IMF – Soaring Metal Prices May Delay Energy Transition


NOVEMBER 10, 2021

By Lukas BoerAndrea Pescatori Martin Stuermer and Nico Valckx

Clean energy needs may cause years of high prices for copper, nickel, cobalt, and lithium under a net-zero emissions scenario.

The world’s historic pivot toward curbing carbon emissions is likely to spur unprecedented demand for some of the most crucial metals used to generate and store renewable energy in a net-zero emissions by 2050 scenario.

Prices could reach historical peaks for an unprecedented length of time—and even delay the energy transition itself.

A resulting surge in prices for materials such as cobalt and nickel would bring boom times to some economies that are the biggest exporters—but soaring costs could last through the end of this decade and could derail or delay the energy transition itself.

Prices for industrial metals, an important foundation for the global economy, have already seen a major post-pandemic rally as economies re-opened, as we recently wrote. Our latest research, included in the October World Economic Outlook and a new IMF staff paper, details the likely effects of the energy transition for metals markets and the economic impact for producers and importers.

For example, lithium, used in batteries for electric vehicles, could rise from its 2020 level around $6,000 a metric ton to about $15,000 late this decade—and stay elevated through most of the 2030s. Cobalt and nickel prices would also see similar surges in coming years.

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