As the world pushes toward a greener future, the demand for copper, a crucial component in renewable energy infrastructure, has surged dramatically. This increase in demand, however, has raised concerns about a looming shortage of the metal, threatening to impede progress towards climate goals.
Experts predict that the demand for copper will skyrocket over 75% during the next two years. The metal, essential for manufacturing wind turbines, solar panels, and electric vehicles (EVs), has seen its price climb steadily, reaching a record of $10,730 per ton last year. With the expected surge in demand, prices are projected to climb even higher, potentially hitting $15,000 per ton in 2025, according to Goldman Sachs.
Among the primary drivers of this increased demand is the rapid expansion of EV production. These electric vehicles alone accounted for two-thirds of the global increase in copper demand between 2020 and 2022, with each EV requiring 176 pounds of copper to build.
The American Solar Energy Society has emphasized that there is currently “no viable alternative to copper in meeting the requirements of the energy transition” which could put “global decarbonization at risk.”
However, as demand for copper intensifies, there has also been a decrease in its production. China, the world’s leading producer of refined copper, is facing a crisis due to a shortage of copper ore, forcing smelters in the country to cut back on production. Similar challenges have emerged in Latin America, which accounts for 40% of global copper production, where mine closures have exacerbated the dwindling supply of ore.
In the United States, the mining industry is grappling with regulatory hurdles and a slow permitting process. The Biden administration’s push to reform mining laws has left some mining executives frustrated, further complicating efforts to ramp up domestic copper production.
Additionally, the proximity of many copper reserves to Native American reservations has raised environmental and social concerns. Almost 90% of U.S. copper reserves are within 35 miles of tribal lands, many in areas considered sacred by the local indigenous communities.
The copper shortage presents a significant challenge to the clean energy transition, as the metal remains irreplaceable in many critical applications. Without adequate copper supplies, the world risks falling short of its emissions goals for 2050.
