Will Renewable Energy Suffer Due to a Shortage of Copper?
For those government ministers throughout the world in charge of renewable energy, the year on their lips is 2030, where global renewable energy capacity is expected to grow by 2.5 times. However, governments need to go further to achieve the goals that were agreed at the 2023 United Nations climate talks. Part of the report coming out of this meeting suggests that the biggest challenge to meeting the 2030 goal will be the deployment of renewables and the scaling up of financing in most developing and emerging economies. But there is one more important constituent to consider…
The retooling of transportation and power to run on renewable energy goes a lot further than just political will, it will actually require more copper than the mining companies are currently committed to deliver. The big question is: will the mining companies, who are by tradition cautious (and are having to deal with increasing rigorous regulations) invest the capital required to help the world reach their 2030 goal and beyond? The current belief by experts suggest this will not happen as currently Anglo American Plc is facing a USD39 Billion takeover bid by BHP Group Ltd, suggesting that investment is angled towards mergers and acquisitions rather than increasing growth in production.
When it comes to conductive metals, copper is second in line after silver, and the comparisons made between the use of copper in renewables compared with non-renewables is staggering. Data released from the Copper Alliance shows that wind and solar farms require more copper per unit of power produced than today’s gas and coal fired power stations. In order for renewable energy to meet future demand more complex grids have to be built, and in order to balance the intermittent supply, millions of feet of copper wiring will be required. Another statistic shows that electric vehicles use twice the amount of copper than petrol driven automobiles.
There are, however, socio and economic barriers in the way of increasing copper production. Experts suggest there is enough unmined copper to serve future world demand, but copper is a bellwether within the global economy falling and rising together with industrial production, and miners for decades have been very wary by increasing production then getting caught out by a drop in demand. Furthermore, on the excavation side, new deposits are getting more expensive and harder to extract, and with ore grade decreasing, more rock has to be excavated to secure the same amount of copper. Environmental scrutiny is ramping up which is also discouraging further investment in production.
Recent data released suggests that over the next ten years the mining industry will have to spend circa USD150 Billion to cover what is projected as an annual shortfall in supply of 8 million tons. If there are severe copper shortages in the future this would cause a surge in prices affecting smart grids, renewables, EV’s and would slow the pace of turning to renewable energy. Whilst higher prices would incentivise miners to increase production in tandem with higher demand, experts suggest it would take a decade for the world to feel the difference. For those companies manufacturing clean energy technologies, it may well be prudent to try and find, if not an alternative to copper, but a way of using less, otherwise such goals as the 2030 and beyond renewable energy goals may become difficult to achieve.
