There are 118 different known elements commonly illustrated in the periodic table and around 93 of them are metals. Everything we use in our daily lives either contains metals or has gone through a process involving metals to reach us. In clean technology, one common property makes metals particularly important – that they are very good conductors of heat and electricity. In this report, we look at ten of the most important energy transition metals.
By Mobeen Tahir, Director, Macroeconomic Research & Tactical Solutions, WisdomTree
Of course, there is considerable variation in terms of how abundant and important the metals are. For investors looking to invest in one of the most important megatrends of our time, the transition towards low-carbon sources of energy, then identifying the right metals matters.
This article highlights the five key metals commodities that make the energy transition possible. This article will offer a whistle-stop tour of why these metals commodities are important in the energy transition with the aim of inspiring readers to further explore the fascinating world of energy transition metals.
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1. Copper
Electrification is at the heart of the energy transition, which can only be made possible with copper. According to our energy transition industry expert partner, Wood Mackenzie, copper’s annual demand is expected to rise from around 28 million tonnes in 2020 to over 68 million tonnes by 2050 – driven almost entirely by emerging sources of demand like electric vehicles (EVs), charging infrastructure, renewable energy, and energy storage systems.
According to the International Energy Agency (IEA), generating one megawatt (MW) of power from coal requires 1,150 kilograms (kg) of copper. Generating the same amount of power from offshore wind requires 8,000kg of copper. Similarly, an electric car can have 53.2kg of copper per vehicle compared to 22.3 kg for an internal combustion engine (ICE) car. For larger vehicles like electric buses, the numbers are significantly higher.
These are merely a few examples of how clean technologies will increase copper demand dramatically as the world ramps up its decarbonisation efforts.
2. Nickel
Today, stainless steel accounts for over two-thirds of nickel demand while batteries account for less than 10%. Although not all nickel grades are suitable for batteries, batteries are expected to be the biggest source of demand growth for at least the next two decades. According to the Nickel Institute, “Nickel in batteries helps deliver higher energy density and greater storage capacity at a lower cost”. Among the most dominant lithium-ion battery cathodes are NCA (nickel cobalt aluminium) and NMC (nickel manganese cobalt) chemistries. Within these mixes, the share of batteries with higher nickel percentages is expected to rise precisely for the reasons stated by the Nickel Institute.
According to the IEA, an electric car has nearly 40kg of nickel per vehicle compared to virtually nothing in a comparable ICE car. If nickel loadings keep rising, this could increase further. And even if solid-state batteries (which promise high energy efficiency, giving EVs longer ranges and short charging times) become mainstream, nickel is expected to remain relevant.
Another interesting avenue of nickel demand is nuclear power. The Nickel Institute states that nickel-containing heat and corrosion-resistant alloys play an important role in ensuring the integrity, durability, and long-term performance of nuclear power stations. They are used in the heat transfer, cooling systems and inside the reactor vessel. According to the IEA, generating one MW of power from nuclear requires 1297kg of nickel, the highest loading of nickel to generate power from the various sources of energy.
3. Aluminium
From wind and solar power to green hydrogen, and high-voltage cables to batteries, aluminium is fully integrated in the energy transition. In addition to being highly conductive and lightweight, aluminium is also corrosion-resistant, which makes it ideal for harsh outdoor conditions. According to the World Bank, aluminium accounts for more than 85% of the material used in solar power frames.
In batteries, aluminium’s thermal conductivity prevents the battery from overheating or cooling down too much, improving the battery’s performance and lifespan. In transmission and high-voltage cables, aluminium provides a superior conductivity-to-weight ratio compared to copper. In the production of green hydrogen, aluminium is used as a base plate metal. With a 360% increase in the deployment of hydrogen electrolysers (the machine used to produce green hydrogen) in 2023 compared to 2022, this is another promising area of growth for metals like aluminium and platinum (more on that in part two). In heat pumps, which are quickly becoming a viable alternative to gas boilers for heating, heat exchangers are typically made with aluminium.
4. Silver
Silver forcefully makes its way among industrial metals in this list of energy transition commodities. Even as it stands, around 57% of silver’s physical demand comes from industrial applications. But solar power and EVs are expected to be the strongest growth areas for silver demand going forward.
A typical solar panel can contain as much as 20 grams of silver. When light strikes the solar panel, a paste made from silver – considered to be the world’s best conductor of electricity – helps carry the electrons that are set in motion, maximising the energy output of a solar cell. According to the IEA, there was an 85% annual increase in solar deployment worldwide in 2023, making it an exciting area of structural demand growth for silver.
In EVs, which also experienced a 35% increase in annual sales in 2023, silver is used for its conductivity and corrosion resistance. In a car, all electrical connections are coated with silver. This not only applies to the electric engine, but also to features like power windows and seats, parking and braking assistance, infotainment systems and so forth.
5. Tin
Tin’s primary industrial use is in making solder, a material used to create electrical connections. Therefore, tin is often referred to as the glue that holds the energy transition together. According to Wood Mackenzie, without tin, electrons don’t flow, which means mobile phones don’t work, EV batteries don’t change, and the Internet of Things ceases to exist.
Tin also has very specific uses in renewable energy. According to Fastmarkets, solar panels are formed of many individual solar cells, which are connected by a “solar ribbon” of copper wire coated in a layer of tin.
EVs can require around 4kg of tin compared to an ICE vehicle, which requires just over 1kg. Although these are relatively smaller numbers compared to, say, copper, but for a much smaller commodity market, the multiplicative effect is still meaningful.
