The energy transition is the greatest human endeavor of our time. Shifting the world’s entire energy consumption away fossil fuels, in a race against time to avoid cataclysmic climate change, is beyond anything our species has attempted before. And most people do not even realize how big the task is.
For the average global citizen, ‘energy transition’ essentially means moving our electricity supply from coal, gas and diesel to renewable energies such as solar and wind. But that is only a minor part of what we have to do.
Electricity makes up less than a fifth of the energy we use, according to 2018 figures from the International Energy Agency. It is less than half of what we use in oil to power our vehicles, vessels and aircraft. And not much more than the gas we use for heating and industrial applications.
Hence, an energy transition that only covers our electricity system will not even go halfway towards meeting out climate goals. For us to truly avert a climate disaster before 2050, we need to decarbonize all our industrial sectors.
That is a massive challenge, but some sectors are showing the way. Take mining. This is “one of the most energy-intensive industries worldwide,” according to a report last year by the US National Renewable Energy Laboratory.
Metal production, in particular, is highly energy intensive since power is needed not only for mining and transportation but also, in significant quantities, for process heating and machining.
In US, for example, the metal production industry uses more than 175 TWh of energy a year for process heating alone. Historically, most of the mining industry’s energy consumption has been based on fossil fuels, and with good reason.
Many mining operations are in remote areas, off the grid, where diesel or natural gas generation was until recently about the only option for round-the-clock electricity and heat production.
And where mines were close enough to civilization to be able to get a grid connection, the carbon intensity of their operations usually depended on the generation mix of the local electricity provider. In some countries, such as Brazil, the mix is mainly based on hydro power.
But in South Africa, another major mining country, the mix is overwhelmingly based on coal. That means South African mining companies, and others relying on fossil-fuel-heavy grids, are actively contributing to climate change. This is not something that most mining companies are happy about.
Because their operations are sometimes dangerous and polluting, the big mining concerns are very aware of what is called their ‘social license to operate.’ This can roughly be defined as the amount of hassle that a local community will put up with before it decides it has had enough.
Mining companies without a social license to operate can find it hard to get permits and their profitability, and share price, can suffer as a result. Carbon emissions are perhaps not as bad in this respect as accidents or pollution spills.
But they can add to the perception that mining firms should not be encouraged, which is the last thing the companies want. And besides good citizenship, mining companies also have good economic reasons to ditch fossil fuels.
Energy is a major cost for mining companies, and the margins for the sector aren’t great. So anything that helps cut energy bills is good news for shareholders. Furthermore, the volatility of fossil fuels can be a real problem.
A serious increase in the price of diesel or natural gas, for example, could jeopardize operations for a mine extracting relatively low-value ore.
Thanks to the growth and related cost reductions of wind and solar, mining companies can now supplant some of their former fossil fuel requirements with lower-cost renewable energy. And the cost of that energy can be fixed for years through a power-purchase agreement.
Not only that, but mining operations in remote regions can build their own renewable energy plants, eliminating the risk of the lights going out because a shipment of diesel hasn’t got through.
Wind and solar can be great for hedging mining energy use in this way, but they are too intermittent to satisfy a mine’s requirements for round-the-clock power. Recently, however, new technologies have come to the fore that could allow for a complete decarbonization of the sector.
The first of these is grid-scale battery systems. These can help overcome short-term intermittency and allow, say, solar power to continue to drive mining operations way into the evening.
And for longer-duration carbon-free operations, there are a couple of other options in places where hydro isn’t available. The first, perfect for sunny environments such mining regions in Australia, Chile and South Africa, is concentrated solar power with thermal energy storage.
Combined with PV for daytime power, this can provide round-the-clock electricity and process heat. And for even greater flexibility, there will soon be green hydrogen, which could largely replace natural gas but with none of the associated carbon emissions.
None of this is lost on the mining industry, so it is no surprise that companies in the sector have rushed to embrace renewables in recent years, according to 2019 data from the analyst firm BloombergNEF. Particularly prevalent are hybrid projects that combine renewables with storage.
Admittedly, there is still a long way to go. But after years of piling carbon emissions on top of an often-questionable environmental footprint, mining is now a leader among so-called hard-to-abate sectors in terms of its investment in renewable energy.
And this is just as well, since mining companies will be essential in bringing the energy transition about. Key electrification materials, from copper and aluminum to nickel and cobalt, all depend on mining capacity. Sourcing them in a low-carbon way is imperative.