries for energy storage all run on copper. An EV needs 2.5 times as much copper as an internal combustion engine vehicle, according to S&P Global. Therefore, solar and offshore wind need 2 and 5 times more copper per megawatt installed power than natural gas or coal.

Copper is also key to the infrastructure that transports renewable energy, thanks partly to its electrical conductivity and low reactivity. Its uses include cables, transistors, and inverters.

“The energy transition is moving to be dependent much more on copper than our everyday energy system,” Daniel Yergin, S&P Global vice chairman, told CNBC. “There’s just been the assumption that copper and other minerals will be there. Copper is the metal of electrification, and electrification is much of what the energy transition is all about.”

The report forecasts that copper demand will nearly double over the next decade to 50 million metric tons by 2035. By 2050, the order will reach more than 53 million metric tons. To put this figure in perspective, S&P Global noted that that’s “overall the copper consumed in the world between 1900 and 2021.”

Renewable energy deployment will account for much of the demand spike. S&P Global forecasts copper needed for EVs, wind, solar, and batteries tripling by the center of the future decade. This will happen alongside demand growth from other areas, making copper’s demand to never-before-seen levels.

It’s not as simple as building further mines. According to the International Energy Agency, a unique mine brings 16 years to get off the ground.

For the time being, increasing utilization at existing mines and ramping up recycling can fulfill a few of the higher demands.

S&P Global offers two future scenarios to forecast how short the market will be. Beneath the “Rocky Road Scenario,” production continues as the annual supply shortfall will reach almost 10 million in 2035.