Global Copper Supply Falling Short Energy Transition Faces Risks

The world is facing a significant shortfall in copper supplies needed for the transition to low-carbon energy systems, according to the International Energy Agency (IEA). Projections indicate that global copper supply may fall 30% short of demand by 2035 unless urgent action is taken. Copper, a fundamental material in all modern electrical energy systems, is under increasing pressure as the push towards renewable energy accelerates.

Fatih Birol, executive director of the IEA, has described the looming supply gap as a major challenge. Developed nations, he suggests, must take an active role in refining copper and other critical minerals domestically while fostering partnerships with resource-rich developing nations. The call to action comes at a time when over 70% of the world’s top 20 critical minerals, including copper, cobalt, lithium, gallium, and manganese, are refined in China. This monopolisation could hinder efforts to diversify supply chains.

Efforts to strengthen the supply chain for critical minerals are essential to prevent delays and rising costs associated with the global green transition. The IEA highlights that transitioning to a green economy will be far more expensive if the price of raw materials increases. Current trends show that the average time from discovery of copper deposits to production stands at 17 years. Without accelerated measures, significant bottlenecks could hamper progress towards clean energy targets.

Recycling copper and sourcing alternative materials such as aluminium are strategies that can help alleviate supply constraints, according to the IEA. Birol has urged governments to intervene decisively, suggesting that reliance on market forces alone will not address the issue. Policies supporting new market entrants and improving trade links could aid diversification and minimise risks of price hikes similar to those experienced during the pandemic-induced supply shocks of 2021 and 2022.

The rising demand for copper is largely attributed to China’s massive build-out of its clean energy grid alongside its dominance in manufacturing renewable technologies such as solar panels and wind turbines. Demand for other minerals like lithium has also surged, with a 30% rise recorded last year. Any disruption in the supply of these materials could have severe repercussions for the global economy, raising costs for consumers and reducing industrial competitiveness in green sectors.

The report underscores the urgent need for governments to act swiftly to mitigate the risk of a critical mineral supply crisis. Strategic investments in mining, refining, recycling, and international partnerships remain key to reducing the projected shortfalls and ensuring smooth progress toward a low-carbon future.