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SustainabilityFebruary 4, 2025

What do critical materials have to do with clean energy?

As demand for key minerals intensifies, reuse and recycling can accelerate progress towards net zero. Examining the role of critical materials in the clean energy transition.
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Avatar Patrick Ball

Rising global temperatures represent one of the biggest challenges for our planet. Since the Industrial Revolution, mounting greenhouse gas (GHG) emissions have caused rapid temperature changes, so that today the Earth is about 1.3°C warmer than it was in the late 19th Century.

To minimize the harmful effects, experts around the world agree that we need to limit those increases to 1.5°C above pre-industrial levels. That is the target of the 196 United Nations member states that joined the Paris Agreement in 2016. To achieve it, they pledged to reduce emissions by 45% by 2030 and reduce them to net zero by 2050.

Clean energy is the cornerstone of efforts to reach net zero. About 75% of global GHGs are generated by fossil fuels such as coal, oil and gas. Replacing those fuels with cleaner energy sources such as wind, solar, wave and nuclear power will dramatically reduce carbon emissions.

This transition to clean energy is underway all around us, embodied by innovative technology from wind turbines to solar panels, electric vehicles (EVs) and batteries. But these technologies take far more critical materials to build than the systems they are replacing. Managing the supply of critical materials – and reusing them wherever possible – is essential to smooth the road towards net zero.

Which critical materials do clean energies need?

Critical materials are the building blocks of technologies such as wind turbines, solar panels and batteries.

Lithium, nickel, cobalt, manganese and graphite, for example, are integral to the batteries that power consumer electronics such as mobile devices, EVs and – as part of a solar or wind-powered energy system – homes and workplaces. These minerals are vital to make sure the batteries can store enough energy and perform reliably over many years.

Rare earth elements play a key role in permanent magnets, which are vital to the performance and reliability of wind turbines and EV motors. Copper is a crucial ingredient of all electricity-related technologies and is used in huge volumes by electricity networks. Aluminum, meanwhile, is used for a vast range of clean energy components, from battery housing in EVs to electricity gridlines and solar panels.

How much critical material is needed to reach the Paris Agreement goals?

Rapid transition towards clean energy has brought exponential growth in demand for critical materials.

Overall, the International Energy Agency predicts that six times more minerals will be needed for clean energy technologies by 2040, to meet global net-zero goals by 2050. Nickel demand will increase 40-fold, while 20-25 times more graphite, cobalt and nickel will be required. Expanding electricity networks will consume more than twice as much copper. In addition,  some rare earth elements may see three to seven times higher demand in 2040 than today,

What are the challenges for critical materials supply chains?

Critical materials bring significant risks and uncertainties that put great strain on the supply chain.

Uncertainty over EV sales can bring huge supply chain headaches. In 2023, for instance, EV batteries accounted for 85% of total lithium demand – so any fluctuation in this market can have a big impact on the supply chain. Developing technology and changes to subsidies, regulations and consumer perceptions all influence the market and make it difficult to predict demand.

Geopolitical influences, such as policy changes, competition and conflict, also have a significant impact on demand, pricing and availability of critical materials.

Price volatility is also a characteristic of the critical materials market. Mining and processing challenges, market changes and geopolitical influences are just a few of the factors that can cause massive price surges, which in turn affect the economic viability of projects.

As well as making it difficult to balance supply with demand, these factors add risk to supply chain investments. As a result, companies may be less keen to invest in new mining and processing operations – further increasing the risk of long-term materials shortages.

How can these challenges be overcome?

A circular approach, which reuses and recycles critical materials instead of discarding them at the product’s end of life, is imperative to build resilience against supply shortages and price volatility. But circularity requires new ways of thinking about processes, materials and systems. To achieve it, organizations need a dynamic, end-to-end view of the supply chain and product lifecycle.

Virtual twin technology can help by modeling complex systems and simulating how they work, so teams can perfect their plans in the virtual world before implementing them in the real one. Its efficiency and accuracy have already helped to develop 85% of the world’s EVs and more than 75% of its wind power. When this technology is used to model clean energy systems and supply chains, it can accelerate steps towards circularity too.

Here are some examples:

  1. EV providers can use virtual twins to support circular business models like “battery-as-a-service.” With a twin that shows the battery’s condition and performance in the vehicle, the company can provide timely service and replacement. In doing so, they keep reusable materials in their supply chain and add value for consumers.
  2. Companies that produce components from critical materials like aluminum can model their supply chain to get a holistic view of processes and key performance indicators across material inflows and outflows, factory locations and suppliers. This gives them full visibility into how they use materials, where and what type of waste they are producing, and how that scrap can be reused in their own processes or by others. Any increase in the use of scrap helps to decrease reliance on virgin raw materials while reducing waste and boosting supply chain resilience.
  3. Recovering materials like lithium from spent batteries is vital to support ongoing EV adoption – but this can be a complex and intensive process because most batteries are not designed with recycling in mind. To overcome this challenge, virtual twin technology can be used to simulate dismantling and recycling processes based on battery types, technologies, designs and chemistries. This makes it possible to recover critical materials of the highest quality, with minimal resources. 
  4. When it comes to decommissioning much bigger systems – such as offshore wind farms – the same principles apply. By combining 3D virtual twins with operational data, organizations can simulate every step of the dismantling process before work begins on site. This helps them to optimize the volume and quality of materials and components they recover. They can even share data with others to maximize the exchange value of those materials.

As such, virtual twin technology provides an efficient way for companies to explore how they approach circularity. Even a small change made now stands to improve resilience and reduce risk in the critical materials supply chain – and accelerate progress towards net zero.

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