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The ESG Challenges for Transition Metals

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The following content is sponsored by Wood Mackenzie

The ESG Challenges for Transition Metals

An accelerated energy transition is needed to respond to climate change.

According to the Paris Agreement, 196 countries have already committed to limiting global warming to below 2°C, preferably 1.5°C. However, changing the energy system after over a century of burning fossil fuels comes with challenges.

In the above graphic from our sponsor Wood Mackenzie, we discuss the challenges that come with the increasing demand for transition metals.

Building Blocks of a Decarbonized World

Mined commodities like lithium, cobalt, graphite and rare earths are critical to producing electric vehicles (EVs), wind turbines, and other technologies necessary to burn fewer fossil fuels and reduce overall carbon emissions.

EVs, for example, can have up to six times more minerals than a combustion vehicle.

As a result, the extraction and refining of these metals will need to be expedited to limit the rise of global temperatures.

Here’s the outlook for different metals under Wood Mackenzie’s Accelerated Energy Transition (AET) scenario, in which the world is on course to limit the rise in global temperatures since pre-industrial times to 1.5°C by the end of this century.

MetalDemand Outlook (%) 2025203020352040
Lithium +260%+520%+780%+940%
Cobalt +170%+210%+240%+270%
Graphite+320%+660%+940%+1100%
Neodymium+170%+210%+240%+260%
Dysprosium+120%+160%+180%+200%

Graphite demand is expected to soar 1,100% by 2040, as demand for lithium is expected to jump 940% over this time.

A Challenge to Satisfy the Demand for Lithium

Lithium-ion batteries are indispensable for transport electrification and are also commonly used in cell phones, laptop computers, cordless power tools, and other devices.

Lithium demand in an AET scenario is estimated to reach 6.7 million tons by 2050, nine times more than 2022 levels.

In the same scenario, EV sales will double by 2030, making the demand for Li-ion batteries quadruple by 2050.

The ESG Challenge with Cobalt

Another metal in high demand is cobalt, used in rechargeable batteries in smartphones and laptops and also in lithium-ion batteries for vehicles.

Increasing production comes with significant environmental and social risks, as cobalt reserves and mine production are concentrated in regions and countries with substantial ESG problems.

Currently, 70% of mined cobalt comes from the Democratic Republic of Congo, where nearly three-quarters of the population lives in extreme poverty.

Country2021 Production (Tonnes)
🇨🇩 Democratic Republic of the Congo120,000
🇦🇺 Australia5,600
🇵🇭 Philippines4,500
🇨🇦 Canada4,300
🇵🇬 Papua New Guinea3,000
🇲🇬 Madagascar2,500
🇲🇦 Morocco2,300
🇨🇳 China2,200
🇨🇺 Cuba2,200
🇷🇺 Russia2,200
🇮🇩 Indonesia 2,100
🇺🇸 U.S.700

Around one-fifth of cobalt mined in the DRC comes from small-scale artisanal mines, many of which rely on child labor.

Considering other obstacles like rising costs due to reserve depletion and surging resource nationalism, a shortfall in the cobalt market can emerge as early as 2024, according to Wood Mackenzie. Battery recycling, if fully utilised, can ease the upcoming supply shortage, but it cannot fill the entire gap.

Rare Earths: Winners and Losers

Rare earths are used in EVs and wind turbines but also in petroleum refining and gas vehicles. Therefore, an accelerated energy transition presents a mixed bag.

Using permanent magnets in applications like electric motors, sensors, and magnetic recording and storage media is expected to boost demand for materials like neodymium (Nd) and praseodymium (Pr) oxide.

On the contrary, as the world shifts from gas vehicles to EVs, declining demand from catalytic converters in fossil fuel-powered vehicles will impact lanthanum (La) and cerium (Ce).

Taking all into consideration, the demand for rare earths in an accelerated energy transition is forecasted to increase by 233% between 2020 and 2050. In this scenario, existing producers would be impacted by a short- to medium-term supply deficit.

The ESG dilemma

There is a clear dilemma for energy transition metals in an era of unprecedented demand. Can vital energy transition metals markets ramp up production fast enough to satisfy demand, while also revolutionising supply chains to meet ever-more stringent ESG requirements?

Understanding the challenges and how to capitalise on this investment opportunity has become more important than ever.

Sign up to Wood Mackenzie’s Inside Track to learn more about the impact of an accelerated energy transition on mining and metals.

 

 

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Energy Shift

Charted: Coal Still Dominates Global Electricity Generation

Fossil fuels account for nearly 60% of power generation.

