Critical minerals shortages may challenge global energy transition goals

The worldwide shift toward clean energy, driven by technologies such as solar panels, wind turbines, hydrogen solutions, energy storage, and carbon capture, has led to a sharp increase in demand for critical minerals. This growing reliance on these resources presents significant challenges to achieving international energy transition targets, according to a new report by GlobalData, a leading data and analytics firm.

The report, Critical Minerals (2024), highlights key obstacles to scaling clean energy technologies, including mineral depletion, resource monopolization, geopolitical tensions, and water scarcity.

Martina Raveni, Strategic Intelligence Analyst at GlobalData, explained: “The near-term depletion of critical minerals raises concerns, especially as instability in the green technologies market causes price volatility. Lower-grade ores complicate extraction, making it less efficient, particularly in the copper industry. Recycling is expected to play a key role in diversifying supply chains.”

The uneven global distribution of critical minerals adds to these challenges. South America and Australia hold much of the world’s lithium reserves, the Democratic Republic of the Congo (DRC) leads in cobalt production, and Indonesia dominates the nickel market.

Raveni further noted: “Geographic monopolies worsen supply risks and are further exacerbated by geopolitical tensions, environmental, social, and governance (ESG) disclosure rules, and environmental factors like water scarcity. The race to control these critical minerals has intensified rivalries between China, the US, and the EU, with China currently dominating the mineral supply chain and energy transition technologies.”

Geopolitical tensions have also disrupted the market. Western nations have introduced sanctions aimed at reducing dependency on single suppliers, while China, in response, banned exports of certain rare earth elements (REEs) in 2023, further escalating supply chain instability.

“Given these issues, there are concerns that shortages of critical minerals may make it harder for nations to achieve energy transition goals,” Raveni concluded.

Source: GlobalData, Photo: Fotolia