Cost, public opposition and regulatory delays often impede efforts to prepare the US grid for rising electricity demand. Now comes another one — and it’s big — lack of copper.
Daniel Yergin, vice chairman of S&P Global, and Debra Phillips, president and CEO of the National Energy Manufacturers Association (NEMA), were among those who delivered the warning yesterday during a Congressional oversight hearing.
“There is no energy system without copper, and we’re going to need significantly more of it to meet the demand that is growing at unprecedented rates,” Yergin said, testifying before the House Natural Resources Committee’s Subcommittee on Energy and Mineral Resources.
Copper permeates the electric grid
S&P Global projects a 10-million metric ton shortfall in the 42-million metric ton global copper market in 2040. Meanwhile, copper prices are rising dramatically. Copper climbed 7.6% last year and is expected to increase 14.5% this year.
And copper, it turns out, is in almost everything electric.
“Copper runs through this entire system. It’s embedded across the infrastructure that moves energy molecules and electrons, from extraction to production to the grid, from the grid to homes and factories, to new sources of demand like data centers and EVs,” said Phillips in testimony.
For those seeking to bypass the long wait times tied to central grid expansion, distributed energy resources (DERs) offer a faster option. However, DERs also depend on copper. Rooftop and community solar, batteries, small wind, microgrids, and fuel cells all require copper to conduct, convert, and ground electricity.
On top of that, electric vehicles require nearly three times as much copper as a conventional car, according to Yergin.
Recycling limits
The US doesn’t lack copper. In fact, it has the second-largest reserves behind Chile. But it’s fallen way behind in production, from 18-19% worldwide in 1990 to 3-4% today. Meanwhile, China has pulled ahead. The US has only two copper smelters, while China has 60, accounting for 40% of global production, according to S&P.
The solution — more mines and more smelters — carries environmental risk. Michele Bustamante, a staff scientist at the Natural Resources Defense Council, pushed for greater study of recycling. Only 17% of copper used worldwide, and 25% in the US, comes from recycled or reused material.
Bustamante also questioned how much the US needs to ramp up its copper production, arguing that the nation has been able to rely on its closest allies to fill the gaps.
The NRDC called for a three-part solution:
- Site new mines and processing in the best locations possible.
- Manage demand drivers to focus on efficiencies and limitations.
- Create manufacturing and disposal standards to increase recycling.
Not all recycled copper, however, is usable by the power industry. Yergin estimated that recycled copper can meet about a quarter of US demand.
“You need more EVs out there, and then at the end of their life, there’ll be the opportunity for recycling, but recycling does not obviate the need for considerable expansion of mining and mineral supply,” Yergin said.
Philips said that recycled copper often lacks the purity required for electrical use.
“We support research to get there and to improve those recycled supply chains,” she said.
China’s edge
Building new smelters costs between $1 and $4 billion in the Western world, and competing with Chinese facilities faces several hurdles. One is that it takes an average of 19.1 years to bring a new mine into production in the US, according to S&P. Economics create another obstacle. Yergin said the Chinese smelters often operate at a loss because they have other sources of revenue.
Adam Estelle, president & CEO of the Copper Development Association, pushed for permitting reform, regulatory changes, federal grants, and tax incentives, particularly to make primary and secondary refiners eligible for the Section 45X Advanced Manufacturing Production Tax Credit created in Biden’s Inflation Reduction Act.
Protecting natural systems
Meanwhile, as electric demand grows, it brings with it the demand for even more copper.
In addition to expanding recycling, NRDC’s Bustamante urged the committee to focus on better energy management and consider solutions that protect natural systems.
“The choice we make will matter enormously to the question at hand. Different development paths lead to very different outcomes for greenhouse gases, energy demand, manufacturing needs, and material use, including for copper,” she said.
