Mr Yergin said that while the goal of reaching net zero by 2050 or earlier is clear, there remains significant uncertainty about how countries will achieve this, and less clarity still on how much minerals and materials will be needed to build assets such as solar panels and wind turbines.
“Much greater examination is needed on the minerals that will be needed as the building blocks of net zero emissions and the availability of them,” “Mr Yergin told the federal government-organised Sydney Energy Forum on Wednesday.
“It’s a big question, a very important question, and it will loom larger as the drive for net zero emissions increases.”
Alluding to critical minerals, which are used in smartphones, computers, rechargeable batteries and electric cars as well as defence and space technology, Mr Yegin said the global supply tightness has been complicated by geopolitical tensions.
“As we now see with semiconductors that are caught up in what has been called the great power competition,” Mr Yergin said.
“Australia will have a very important role in these supply chains.”
Concern among Western governments about Chinese control of some rare earths has fuelled increased interest in boosting supplies.
Australia on Tuesday joined an international partnership that seeks to develop and secure global supply chains for critical minerals that are crucial to clean energy technology and the global transition to clean energy. It comes just months after Canberra agreed to work with its Quad allies, the United States, Japan and India to improve supply chain security for rare earths.
Earlier this year former Prime Minister Scott Morrison’s government announced nearly $500 million of funding to boost output of critical minerals, aiming to diversify supply for its allies and counter China’s dominance of the global market.
More than half of all lithium, cobalt and graphite processing and refining capacity is located in China, while Beijing produces three-quarters of all lithium-ion batteries and has 70 per cent of the production capacity for cathodes and 85 per cent for anodes, both of which are essential components of batteries.
The United States is also ramping up spending to source new supplies and has even pumped money into Australian corporates to safeguard critical minerals that it now deems critical” to national security and economic growth.
Last month, Lynas said it had signed “a follow-on contract” for about $US120 million ($173 million) with the US Department of Defence (DoD) to establish the refinery, which will produce separated heavy rare earths like terbium and dysprosium.
The cash injection for Lynas comes after the US government announced in April that it would provide $US107 million to ASX-listed Syrah Resources under a conditional plan to secure battery-grade graphite for American carmakers such as Tesla.
Australian corporates are also investing their own funds in developing new supplies. Liontown Resources and Pilbara Minerals earlier this month said they will spend more than $800 million to expand lithium production as both seek to capitalise on the global push to decarbonise.
Liontown said it would develop its Kathleen Valley lithium mine after it struck an offtake deal with US car manufacturing giant Ford for up to 150,000 dry metric tonnes of spodumene concentrate – a source of lithium essential in key EV battery chemistries – for five years, beginning in 2024.
While issuing a warning on the energy transition, Mr Yergin also said the energy crunch may get worse before it gets better, threatening to exacerbate global tightness for fuel sources such as oil and coal.
The energy crunch has intensified inflation, fuelling interest rate rises and squeezing many households, a crisis widely blamed on Russia’s invasion of Ukraine.
