As much as $4 trillion in investments may be needed by 2030 to scale up the materials supply chain to address upcoming supply shortages of key metals and materials required to meet global decarbonization goals, according to a new report released by global management consulting firm McKinsey & Company.

The report, “The net-zero materials transition: Implications for global supply chains,” highlights the role of the materials supply chain as a key enabler of the global transition to net zero, with many of the technologies, from renewable energy and battery storage to electric vehicles, requiring more and different materials than the conventional technologies they are replacing.

On a per-GW basis, for example, solar PV’s material intensity is 1.4x that of conventional technology, according to the report, while onshore wind is 2.4x as material intensive, and offshore wind 6.3x. Similarly, battery electric vehicles (BEVs) can be 20% heavier, or more materials intensive, than comparable internal-combustion engine (ICE) vehicles.

As these technologies are increasingly deployed to help support initiatives to decarbonize industries, transportation, energy production and other sectors, the McKinsey report predicts that future growth rates for many materials are expected to outpace historical patterns, leading to shortages for many critical materials under a variety of scenarios examined by the study.

Forecast supply-demand imbalances include moderate shortages for battery materials including lithium, cobalt, nickel, manganese and graphite, with more severe shortages for magnet materials, which are used in electric motors and wind turbine drivetrains, including by as much as 70% for dysprosium. Significant shortages are also forecast for key materials for end markets including semiconductors, electrolyzers, and process material.

The McKinsey report also highlights high local materials concentrations, such as rare earth elements in China and nickel in Indonesia, as potentially having an impact on regional access to materials.

In order to scale up the required supplies of these key materials and minerals, the report predicts that investments in the materials supply chain, including in mining, refining and smelting, will need to increase by $3 trillion to $4 trillion by 2030, including capital expenditure for exploration, and new and ongoing projects.

In addition to these investments, the report estimates that labor capacity will need to be increased by as much as 600,000 specialized mining professionals, and an additional energy supply of 200 GW – 500 GW will need to come online as well.

In addition to the need to ramp investments in the material supply chain, workforce and energy, the report outlines a series of recommended actions to help bridge the materials gap, including recommendations to drive a shift in demand patterns towards proven technologies that are less material-intensive or rely on less constrained materials, increase investment in materials innovation and recycling practices, and policy recommendations such as streamlining permitting processes and driving demand to alternative technologies.

Michel Van Hoey, senior partner at McKinsey & Company said:

“Increasingly bold climate targets are changing global material value chains, to the extent that the transition to net-zero emissions has sparked a materials transition. Our report provides an integrated perspective on those changes and key actions that will be required to balance the equation and safeguard the industry.”

Click here to access the report.