Correction: Decarbonisation to boost metals demand

Amends paragraph 4 to clarify that Europe has largely phased out the use of rare earth magnets in onshore wind farms but they are still used in offshore and can be recycled, and that electrification of the transport sector is the strongest demand driver for rare earths in Europe and globally.

Moves towards low-carbon economies are expected to "drastically" increase demand for metals used in renewable energy technologies. But supply chain vulnerabilities could jeopardise these plans, according to the European Commission.

The EU's legally binding 2030 climate change targets and global commitments to limit greenhouse gas emissions are likely to result in the rapid deployment of wind and solar photovoltaic (PV) technologies, so consumption of raw materials necessary to manufacture wind turbines and solar panels should rise sharply in the coming years, according to the commission's report.

The commission considered three factors — the likely lifetime of new renewable plants, sub-technology market share and materials intensity — to establish low, medium and high-demand projections.

Rare earths demand for onshore wind to soar

For wind turbines, demand is expected to rise for structural materials such as concrete, steel, plastic, glass, aluminium, chromium, copper, iron, manganese, molybdenum, nickel and zinc. Consumption of technology-specific materials such as rare-earth elements and minor metals will also grow.

According to the commission's report, the EU onshore wind sector will see the biggest increase in demand, especially for rare earths dysprosium, neodymium, praseodymium and terbium, which are used in permanent magnet-based turbines. However, some market participants question the commission's projections, noting that Europe has largely phased out the use of rare earth magnets in onshore wind farms but that they are still used in offshore and can be recycled. Electrification of the transport sector is the strongest demand driver for rare earths in Europe and globally.

In the commission's high-demand scenario, EU consumption of these rare earths could increase sixfold between 2018 and 2030 and 15-fold by 2050. Based on the EU's 2050 decarbonisation targets, Europe alone would require most of the neodymium, praseodymium, dysprosium and terbium currently available globally, if all the extra wind turbines envisaged were to be built.

For the rest of the world, the high-demand scenario envisages consumption of rare earths for wind turbines rising by a factor of 8-9 between 2018 and 2030, and by a factor of 11-14 between 2018 and 2050.

Demand within the EU from the offshore wind sector is expected to rise less sharply, but the opposite will be true for the rest of the world — largely because globally the sector lags behind Europe.

Efficiency to cap demand from solar

In the EU's solar sector, structural material consumption doubles under the low-demand scenario and rises by a factor of 21 in the high-demand scenario. In the report's most severe projection, EU demand rises eight-fold by 2030 and 30-fold by 2050.

But for technology-specific materials, consumption falls in the low-demand scenario because of efficiency gains and the resulting drop in material intensity.

And the medium-demand scenario, a balance between capacity deployment and material intensities results in consumption of gallium, germanium, indium and selenium rising most sharply, but consumption of silver falling because of enhanced material efficiencies.

In the high-demand scenario, cadmium, gallium, indium, selenium and tellurium consumption grows by up to 40 times by 2050. The strongest demand in 2050 is expected to be for germanium — up to 86 times higher than in 2018.

EU demand for silicon is expected to double by 2030 and to quadruple by 2050 under the medium scenario, and increase seven-fold by 2030 and 13-fold by 2050 under the high-demand scenario.

Supply-chain stress

Limits on raw material availability could threaten decarbonisation efforts.

The report calls for government efforts to ensure stable and secure supplies, noting that Europe is largely dependent on imports for many raw materials. "The EU's transition to green energy technologies... could be endangered by weaknesses in future supply security for several materials, such as germanium, tellurium, gallium, indium, selenium, silicon and glass for solar PV, and rare earth elements for wind turbine technologies."

No rare earths are mined in the EU, so the bloc depends on the world's leading producer, China, to supply these critical materials. The Covid-19 pandemic and China's resulting border restrictions have led to a heightened awareness of weaknesses in supply chains.

The report also call for replacement for materials currently used to manufacture wind turbines, arguing that this would allow supply diversification.

And the report highlights the fact that the main global producers and suppliers of certain critical materials are concentrated in countries with a poor level of governance — something that increases risks related to supply security and environmental and social problems.

By Anuradha Ramanathan