Clean electrification is the best way to achieve the climate goals set forth by the United Nations. But for a sustainable energy transition, it’s not enough just to generate electricity from renewable sources: it’s also necessary to ensure the resilience and sustainability of the supply of the wide range of raw materials that enable that energy to be generated and then distributed, or stored to make it available when and where it’s needed.
These materials have very different characteristics but they have one thing in common: their use will grow in the coming decades. That’s why we need to accelerate the adoption of a circular economy approach along the entire value chain to make the energy transition fully competitive and sustainable.
The exponential growth of renewables and electrification of consumption that’s expected in the coming decades brings enormous environmental and economic benefits, but also a growth in demand for certain minerals that the International Energy Agency (IEA) estimates will reach 400% by 2040. For example, a photovoltaic system with conventional modules uses about two tons of copper per MW and nearly two tons of silicon, while an average electric car contains more than 50 kilograms of copper, 40 of nickel, 60 of graphite, significant amounts of manganese, cobalt and lithium.
In the era of the energy transition, these and other materials are set to replace oil, gas and coal as the key resources on which our economy will depend. In addition to helping reduce emissions, these materials have another key advantage over fossil fuels: they are not burned and thus can be used indefinitely in the production cycle, thanks to a circular economy approach.
Critical and strategic materials
The list of materials that are important for clean energy is very long, and includes minerals, metals and alloys with profoundly different characteristics. Many of them are on a list of raw materials considered critical or strategic by the European Union, due to factors such as their geographical concentration outside the Union, which could put their supply at risk in the future, and because they are crucial to the EU's economic development.
Among the best known is certainly lithium, called by the United Nations “the cornerstone of a fossil fuel-free economy”. Its main use is in batteries known as lithium-ion batteries. Its extraction is concentrated in Australia, Argentina and Chile.
Among the most widely used materials in the electricity sector is copper: for every MW of new renewable power installed, about two tons of copper are needed, while all other materials together total about four tons (source: IEA). Its excellent ability to conduct heat and current, second only to that of silver, makes it essential for all components that electricity must flow through. It’s mined mainly in Chile, Peru and China. China, Chile and Japan host a major share of the processing, which overall is fairly globally distributed.
Silicon, which is critical for photovoltaic cells, is extremely abundant in the Earth's crust in the form of silicate minerals such as quartzite, and poses no problems of scarcity. But to use it in photovoltaic panels and in chips, it needs to be processed and transformed into high-purity silicon, and more than 80% of this processing is currently concentrated in China.
Another key material for photovoltaics is aluminum, which is used for the structural part. This metal is also used in electricity grids, batteries, and to a lesser extent in all renewable technologies. According to the World Bank, demand for aluminum could double by 2050. As of today, China controls more than 50% of world production. On the other hand, it is already a good example of a recycling process: according to European Aluminium, in the automotive and construction sectors the recycling rate is over 90%, while in the beverage can sector it is 75%.
Nickel is also used for lithium battery electrodes, especially for automotive uses, but it also plays an important role in the wind power industry, where it is added to steel to increase the hardness and strength of alloys used in turbines. Mining is concentrated in Indonesia, followed by the Philippines and Russia. More than 30% of processing takes place in China. Easily recyclable, about 60% of it is now recovered.
Then there are the so-called rare earth elements: a set of 17 metals including Lanthanum, Cerium, Neodymium, Scandium, that are used in electric motors, in (mainly offshore) wind turbines, and to a lesser extent in fuel cells and some types of batteries (but not in modern lithium-ion-based batteries). Production is highly concentrated in China, and overall the IEA expects demand for these materials to rise 7-fold above 2020 levels by 2040.
Unlike crude oil and petroleum products, which are burned, minerals and metals can be continuously reused and recycled with the right infrastructure and technologies, and especially if assets and products are properly designed. As the IEA notes, compared to combustible fuels, "we have more avenues to ensure a stable supply of these materials, simply by keeping them around as long as possible."
Recovering and reintroducing materials back into the production cycle, using them more efficiently in products, and extending the life cycle of vehicles, batteries, and electrical components are all viable and already actively explored avenues for reducing the primary demand for critical minerals – that is, reducing the amount that must be extracted to meet growing needs. Indeed, stimulating greater efficiency in their use can become an important element in creating a circular and more sustainable economy. McKinsey calculates, for example, that a circularity policy can reduce CO2 emissions currently linked to materials supply chains by 56%.
Copper, used in power grids, is already about 60% recovered today, above the overall average for copper recovery in all other applications. The IEA estimates, however, that the real potential for recovery is 85%, and once achieved would reduce global demand by more than nine million tons per year. Similarly, thanks to recovery, aluminum’s primary demand could drop by 32.5 million tons from current levels. In the battery sector, the IEA calculates that by 2040, reuse and recycling could reduce the total demand for the minerals that make them up by 12%.
