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Is carbon dated for metals?

The pathway to net-zero for miners

Metals enable the energy transition through their use in low-carbon technologies, but the production of metal is emissions-intensive. How can the metals and mining industry ramp up production to meet demand while finding its way to net-zero emissions? Is electrification the answer? Read on to find out.

What tables and charts are inside this report?

  • Average US$110/t carbon tax on direct and indirect emissions as % of 2019 revenue
  • Diversified miners’ renewable electricity share of total energy usage (%)
  • Diversified miners’ Scope 3 emissions relative Scope 1 and Scope 2

James Whiteside

Research Director, Global Head of Multi-Commodity Research

With over a decade of experience in the metals and mining industry, James heads our Multi-Commodity Research division.

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Metals enable the energy transition through their use in low-carbon technologies

Rising demand means metal production needs to grow while simultaneously reducing absolute emissions if the Paris Agreement goals are to be met. Carbon taxes are a blunt stick to achieve these goals that would radically shift the economics of production, with reverberations far and wide. Each metal would have a different pain point – copper at the mine site, steel at the mill or aluminium in power prices – but each would be afflicted.

The remedy for metal mining is consistent – electrification. This cannot happen overnight. Mine designs need to adapt, and more renewable electricity is required. Whether from the grid or self-supplied, power supply arrangements will grow in prominence as miners become increasingly reliant on this single energy source.

Net-zero minesites won’t provide immunity for miners. Scope 3 emissions will increasingly be the focus of investors, if not taxes. Carbon is inherent to the downstream processes to produce aluminium and steel.  

Technologies to remove emissions have an incremental cost to traditional processes, with longer lead times for implementation. Scaling-up of these technologies – like CCS and green hydrogen – requires massive investment in R&D today. Miners need to form partnerships with customers to ensure decarbonisation happens in time and at a cost that won’t preclude their products from the low-carbon economy.

Miners must “own” the decarbonisation of the entire value chain to become the keystone of the energy transition.

The energy transition begins and ends with metals 

It’s hard to think of a metal that hasn’t been touted as central to the energy transition – for some, this claim is unproven. What is certainly true is that wind, solar, EVs, stationary storage and distribution are all central to achieving the Paris Agreement decarbonisation goals. And each of these technologies relies on metals. 

The implausible growth required of battery raw materials to meet decarbonisation goals has been well discussed. A similar supply trajectory is needed for rare earths to supply efficient EV and wind motors. Technology and policy will shape the role of uranium, vanadium and PGMs. But it is the absolute growth in energy transition use, incremental to traditional sectors, that may most impact copper, aluminium and steel industries. 

Emissions: same aim, different pain

Miners are obligated to deliver supply growth to satisfy demand from the energy transition. At the same time, they too need to decarbonise. The steel industry contributes 10% of global carbon emissions due to its vast volumes of production. Among metals, aluminium produces the second-highest absolute emissions at 2% but competes with nickel for highest intensity.

  • 10%

    of global carbon emissions are contributed by the steel industry

  • 2%

    of global carbon emissions are contributed by the aluminium industry

  • US$110 by 2030

    is the price of carbon dioxide per tonne under our 2-degree scenario

  • 5%

    of the energy required to smelt alumina is used to produce aluminium from scrap

To meet the requirements of Paris, global emissions must reach net zero by the second half of the century to keep global temperature rises below 2 °C. Governments are slowly introducing policies to enforce national-level targets. Emissions from metals production will need to halve over the next 20 years.

Under Wood Mackenzie’s 2-degree scenario, the price of carbon dioxide per tonne must rise to US$110 everywhere by 2030. These taxes aim to fundamentally alter production economics and spark massive technological change...