Sacred Headwaters #60: "Critical Minerals" Pt 2 - the Mineral Production Gap
Investment in new mineral production is nowhere near on track with what most Paris-compliant scenarios demand. Why is that, and how can we close the mineral production gap?
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Issue #60: “Critical Minerals” Pt 2 - the Mineral Production Gap
Around the same time I wrote the last issue of this newsletter, a progressive independent media outlet here in Canada ran a piece about "critical minerals" subtitled “The green techno-dream is so vastly destructive, they say, ‘we have to come up with a different plan.’”
I wrote the last issue because I’d started seeing this narrative surfacing more frequently. Since then, I’ve seen it in the Washington Post and I’ve had it parroted back to me through family members (“you still believe in electric cars?”). It appears to have established itself thoroughly in the mainstream. And the problem, as I wrote last time, is that it’s not exactly wrong. But the way its discussed lacks a nuance that is absolutely critical to charting a just and plausible path forward.
We are offered two choices: move to a world with billions of electric cars, devastating the environment and trampling human rights by ramping up mining so rapidly we might even run out of minerals…or keep using internal combustion vehicles.
But those aren’t actually the only options we have. If anything, they’re the two worst options, given that electrification of cars alone cannot sufficiently reduce transport sector emissions.
The last issue, “More Mobility…Less Mining,” looked at exactly that: what other options are there for the transport sector, the largest potential driver of mineral consumption? But I jumped the gun a bit by jumping right to that, and decided we needed to take a deeper look. So I’m making this into a series on “critical minerals” that will look at what the liberal climate policy regime implies about mineral demand, whether that’s possible, and how it effects both geopolitics and the pace of the very “energy transition” that policy regime is meant to move forward.
Issue #24: “Cars to drive or a planet to live in?” (Oct 26th, 2020) — not exactly about critical minerals, but relevant given the dominant role EVs play in projected mineral demand.
Issue #59: “More Mobility…Less Mining” (Apr 10th, 2023)
Issue #60: “Critical Minerals” Pt 2 - the Mineral Production Gap (May 8th, 2023)
We’ve already looked at strategies for demand reduction in personal transport and the scale change they can effect on future lithium demand. In this issue, we’re going to take a step back and look at the demand forecasts that are driving the panic: just how much are various mineral demands expected to rise? What projected uses are driving those rises (electric vehicles vs. solar vs. wind vs. grid technology)? What uncertainties do these demand forecasts express, and what uncertainties do they leave unmentioned or ignored?
And at the same time, are these demand forecasts realistic given supply side constraints — both geologic constraints and investment / infrastructure constraints? This may be the most salient problem with the “energy transition” as its presented. It’s what I’ve started thinking of as the “mineral production gap” (you heard it here first, folks): investment in and approvals of new mines are far too low to match the demand indicated by most scenarios that limit warming to 1.5 or 2 degrees. It’s analogous to the fossil fuel production gap defined by the UN’s periodic Production Gap report.
These production gaps share a common cause: the ruling class simply doesn’t believe that the world can or will limit warming to less than 2.5 or even 3 degrees. Mostly this goes unsaid. But not always: in a recent interview, Bill Gates said, “there's no chance you'll hit 1.5 degrees. It's very unlikely you'll hit 2 degrees. The key is to minimize the warming as much as possible...at this point, staying below 2.5 would be pretty fantastic.”
This phenomenon explains why, despite study after study indicating that globally agreed upon climate trajectories would render trillions of dollars of new and already existing fossil fuel infrastructure useless, capital is still pouring into the industry.
It also explains the mineral production gap: investors and governments — i.e. capitalists — simply don’t believe the “energy transition” will happen at anything approaching the pace laid out in any of the 1.5 or 2 degree-compatible scenarios.
We can only move one side of the scissors to resolve the fossil fuel production gap: limiting production. The other side is held firm by Earth’s atmosphere. But the mineral production gap is more malleable: by choosing climate policies like those explored in the last issue, we can narrow the gap without running roughshod over ecological and human rights concerns and creating a whole new world of opportunity for predatory capitalists.
And we can’t mitigate climate change without narrowing the mineral production gap because the gap itself serves as a negative feedback loop: as demand outpaces supply, we’ll face rapidly rising commodity costs (and possibly shortages) that will drive up the costs of non-fossil energy technologies, slowing the pace of adoption even further. This feedback loop overlaps with and accelerates others: projected shortages of “critical minerals” will raise expected demand for fossil fuels, driving investment that will further widen the fossil fuel production gap. And anything that slows the pace of emissions reduction drives up the temperature, raising the risk of water shortages and other extreme climate events that impact both non-fossil energy production and “critical mineral” mining, sending the loops full circle.
That was a longer-winded introduction than usual, but I wanted to introduce this idea of the mineral production gap, the levers we have over it, and the feedback loops it engenders. As you read this issue, keep that concept in mind, and think about the role that the demand and production forecasts we’ll read play themselves in defining the breadth of the production gap and shaping our climate future.
