In November, the Global Carbon Project released its latest stocktake figures of the world's total greenhouse emissions.
According to the report, the world will, at the current trajectory, exceed the carbon limit for a global warming of 1.5 degree Celsius within nine years.
Some data suggests that, if the world was to warm by just 2 degrees, an additional 177 million people would face water scarcity and an extra 62 million people would experience severe droughts.
Projections like this show that greenhouse emissions need to drop and the transition to renewable energy technologies needs to happen fast.
There are well known hurdles to the transition, like Australia's political landscape. But there are less known problems too, such as issues with the supply of copper, which is essential in many renewable energy technologies.
"When we think about the bigger picture, and you're talking longer term – in terms of how much copper do we need to meet future demand – I think it is going to be completely dependent on how aggressively we move in terms of decarbonisation," Vivek Dhar tells ABC RN's The Money.
"And the outlook right now is we could have a significant gap – and that can be seen as early as 2030," the Commonwealth Bank of Australia mining and energy commodities strategist says.
"From a raw material standpoint, copper is very much going to be necessary. But the challenge has actually been finding the deposits and finding the right supply."
Essential to the transition
Copper is an important part of the green energy transition. It's considered to be the most cost-effective conductive material. However renewable energies technologies require up to five times more copper than their non-renewable counterparts.
According to a 2021 report by Goldman Sachs, by its lowest estimates, renewable energy sources – like wind, battery and solar – will drive copper demand up nearly 600 per cent, or 5.4 megatonnes, by 2030.
In the case of "hyper adoption of green technologies", this demand would grow to 8.7 megatonnes by 2030, a lift of 900 per cent, according to the report.
This increase is due to energy transmission, which Dhar says already accounts for 21 per cent of the world's demand for copper.
"This is one of the key aspects of the transition [to renewables] happening successfully," says Dhar.
"And this is likely to grow quite strongly for the rest of this decade."
The increased demand is because of the decentralised nature of renewable energy. Fuel sources like coal or gas run on a centralised power grid, like a power station, but renewable energy is generated at a smaller, but more spread out, scale.
However a lack of copper could hamper this growth. And some reports suggest there will be a copper deficit by the end of the decade, which could create further difficulties for the transition to renewable energy technologies.
A lack of incentive
Another problem is that there doesn't appear to be a push to increase the supply of copper.
Currently copper supply is low and prices are falling. Between June and October 2022, the price of copper fell by 33 per cent – a drop related to rising interest rates in Australia and the US, Dhar explains.
Interest rates have historically been shown to have an inverse relationship with the prices of oil and mineral commodities.
Dhar says this decline in value combines with low supply to almost "engineer a slowdown" in copper production.
With decreasing prices, as well as the increased likelihood of a global recession, the strategist says the incentive for suppliers to create new copper mines shrinks.
"Prices are coming down to reflect that demand has to soften globally. And … in this environment, is it really likely we're going to see massive investment in new copper supply?"
To make matters worse, copper mines take up to a decade to build, which further impacts the supply of copper.
"So this downturn we've seen couldn't have happened at a worst time," Dhar says.
Politics and unrest
Dhar says there is an additional concern and that is where copper comes from.
According to the United States Geological Survey, the biggest copper producers in 2021 were Chile, Peru, the Democratic Republic of Congo (DRC) and China. These countries accounted for more than half of the global supply.
Chile was the biggest player. It produced around a quarter of the world's supply alone.
Dhar says the fact that Chile, Peru and the DRC are the key countries for copper supply is "very risky" for copper prices and for the transition to renewable energy.
[If] you just step back, and you look at what has really hurt supply, it's been political unrest, it's been water scarcity, it's been falling copper head rates," Dhar explains.
"And these are all accentuated in these jurisdictions."
For example in April, protesters in Peru stopped copper mines from operating.
Then in July, one of the largest copper mines in the DRC was banned from exporting copper after a contract dispute between its owner, the Chinese company CMOC Group, and the state-owned company Gecamines.
Last year, it was reported that Chile's copper production was beginning to threaten that country's water supply.
The reality of the current situation and how this impedes measures to increase supply means a solution isn't obvious.
Dhar says one answer to increasing copper supply depends on China's economic behaviour in 2023, including the relaxation of its COVID zero policy.
China is considered to be one of the world's major consumer of commodities and its COVID lockdown resulted in the drop of commodity prices earlier this year.
"But if the downturn in China happens alongside the other economies in the world next year as well, it's just going to be further delays to new [copper] investment in this environment," Dhar says.
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