Critical raw materials for the energy transition

Aude Pommeret (), Francesco Ricci () and Katheline Schubert
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Aude Pommeret: IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc
Francesco Ricci: CEE-M - Centre d'Economie de l'Environnement - Montpellier - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro - Montpellier SupAgro - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement

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Abstract: Renewable energy generation and storage requires specialized capital goods, embedding critical raw materials (CRM). The scarcity of CRM therefore affects the transition from a fossil based energy system to one based on renewables, necessary to cope with climate change. We consider the issue in a theoretical model, where we allow for a very costly potential substitute, reflecting a backstop technology, and for partial and costly recycling of materials in capital goods. We characterize the main features of the efficient energy transition, and their dependence on the relative abundance of CRM and on the recycling technology. Recycling reduces the cost of the transition. It also calls for having a large stock of recyclable CRM embedded in specialized capital at the time of adoption of the backstop technology. Moreover, we consider constraints on policy tools and myopic regulation, and show how abstracting from the scarcity of CRM, or tightly linking subsidies for renewables to the carbon tax revenue, is misleading in designing climate policy.

Keywords: Material scarcity; Recycling; Energy transition; Policy acceptability; Myopia (search for similar items in EconPapers)
Date: 2021-06-23
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Published in 26. Annual Conference of the European Association of Environmental and Resource Economists, Jun 2021, Berlin, Germany

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Related works:
Journal Article: Critical raw materials for the energy transition (2022)
Working Paper: Critical raw materials for the energy transition (2022)
Working Paper: Critical raw materials for the energy transition (2022)
Working Paper: Critical raw materials for the energy transition (2021)
Working Paper: Critical raw materials for the energy transition (2021)
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