Energy Transition Metals

IMF Working Papers, October 12, 2021

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Energy Transition Metals

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Bibliographic details

• Authors: Lukas Boer, Andrea Pescatori, Martin Stuermer
• Published: October 12, 2021
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781513599373.001

Summary

• The energy transition requires substantial amounts of metals such as copper, nickel, cobalt and lithium.
• The paper asks whether these metals are a key bottleneck.
• The authors identify metal-specific demand shocks, estimate supply elasticities and pin down the price impact of the energy transition in a structural scenario analysis.
• Metal prices would reach historical peaks for an unprecedented, sustained period in a net-zero emissions scenario.
• The total value of metals production would rise more than four-fold for the period 2021 to 2040, rivaling the total value of crude oil production.
• Metals are a potentially important input into integrated assessments models of climate change.

Key Findings and Projections

• Metal prices: projected to reach historical peaks and remain elevated for an unprecedented, sustained period under a net-zero emissions scenario.
• Metals production value: projected to rise more than four-fold over 2021 to 2040.
• Comparative scale: the increased total value of metals production would rival the total value of crude oil production.

Methodology and Analytical Tools

• Identification of metal-specific demand shocks.
• Estimation of supply elasticities.
• Structural scenario analysis to quantify price impacts of the energy transition.
• Use of structural vector autoregressions (listed among keywords).

Policy-Relevant Implications

• Elevated and sustained metal prices in a net-zero scenario imply significant price risk for consumers and producers.
• Large increases in the value of metals production suggest metals should be incorporated into integrated assessment models of climate change and broader macroeconomic planning.

Publication and Metadata

• Authors: Lukas Boer, Andrea Pescatori, Martin Stuermer
• Publication date: October 12, 2021
• Series: Working Paper No. 2021/243
• Issue: 243
• Volume: 2021
• Pages: 41
• DOI: https://doi.org/10.5089/9781513599373.001
• Stock No: WPIEA2021243
• ISBN: 9781513599373
• ISSN: 1018-5941
• Subject tags: Commodities, Copper, Economic theory, Metal prices, Metals, Prices, Supply elasticity
• Keywords: aggregate commodity demand shock, climate change., Conditional forecasts, Copper, energy transition, estimate supply elasticity, fossil fuels, Global, Metal prices, metals, Metals, metals production, price risk, prices, structual scenario analysis, structural vector autoregressions, Supply elasticity

IMF Working Paper: "Energy Transition Metals" by Lukas Boer, Andrea Pescatori, and Martin Stuermer (Working Paper No. 2021/243, October 12, 2021).

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