#Industry News
Where will carbon dioxide emissions lead the copper supply and demand pattern?
The non-ferrous industry news
With the vigorous development of new energy vehicles, the demand for charging piles has increased. The current number of charging piles for new energy vehicles in China is insufficient. As of December 2020, the number of charging piles in China is 1.5567 million tons. However, the number of new energy vehicles in the same period has reached 4,990,200, and the ratio of vehicles to charging piles is 3.21:1, this is far from reaching the goal of a ratio of close to 1:1 between cars and charging piles planned in the "Electric Vehicle Charging Infrastructure Development Guide (2015~2020)". The rapid growth in the production and sales of new energy vehicles in the future will promote the improvement of supporting facilities such as charging piles. With the gradual start of carbon peaks and carbon neutral actions, the copper industry will usher in new challenges and opportunities. On the one hand, the certainty of low-carbon metallurgy has increased, and the industry is facing the dual challenges of industrial upgrading and output adjustment. On the other hand, consumer demand is ushering in changes, and the focus of terminal consumption is shifting to the new energy industry. Copper smelting and related processing companies will seize development opportunities.
The supply side of the copper smelting industry faces new challenges
Carbon emission accounting of copper smelting enterprises
According to statistics from the China Nonferrous Metals Industry Association, the output of refined copper in 2019 was 9,422,400 tons, which brought at least 34,862,900 tons of carbon emissions, accounting for about 0.35% of the national carbon dioxide emissions. Although copper smelting companies have relatively less carbon emissions, they are still in the non-ferrous metal industry with the label of "high energy consumption" and are also facing the challenges of industrial upgrading and output adjustment.
Drive quality improvement, the focus is on industrial upgrading
Peaking carbon dioxide emissions and Carbon neutrality are the goals of the Central Economic Work Conference. The copper smelting industry should also follow the pace closely, strengthen corporate social responsibility, promote industrial technology upgrades, and achieve low-carbon and high-quality development of the entire industry. Facing strict carbon constraints, copper smelting enterprises may experience difficulties in industrial upgrading and energy structure transformation, however, the flexibility of the adjustment of the company’s production system makes it almost impossible for smelters to reduce production unexpectedly during the technological innovation period, a less improvement in the process has less impact on the supply of electrolytic copper, therefore, carbon peaking and carbon neutrality also have little impact on copper smelting capacity.
The impact of adjustments on production
The impact of carbon peak and carbon neutral work deployment on output is embodied in three aspects: electricity prices, carbon emission quotas and environmental protection policies.
1. The copper smelting output is related to the rise and fall of electricity prices, large changes in electricity prices have a greater impact on costs and output, but less adjustments in electricity prices have little interference with supply.
2. The space above the output is related to the carbon emission quota and its transaction price. If the allocation of carbon emission allowances is strict and the transaction price is high, production will suffer a huge blow, and the opposite is also true.
3. Copper smelting output is also affected by environmental protection policies, and the reduction is determined by the intensity of environmental protection control and policy implementation.
In general, the target of carbon peak and carbon neutrality has a relatively less impact on the amount of copper on the supply side, but a greater impact on the improvement of quality. Only when copper smelting enterprises take energy-saving, efficiency-improving and clean production as their primary goals, can they reduce the contradiction between electrolytic copper production and the national carbon reduction work rules, so as to maintain stable output.
"Carbon neutrality" drives the rapid development of new energy
Significant opportunities on the demand side
The important way to achieve carbon peak and carbon neutrality is to adjust the energy structure. It is necessary to "steadily advance the development of hydropower, safely develop nuclear power, and accelerate the development of photovoltaic and wind power." Photovoltaic and wind power will develop rapidly and become the main force of clean energy. At the same time, to achieve carbon peak and carbon neutrality, it is necessary to increase the electrification rate of the end consumer industry. Promote the research and development, promotion and application of energy-saving and low-carbon technologies to reduce fossil energy consumption and carbon dioxide emissions.
