Demand for commodities essential to the green energy transition are expected to rise fourfold by 2040 if we are to reach the goals of the Paris Agreement, i.e., climate stabilisation at “well below 2°C global temperature rise”. In order to achieve net-zero globally by 2050, six times more commodity inputs will be required by clean energy technology in 2040, according to the International Energy Agency (IEA).
However, the average growth in commodity demand does a disservice to the growth requirements of certain niche metals essential to the energy transition. For example, demand for nickel, cobalt and graphite are all projected to grow 20-25 times under the IEA’s Sustainable Development Scenario (SDS) by 2040.1
Lithium demand is projected to grow almost twice as fast, with the IEA estimating that the requirement for lithium from clean energy technology will need to rise 42 times by 2040, primarily reflecting the expected growth in demand for electric vehicles (see Carbonomics returns).
Despite serving an overwhelming positive environmental outcome, lithium cannot escape its own carbon footprint being scrutinised by battery producers, automobile manufacturers and investors.
The environmental performance of lithium miners and refiners is likely to become a key differentiator in the lithium industry, with strong leadership on emissions reduction rewarded by institutions allocating capital to the sector.
So, how is lithium extracted and processed, what are the main sources of emissions, and what can be done to minimise them?
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