Issues and Required Changes in the Supply of Raw Materials in the Renewable Industry

#Renewables #RareEarths #Wind #Solar #Hydrogen #FuelCell #Energytransition

The renewable energy industry is booming in Korea, Japan and Australia, with ambitious targets set for the deployment of solar, wind, and other renewable energy technologies. However, the rapid growth of the industry is raising concerns about the supply of critical raw materials, such as lithium, cobalt, and nickel, which are essential for the production of batteries and other renewable energy components.

In this context, Pacific countries and especially Australia are major producers of many critical raw materials but they are also a major consumer. This means that, as of today, the region remains heavily dependent on imports of some critical raw materials, such as lithium, copper, cobalt or even nickel. This dependence is a key vulnerability, as it exposes the region to supply disruptions and price volatility.

In fact, if current trends are confirmed, the demand for critical raw materials will definitively grow significantly in the coming years. For example, the International Energy Agency (IEA) estimates that global demand for lithium could increase by more than 40 times by 2040 and our region is expected to remain a major producer and consumer of critical raw materials for renewable energy.

if we look at more into details to our region, as already shared, Korea, Japan, and Australia are all committed to reducing their reliance on fossil fuels and transitioning to clean energy. This transition is leading to a growing demand for raw materials such as lithium, cobalt, nickel, and rare earth elements, which are used in batteries, solar panels, and wind turbines.

For instance, Korea is investing heavily in electric vehicles and battery storage. This is leading to a growing demand for lithium and cobalt, which are key components of lithium-ion batteries.

Japan is also investing strongly in renewables, particularly solar and wind power. This is definitively leading to a growing demand for silicon, which is used in solar panels, and rare earth elements, which are used in wind turbines. Within next years, Japan will also increase its electrolyzers capacities with an impact on the demand for platinium.

Finally, if Australia is a major producer of many of the raw materials needed for the energy transition, such as lithium, cobalt, nickel, and rare earth elements, it is also a major consumer of these raw materials, as it invests heavily in renewable energy to reduce its reliance on coal.

In these conditions, shortages and price increases of critical minerals for renewable energy technologies are expected in the near future.

These issues will be leverage by geopolitical tensions and especially the growing tensions between the United States and China which may also have a negative impact on the supply of critical minerals. China remains the major producer of many of the critical minerals used in renewable energy technologies. If tensions between the two countries escalate, it could lead to trade restrictions or disruptions to supply.

It is difficult to say exactly when shortages and price increases of critical minerals will occur but likelihood to face these issues before 2030 remain high.

However, even if above statements are highly important, I do believe that two other dimensions need urgently to be considered to avoid any failure in the required energy transition. These two dimensions have direct impacts on people acceptances and they are currently clearly underestimate.

First, with the existing supply chain, energy transition is not green. China and several countries under development are hosting mostly all rare earths mines and transforming factories. Minerals are extracted while using polluting solutions both for local populations and environment.

For instance, let’s look at Baotou, a city in Inner Mongolia, China, which is commonly recognised as the world capital of rare earths: This city is home to the Bayan Obo deposit, which is the largest known rare earth deposit in the world. Baotou produces over 60% of China's rare earths, and it is a major supplier of rare earths to the global market.

Baotou is also home to a number of large factories and mines, which produce a variety of products, including steel, cement, and aluminum. These industries produce a significant amount of pollution, including air pollution, water pollution, and soil pollution.

The air quality in Baotou is particularly poor. The water quality in Baotou is also poor. The city's water is polluted by industrial waste, wastewater, and agricultural runoff. This pollution has made the city's water unsafe to drink and has also had a negative impact on the city's aquatic life.

The soil pollution in Baotou is also severe. The city's soil is contaminated by heavy metals and other pollutants from industrial activities. This pollution has made it difficult to grow crops in the area and has also had a negative impact on the health of the city's residents.

Question is simple: For how long will we accept a transition where the “green” color of the transition can be really challenged ?

Second, Beside the pollution topics, human rights needs also to be considered as an increasing number of mines, especially the artisanal ones, are not respecting the minimum regulation when it comes to wellbeing. Let’s have a look at the Shabara artisanal mine (Picture in the introduction), in Republic Democratic of Congo, which is both one of the largest cobalt mines in the world and one of the most dangerous, with very poor safety standards and rampant human rights abuses.

In this mine, miners work more than ten hours a day while being exposed to dust, fumes, and dangerous chemicals. They are often paid less than the minimum wage, and they have little or no bargaining. Children as young as six years old can be seen working in the mine, often alongside their parents.

Some children are even forced to work to support their families. Others are orphaned and have no other means of survival. Still others are trafficked into the mine and forced to work.

The Congolese government and the international community have taken some steps to address the problem of child labor in the Shabaka mine. However, there are clearly more needs to be done to protect children from the dangers of working in the mine.

For this second point, question is also simple: How long will we accept a transition if labour conditions in mines do not fit with the minimum ?

A holistic view of the value chain considers the full range of environmental and social impacts of energy production and consumption. This includes the impacts of mining and processing raw materials, manufacturing and transporting energy technologies, and operating and decommissioning energy infrastructure.

It is important to consider the public's concerns about human rights and pollution when developing and implementing energy transition policies and projects. The public is increasingly aware of the environmental and social impacts of energy production and consumption, and they are demanding a transition to a clean and just energy system.

If we do not take into account the public's concerns, we risk facing opposition to the energy transition. This could delay or even derail the transition, and it could also lead to social unrest and instability.

To avoid these risks, we need to ensure that the energy transition is truly green. This means adopting technologies that are clean and sustainable, and it also means ensuring that the value chain is free from human rights abuses and pollution. The energy transition must be green, not just in terms of the technologies we adopt, but also in terms of the way we produce and consume energy.