The IEA’s World Energy Outlook Special Report provides analysis of the links between critical minerals and the prospects for a secure, rapid transformation of the energy sector, setting out six recommendations for policy makers.
Roskill View
The central message of the International Energy Agency (IEA’s) World Energy Outlook is that an energy system powered by clean technologies differs profoundly from one fuelled by traditional hydrocarbon resources. As a result, the report argues that, as countries accelerate their efforts to reduce emissions, they need to make sure that energy systems and associated minerals supply chains remain resilient and secure. The IEA contends that today’s international energy security mechanisms are designed to provide insurance against the risks of disruptions or price spikes in hydrocarbons supply, but that no such mechanisms are in place to deal with the critical materials set to underpin the energy transition.
The report is correct in its framing of the potentially different challenges of the past and future. It highlights that there are significant differences between hydrocarbon security and mineral security, notably in the impacts that any disruption may have. While price spikes in the oil market, generally speaking, have geographically consistent impacts, the consequences of a lithium price spike are much more complex and heterogeneous.The ability to expand critical materials supply also has a very complex set of funding, geographical, resource and ESG challenges to overcome.
The IEA makes six key recommendations for a new, comprehensive approach to mineral security:
- Ensure adequate investment in diversified sources of new supply
- Promote technology innovation at all points along the value chain
- Scale up recycling
- Enhance supply chain resilience and market transparency
- Mainstream higher environmental, social and governance standards
- Strengthen international collaboration between producers and consumers
Roskill supports these recommendations and the “call to action”. We note, however, that in the UK media this week, a good deal of attention has been paid to recommendation 4, which the IEA suggests should include regular market assessments and stress-tests, as well as building strategic stockpiles in some instances. The Telegraph, for example, published a story with the headline Britain set to stockpile metals for electric cars to beat Chinese threat. In Roskill’s view though, it is international collaboration, not autarkic measures, that governments should be looking to promote if sustainable long term objectives are to be realised.
Roskill is the leader in critical materials supply chain intelligence. Over our long history, we have developed a comprehensive coverage of most of the metals and minerals that are today classified as critical, and we deliver this through market reports, consulting, sustainability and cost analysis, and events.