Abstract

The existing literature establishes the link between clean energy technology (CET) expansion and rising mineral demand but lacks a comprehensive analysis of the transmission mechanisms through which CET policy incentives particularly production and consumption subsidies affect mineral markets. This study addresses the gap by developing an economic model where a CET producer optimally determines mineral input demand and production volume, where the concept of elasticity is used to measure the response of mineral demand to policy incentives. Analytical results demonstrate that the elasticity of mineral demand with respect to CET policies is highly sensitive to returns to scale of CET production, mineral prices, and CET market size. Model implementation using most current data (2023/2024) from the US electric vehicle battery market suggests that subsidies have a stronger impact on mineral demand with declining but not constant returns. Further extrapolations show that the estimated elasticity changes with changes in market size and mineral prices but not with technical efficiency. These findings highlight the importance of integrating mineral market considerations into CET policy design to ensure sustainable resource availability for clean energy transitions.

Department(s)

Economics

Second Department

Mining Engineering

Publication Status

Full Text Access

Comments

U.S. Department of Energy, Grant G-2023-20975

Keywords and Phrases

Critical minerals; Elasticity; Electric vehicles; Energy transition; Production and consumption subsidies; Tax credits

International Standard Serial Number (ISSN)

0959-6526

Document Type

Article - Journal

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2025 Elsevier, All rights reserved.

Publication Date

20 Jul 2025

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