Europe already leads the world in material circularity, with more than 50% of the base metals used in the EU (a category that includes copper and aluminum) coming from recycling. Extending this approach to other critical minerals is the goal of the recent Critical Raw Materials Act, which sets a target of having at least 15% of Europe’s raw material needs come from recycling, at least 10% from mining (materials such as lithium are also found in large quantities in Europe) and internalizing at least 40% of the production chain by 2030.
International collaboration also plays an important role. The United States, Canada, Australia, and Japan have all enacted policies aimed at securing a stable and sustainable supply of critical minerals, which include collaboration – among themselves and with the European Union – for the circular management of materials.
The key lever for developing a circular approach, and one on which the efforts of companies and governments are focused, is innovation, which makes it possible to reduce the intensity of use of certain minerals or replace them with less critical ones. In the photovoltaic panel industry, for example, reductions in the thickness of wafers used to produce cells have allowed the intensity of silicon use to be halved since 2008, while improvements in manufacturing processes have reduced silver requirements by 80%. This trend toward efficiency is continuing, as we will see below, while also discussing our own experience.
Research continues apace in the battery sector, for example, in batteries for automotive uses, to replace cobalt – whose production is now concentrated in the Democratic Republic of Congo – with the less problematic nickel and manganese; or to arrive at solid-state batteries that could change the rules of the game in electric mobility, storing much more energy for the same weight and drastically reducing the need for graphite or cobalt. For stationary use, the most widely used batteries – lithium-iron-phosphate (LFP) batteries – solve the problem upstream, as cobalt is naturally absent. Another promising option is the replacement of permanent-magnet electric motors with others, such as wound-rotor motors, that do not require rare earths but only copper.
Innovation for the circularity of raw materials: our strategy
Consistent with a strategy that has made Enel the world's leading private operator in the renewables sector, we have put circularity at the heart of our materials strategies to make the supply chain increasingly resilient and sustainable.
All of our production processes adopt circularity principles such as: the priority use of renewable or recovered inputs from previous life cycles, the extension of the useful life of products, and the promotion of resource sharing and product-as-a-service models that reduce the number of products in circulation for the same number of services offered and, consequently, the demand for materials. In 2021, we were the first utility to join the European Raw Material Alliance, an association of public and private stakeholders, promoted by the European Commission, that works to overcome barriers to the supply of critical materials in Europe.
In absolute terms, our operations have little dependence on critical and strategic materials, which make up a limited share of our overall supply, and are almost entirely copper and silicon. Nevertheless, we are constantly working on innovation and experimentation to promote the recovery of all materials and reduce their intensity of use, benefiting the entire energy sector.
With regard to polysilicon, which accounts for the bulk of the critical raw materials we source, the 3Sun Gigafactory project in Catania, which will lead to the creation of a 3-GW per year solar panel production center, focuses precisely on greater independence for the photovoltaic supply chain, not only by bringing the production of solar cells and panels to Europe, but also by using innovation to reduce the intensity of silicon use and fostering the construction of a diversified and sustainable supply chain. Starting in 2024, the new type of high-efficiency HJT panel will use less silicon, due to cells that are 20% thinner but have a larger surface area. Innovation in panel grids and contacts will reduce the use of silver by at least 60%, and in the future will further increase efficiency by 15%-20% compared to today, thus producing more energy for the same amount of material used in installed modules.
In terms of lithium, we’re working on a pilot project to extract it in conjunction with geothermal power generation activities at a site just a few kilometers from Rome. Through the use of geothermal energy and an innovative separation process, this would also make lithium extraction more environmentally sustainable. We’re working on solutions to extend battery life, including artificial intelligence tools for predicting failures, anomalies, and for modeling the degradation of lithium-ion batteries. We’ve also developed an electricity storage facility in Melilla, Spain, that reuses discarded batteries from electric cars, and we’re completing another one with Aeroporti di Roma. In Spain, we’re setting up a pilot plant for dismantling batteries, crushing and sorting materials – beginning with lithium – and reintroducing them into production cycles, aiming to recycle 8,000 tons of batteries per year.
As for metals like steel, copper and aluminum, which are not in short supply and which already achieve significant recycling rates, our efforts focus on reducing emissions associated with their supply chain, with the goal of increasingly powering their extraction, processing and transport with green energy.
The three strands of "circular" electrification
While this is the general picture of the role of materials in clean energy supply chains, each technology sector has its own specific needs in terms of materials used, development prospects, technical options and logistical options in order to best ensure their circular management.
In a series of more in-depth articles, we’ll look at how innovation and circularity are making the supply of materials more resilient and sustainable, particularly for wind, solar and energy storage systems.
Learn more in the dedicated sections of Beyond Reporting