Judging from the current situation, new energy vehicles will be one of the important drivers to help reduce fossil energy consumption. New energy vehicles mainly use electricity or hydrogen energy to obtain power, and the direct emissions of carbon dioxide or other greenhouse gases are zero, so the rapid development of the new energy vehicle industry can significantly reduce carbon emissions.
Photovoltaic and wind power are the main force of clean energy
The rapid development of wind power and photovoltaics, according to the content of China's State Grid’s 14th Five-Year Plan, wind power will account for 48% of the total installed capacity of wind power and photovoltaics in 2020, and this proportion will rise to 53% in 2025. It is estimated that the total installed capacity of photovoltaic and wind power will grow to 855 million kilowatts in 2025, the total installed capacity of 1.524 billion kilowatts by 2030 and the goal of over 1.2 billion kilowatts set by the Climate Ambition Summit can be achieved.
The increase in the total installed capacity of photovoltaic and wind power is a major benefit to copper consumption. According to the data of the International Copper Association, it is estimated that in 2021, photovoltaic and wind power will drive the consumption of 31 million tons of copper; from 2021 to 2025, it will drive 1.9169 million tons; from 2026 to 2030, it will drive 3.262 million tons, the demand for copper from photovoltaics and wind power continues to expand.
New energy vehicle leading industry development pattern
With the vigorous development of new energy vehicles, the demand for charging piles has increased. The current number of charging piles for new energy vehicles in China is insufficient. As of December 2020, the number of charging piles in China is 1.5567 million tons. However, the number of new energy vehicles in the same period has reached 4,990,200, and the ratio of vehicles to charging piles is 3.21:1, this is far from reaching the goal of a ratio of close to 1:1 between cars and charging piles planned in the "Electric Vehicle Charging Infrastructure Development Guide (2015~2020)". The rapid growth in the production and sales of new energy vehicles in the future will promote the improvement of supporting facilities such as charging piles.
The rapid rise of the new energy automobile industry and the growth potential of the demand for charging piles have jointly driven the increase in copper consumption. It is estimated that the amount of copper used in new energy vehicles and charging piles will be 159,000 tons in 2021, 598,800 tons in 2025, and 1.356 million tons in 2030. The rapid increase in copper demand is obvious.
The trend towards cleaning is accelerating, and the potential for copper consumption increases
In the strategic layout of carbon peaking and carbon neutrality, the new energy industry will play its main role and become an important goal of carbon reduction work. There is huge room for growth in new energy, and it also contains important opportunities for the development of the copper industry.
From the perspective of the growth rate of copper for new energy, the average growth rate from 2021 to 2025 is expected to be 24.32%, and the average growth rate from 2021 to 2030 is 19.12%, both at a relatively high level of growth. Among the segmented industries, copper for new energy vehicles has the fastest growth rate. The average growth rate of copper consumption in new energy vehicles from 2021 to 2025 is 37.11%, and the average growth rate from 2021 to 2030 is 26.84%, far exceeding the average growth rate of copper consumption in the new energy sector. The proportion of copper used in new energy vehicles in the field of new energy is also increasing. In 2020, 2025 and 2030, the proportion of copper used in new energy vehicles will be 23%, 41% and 60%, respectively. The gradual increase in the proportion indicates that new energy vehicles will be an important driving force for future copper consumption.
The question now is whether the rise of the new energy industry has severely affected the traditional copper consumption industry? In the new energy vehicle industry, the increase in sales of new energy vehicles will disturb the sales of traditional vehicles, but less affected. Charging piles are a supporting facility for new energy vehicles, and their number growth will maintain a certain proportion with the number of new energy vehicles, and will not put pressure on other consumer industries. It can be seen that the rapid development of the new energy industry will blaze a trail for the growth of copper consumption and continue to stimulate the consumption potential of copper.
