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A transition to renewable sources of energy will prompt a surge in demand for base metals in the coming years, Wood Mackenzie has predicted.
In a report published Monday, analysts at the energy consultancy said that as governments fulfil commitments to limit global warming, a growing reliance on solar power would boost demand for several non-ferrous metals.
Three metals in particular were named by Wood Mackenzie as commodities to watch: aluminum, copper and zinc.
The report’s authors outlined three possible scenarios for the metals, with demand growth for each depending on the success of international efforts to limit global warming.
Under the Paris Agreement — a landmark deal adopted in 2015 and signed by 196 countries — nations agreed to a framework to prevent global temperatures from rising by any more than 2 degrees Celsius compared to pre-industrial levels, although the treaty aims to prevent global temperature rises exceeding 1.5 degrees Celsius.
Wood Mackenzie’s base case scenario assumes that by the end of the century, temperatures will have risen by 2.8 to 3 degrees Celsius from pre-industrial times.
In this situation, aluminum demand from the solar power sector would rise from 2.4 million tons in 2020 to 4.6 million tons in 2040.
Typically, aluminum is used in solar panel frames and their structural parts, Kamil Wlazly, a senior research analyst at Wood Mackenzie, noted.
If the global temperature rise was kept between 1.5 and 2 degrees Celsius, however, it would mean that aluminum demand for solar power had reached between 8.5 million tons and 10 million tons a year by 2040, the analysts said.
In the most optimistic climate scenario, where renewable sources of energy were embraced more readily to cap warming at 1.5 degrees Celsius, demand from the solar sector would account for 12.6% of total global aluminum consumption by 2040 — up from 3% in 2020.
Demand for copper — used in high and low voltage transmission cables and thermal solar collectors — is also set for “notable gains” as solar energy becomes more mainstream, Wood Mackenzie said.
The report’s base case scenario predicted that demand for copper arising from solar power generation would rise from 0.4 million tons in 2020 to 0.7 million tons a year by 2040.