Jack Richardson is a Climate Programmes Manager at the Conservative Environment Network.
COP26 consolidated the direction of international political travel towards Net Zero. But for all the hard yards put in by the politicians and negotiators over the document, the market is miles ahead. The global clean energy transition is well underway, but with new technologies, from solar panels to electric vehicles, comes new challenges – including environmental ones.
‘Critical minerals’ (lithium, cobalt, nickel, rare earths, etc) are an essential ingredient to the modern economy. Their rise in the global economy initially came from laptops and smartphones, but the International Energy Agency projects that the Net Zero transition will mean a sixfold increase in demand.
There’s no avoiding that this presents an economic, geopolitical, and environmental challenge. There are some disingenuous arguments relating to it put forward by those who are sceptical of Net Zero because they cannot comprehend the economic or the scientific rationale behind it.
For example, some people point to the process of extracting these minerals and making lithium batteries or wind turbines, claiming clean energy technology is as bad as fossil fuel-based technologies.
But electric cars result in half the lifetime emissions of their petrol and diesel counterparts. Siemens wind turbines pay their whole production CO2 back in less than a year. Costs will come down further through the oncoming clean steel revolution. The fact is that clean energy transition is the only way to mitigate temperature rises and therefore maintain, let alone progress, our standard of living.
Some pundits worry that China is rubbing its hands with glee at the net zero transition because it has dominated many critical mineral supply chains. There is more merit to this concern: the world awoke to this particular threat when a dispute over the Senkaku Islands led China to reduce export quotas of rare earths by 40 per cent, leading to global prices rocketing.
Leaving aside the fact that this argument applies equally to the current fossil fuel based global economy, (OPEC countries provide 80 per cent of the global oil supply; Russia half of Europe’s gas, etc) the cases themselves are not like-for-like.
The world’s critical minerals are spread more evenly. China dominates the supply chain in refining and production – not reserves. It’s a result of decades of outsourcing industry to China; an issue of strategic miscalculation rather than geography.
We can diversify supply chains if we want to, and much of the world has been busy doing so since 2010. Diversification policies are now picking up pace as more countries have signed up to Net Zero. The US, for example, is now seeking to build an end-to-end lithium battery supply chain, while Japan has been working with Vietnam to develop its rare earth reserves.
Nevertheless, the risk is there, which is why William Young and I have written a report on the matter from the Council on Geostrategy. Ahead of the Critical Minerals Strategy which the Government will be publishing next year, we have identified two broad areas the strategy should focus on: resilience and growth.
Building more resilience into global supply chains comes through diversification, which in turn produces growth. Here in the UK, we can build on our progress of onshoring more Net Zero manufacturing as we have done with the new gigafactory in Sunderland, which will create thousands of jobs. Recycling and the circular economy, too, provides a chance for new industries and jobs while also reducing our supply needs from abroad.
Notwithstanding promising projects in Cornish lithium extraction, there is no avoiding the fact that we’ll continue to be importing much of the raw materials we need given the scale of demand. There are opportunities in working with other friendly countries who have massive opportunities for extraction.
Australia provides over 40 per cent of the global lithium supply; Canada has the fourth largest reserves of cobalt; Vietnam, a country the UK must forge closer ties with for other strategic reasons, has the second largest reserves of rare earths in the world.
In our report on critical minerals, we have concluded that trade and investment in diversification will bring both resilience and growth to our supply chains. There are also diplomatic and geostrategic opportunities for Global Britain to lead on developing human and environmental standards. We should seek to offer a better route to development than Beijing’s model of extraction at any cost.
We must walk a tightrope to extract these raw materials that are so vital for addressing climate change without worsening the nature and waste crises. As my colleague James Cullimore wrote on this site last year, human encroachment upon natural habitats risks zoonotic pathogens like Covid breaking loose. A mine has a pollution radius far beyond its boundaries, which risks irreversible damage to some of the Earth’s most important ecosystems. We must find methods of extracting what we need without inflicting unsustainable damage.
Nobody is saying this is going to be easy, but the solutions are there. Through our report we have provided some specific ideas to the Government, but the general direction of travel for critical minerals is clear and consistent with the rest of UK net zero policy: invest, diversify, trade, grow.