Wood Mackenzie Warns of Lithium Supply Shortage by 2028

2026-03-05 17:32:44

Wood Mackenzie's latest Lithium Energy Transition Outlook report points out that in the context of accelerated energy transition, global lithium demand may exceed 13 million tons by 2050, more than twice the benchmark forecast. Without significant new investment, a supply gap could emerge as early as 2028.

Wood Mackenzie pointed out in his latest report "Prospects for Lithium Energy Transition " that under the background of accelerated energy transition, the global demand for lithium may exceed 13 million tons by 2050. More than double the baseline forecast. Without massive new investment, the supply gap could emerge as early as 2028. Even under Wood Mackenzie's baseline scenario, existing supply projects are difficult to meet demand beyond the mid-2030s, highlighting the need for sustained investment throughout the industry chain . Alan Pedersen, research director at

Wood Mackenzie, said: The lithium market is about to face a supply shortage, and this is happening much earlier than many in the industry expected. Under ambitious climate targets, we expect a supply gap from 2028 onwards. If governments move forward with net-zero policies, industry needs to act now. The projects approved today will determine the balance of the market in this critical period of the 2030s. Demand growth

driven

by electrification Wood Mackenzie modeled four energy transition paths, with lithium demand ranging from 5.6 million tons of lithium equivalent in a delayed transition scenario to 13.2 million tons of lithium equivalent in a net zero emissions scenario by 2050.

· Under the delayed-transition scenario, the market will remain in balance until 2037, after which there will be a shortage.

· In line with the implementation of the National Commitment Programme, there will be a gap around 2029 and an additional supply of 6.7 million tonnes will be required by 2050 to meet the projected demand.

· Under a net-zero emissions scenario , energy shortages are projected to begin in 2028 and continue until mid-century. An additional supply of about 8.5 million tonnes of low carbon equivalent carbon (LCE) will be required by 2050.

electric vehicle remains the main driver of lithium demand growth, accounting for 72 to 80% of lithium consumption under all scenarios. Under the "national commitment" scenario, electric vehicle penetration would reach about 75% by 2040; under the "net zero" scenario, the figure would reach 95%.

The report also States that rechargeable batteries in all applications will account for 96 to 98% of lithium battery consumption by the middle of the century. Rebecca Grant, senior research analyst at

Wood Mackenzie, said: "electric vehicle is still the main driver of lithium demand growth, but energy storage systems (ESS) is the real growth point that can not be ignored.". In our projected future scenario, the demand for energy storage systems will grow at an annual rate of 6% to 7% as new energy sources become the main force of new installed capacity and the grid needs large-scale flexible regulation. "

Demand is growing rapidly, and large-scale new supply

is urgently needed." Under the "national commitment" scenario, the carbon emission supply gap will reach 670 million tons of standard coal equivalent (LCE) by 2050. Under the "net zero emission" scenario, the gap will expand to 8.5 million tons and 670 million tons of standard coal equivalent. Lithium recycling will help increase supply, but it is unlikely to solve the short-term shortage. The supply of recycling increased by 13% to 16% a year until the 2040s, when electric vehicle batteries were scrapped and large-scale recycling could produce a significant supply.

Wood Mackenzie pointed out that by 2050, under the more optimistic scenario, recycling will contribute 2.3 million tons to 2.7 million tons of standard coal equivalent. Unprecedented investment

is needed to

meet demand According to Wood Mackenzie's estimates, the total investment demand for the whole lithium industry chain ranges from about $104 billion under the delayed transition scenario to $276 billion under the net zero emission scenario. Investment needs under

different scenarios:

Transition delay: $

104 billion Base scenario: $

114 billion National commitments: $

236 billion Net zero emissions: $276 billion 0 HTML 0 UNK4 8 Investment is expected to peak between 2030 and 2034, primarily in 0 HTML0 UNK4 9 New mining capacity, refining infrastructure, and regional supply chains. 0 HTML0 UNK5 0 "This will be a $100bn to $275bn investment track, depending on how the Energiewende develops," Grant said. "The ultimate winners will be those companies that can allocate capital efficiently while dealing with trade fragmentation and ensuring regional market access." 0 HTML0 UNK5 1 Four paths, but only one conclusion 0 HTML0 UNK5 2 All scenarios point to the same conclusion: lithium is critical to the energy transition, and the industry faces structural supply challenges that require immediate action. 0 HTML0 UNK5 3 "Whether we choose the 1.5 ° C temperature target or other less ambitious targets, lithium demand will outstrip current supply projections," Pedersen concludes. "The question is not whether we need more lithium, but whether the industry can move quickly to meet demand in an increasingly fragmented global trading environment." 0HTML0UNK54

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Wood Mackenzie's latest Lithium Energy Transition Outlook report points out that in the context of accelerated energy transition, global lithium demand may exceed 13 million tons by 2050, more than twice the benchmark forecast. Without significant new investment, a supply gap could emerge as early as 2028.

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