Wood Mackenzie and Deutsche Bank highlight essential steps and challenges towards achieving net zero emissions by 2050. The rise in clean energy investments, dominance of China in the lithium market, and global EV trends shape the future of energy transitions and sustainable technologies.
Key Factors in Achieving Net Zero by 2050 and Market Trends in Lithium
Wood Mackenzie’s 2023 Energy Transition Outlook outlines essential steps to reach net zero by 2050, aligning with the Paris Agreement. The report forecasts a 2.5°C global warming scenario by 2050 due to current investment rates and technological and policy advancements. Key drivers include renewables, electrification, and policy.
Yann Ropers from Deutsche Bank highlights the intensive use of metals in the energy transition, with constraints posed by the availability of critical minerals and metals. The transition still requires ongoing investment in oil and gas to ensure energy affordability.
The report indicates that electricity and low-carbon hydrogen will constitute up to 61% of total final energy consumption by 2050 under a net zero scenario.
Investments and Challenges in Energy Transition
The International Energy Agency (IEA) noted an increase in clean energy investments from $1 trillion to $1.8 trillion over five years. However, it stressed that investments must surpass $4 trillion annually by 2030 to achieve net zero emissions by 2050. The IEA also raised concerns about the geographical concentration of clean energy supply chains, which is dominated by China.
China’s control extends across the electric vehicle (EV) battery supply chain, encompassing upstream mining, midstream processing, and downstream manufacturing.
Lithium Market Trends
Lithium, essential for EV production, saw its prices drop to $12,900 per ton in June 2024, a 35-month low despite increased plug-in EV sales. Spodumene prices also fell, leading to negative merchant conversion margins. Government interest in lithium production remains strong, with Indonesia and Serbia emerging as significant players.
Global EV Market and Government Policies
Plug-in EV (PEV) sales grew by 14.7% month-over-month and 25.9% year-over-year as of May 2024, driven by China’s market. In contrast, PEV adoption has slowed in Europe and the US due to high costs. The EU plans to impose higher tariffs on imported BEVs from China starting July 4, aiming to protect local production.
Future Outlook for Lithium Market
S&P Global forecasts prolonged low lithium carbonate prices, which may lead to further supply cuts and project delays. Despite challenges, the long-term outlook for PEV uptake remains positive with affordable vehicle launches.
