To reduce carbon emissions or advance the necessary energy transition, we must radically rethink our energy and transport systems. America must lead the way in creating a new energy supply chain literally built from the ground up.
Clean energy technologies require different minerals and metals than conventional hydrocarbon-based energy and on a much larger scale. By accelerating a well-meaning climate ambition, world leaders are widening the gap between supply and demand.
For example, meeting the Glasgow climate declaration by 2040 would require more than 7 million tonnes of lithium per year, 17 times more than what will be produced in 2021, according to Benchmark Minerals Intelligence. As the IEA warned, there is an “imminent mismatch between the world’s heightened climate ambitions and the availability of essential minerals that are essential to achieving those ambitions.”
Businesses and countries can build their electric vehicle gigausines anywhere they want, but they can’t change the geology of the earth’s crust. We must develop the mineral resources where they are found. Minerals from the clean energy transition are often found in countries with poor human rights, weak rule of law and insufficient environmental protections. Growing constraints, such as water scarcity, can exacerbate conflicts with local communities and jeopardize existing production. We need to partner with resource-rich countries rather than blindly relying on an opaque supply chain that undermines our interests.
Recently, President Biden called on OPEC to increase oil production to cope with rising fuel prices in his country. Although their influence has waned in recent years, the cartel still controls 40% of the world’s oil production. In contrast, one country, China, controls 50 to 90 percent of global supply chains for clean energy minerals. Unless we take a drastically different path, the United States could relinquish its climate leadership and national security in favor of the Communist Party of China.
We can either increase our quiet reliance on an increasingly authoritarian regime or muster the political will to develop a responsible, resilient and secure clean energy supply chain. The Biden administration has taken steps to identify U.S. dependencies, and the bipartisan infrastructure bill includes important provisions to address it. Yet the United States must take bolder steps to close our growing supply gap.
We must avoid a future scenario where the US president is forced to ask President Xi to produce more cobalt or process more lithium used for electric vehicle batteries so that we can meet our climate targets. The United States has a lot of minerals in the house. Yet the permissible uncertainty, expensive financing, and cheap Chinese raw materials have marginalized US mining. We need to level the playing field to regain America’s clean energy security.
Extraction and processing affect several federal agencies. I can attest from personal experience that if everyone is in the driver’s seat, then no one is. The White House is expected to establish a high-level political post in the National Economic Council to accelerate and implement the United States’ clean energy supply chain. This new “czar” should have the experience and authority of the private sector to resolve interagency conflicts.
America should lead its allies and partners to develop a free and transparent clean energy supply chain. The Biden administration must continue to expand the State Department-led energy resources governance initiative to advance a global standard for responsible development. The US government, businesses and financiers must require disclosure of the mineral supply chain because they are asking for emissions disclosure.
Washington can set rules and market signals. The private sector responds to these signals, deploys capital, innovates and executes. The United States and other Western leaders have reported an exponential increase in demand for clean energy transition minerals. We need to send a proportionate supply signal, muster the political will and mobilize the private sector to answer the call.
Frank Fannon was the first Deputy Secretary of State for Energy Resources. He is currently Managing Director of Fannon Global Advisors, Non-Resident Principal Investigator of the Atlantic Council, Non-Resident Principal Advisor of the Center for Strategic and International Studies, and Principal Visiting Fellow of the Center for Technology Diplomacy at Purdue.
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