Resource scarcity in the energy transition

By Diego Angelino Velázquez

In the context of the climate crisis and the pursuit of the Sustainable Development Goals (SDGs), the decarbonisation of production and energy models has been identified as a major goal for societies around the world. This transformative goal should be made a priority in order to respond to the climate crisis and its economic and humanitarian-related effects.

Major investments in Renewable Energy (RE) sources, such as solar photovoltaic, wind (onshore and offshore), geothermal, biomass (waste from urban centres communities, local markets), appear attractive and are increasingly pursued by countries. However, energy transition goes beyond good intentions and “green dreams”. Apart from the tremendous work required to undertake the drastic transformations of economies based on oil, gas, and large-scale hydropower; the energy transition goal faces resource scarcity of minerals; a threat to the entire functioning of the sector.

This phenomenon occurs because RE is sustained by a select group of raw materials and minerals with unique properties for energy production. Lithium, for example, is a key mineral for building batteries. Rare Earth Elements (REEs) provide special conditions for energy conductivity. These minerals, along with having unique characteristics, are also scarce and highly concentrated in a small number of countries. This resource scarcity is further influenced by economic and geopolitical variables, suggesting that the management of raw materials and minerals related to the energy transition is subject to complex, strategic decision-making. Furthermore, they are key to the possibility of an effective energy transition, which is a priority for the fulfilment of the goals related to climate response and sustainable development.

This can be illustrated with a number of examples. In the case of wind energy, the turbine generator requires REEs such as Neodymium (ND), Praseodymium (Pr) and Dysprosium (Dy). The solar photovoltaic requires crystalline silicon, made of Silicon and Silver, and the panels and other related technologies require important quantities of Silicon, Iridium (In), Copper (Cu), Gallium (Ga), Selenium (Se), Cadmium and Tellurium. The electric vehicle industry requires Lithium, Cobalt and Graphite for the batteries, and, for the electric traction motor, large quantities of rare earths such as Praseodymium and Dysprosium are required. Most of these materials are highly concentrated. China, for example, has control over 65-70% of the reserves of the total of Rare Earth Elements and Graphite.

It is necessary for the public sector, private sector and academia, as well as civil society, to reflect upon the potential implications of resource scarcity in the development of the energy sector. Especially for academia, it is important to increase the production of studies and articles that suggest practical solutions for the escalation and rapid development of capacities within topics such as circular economy, resource efficiency and others related to energy transition. Such insights provide us with sufficient time to develop potential substitutes and new engineered solutions that can help humanity navigate and advance within the scarcity paradigm.

© 2019 by Centre for Business and Development Studies

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