Chapter 4A RACE TO ZERO: THE CRITICAL IMPORTANCE OF CRITICAL MINERALS

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Mining Law

Chapter 4A

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RACE TO ZERO: THE CRITICAL IMPORTANCE OF CRITICAL MINERALS

Daniele La Porta
E. Cameron
A. Bhalla
T.P. Fabregas
J. Drexhage
R. Hamilton

DANIELE LA PORTA is a Senior Mining Specialist with the World Bank Group in Washington D.C. In this role she manages projects in Colombia, Sierra Leone, Romania, Brazil, and Liberia. She also co-leads the Bank's knowledge products on innovative areas, such as Mining and Climate Change, Deep Sea Mining, and the preparation of innovative Public-Private Partnerships in the water and mining sectors. Daniele has extensive experience working with developing countries to ensure natural resources achieve more sustainable outcomes. She advises and works with governments on institutional reforms and crafting strong governance policies. Daniele also has experience in mineral exploration and development. Daniele began her mining career in 1995, exploring for diamonds and base metals in Brazil. She then shifted her work to other areas in the geosciences, working mostly on environmental management issues.

Abstract

The minerals and metals sector are critical for the low carbon energy transition. The World Bank Climate Smart Mining Initiative, estimates that over 3 billion tons of minerals and metals will be needed to deploy clean energy technologies, or the equivalent of about 300,000 Eiffel towers. Production levels of minerals such as graphite, lithium and cobalt, for instance, are expected to increase by nearly 500% by 2050. Many of these minerals and metals will come from resource-rich countries, who are consistently ranked amongst the most vulnerable to climate change impacts. The World Bank is developing roadmaps that can guide critical mining value chains towards net-zero emissions by 2050, while enhancing their resilience in the face of a changing climate. This paper will explore the increase in demand for minerals and metals needed to produce a range of clean-energy technologies and offer guidance on how resource-rich countries and mining companies can help decarbonize mining value chains and enhance community resilience for the low-carbon economy.

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I. Introduction

This paper will explore the increase in demand for minerals and metals needed to produce a range of clean-energy technologies and offer guidance on how resource-rich countries and mining companies can help decarbonize and minimize the ESG impacts of mining value chains and enhance community resilience for the low-carbon future. The introduction outlines the urgency of the climate crisis, revealing the need to scale up decarbonization dramatically during this coming decade with the ultimate goal of reaching net-zero greenhouse gas emissions (GHGs) by 2050. The second section presents the key innovations necessary to drive decarbonization in mineral supply chains. These innovations are in turn reliant on a suite of 17 critical minerals and metals - the key building blocks to renewable energy generation and storage. The third section offers guidance on how to meet the increasing demand for critical minerals and metals in a manner consistent with achieving net-zero emissions by 2050. The final section underscores the necessity of building mining operations that properly diagnose climate risk and enhance resilience.

In January 2021, a group of the world's leading natural scientists published a short and stark overview of the interrelated global risks facing humanity over the coming decades. The climate crisis featured prominently in their assessment. They suggested "the choice before us is between exiting overshoot by design or disaster - because exiting overshoot is inevitable one way or another".1 This assessment has been reinforced by a recent report by Verisk Maplecroft, one of the world's leading specialists in global risk analytics and country risk analysis. They are advising their corporate and investor clients to brace themselves for at best a disorderly transition and at worst a whiplash from a succession of rapid shifts in policy across a host of vulnerable sectors as climate risk increases and governments pay the price for delaying their ambition for far too long.2

This delayed ambition has been captured by the United Nations Environment Programme (UNEP) in a recent assessment of climate policies. Describing the findings as "sobering", the analysis reveals that global greenhouse gas (GHG) emissions in 2018 were almost exactly at the level of emissions projected for 2020 under the 'business as usual' or 'no policy' scenarios used in the Emissions Gap Report of 2011.3 This is remarkable given that 140 countries endorsed the Copenhagen Accord in 2009, with 85 of them pledging to reduce their emissions through national policies. The unprecedented Paris Agreement of 2015 was