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Bar chart showing coal as the main electricity generation source in 2024

Charted: Coal Still Dominates Global Electricity Generation

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Key Takeaways

  • Fossil fuels made up nearly 60% of 2024 electricity generation.
  • Coal accounts for 35% of total power generation.

Fossil Fuels Still Power Most of the World

Global energy demand grew faster than average in 2024, driven by rising electricity use across sectors. The power sector led the surge, with demand growing nearly twice as fast as overall energy use—fueled by increased cooling needs, industrial activity, transport electrification, and the expansion of data centers and AI.

Despite a growing push toward cleaner energy sources, coal remains the leading source of electricity generation worldwide. In 2024, fossil fuels accounted for nearly 60% of global power generation, with coal alone contributing 35%, according to the International Energy Agency.

While renewable energy continues to expand, making up about one-third of total electricity production, the global energy mix still leans heavily on traditional sources.

CountryCoalNatural GasOilRenewablesNuclear
🇮🇳 India73.4%3.3%0.2%20.5%2.6%
🇨🇳 China58.4%3.2%0.1%33.9%4.4%
🇺🇸 U.S.15.6%42.6%0.7%23.3%17.9%
🇪🇺 EU10.7%15.6%1.5%48.7%23.6%
🌍 Global34.5%21.8%2.4%32.1%9.1%

In emerging markets and developing economies, coal continues to be the backbone of power systems. China, the world’s largest energy consumer, generated nearly 60% of its electricity from coal. In India, coal’s dominance is even more pronounced, providing close to three-quarters of all electricity produced.

In contrast, advanced economies are increasingly relying on cleaner sources. In 2024, the European Union made significant strides in renewable energy adoption—nearly half of its electricity came from renewables, far exceeding the global average.

In the United States, natural gas led the power mix, accounting for over 40% of electricity generation in 2024. President Trump’s pro-coal policies and the surge in energy demand from AI innovation are expected to boost coal production in the U.S. over the next few years.

Learn More on the Voronoi App 

If you enjoyed this topic, check out this graphic that shows how 36 companies are responsible for half of the fossil fuel and cement CO2 emissions.

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Energy Shift

How the Largest Importers of Russian Fossil Fuels Have Changed (2022 vs. 2025)

Despite sanctions against Moscow, the EU remains a key consumer of Russian fossil fuels.

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This graphic highlights the largest importers of Russian fossil fuels, based on the daily flow of oil and gas

How the Largest Importers of Russian Fossil Fuels Have Changed (2022 vs. 2025)

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Since the war in Ukraine began on February 24, 2022, Russia has earned $915 billion from fossil fuel exports, with EU countries accounting for over $223 billion.

Despite sanctions against Moscow, the EU remains a key consumer of Russian fossil fuels.

This graphic highlights the largest importers of Russian fossil fuels, based on the daily flow of oil and gas, using data from the CREA Fossil Fuel Tracker as of March 2025.

China Becomes the Biggest Buyer

In June 2022, China overtook the EU as the largest importer of Russian fossil fuels. Today, China imports nearly six times more than the EU. India and Turkey have also emerged as major buyers.

Country2022-01-14 (tonnes)2025-03-13 (tonnes)
🇨🇳 China435,025607,288
🇪🇺 EU928,998104,646
🌍 Others244,945275,747
🇮🇳 India28,907344,848
🇹🇷 Turkey138,860239,662
🇰🇷 South Korea93,26730,255
🇺🇸 United States33,4680
🇬🇧 UK49,0620

Meanwhile, imports from the U.S. and UK, which were relatively small before the invasion, have dropped to zero.

EU Reliance on Russian Fuel

A report released by Ember estimates that European purchases of Russian gas amounted to €21.9 billion ($23.6 billion) in 2024.

Additionally, data collected by Kpler and analyzed by POLITICO Europe revealed that in the first 15 days of 2025, the 27 EU countries imported a record-high 837,300 metric tons of liquefied natural gas (LNG) from Russia. This has raised concerns that billions of dollars could be fueling Moscow’s war in Ukraine.

Russia’s Position in Global Oil Production

Russia remains one of the world’s top oil producers, frequently competing with Saudi Arabia for the second spot behind the United States.

Following the fall of the Soviet Union, Russia’s oil industry was privatized, but in 2021, the state forced a consolidation and restructuring of the sector. Today, Gazprom, Rosneft, and Lukoil are Russia’s leading oil and gas producers.

Learn More on the Voronoi App 

If you enjoyed this topic, check out this graphic that shows Ukraine’s mineral resources.

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