TELF AG measures the possible effects of a copper supply on the world energy transition
New agreements
Among the results produced by the International Climate Conference, which in recent hours has extended its original duration to find an agreement on fossil fuels, there is certainly the commitment to triple the capacity to generate renewable energy by 2030.
This commitment might reduce greenhouse gases by 43% in the next seven years but also potentially slow down the increase in global temperatures. Still, it could have very specific results on the markets of some of the raw materials most involved in the global green energy transition.
One of these is copper. Tripling renewable energy in just three years, from this point of view, also means giving a decisive boost to global copper consumption, which, according to a recent study by Citigroup, could reach truly important volumes: 350,000 tonnes in 2025, 530,000 in 2026 and as many as 2.5 million in 2030, with singularly massive annual increases.
The increase in the world’s need for copper, which is very useful for sustaining and supporting the energy transition, risks conflicting with the possible shortages of this raw material. Something that had already begun to be discussed exhaustively even before Cop28. Unlike other raw materials such as rare earths or lithium, copper is generally perceived as not a difficult resource to find.
Nowadays, around 22 million tonnes of copper are consumed every year. Still, according to some, the availability of this raw material could no longer be sufficient to support the foreseeable increases in demand (destined to increase within a very few years). Copper is one of the materials most directly involved in decarbonization processes and is of great use for developing all technologies related to the green transition: wind turbines, solar panels, electric cars, and heat pumps. Copper also plays a very important role in the distribution of electricity, and in the diffusion of renewable energy. The International Energy Agency has estimated that, by 2040, as many as 80 million kilometers of power lines should be installed globally, approximately twice the circumference of planet Earth.
In parallel with the expected increases in demand, recently, there has been a general weakening in consumption and copper prices, also due to the lack of investments in the sector. The shortage of copper, in this sense, could also be favored by delays in the development of mines, which concretely risk slowing down the extraction processes and subsequent processing. Although resource supplies are increasing (the International Copper Study Group forecasts an oversupply of 467,000 tonnes by 2024), a recent study by IHS Markit – Standard & Poor’s calculated that copper shortages could reach ten million tonnes by 2035. In this sense, the focal point is that the global supply of copper may not be able to adapt to the estimative increases in demand.
