Is there enough lithium for the energy transition?
That is a common refrain for those who are hesitant about the energy transition; the world does not have enough lithium deposits necessary to transition away from fossil fuels as the main source of energy because the lithium deposits are not sufficient to support EVs and battery storage for renewables. But do the facts support that assertion? To truly understand how to look at and analyze lithium supply, we need to first look back into history to see how previous generations have analyzed necessary resources for humanity to thrive.
The Club of Rome is an international non-governmental organization that was founded in 1968 by a group of scientists, economists, and industrialists. The club's goal is to promote understanding of the complex problems facing humanity and to develop solutions that will help ensure a sustainable future.
In 1972, the Club of Rome published a report called "The Limits to Growth". This report was based on a computer simulation of the world's economic and environmental systems. “Limits to Growth” concluded that the world was on a path of unsustainable growth and that, if current trends continued, the world would face a number of serious problems, including resource depletion, environmental degradation, and economic collapse.
An important study, to be sure, but one with some flaws. One of the main flaws of the Club of Rome's report was its oil analysis. It assumed that the world's oil reserves were finite and that they would be depleted at a linear rate with the world struggling to find new pockets of oil since we had seen a major slowdown in new oil field discoveries during the decade previous to 1972. However, this assumption has turned out to be incorrect. Since the report’s publication, new oil reserves have been discovered every decade, and the rate of oil production and the level of know reserves has actually increased.
Another flaw in the Club of Rome's analysis was not taking into account the possibility of technological change. Technological change has significantly increased the world's supply of oil and other resources. For example, new technologies for extracting oil from shale formations have made it possible to produce oil from resources that were previously considered to be uneconomical.
The Club of Rome's report "The Limits to Growth" was a landmark publication that raised important questions about the future of the world. However, the report's analysis of oil was flawed, and its predictions about the depletion of oil reserves have not come to pass. Today we are seeing some of those same assumptions when it comes to resources that are important for the energy transition. This is most noticeable when we talk about lithium.
If you look at historic estimates of reserves for lithium, the amount was limited. This made sense at the time. Those estimates were based on known lithium deposits. The limited demand for lithium limited knowledge and study of lithium deposits at the time. Fast forward to current times and a different picture unfolds. The chart below shows the rapid growth in the estimates of global reserves and resources. As you can see, estimates for both reserves and resources have risen substantially over the past 10 years.
The increase in lithium reserve and resource estimates come from three main factors.
Increased exploration which has expanded the number of known deposits
New technology to recover lithium
Increased price of lithium which increases the number of deposits that are economic to mine
These factors are why we are less concerned about raw materials such as lithium limiting the energy transition.
A great lesson from the Club of Rome and the mistaken assumption it made about oil reserves 50 years ago is to never underestimate humanities’ capacity to continue exploring and innovating. As the demand for lithium for batteries increases so do the efforts being made to find more lithium deposits. As the energy transition accelerates, we expect to continue to see increases in the level of reserve and resources for lithium for decades to come.
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