The world needs 2 billion electric vehicles to get to net zero. But is there enough lithium to make all the batteries? (10 minutes)
Ian Shine, World Economic Forum, Jul 20th 2022
Like the report in issue #59, this article looks specifically at lithium, a “critical mineral” whose projected use is dominated by electric vehicles. It compares both short-term sales projections and medium-term (2050) climate scenarios with lithium production and reserves. I should mention that I think the author mis-reads the IEA Net Zero by 2050 report when they claim that “2 billion EVs need to be on the road by 2050” — they say two billion vehicles will be on the road (p. 131), but they won’t all be EVs. But even if the headline number is an exaggeration, it’s only a slight one, and it doesn’t really change the message: we are on track, if EV sales continue to rise at rates dictated by the IEA’s net zero scenario — or even at rates indicated by current sales growth! — for lithium shortages both in the immediate term and in the long term. These shortages, in turn, will drive up prices and slow down the transition away from fossil fuels, resolving themselves (this is what markets are supposed to do, after all) but not the climate crisis.
One number the author highlighted stuck out to me as an almost too perfect example of what’s wrong with the liberal climate conception of the “energy transition:” total electric vehicle sales in 2021 were roughly equivalent to the total growth in car sales from 2020-2021. Obviously, there was some demand replacement here — car sales would've grown whether or not EVs had been added to the mix — but it still serves as a microcosm for the broader process of change: instead of replacing existing fossil fuel demand, electric technologies are simply adding to it, repeating the way every other so-called “energy transition” in modern history unfolded.
The Role of Critical Minerals in Clean Energy Transitions (20 minutes)
IEA, May 2021. Read the Executive Summary.
The PDF version and the “read in your browser” version are slightly different. The version on the website includes the NZE (net zero by 2050) scenario in some of the figures.
Today’s supply and investment plans for many critical minerals fall well short of what is needed to support an accelerated deployment of solar panels, wind turbines and electric vehicles (p. 1)
The IEA’s report opens with as clear a statement of the mineral production gap as you can get: investment in mining is vastly lower than what it would need to be for the “energy transition” that they and others have modeled. It then proceeds to give an overview of which minerals are “critical” for which aspects of climate mitigation, where those minerals are found (and where they are currently mined), and what the mineral demands of various climate scenarios look like. As they note, “today’s supply and investment plans are geared to a world of more gradual, insufficient action on climate change (the STEPS trajectory).” What they say here is reflected in the fossil fuel production gap and in the ambition of climate commitments and climate policies: no one who actually makes the decisions thinks we’ll meet the Paris goal.
In addition to giving a sense of scale to the mineral production gap and clarifying how much of that gap is driven by the various aspects of the “energy transition,” this report also highlights a few important considerations, including the overlapping negative feedback loops between policy, investment, supply, and climate change itself; the importance of investor sentiment (do they believe that governments will implement more stringent policies? clearly not); and the not insignificant emissions of the mining sector itself.
Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition (15 minutes)
Kirsten Hund, Daniele La Porta, Thao P. Fabregas, Tim Laing, John Drexhage, World Bank, 2020. Read the Executive Summary.
This report gets into the nitty gritty a bit more than the IEA’s, focusing less on the climate politics side of things and more on the specific mineral-related risks that threaten the “energy transition.” The mineral-by-mineral analysis is interesting in its own right and it highlights some of the reasons it’s difficult if not impossible for private sector investment to meet demand for many “critical minerals” on an appropriate timeline. Even if the ruling class was genuinely committed to meeting the Paris goal, the market is poorly equipped to direct investment in ways that minimize the risk to climate mitigation. Many of the minerals involved in non-fossil energy technologies could see future demand shift by orders of magnitude depending on how these technologies evolve, which makes new production capacity a highly risky investment.
The authors also point out the problem of emissions from the mining sector. Obviously, the sector’s emissions are very small when compared with fossil fuel production and use, but they’re still large enough to be significant to a rapidly dwindling (or already exhausted) global carbon budget.
If, however, the mitigation of emissions and other potentially harmful environmental and social effects are not achieved from increased mineral production, there is a risk that clean energy technologies may not maintain the same level of support they have today for climate action. Therefore, it is vital that the production and disposal of these technologies do not come at the expense of people and the environment.
Towards the end of the summary, the World Bank makes a subtle connection between social license and climate action, arguing in somewhat cagey terms that mineral extraction needs to focus on improving its environmental and human rights record precisely because if it fails to, public opposition to new mines will end up slowing or halting the “energy transition.” The IEA report made a similar point, as have countless others, including a 2021 editorial in Nature. But these reports themselves have an almost opposite effect: the “critical minerals” strategies they encourage are trending towards the further deregulation of an already wildly exploitative and destructive industry. The IEA, the World Bank, and others can point out this problem as often as they like, but encouraging rapid, market-driven growth in the mining industry seems doomed to have the opposite effect.
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Deep appreciation for the homework you're doing for the lot of us, and your willingness to embrace the nuance here. I have thoughts and questions but will digest and come back with something coherent. For now just wanted to express my gratitude for your work. I have been wandering in a slightly different woods, glad I finally got back here.