As the narrative for the energy transition evolves, the Lux Energy Team continues to track the critical storylines that will shift the world to an economical, efficient, and enduring energy system. In our recent blogs, we unveiled the first chapter of two storylines – decarbonization of industry and evolution of energy networks. This week, we highlight the third storyline – optimal use of resources. As the energy transition pivots its dependence away from fossil fuels, it will lean toward new energy technologies with its own unique set of resource limitations. From reliance on key minerals for batteries, to fresh water for industrial processes, to land for solar and wind farms, optimizing resource utilization will be critical. However, the definition of optimization is unclear, as cost, efficiency, emissions, and access to energy are all key variables. How will the roadmap for optimization unfold throughout the energy transition?
One thing is clear – the lithium industry has struggled to rapidly scale production of battery-qualifiable material, leading to the impending gap between supply and demand that may drastically stall major efforts in decarbonization, especially for electric vehicles and stationary storage. Lithium is both a highly specialized niche market and a key mineral in the energy transition. In five short years, the lithium market has more than quadrupled to become a $4.9 billion market – yet this is still only a small fraction of the size compared to the oil market. This rapid growth is due to the increasing demand for Li-ion batteries – first for electronics, now for electric vehicles, and soon for stationary storage.
Although lithium is an abundant element in the crust and oceans, it is only economically feasible to extract lithium from deposits with high concentrations and specific impurity profiles, leading to most of the world’s lithium feedstock production taking place in Australia and South America. Even as lithium supply forecasts are expected to exceed 1,400 ktpa by 2035, it is important to note that less than half of this has a probably likelihood and the market has been flooded with low-quality lithium in recent years. With electric vehicles approaching 2 million in annual sales, there is a potential unmet supply gap for battery-qualifiable lithium by more than 1,600 ktpa. See our industry event recap from the 2019 Lithium Supply & Markets Conference.
To address this impending gap between supply and demand, new innovations must be adopted in lithium extraction. But in order for innovation technologies to succeed in the lithium sector, they need to address two key issues – move an existing project down the cost curve and up the quality curve and turning a low-quality or unconventional deposit into a feasible resource. The former has seen less traction as lithium majors are motivated to focus their limited resources on pursuing more profitable products rather than risk disrupting their lithium operations. On the other hand, the latter, has seen a flurry of activity as commercializing a low-quality or unconventional lithium deposit requires innovation on multiple fronts. Find the key players, technologies, and strategies that are best-positioned to take advantage of this critical market opportunity in our report “Innovating the Lithium Industry.”
- Report: Optimal Use of Resources: Innovating the Lithium Industry (Members Only)