Huge investment is needed into the metals and mining sector to help it adapt to a net-zero carbon emissions future, according to a new report.
UK-based asset manager Legal & General Investment Management (LGIM) and mining giant BHP published the research exploring the obstacles facing investors, companies, and policymakers in the efforts to secure the Paris Agreement’s aim to limit global warming to below 1.5°C by the end of the century.
The publication, titled ‘The Energy Transition Dilemma’, highlights that the energy transition cannot succeed without a substantial increase in the supply of metals for existing and new energy technologies. However, the extraction of minerals is an emission-intensive process.
The report called for investors to “engage constructively” with the mining sector to help reduce emissions, and “mobilize the capital that will be required to ensure metal supply does not become a bottleneck” for efforts to meet emission reduction targets.
LGIM and BHP’s research found that authorities around the world needed to increase the pace and scale of change to the world’s energy and land use systems. It said millions of hectares of land must be utilised for forestation, solar and wind farms, and facilities for bioenergy production.
The retrofitting of buildings to improve energy efficiency must also increase substantially, the report said. It also called for a carbon pricing system to form part of any policy framework supporting the energy transition.
Alleviating “energy poverty” in developing markets would play a key role in addressing emissions issues, the report stated.
LGIM and BHP said that if action was taken sooner, the monetary cost and socio-environmental impact would be significantly less than if action was delayed.