The growth of investment in renewable energy sources has driven up global demand for certain critical materials (including copper, nickel, cobalt, lithium, rare earth elements, and graphite). This paper assesses whether, due to their increased importance, the price volatility of these materials could significantly impact macroeconomic variables such as inflation and output, similar to the effects seen with traditional energy commodities like oil and gas.
In a scenario of accelerated ecological transition, the markets for critical materials could reach an overall size comparable to that of the natural gas market by 2030. However, the potential impacts on inflation and output could be mitigated by several factors, including the increasing substitutability of critical materials due to technological advancements. Nonetheless, supply risks remain, tied to the intensification of geopolitical fragmentation.
