Clean Energy, Material Scarcity and Urban Mining (Revision 1 )

The low-carbon economy is a materials economy. Clean energy technologies – essential for the reduction of carbon emissions – require large amounts of critical raw materials. The supply of these critical materials cannot keep up with skyrocketing demand, which may be a roadblock for the current ambitious energy transition plans. In this paper the authors study two practical approaches that can sustain the clean energy industry’s momentum: (i) Material Reduction, i.e., changes to production technology to reduce the critical materials used; (ii) Urban Mining, i.e., recovering and recycling critical materials from end-of-life clean energy technology products. The authors show that the effectiveness of these two approaches depends on the levels of material scarcity and systemic leakage in circular infrastructures. A long-term focus on clean energy production favors Urban Mining (Material Reduction) when material scarcity is high (low). Meanwhile, an urban mining strategy is more likely to maintain the profitability of the clean energy industry. Yet, the authors find that producer incentives to implement these material scarcity mitigation strategies need not align with policy objectives. In turn, subsidizing producers to ease the capital expenditure burden of the urban mining (material reduction) strategy will be necessary when the access to end-of-life products is constrained and material scarcity is high (when material scarcity is moderate).