Energy systems and resource availability: is the world ready for the next challenge?
The debate surrounding the future availability of energy resources has represented a crucial and controversial aspect of public discourse for years. However, it is time to step away from the usual approach of asking whether scarcity is a concrete problem, or whether future availability will constrain society’s future goals.
The issue now is to examine the most important aspect: that is the energy system’s response to constrained availability of resources.
For decades, scientists and researchers have reiterated the high reliance of today’s global energy system on exhaustible conventional resources, such as oil and coal. Similarly, they have highlighted the dilemma of remaining affordable in the context of depleting resources and at the same time decarbonising in response to rising greenhouse gas emissions and impacts of climate change. In the context of such ambitious challenges, the growth and development of renewable and low-carbon technologies becomes an imperative response to the constrained availability of traditional resources.
The proportion of primary energy coming from renewable energy sources is expected to rise, with several technologies expected to make up this share. For instance, solar photovoltaic currently accounts for a small share of global electricity. However, as confirmed by the International Energy Agency (IEA), cumulative installed capacity is growing at a fast pace and is expected to continue, providing up to 16% of global electricity with 6300TW generated in 2050. Similarly the rapid advances in wind power technology, will make the surge to 18% of the world’s electricity generation by 2050 increasingly possible. Electric vehicles are believed to play a significant role in decarbonising the economy. Sales of electric vehicles are expected to grow significantly in the coming decades, with 20 million units on the road by 2020. Energy efficiency as well plays a central role in containing the world energy demand growth to one-third by 2040 and in reducing demand growth in OECD countries to 60%.
However, the scale and pace of the transition to a full low-carbon energy system depends on the individual characteristics and challenges of the technologies that will deliver it. In other words, whilst the transition to low-carbon technologies will definitely relieve pressure on conventional fossil fuels, including oil, it would on the other hand transfer it on the raw resources needed in this new energy system.
In fact, many of the low- carbon technologies briefly described above are linked to the metals and materials used in their manufacture, such as lithium for electric vehicles, indium and thin film for photovoltaic, steel for wind turbines and platinum for hydrogen fuel cells. These however, are not inexhaustible materials, and reserves in nature are relatively scarce, with a small number of countries responsible for a large proportion of metal production. In 2012 China was responsible for over 85% of global production of rare earth elements market but only held 50% of global reserves, while the remaining half was split among the United States, Brazil, India, Australia, Vietnam and Russia.
As a consequence, such scarcity threatens any capability of maintaining adequate supply, as demand for low-carbon technologies increases dramatically through the course of the low-carbon transition and raises the issue of how we can build energy systems in the context of limited availability of resources.
In this regard, the term ‘resource systems’ is commonly used to represent the dynamic behaviour of supply of and demand for any type of resource, such as oil, lithium, steel, etc., which are all characterised by strong dependency on a wide range of dynamic aspects. However, these can be grouped into three main factors, lying at the heart of the debate.
First of all, supply factors. These include the resources’ geological availability (i.e. what is physically available), economic availability (i.e. what can be economically accessed) and reuse (i.e. what can be recycled). This latter is of particular interest especially for countries that are net importers of critical resources and are seeking to protect themselves from any constraints. For them, recycling represents a way of reducing the relative level of imports and can be incentivised by improvements in the design of products so that they can be easily recycled, or even by better regulation and policy support for recycling capabilities. Second, geopolitical factors, which reflect the risks of supply disruptions caused by political decisions of a country’s internal and external strategies. This includes the impacts of domestic policies as well as impacts of trade policies (tariffs, export quotas) and especially impacts of measures affecting the amount of global production coming from strategic countries (i.e. Middle East) with instable political situations. This aspect is very controversial, because reserves of critical resources are not evenly distributed across the globe. This means that their extraction and production is in the hands of a very small number of countries, which are responsible for a large proportion of metal extraction and production. Hence, any political event or potential geopolitical factor within a single country can have a massive impact on the availability of a resource globally. Finally, all other factors impacting resource availability, namely: environmental policies affecting the production and economy of certain resources and price changes having an impact on demand. For example, China is responsible for approximately 90% of mined output of rare earths and it is also its top user. However, in 2014 the country has banned artisanal rare production due to its negative environmental impacts and dangerous artisanal mining practices. This supply disruption could significantly hamper the development of the green economy, as these materials are used in the manufacturing of high-tech products including offshore and onshore wind turbines and batteries for electric cars.
There is now a widespread and unquestionable consensus on the importance of the energy sector and especially on low-carbon and renewable energy technologies in being at the heart of global action to tackle climate change. Yet, the availability of certain resources, namely rare earth materials which are used in the manufacture of a wide variety of green technologies, still remains less well understood when compared to that of oil, which has always had a significant economic importance, and thus experienced a sustained research attention. This being so, the supply and demand response of certain renewable technologies to constraints in availability of certain key resources remains till insufficiently understood.
Improvements in the resilience of resource systems to constraints in capacity represents the world’s next challenge and it is about time to abandon rhetoric and take the global debate to the next level.
Elisa Asmelash, Junior Energy Consultant, Brussels @ Revelle Group
