The energy transition is creating a historic materials transition. Here's why

Continued economic growth, driven by the expansion of populations and urbanization, is expected to drive a 30% increase in global materials demand by 2050. Traditional materials, like cement, wood, iron and steel, are expected to be in the highest demand, especially in the construction sector.

This growth in materials demand will be due to the transition toward achieving net-zero greenhouse gas (GHG) emissions and the associated deployment of new energy technologies. These technologies will include, but will not be limited to, renewable power, energy storage and hydrogen.

As demand for traditional and new materials accelerates, the energy transition is now creating a “materials transition,” buoyed by two key drivers.

One driver is the development and production of new and enhanced materials that will play a critical role in enabling the energy transition. Critical minerals, for example, or materials like engineered polymers and carbon fibers.

The other key driver is the transition from materials that have a high energy and emissions intensity to those with lower energy and emissions intensity, like lower carbon steel, for example.

Materials used in renewable energy and batteries have already experienced significant growth in relative demand over time. Rystad Energy reports that the overall materials demand for renewable energy and batteries sector was 72 million metric tons (MMt) in 2022. This is expected to quadruple by 2050, reaching approximately 316 MMt, and is likely to surpass 400 MMt if the energy transition progresses at an accelerated pace.

To support the expanding energy infrastructure, the global electrical grid is expected to nearly double in size by 2050, covering a distance of 145 million kilometers. Furthermore, the rise of Artificial Intelligence is driving its own surge in power demand and highlights the need to upgrade grid infrastructure, which will require more materials. It has been estimated that every 1 megawatt (MW) of data center power capacity could require between 20 and 40 tons of copper for grid upgrades, a commodity already in short supply. If the transition unfolds at a faster pace, an additional 18 million kilometers of grid network would be necessary, requiring approximately 30 MMt of additional copper.

There is, however, a win-win scenario emerging — not only in opportunities for reducing the emissions associated with the production of materials but also in how those materials are deployed in the manufacturing of new energy technologies.

Materials are multi-faceted in their use for reducing the energy, materials and emissions associated with the transition, as well as helping societies produce the new technologies that can help in achieving net-zero GHG emission ambitions. It takes materials to make wind turbines, solar panels, storage devices, all modes of transport and the infrastructure to mitigate emissions. These technologies often require more physical materials for the same energy output when compared to their conventional counterparts, especially during the construction phase.

As wind turbines grow larger, for example, advanced materials like thermosetting polymers, fiberglass and carbon fibers are helping to reduce the extra weight and to increase their energy efficiency, reducing environmental impact per kWh of installed capacity.

The extent to which global materials supply chains can keep up with new and accelerating sources of demand will be a critical determinant of global emissions reduction efforts.

The supply of many minerals, metals and materials required for key climate technologies face potential shortages by 2030. While some, such as nickel, may experience modest shortages (reduced by approximately 10-20%), others, such as dysprosium, used in most electric motors, could see shortages of up to 70% of demand. Without proper forecasting to meet growing demand for the resources required for transition, shortages could impact the speed of transition. They may lead to price spikes and volatility across materials value and supply chains, making the technologies they enable more expensive and slowing adoption rates.

Energy and emissions intensity are likely to become increasingly important attributes in the materials transition. Materials with high energy and emissions intensities will need to be substituted with materials that have lower energy and emissions intensity.

For example, with increasing focus on light weighting in the automotive industry, products like polypropylene, a type of thermoplastic, can be used to enhance materials-induced energy efficiency while reducing emissions through substitution. If the world substituted 20% of the global crude steel production today with polypropylene, this would equate to 595 MMt CO2 savings, or the entire annual emissions from a country like Germany.

Similarly, substituting 8% of copper pipe with carbon-based HDPE/PVC plastics could save around 90 MMt of copper between now and 2050 and save 285 MMt of CO2.

Materials have an associated carbon footprint, can it can extend beyond production. Materials choice should begin with taking an inclusive approach that expands the system boundary from solely operational aspects of production to include considerations on intended use, deployment and efficiency as well as disposal and recycling, where relevant.

Adopting new methodologies that take an appropriate Life Cycle Assessment (LCA) approach is especially important for energy transition when considering the resources and materials intensity of many new energy technologies.

For instance, plastics generally have higher emissions intensity compared to steel (4 versus 2 kg CO2e/ton) on a per ton basis during production; however, plastics like polypropylene are much lighter than steel and less of it is generally required for many light-weighting applications. As a result, substituting polypropylene for steel to achieve light-weighting in the automotive industry can result in significant improvements in fuel efficiency and reduced GHG emissions during operation. Plastics can also be recycled, and cradle-to-cradle assessments can be made that provide indicators of not only carbon emissions but also the circularity of materials. Therefore, to gain a comprehensive perspective, it is essential to conduct application-specific life-cycle analysis for materials.

As a result, evaluating materials with a holistic approach to carbon emissions accounting will need to be developed where both supply chain emissions from manufacturing and production, and the net emissions resulting from the deployment of final products, will need to be taken into consideration.

To mitigate that risk, companies, governments and policymakers should strengthen their understanding of how the energy transition is creating a materials transition, and what that means in terms of adapting global materials value and supply chain dynamics.

There are several levers available for facilitating an enhanced global materials supply system to meet the needs of the energy transition. These include: enabling legislation by policymakers, increased risk appetite by the financial sector, development and deployment of new technologies and placing energy and emissions intensity at the heart of product design.

The scale, opportunities and challenges of the materials transition are only starting to be understood and appreciated. Achieving the full potential of new materials, including more sustainably manufactured traditional materials, will require the creation of new value chains and the reconfiguration of existing ones.

As the world accelerates the energy transition and the deployment of emissions reducing technologies that enable a net-zero world, there is a risk that the supply of materials might not scale upward quickly enough.

If done right, the materials transition can support the energy transition to deliver a healthier, more sustainable world for us all.

This article was made possible by contributions from: Bassam Fattouh, Oxford Institute for Energy Studies; Lame Verre, SSE Energy Solutions; Hannah Hauman, Trafigura, Tatsuya Terazawa, The Institute of Energy Economics, Japan; David Victor, UC SD; and Andrew Herscwitz.