Climate change is real. And to fight it, the imperative of energy transition — away from polluting fossil fuels — is well-recognised.

The question to ponder is whether the world — including India — has adequate financial, technological and human resources to make the transition towards a green future happen in a time-bound manner. Assuming the aforesaid three resources are available, there’s a question mark over adequate availability of another — material resources. Energy transition will be material intensive, more specifically metals intensive. Sadly, on current reckoning, the world may not have all the critical metals necessary for an accelerated transition.

Key energy transition metals include copper, nickel, manganese, molybdenum, cobalt, chromium, zinc and rare earths. Over the next two decades or so, demand for electric vehicles (EVs) and renewable energy (solar, wind, biofuels) will be decisive drivers of the global metals market.

China will continue to be a significant market that would impact demand for metals in energy transition given its growing share in EVs and renewable power.

According to International Energy Agency, globally, 14 per cent of all new cars are electric. In 2023, EVs accounted for 18 per cent of all vehicles sold, sharply up from a mere 4 per cent in 2020. As compared with 30 million today, 240 million EVs will be on the roads by 2030.

Material resources

For this massive projected expansion, from where do we obtain the critical metals? Not all countries have these material resources. Importantly, mining projects have long gestation period and production of ores is usually subject to policy intervention, labour action, natural calamities and so on. Uncertainty of supplies is real.

Copper is a metal of electrification widely used in EVs, wind turbines, power grids, and so on. The benefits of several greenfield and brownfield projects that were initiated over a decade ago may start to dissipate in the next 2-3 years. The ore quality is beginning to fall.

EVs will require four times more copper than the traditional internal combustion engine (ICE) vehicles. Experts assert, by 2032 the world will need an additional six million tonnes of capacity. It is unclear where it will come from and how it will be financed.

Copper supply can potentially falter in the coming years. This is sure to affect market prices. If supplies are not augmented, copper prices may nearly double from the current levels to around $16,000 a tonne, pushing EV production cost higher. In other words, renewables will add to metal scarcity by 2030.

India is a net importer of copper, nickel, manganese, etc. We depend on global supply chains that are often vulnerable to supply dislocation.. Nickel is another metal for which we depend on outside sources such as Indonesia, a country whose trade policies are unpredictable.

Energy transition stands on four pillars — access, efficiency, sustainability and security. While each one of the pillars is important, security of supplies is critical. Our policies and regulations must take this on-board.

As far as biofuels are concerned, the food versus fuel debate has been raging worldwide for about 20 years now. Some of the western economies like the US with significant surplus of corn, wheat and soyabean can afford to divert food crops for fuel purposes.

India is not in that league. The existing arable land available for agriculture is required to ensure food security because of the challenges of water shortage and climate change. Yet, without compromising food security, India can still promote biofuel crops by effectively utilising wastelands.

By one estimate, India has over four million hectares of wasteland. There used to be a Wasteland Development Board, which was abolished years ago. Maybe it’s time to revive it.

Long-term lease of wastelands to corporates for cultivation of biofuel crops may be considered. Strict regulation and accountability is necessary to prevent it from becoming a land-grab. Indian Railways has a lot of land, especially along the tracks, which may be productively utilised too.

Excerpts of the writer’s speech at the recently held Renewable Energy Summit in New Delhi on Policy and Regulation in a Green Future. The writer is a policy commentator and commodities market specialist. Views are personal

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