While metals help ‘green’ industry, industry itself needs cleaning up.
While global carbon dioxide emissions fell 5.8% in 2020 due to Covid-19 lockdowns around the world and the resulting drop in energy demand, Dutch multinational banking firm ING says it won’t It is only a matter of time before they reach record levels again.
The International Energy Agency (IEA) estimates that energy-related carbon emissions will increase by 4.8%, or 1.5 billion tonnes, in 2021, the largest increase in emissions since the global financial crisis.
This makes energy transition movements on a global scale increasingly urgent, which, according to ING, bodes well for the metals industry.
For example, the European Union plans to reduce emissions by 55% by 2030 from 1990 levels, while the longer-term goal is to reach net zero by 2050. The United States The United States is also targeting a 50% reduction in greenhouse gas emissions by 2030, compared to 2005 levels.
Asian countries have also announced long-term carbon neutrality goals.
ING says that renewable energies and transport will be the key sectors for the growth in demand for metals.
Copper, aluminum, nickel, cobalt and lithium are particularly used in the electrification of transport and industry, as well as in renewable energies and stationary energy storage.
In ING’s most optimistic scenario, demand for copper in road transport and the electricity sector may increase from 4 million tonnes currently to 16 million tonnes by 2040, while the most pessimistic scenario considers growth in demand for copper to 8.7 million tonnes by 2040.
In turn, demand for aluminum will likely increase from 20 million tonnes currently to 38 million tonnes by 2040.
Nickel, cobalt and lithium could see average demand growth in the transportation and power sectors of 16.8%, 14% and 13.6%, respectively, by 2040.
However, while metals could play a crucial role in the energy transition, the metals industry is still energy intensive and a major emitter of carbon emissions.
Greenhouse gas emissions from the aluminum industry, for example, are estimated at over one billion tonnes, which equates to 11.5 tonnes per tonne of aluminum produced.
Naturally, smelters that use coal to generate electricity have significantly higher emissions than smelters that use natural gas or renewables.
ING considers it crucial that the industry tackles the problem of its own emissions. Some have taken action, by increasing the production of “green” aluminum, or by using more recycled metals, or by engaging in emissions trading systems, for example.
Aluminum has one of the highest recycling rates, currently around 76%, nickel is around 68%, and copper around 60%.
Cobalt and lithium show much lower rates, with end-of-life recycling rates for cobalt around 32% and less than 5% for lithium. These rates will undoubtedly increase with the growth of these two markets.
Increased recycling not only helps reduce emissions, but will also help meet the strong demand growth expected in the years to come.
Decarbonization will require huge investments in new technologies, such as green hydrogen production, carbon capture and storage, and transportation.
According to the IEA, energy intensity must decrease by 1.2% per year in steel production and 1.5% per year in aluminum production until 2030 to be in line with the objectives of sustainable development.
ING says that disclosing carbon emissions and setting and achieving targets will be crucial for large public players in the sector. Investors and banks will take a closer look at companies’ record of decarbonization and their achievements in increasing energy efficiency and reducing overall carbon emissions and carbon intensity.
However, the company adds that the lack of unified reporting and the large and varied set of data disclosed means that it is difficult to obtain a good and credible cross-regional and cross-sectoral analysis.
Tracing carbon emissions and other environmental data is therefore quite problematic.
To achieve this, various non-profit organizations have sprung up to help society, businesses and regulators track carbon emissions, report carbon, reduce carbon emissions, define and verify carbon targets and empower companies to follow market best practices in carbon disclosure.
In summary, ING claims that the metals sector is in the process of concluding a number of agreements to advance carbon reduction projects, which is crucial if the industry is to provide the transport and transportation infrastructure. electricity of the future.