Here's a problem that could derail the entire energy transition: we're running out of copper. Not today, but soon enough that people are starting to worry.
S&P Global released a report Thursday warning that without major increases in mining and recycling, the copper industry faces a deficit exceeding 10 million metric tons by 2040. That would leave nearly a quarter of projected demand unmet, which is the kind of supply gap that keeps economists up at night.
The Copper in the Age of AI report projects demand for copper will hit 42 million metric tons annually by 2040, up 50% from 2025. Think about what's driving that: electric vehicles need copper wiring, AI data centers need copper cooling systems, renewable energy infrastructure needs copper transmission lines. It all adds up fast.
Energy transition projects alone will require an additional 7.1 million metric tons of annual copper between now and 2040, making it the single largest source of demand growth. Meanwhile, AI, defense, and robotics sectors are piling on, with China and Asia-Pacific countries leading the charge.
Geopolitical tensions aren't helping either. The conflict in Ukraine and ramped-up defense spending from countries like Japan and Germany are adding fuel to the fire. As S&P put it: "The intersection of accelerating demand, constrained supply, and concentrated processing capacity creates systemic risks that require responses from policymakers, regulators, industry, and investors."
