Analysing the supply and demand balance of critical raw materials required for the energy transition

Abstract

Understanding material requirements is crucial for the energy transition (ET) driven by renewable energy technologies. This study contributes to balancing the supply and demand of critical raw materials (CRMs) required for the ET, as modelled in the LUT Best Policy Scenario–2050. This scenario was developed using the LUT Energy System Transition Model, a widely recognised, cost-optimised tool designed for renewable energy-dominated systems. Supply modelling in this study, based on Hubbertian trends, indicates that 20 out of 55 CRMs may pose potential supply bottlenecks before 2050. To validate these supply-side projections, demand projections were conducted using a dynamic material flow analysis (MFA) approach. The analysis confirms that only 15 CRMs are expected to create actual material bottlenecks. These CRMs fall into three categories identified in the European Union CRM Report 2023: Other non-ferrous metals: copper, gallium, lead, magnesium, selenium, silver, tellurium, tin, and zinc; Industrial and construction minerals: natural graphite; Iron and ferro-alloy metals: chromium, molybdenum, nickel, niobium, and tantalum. By 2050, the cumulative demand for these three groups is projected to rise by 171-fold, 206-fold, and 222-fold respectively, compared to their annual demand levels in 2020. These findings highlight the urgency of addressing long-term material supply constraints to ensure a smooth and sheer-scale electrification process. Incorporating material cost structures into energy system models will help mitigate future potential material risks to the ET and support the development of more sustainable and resilient energy infrastructures. Apart from that, material substitution, enhancing circular economy practices such as recycling, and replacing conventional CRMs with advanced materials can also help mitigate future material bottlenecks from the supply side, as well as reduce mining pressure.