Abstract
Clean energy technologies are widely recognized as a part of the solution for a sustainable future. Unfortunately, these technologies often rely on materials that are considered critical because of their importance to the technology and their potential for supply disruptions, which often lead to drastic and unexpected price spikes. With many clean energy technologies still struggling to compete economically with incumbent technologies, it is uncertain if such material price changes could have a significant economic impact on overall clean energy technology costs. In this paper, we first estimate material intensity of critical materials for three case study clean energy technologies: proton exchange membrane (PEM) fuel cells in fuel cell electric vehicles (FCEVs), neodymium iron boron (NdFeB) permanent magnets in direct drive wind turbines, and Li-ion batteries in battery electric vehicles (BEVs). Using these data, as well as material price information, we analyze technology-level costs under potential material price spike scenarios. By benchmarking against target costs at which each technology is expected to become economically competitive relative to incumbent energy systems, we evaluate the impact of price spikes on marketplace competitiveness. For the three case studies, technological costs could increase by between 13 and 41% if recent historical price events were to recur at current material intensities. By analyzing the economic impact of material price changes on technology-level costs, we demonstrate the need for stakeholders to push for various supply risk reduction measures, which are also summarized in this paper.
Highlights
Clean energy technologies are essential tools for reducing carbon emissions and providing for a sustainable future
In the fuel cell case study presented in this paper, we considered only proton exchange membrane (PEM) fuel cells for fuel cell electric vehicles (FCEVs), as other types such as solid oxide fuel cells (SOFC) and molten carbonate fuel cells (MCFC) are primarily used in stationary applications [18]
Through the use of historical price spike data, combined with current material intensities, we have found the impact of critical material price spikes on technology component costs to be increases of 13–41% within the three case studies considered
Summary
Clean energy technologies are essential tools for reducing carbon emissions and providing for a sustainable future. High demand, coupled with criticality, promotes the risk of extreme price spikes or even material unavailability in the event of a disruption in the supply chain Many of these materials have extreme price inelasticity, which stems from the small quantities that are used in final products, allowing for the cost increase to be passed on by the intermediate purchaser to the final consumer. When a change in price does cause a change in demand, producers may be slow to change output due to the scale of operations, high capital requirements, long lead times for new projects, or the interconnected nature of mining (in which raw materials are not mined separately, but rather as byproducts and coproducts of one another) [4] These factors, when combined, can lead to significant price spikes. Over 50% of cobalt comes from that same region, and prices have long since recovered, such a concentrated supply in a provenly unstable region leaves concern over the potential for another major supply disruption [7, 8]
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