How the clean energy transition exposes the world to new vulnerabilities
- The copper, cobalt, lithium, nickel and rare earths powering clean tech are controlled by a handful of producer countries, causing supply chain insecurities
- It also comes with rising environmental costs in mining, especially with degrading ores, and the need to deal with waste, such as that from electric vehicle batteries
Given that we need to at least triple wind and solar power by 2040 to meet zero-emissions targets, and to grow the global electric vehicle fleet at least 25-fold, a colossal increase in demand for “clean energy minerals” is implied.
It also means a potentially unsustainable reliance on a small concentration of producers. Much of the West’s paranoia homes in on China, which dominates the mining, processing and consumption of many clean-energy minerals, but the vulnerability stretches far beyond.
Compounding this, China processes around 70 per cent of the world’s cobalt, and is the biggest consumer.
That so many mineral resources are owned or controlled by governments, and by entities with opaque ownership structures, amplifies the supply-chain security concerns of many companies in the clean-energy minerals sector.
For example, a working paper put out by the Washington-based Peterson Institute for International Economics, notes that about 57.9 per cent of cobalt output is produced by firms that are active and known, but that little is known about the rest.
Numerous other problems complicate the supply of clean-energy minerals. The first, according to the IEA, is that it takes on average 16.5 years from mineral discovery to commercial production: no matter how fierce the demand, the time needed to increase – and diversify – supply is painfully long.
Because cobalt, copper and nickel normally coexist, it has rarely proven profitable to mine cobalt without a significant cross-subsidy from copper. A fall in copper prices can result in a mining suspension for cobalt or nickel, even if demand remains strong.
For copper, a particular problem is that after centuries of exploitation, ore quality is degrading. The IEA says Chile’s copper ore grade has fallen by 30 per cent over the past 15 years: more has to be mined to generate the same amount of copper, and processing costs have risen sharply.
The batteries powering the electric vehicles sold in 2019 are estimated to eventually generate 500,000 tonnes of unprocessed battery-pack waste. This will rise 50-fold by 2030 and 650-fold by 2040 – a wholly unprecedented waste disposal challenge. Clearly there will be a need for radical new recycling technology at the heart of our clean-energy future.
The transition to a net-zero mineral-intensive energy economy may be critical in solving our climate crisis but will bring potentially crippling vulnerabilities. There is no panacea.
David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades