As politicians become more entrenched in their motivation to implement green energy proposals as a way to address climate change, some experts are warning that these policies could drive metal prices to unprecedented levels, which are likely to result in higher prices for consumers.
Some states have adopted renewable portfolio standards (RPS) that seek to implement renewable energy as a source of electricity. The National Conference of State Legislatures (NCSL) says these policies “drive the nation’s $64 billion market for wind, solar, and other renewable energy sources.” New Mexico's RPS goals entail having the entire grid being supplied by zero carbon sources by 2045. The ramp-up to that includes a goal of 40% by 2025 and 80% by 2040. Solar was intended to be 20% by 2020 through IOUs.
While these measures are expected to have a real impact on the amount of emissions, they will also have consequences for consumers. The IMF recently released a statement detailing how the push for clean energy could significantly raise prices for core metals, such as copper, nickel, cobalt, and lithium, for years to come. The cause? An extremely high increase in demand due to the climate policies being adopted by nations around the world.
“Prices could reach historical peaks for an unprecedented length of time – and even delay the energy transition itself,” the article said.
One example is found in the prices of lithium. The IMF article specifically estimates that one metric ton of lithium, which currently costs around $6,000, could jump to $15,000 by the end of the decade and remain at those higher prices through most of the 2030’s.
The article estimates that the metal boom could bring substantial economic gain to companies that are involved in exporting these key metals. The IMF also hinted at some global “mandates” surrounding these key metals to “play a key role in data dissemination and analysis, setting industry standards, and fostering global cooperation.”
Some experts believe that the rise in metal prices could benefit China, which has a vast supply of metals.
“The chaos may offer China, which dominates the world market for rare earths widely used in technology, to step in to develop the mineral reserves, which also include lithium, used in the manufacture of batteries," MarketWatch said.
Though Democratic lawmakers have been vocal about the importance of addressing climate change and instituting green energy initiatives, the U.S., under the Biden administration, has not put anything binding into law that could be categorized as an environmental initiative or legislation. Earlier this year, Biden announced that he would re-enter several climate change agreements with other countries in which the U.S. would commit to lowering emissions, but the agreements are not binding.
