The first impacts were felt in aluminium markets where Russia in 2020 accounted for 6% of global aluminium production (the second largest producer worldwide) and 8% of imports to the European Union. Russia is a major producer of many minerals and metals that are vital for the clean energy transition, and the country’s increasing international isolation puts additional pressure on already tight markets. Clean energy technology costs had been falling, but that is now at risk With the recent surge in lithium and other battery metal prices in early 2022, this figure is now around 20%, which needs to be offset by other measures to contain or reduce overall costs. Higher prices for cathode materials in 2021 pushed up lithium-ion battery pack costs by an estimated 5% from their 2020 levels. That share has risen to over 20% today when some 300 gigafactories are at different stages of planning and construction around the world. Raw materials now account for a significant and growing share of the total cost of clean energy technologies.įor example, cathode materials – which are essential for lithium-ion batteries and include lithium, nickel, cobalt and manganese – accounted for less than 5% of battery pack costs in the middle of the last decade when there were only a handful of battery gigafactories. Innovation and economies of scale had rapidly reduced the cost of key clean energy technologies such as solar PV and batteries, but surging raw material prices could now reverse these gains, with a major impact on the financing needs for clean energy transitions around the world. Prices of key minerals and metals for the clean energy transition have spiked in recent months For most minerals and metals that are vital to the clean energy transition, the price increases since 2021 exceed by a wide margin the largest annual increases seen in the 2010s. The prices of nickel and aluminium – for which Russia is a key supplier – have also kept rising, driven in part by Russia’s invasion of Ukraine. The price of lithium has increased an astonishing two-and-a-half times since the start of the year. The price trends have continued into 2022. The prices of lithium and cobalt more than doubled in 2021, and those for copper, nickel and aluminium all rose by around 25% to 40%. Prices of many minerals and metals that are essential for clean energy technologies have recently soared due to a combination of rising demand, disrupted supply chains and concerns around tightening supply. At the IEA Ministerial Meeting in March 2022, IEA Member Countries voted to endorse and deepen the IEA’s work on critical minerals as part of the Agency’s new mandates to strengthen and broaden its work on energy security. Clean energy technologies require a variety of minerals and metals, and today’s tense geopolitical situation, rising commodity prices and supply chain bottlenecks have highlighted the need for serious actions to enhance the diversity and resilience of their supply.
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