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Things often seem at their worst right before they get better. The need for metals investment has reached an undisputed juncture in meeting the Accelerated Energy Transition (AET) 1.5° pathway. The challenge we now face is to convince investors, lenders, societies and governments that accelerating change is essential and that the power to make change is in their hands.
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Low-carbon electricity and sustainable transportation increase exposure to metals
If we are to move any closer to achieving global net-zero targets, we need a continued increase in renewable energy technologies and electric vehicles (EVs). But while the government continues to stimulate demand, it is clear that we are far behind our targets. Incentives to improve sales of new EVs have been essential to success, and policies such as the US buyer tax credit system and purchase subsidies offered by Germany and France have generated positive sales increases. However, under the AET 1.5°C scenario, EV production would need to double by 2030. This means that EVs should account for around 60% of all cars by the same year.
These two factors present unique challenges for metals and mining. Without a stable supply of primary metals, simply put, the energy transition cannot occur. The push toward renewable energy is a major driver of mining supply, and while small modular reactors (SMRs) have the lowest physical and raw material footprint for baseload power, society remains resistant to nuclear technology. We are wary of this and support remains low.
In fact, demand destruction could occur if primary metal supplies do not see $200 billion in investment. Lack of investment and slow metal development lead times, as well as delays in suitable skills and capabilities, will make it impossible to meet demand for the AET 1.5°C pathway. Rather, $400 billion of investment would be required to change the projection of a reference case Energy Transition Outlook (ETO) of 2.5°C committed primary supply to demand by 2030.
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