6. Zinc
Zinc’s primary industrial use is in galvanising steel for protection from corrosion in everything from buildings and bridges to transmission towers and wind turbines[1]. According to the US Geological Survey[2], between 66% and 79% of a wind turbine’s total mass is made of steel. Therefore, each turbine depends heavily on zinc for its long-term endurance. This is especially true in offshore wind, where turbines are even more vulnerable to damage from the elements.
According to the International Energy Agency (IEA), generating one megawatt (MW) of power from wind requires 5,500 kilograms (kg) of zinc. In contrast, almost no zinc is required to produce power from coal or natural gas. With world leaders having pledged to triple global renewable energy capacity by 2030 (at the latest United Nations Climate Change Conference COP28), the long-term prospects for zinc demand growth appear strong.
Zinc also has a promising role to play in batteries. Zinc‐bromine flow batteries are rechargeable batteries that use zinc and bromine in electrolytes to store and release electrical energy. The relatively high energy density and long lifespan make them an ideal choice for grid‐scale energy storage applications.
7. Lead
Lead has multiple applications across the energy transition. In solar power, lead helps bolster panel durability by mitigating thermal stress. Lead-coated copper ribbons in panels reduce soldering[4] temperatures, thereby extending the panel’s lifespan. In wind energy, offshore wind farms rely on lead-sheathed cables for efficient energy transmission. These cables, lasting up to 50 years, resist corrosion, which is vital for the durability of wind power.
Lead also has an important role in battery technology. Lead batteries are increasingly crucial for energy storage, offering affordability, sustainability, and reliability. With a long life that can span over 15 years and 5000 charge cycles, they’re ideal for storing renewable energy.
8. Platinum
Platinum is one of the rarest metals in the world and, therefore, is rightly classified as precious. Nonetheless, its unique catalytic properties make it very valuable in the energy transition.
Today, the largest source of platinum demand is from the automotive sector. Platinum is central to reducing emissions from internal combustion engine vehicles and higher loadings of the metal are required to meet increasingly strict emissions standards around the world. But platinum’s role as a catalyst in the hydrogen economy is what makes it an exciting energy transition metal.
Platinum is used as a catalyst in electrolysers, which produce hydrogen from water, and fuel cells, which use hydrogen as a fuel source in emerging applications like fuel cell electric vehicles. According to the IEA, the world saw a 360% increase in electrolyser capacity in 2023. Although a small market, the rates of growth in this sector are promising. Electrolysers enable the production of green (or clean) hydrogen, which complements wind and solar power to provide long-term energy storage. According to the World Platinum Investment Council, platinum demand from electrolysers and fuel cell electric vehicles is expected to become a meaningful component of total demand for the metal by 2030 and potentially the largest segment by 2040.
9. Cobalt
Cobalt emerges as a linchpin in the ongoing energy transition, pivotal in the shift towards clean mobility and sustainable power generation. Recognised as a critical raw material by both the European Union and the United States, cobalt’s significance lies in its energy storage capacity, and resilience to high temperatures. Cobalt’s role in enhancing energy density and ensuring stability in lithium-ion batteries is indisputable. These batteries rely on the movement of lithium ions (Li+) between the anode and the cobalt-containing cathode. Cobalt serves multiple vital functions, including enhanced energy density when combined with nickel, contributing to longer driving ranges and improved performance for electric vehicles. Additionally, cobalt-based cathodes are renowned for their stability and long cycle life, allowing EV batteries to undergo numerous charge and discharge cycles before experiencing significant capacity degradation.
Moreover, cobalt-containing batteries maintain stable voltage output throughout their lifespan, which is crucial for the consistent and reliable performance of electric vehicles. Furthermore, these batteries can handle high charging rates, enabling rapid charging and reducing the time required to replenish an EV’s battery. As the demand for rechargeable batteries skyrockets in the pursuit of zero emissions, cobalt’s presence in lithium-ion batteries, particularly in cathodes, is indispensable. According to the IEA, each electric vehicle requires 13.3kg of cobalt compared to almost nothing for an internal combustion engine vehicle.
10. Lithium
Lithium serves as the crucial component in lithium-ion batteries, acting as the electrode material in both the anode and the cathode. During discharge, lithium ions move from the anode to the cathode through the electrolyte, creating an electric current. In recharge, these ions reverse direction. Lithium’s high electrochemical potential and low atomic weight contribute to the battery’s high energy density and lightweight characteristics, making it a cornerstone for efficient energy storage in various applications, from smartphones to electric vehicles.
According to the IEA, each EV requires 8.9kg of lithium compared to practically nothing in an internal combustion engine (ICE) car. Equally, lithium-ion batteries are still the preferred technology for grid-scale energy storage. The IEA states that after their deployment in the power sector more than doubled last year, batteries need to lead a sixfold increase in global energy storage to enable the world to meet 2030 targets.
Energy transition metals: closing word…
As evident from some of the highlights presented here, the different metals have distinct roles to play in the energy transition. Indeed, each metal is influenced by its own set of demand and supply factors, which can be cyclical. And so, prices can fluctuate and diverge. A basket approach can give investors who are seeking long-term exposure to the energy transition megatrend diversification over the long run while capturing the broad opportunity set across the wide spectrum of investable metals.
Our energy needs are constantly on the rise. Technologies like artificial intelligence, cloud computing, and blockchain are very energy intensive. Thus, not only is the world transitioning from fossil fuels towards renewable sources of energy, but rapid growth in these new technologies is also required to sustain our planet and technological progress. And metals are the raw materials that will power this revolution. At WisdomTree, we believe this thematic narrative of metals powering growth in the 21st century is not reflected in markets yet, which still view metals as cyclical assets. This creates an exciting opportunity for investors seeking long-term growth.
