Supply Chain Disruptions causes Slow Clean Energy Transition

By Shubhendra Anand , 31 March, 2025

There is a global race to clean energy sources because of climate change in 2024. However, there is a danger that the impending metal supply crisis will offset this gain. The move to renewable energy technologies greatly depends on critical minerals, including lithium, nickel, cobalt, and other rarer earth elements. However, with all these constraints and the demand increasing, the efforts towards the clean energy revolution are very much in jeopardy.

Lithium from the International Energy Agency (IEA) suggests that there will be increased demand for lithium that will grow to 40 times more than today, with the year 2040 being the target, with the significant factors being electric vehicle consumption and battery consumption. Furthermore, there may be demand for cobalt from six to thirty times the existing market, which may occur around 2040, depending on the battery chemistry dynamics and climate policies in place. Demand for most of the rare earths needed for wind turbines and motors for electric vehicles could quickly increase by a factor of three to seven by 2040.

The effects of supply shortages can be observed globally due to the concentration of the critical mineral supply to a few countries. There are currently no mining production pathways that can accommodate this growth in demand leading to a situation where there are shortfalls in the supply of minerals such as graphite, cobalt, nickel, copper, and lithium. To fix these gaps, over USD 700 billion worth of mining investment capital is required, considering that 75% of this capital will be needed by 2030 to circumvent a shortage in supply by the time of the clean energy transition.

Relations can break down, and trade can be interrupted. Some mining activities are conducted in a manner that violates human rights and causes environmental harm. The mining sector cannot meet the increasing global demand for critical minerals. It, on average, takes 16.5 years to move a mining project from discovery to first production. The ore grade has been declining over time, so extraction was becoming more energy-intensive and costlier. Hence, companies need to focus on sustainable development and responsible mining.

Pursuing the clean energy transition requires the construction of sustainable and robust supply chains. There is more than one way to tackle the clean energy challenges, even if there are problems with the supply of raw materials. There is a need for the government to provide proper incentives for responsible mining by Enforcing rules and policies on mining socially and environmentally responsible practices. Innovation is required in these industries, such as producing new technologies and building up the recycling business.

Supply chain deficit of raw materials in clean energy transition