Clean energy push could increase metal costs, IMF says

The push for clean energy could significantly raise prices for core metals, such as copper, nickel, combat and lithium for years to come, allowing more Chinese influence over the United States, a  report released recently by the International Monetary Fund (IMF) states.

According to the National Conference of State Legislatures (NCSL), some states have adopted renewable portfolio standards (RPS) that seek to implement renewable energy as a source of electricity and “drive the nation’s $64 billion market for wind, solar, and other renewable energy sources.” For Texas, these goals entail reaching 5,880 megawatts of energy generated through renewables by 2015 and 10,000 megawatts by 2025.

“The chaos may offer China, which dominates the world market for rare earths widely used in technology, to step in to develop the mineral reserves, which also include lithium, used in the manufacture of batteries,” MarketWatch said.

An article in Forbes by Kenneth Rapoza states China is currently set up to be the world’s “green OPEC.” While one company in the top 10 solar manufacturers is an American company, eight of the nine remaining are Chinese. Research published by the Coalition for Prosperous America indicates that Chinese dominance in the solar supply chain could be a threat to the independence of the United States. It calls for a fully American supply chain to ensure not only success but true independence.

As of 2019, China was the world’s largest producer of photovoltaic products, responsible for creating 80% of all solar panels globally. But that dominance has taken a toll on human rights. The country has  been accused of genocide against the Uyghur population, forcing many survivors to work on the creation of these products. Research published by Sheffield Hallam University states Uyghurs forced into labor in China are responsible for 45% of the world’s solar-grade polysilicon, which 95% of solar modules rely on.

“One of the biggest mistakes the West has done on green policies to cut CO2 emissions and trying to reduce dependence on oil and gas producing nations is that the transition to renewable energy puts the West at the mercy of China," David Zaikin, an energy industry consultant and founder of Key Elements Group in London, told Forbes. 

Rapoza says nearly 80% of solar panels installed in the United States come from China or Chinese companies. Globe Banner cites the climate policies being adopted by nations around the world, including China, as a leading factor behind the historically high demand for metals, and the resulting price surge.

“Prices could reach historical peaks for an unprecedented length of time – and even delay the energy transition itself,” the article states.

The Metal Price Scenarios graphic shows historical data leading into estimated price increases under the net-zero emissions scenario intended to take effect by 2040. The greyed out areas are the uncertainty bands, which show how much above or below the estimated prices could be.

According to the report, one metric ton of lithium, which currently costs around $6,000, could jump to $15,000 by the end of the decade and remain at those higher prices through most of the 2030s.