Faced with climate change, transportation and energy are the 2 key sectors in terms of sustainable energy transition. Can automobiles change the world?
The new United Nations Sustainable Development Goals have set climate actions as a key priority. The energy sector, currently in a phase of self-analysis, will have major consequences on the transport sector, which is in the process of electrification, and will play a key role in cleaner travel. What are the underlying components of these new technologies? How are the different metals and ores used, and what are their benefits? Lastly, could they provide solutions for current climate issues? Although the inclusion of mining companies within socially responsible investing is still being debated, the sector, which is fundamental for economic activity, may provide solutions for some of the biggest environmental challenges.
Although it is heavily regulated, the automotive sector is the industry in which the final consumer contributes the most directly and significantly towards combating global warming by choosing between models such as electric, hybrid and diesel vehicles. Most green technologies adopted have already demonstrated their efficiency, particularly concerning the reduction in fuel consumption and therefore CO2emissions. Real economic and environmental gains from green technologies will encourage consumers to adopt them, ultimately contributing to the rise of these technologies. This virtuous spiral constitutes a tangible response to energy transition.
Replacing traditional steel with advanced-strength steel is the first option for automobile manufacturers seeking to reduce the weight of vehicles and therefore fuel consumption and the correlated level of CO2emissions. The use of advanced-strength steel in automobile production should therefore at least more than double: from 15% in 2010 to 38% in 2030. Aluminium, the other ultra-light material, also has the advantage of being infinitely recyclable without losing its qualities. These characteristics should enable demand to continue increasing strongly.
By 2025, 75 - 86% of new automobiles are likely to still have an internal combustion engine, albeit one combined with different forms of hybrids. The use of catalytic converters to reduce toxic gas emissions produced by hydrocarbon combustion remains a crucial issue. Demand for PGMs, recognised for their excellent catalytic characteristics, should increase, driven by new, increasingly stringent regulations in developed countries and the introduction of minimum standards in the emerging markets.
The electric vehicles market grew by 27% in 2017, compared to +4.5% for the European automobile sector overall. This level of growth was chiefly attributable to increasingly strict environmental regulations and other favourable factors including subsidies and tax exemptions for new electric-vehicle owners and an increase in the city-dwelling population creating greater demand for new mobility solutions.
Today, the vast majority of electric vehicles use lithium-ion batteries, which are appreciated for their power density, their relatively light weight and high level of reusability. Lithium-ion batteries can be considered a key factor in the technological and energy breakthrough as they are more efficient and more economic. Annual demand should increase by 10 - 15% over the next few years.
The leading battery manufacturers are increasing the proportion of nickel in their nickel, cobalt & aluminium batteries (NCA) and their nickel, manganese & cobalt batteries (NMC) in order to increase power density. Today, less than half of production satisfies nickel demand for batteries. Assuming stable production until 2030 or, under a more bullish hypothesis of a maximum annual growth rate of 4%, there is a risk of a nickel shortage compared to demand.
30% of current cobalt production is used in lithium batteries for its stabilising capacity, which helps avoid the risk of explosion. Its main drawback however is its high price and volatile market – both closely linked to the difficulty of access to this resource and political risks in the countries where it is mined. Furthermore, accusations from several NGOs, including Amnesty International, of human rights violations in cobalt mines in the Democratic Republic of the Congo, demonstrate the importance of carrying out a detailed analysis of the practices within companies using cobalt in their production lines.
On average, an electric vehicle requires 140kg more copper than an internal combustion engine vehicle. Electric vehicles could account for 6% of copper demand within 10 years, compared to less than 1% today. The development of associated infrastructures must also be considered, particularly copper for the electric network, and recharging stations, which may represent almost 25% of demand for electric vehicles.
Behind each metal ore there is a hidden risk but also opportunities. Without minimising the potentially harmful impact on the environment and on populations from uncontrolled mining practices, the total exclusion of this sector could also have an impact on the emergence of energy transition opportunities. Appearances can be deceptive with regard to climate change issues in the mining sector. Upon closer analysis, the mining industry can effectively play an active role. Companies such as Norsk Hydro, Umicore and BHP are participating fully in the transformation of the transport sector towards sustainable mobility.