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subsequently adopted by 195 countries, 184 of which have so-called nationally determined contributions (or national climate plans) designed to limit global warming to well below 2°C.4 The analysis goes on to report that because GHG emissions continue to grow, governments must now triple the level of ambition reflected in their current and planned climate policies to get on track towards limiting warming to below 2°C, while at least a fivefold increase is needed to align global climate action and emissions with limiting warming to 1.5°C by the end of this century.5

The results are stark. The Intergovernmental Panel on Climate Change (IPCC) has concluded that human activities are estimated to have already caused approximately 1.0°C of global warming above pre-industrial levels, with likely warming of 1.5°C by 2050. The consequences of this warming are already evident in the shifting patterns of climate hazards including an increase in intensity and frequency of extreme weather events; alterations to land and ocean ecosystems and the services they provide; an increase in heavy precipitation in regions susceptible to flooding and in drought in historically dry regions; and increases in sea-levels, storm-surges and salt-water incursion.6 These are not just projections for the future, but are increasingly a real-time reflection of shifting socio-ecological systems. Natural disasters doubled in the period 2000-19 when compared to 1980-99. Climate-related disasters account for the difference, rising from 3,600 to 6,700 and affecting 4.2bn people across the globe.7 The economic impacts are also significant and growing. The World Economic Forum (WEF) has consistently ranked climate-related events such as extreme weather events, increased incidence of drought and flood; and ecosystem degradation as the highest material risks to global business in both likelihood and impact.8 The global cost could be as high as $24 trillion by 2030,9 while the Financial Stability Board, which represents ministries of finance and central banks from across the G20, estimates the total stock of manageable assets at risk to be $43 trillion between now and the end of the century.10

Exiting overshoot by design now requires a dual strategy, consisting of avoiding unmanageable climate change through aggressive emissions reductions, and managing unavoidable climate change by enhancing socio-ecological resilience. Emissions reductions should aim to hold global mean temperature rises to less than 1.5°C above pre-industrial levels. The IPCC has determined that this requires that we achieve GHG reductions of 45% below 2010 levels by 2030, and net-zero emissions by 2050.11 Enhancing socio-

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ecological resilience involves improving our collective diagnosis of climate risk and investing in six capital assets - human, social, natural, physical, financial and political capital.

Mining is critical to this endeavor. Minerals and metals enable the energy transition through their use in low-carbon technologies. A combination of at least 17 minerals and metals will be needed at scales significantly beyond current production levels to achieve net-zero emissions by 2050. A low-carbon future will be very mineral intensive because clean energy technologies related to generation, transmission and storage, need more materials than fossil-fuel-based energy technologies. For example, production of graphite, lithium, and cobalt will need to be significantly ramped up by more than 450 percent by 2050 to meet demand from energy storage technologies. Increasing the deployment of solar photovoltaic (PV) energy generation may increase demand for aluminum and copper by more than 350 percent by 2050. The scale of the challenge is enormous. In the last 5,000 years, humans produced about 550m tons of copper. The same amount will need to be produced in the next 25 years to electrify the globe.12 Many critical minerals communities and countries that consistently rank amongst the most vulnerable to climate impacts such as extreme weather events, flooding, drought, wildfires, water scarcity and vector-borne diseases. As a result, properly diagnosing climate risk and enhancing climate resilience in communities and mineral supply chains is not only intrinsically vital to the goal of achieving sustainable development, but is also essential to securing the very foundations of the new low-carbon economy.

II. Decarbonization and the demand for critical minerals

The building blocks of decarbonization

To avoid unmanageable climate change, and safeguard both human and natural systems, we must hold global mean temperature rises to less than 1.5°C above pre-industrial levels. This means a net zero GHG emissions economy by 2050 following reductions of 45% by 2030. The concept of net-zero involves addressing both "sources" and "sinks". Human-caused emissions should be reduced to as close to zero as possible. Any remaining GHGs should be addressed through carbon removal, for example by restoring forests. Net-zero emissions are achieved when any remaining human-caused GHG emissions are balanced

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out by removing GHGs from the atmosphere...

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