The global transition to a net-zero carbon economy by 2050 presents unprecedented challenges, particularly in the resources sector, which will play a pivotal role in providing the materials necessary for the green energy revolution.
As renewable energy technologies, electric vehicles (EVs), and energy storage systems continue to become central to the world’s transition away from fossil fuels, the resources sector is on a pathway to scale up production, improve sustainability, and innovate in line with environmental and regulatory requirements.
However, according to the Wood Mackenzie Energy Transition Outlook 2024, achieving net zero by 2050 is in doubt.
The report notes that no large countries are on track to meet their stated 2030 goals, although the 2050 goals remain in reach with significant investment required to meet global decarbonisation targets and to satisfy the growing demand for critical minerals.
A key takeaway from the reportis the forecast surge in demand for certain critical minerals. The global energy transition, driven by decarbonisation efforts, will require vast quantities of these minerals, which are essential for producing clean technologies such as solar panels, wind turbines, batteries for EVs, and grid storage solutions.
For instance, Wood Mackenzie predicts that global copper demand will nearly double by 2050, driven by the growth of renewable energy infrastructure. Similarly, lithium demand is expected to increase tenfold, largely due to the rise in electric vehicle production.
However, despite the growing demand, the resources sector faces significant hurdles in ramping up production to meet these needs. Geological limitations, regulatory challenges, and geopolitical factors, such as trade restrictions, tariffs and resource nationalism, can all slow the expansion of supply.
The report states that current levels of exploration and investment in the mining industry are not sufficient to meet future demand. The sector will need to accelerate investment in exploration, mining operations, and advanced processing technologies to ensure the steady supply of critical minerals.
So what is the size of the investment needed to meet net-zero targets by 2050?
Wood Mackenzie projects an estimated US$78 trillion in total investment across all sectors and technologies to achieve net zero by 2050.
Of this, ~US$5 trillion in additional investment is required by the resources sector over the next three decades. This investment needs to be focused on exploration, sustainable mining practices, advanced processing technologies, and infrastructure development.
Chatham House forecasts resource extraction from 85 billion tonnes per annum to 186 billion tonnes by 2050 to meet demand.
A lack of sufficient new discoveries will be a key challenge, and investment in exploration and more efficient mining techniques will be essential to increase the available supply of these resources. However, new projects, particularly in the established commodities such as copper, often come with high costs and long timelines, due to increased depth and lower grades. This adds another layer of complexity to the equation.
The responsibility is not just at the corporate level, a supportive policy environment will be essential to ensure the mining sector can meet the challenge of a net-zero future. Governments must create a favourable regulatory environment that promotes responsible mining, encourages innovation, and ensures the stability of the global supply chain for critical minerals. This includes streamlining permitting processes, offering incentives for sustainable mining technologies, and fostering international cooperation to secure access to mineral deposits while respecting environmental and social standards.
Of course, this all assumes that countries that have committed to cuts in emissions via treaties such as the Paris Agreement continue to honour their obligations.
Opportunities abound for strategic investment in the mining industry to enable the global economy to meet its decarbonisation targets while ensuring a steady and sustainable supply of vital critical minerals.
The question remains whether stated net zero targets will be achievable by 2050 or deemed too ambitious and need to be revised.
Photo by Jakub Zerdzicki
