Decarbonisation is on course to run short of key materials, but circularity could bridge the gap

The study highlights that in a business-as-usual scenario, copper, silicon, and lithium each could experience 14 to 15 years during which supply cannot keep up with demand. Cobalt could be in short supply for 11 years in total, and only nickel stays roughly in balance. The shortages look different for each material: cobalt faces frequent but small shortfalls, whereas lithium’s shortfalls are both prolonged and severe.

Faster decarbonisation would require significantly more materials than business-as-usual. However, a wider application of circular strategies largely offsets this additional demand across copper, nickel and cobalt value chains. If circular ambition is high, unmet demand for these materials is nearly eliminated, even under the fastest decarbonisation pathway.

Lithium and silicon are exceptions. Even at high circular ambition, around 8% of lithium demand and 4% of silicon demand remains unmet between now and 2050. Silicon is not recyclable with existing technologies, whereas for lithium, the main problem is timing: much of the lithium now going into batteries, vehicles and infrastructure may not be recycled until after 2050. Therefore, building recycling capacity early could increase future lithium recovery. 

These findings suggest that while circularity is crucial, it should form part of a broader material strategy. Closing the remaining gaps between supply and demand will require other measures, such as using less material overall, switching to alternative materials or, where these fall short,  responsible mining. 

“The circular economy is increasingly highlighted as a means of meeting the demand for critical raw materials. Yet most current practices and policies focus on recycling or additional mining,” said Hilde van Duijn, CEO of Circle Economy. “These measures are needed, but our new study shows they are not enough. Reducing overall material use through measures such as improvements in product design and lifetime extension is crucial to eliminate supply gaps. More ambitious circular policies are, therefore, not only an environmental strategy but also an essential tool to keep our economies running while combating climate change.” 

The report emphasises that, in many cases, reducing the amount of material in products and extending their lifetimes can contribute more to supply chain resilience than end-of-life solutions like recycling. Importantly, possible shortages do not mean climate ambitions should be curtailed. Instead, the study argues, decarbonisation should go hand in hand with a circular transition.

About the study: The Circularity Gap Report Critical Raw Materials was authored by Circle Economy, a Netherlands-based impact organisation, in collaboration with Deloitte Netherlands. It examines the demand, supply, and resilience of five critical raw materials, establishing a historical and prospective baseline, and examining these under different scenarios, modelling three decarbonisation pathways: low, medium and high. The low pathway reflects the current direction, the medium pathway also includes announced pledges, and the high pathway would limit global warming to 1.5°C. These are paired with three levels of circularity ambition, ranging from low (current practices) to medium (announced policies) to high (all technically possible measures).