Supply risk evolution of raw materials for batteries and fossil fuels for selected OECD countries (2000-2018)

Fossil fuels are the dominant form of storable energy, but their share in the global energy supply is slowly diminishing due to climate mitigation policies. Alternative energy production from variable renewable energy sources for both stationary and mobile use requires some form of energy storage. Batteries are the current frontrunner for this application, particularly with Li-ion batteries that are reliable and highly efficient. However, batteries themselves have evolved to meet current requirements and expectations. These changes in battery chemistry have shifted the dependency on raw materials used to produce them. Raw materials critical for battery production are subject to supply risk due to their availability or trade policies prompting a need for supply risk assessment. Such resource supply risks depend on the perspective of the importing country or region. By analysing the supply risk of raw materials used in the production of batteries in comparison to fossil fuels, it is possible to understand the shift in risk to storable energy that is underway. In this study, we analyse the supply risk of selected raw materials used in batteries and compare it with the supply risk of fossil fuels for the period 2000 to 2018 from the perspective of the European Union, USA, South Korea, Japan, Canada and Australia using the GeoPolRisk method. Our analysis demonstrates a higher risk of supply for raw materials compared to that of fossil fuels for all the selected territories. Rare earth elements, graphite and magnesium, are amongst the raw materials with the highest supply risk due to their concentrated production in one or only a few countries. Countries have recognised the need for raw material security and made specific policies to ensure secure supply. Raw material security is an emerging concern for all the countries, especially in the case of batteries for major manufacturing nations that are heavily import-dependent. Raw materials producing countries like Canada and Australia focused on stockpiling minerals and minerals exploration while importing countries such as Japan and South Korea are looking for alternate sources for their supply. The results from our analysis suggest that the necessary policy reforms taken for energy security have benefited all the countries with a reduced risk of fossil fuel supply, while similar policies to secure raw materials are discussed but not yet fully implemented.

Automated summary

This study compared the supply risk of raw materials used in battery production with that of fossil fuels in selected regions from 2000 to 2018, using the GeoPolRisk method. The analysis showed a higher supply risk for raw materials compared to fossil fuels in all territories studied. Countries such as Canada and Australia are focusing on stockpiling minerals and minerals exploration for raw material security, while import-dependent nations like Japan and South Korea are seeking alternate sources for their supply. Policies for energy security have reduced the risk of fossil fuel supply, but similar measures for securing raw materials are still being discussed.