We’ve all used a number 2 pencil with graphite, but most don’t realize that graphite plays a huge role in the green energy economy. Most people think of lithium-ion when they think of electric vehicle batteries, but those same batteries require 50 kilograms or graphite, almost 10 times the amount of lithium needed. In that sense, graphite is in high demand. Global capacity of lithium ion (Li-ion) battery gigafactories is on course to top 7 terawatt hours (11Nh) by 2031. That’s particularly impressive growth with the understanding that ten-year pipeline just crossed the 6 TWh threshold in April.

According to Benchmark, global demand for graphite will outstrip supply, and Credit Suisse stated that graphite could become a better investment than lithium. By 2050, green energy technologies will require nearly 4.5 megatons of graphite every year. But graphite still hasn’t gone mainstream and gained the attention of lithium, copper, and cobalt. Simply put, graphite is next in line to explode. This might be because most production of graphite is in China, and only now are countries like Canada catching up. China also owns most of the anode market needed for EV batteries. According to Benchmark, the flake graphite market at the backbone of this industry is heading for its first ever supply deficit.

Graphite’s use extends beyond pencils and batteries. It is used to make graphene, which is primed to revolutionize industries such as conductors and electricity. By next year, natural flake graphite and smaller flake sizes will move into a structural deficit. Anode demand is expected to grow by 27% each year through 2040. Right now, demand for batteries is just starting to hit graphite.