Pride & Prejudice of Energy Transition

Since last decade, climate change is the biggest problem of humanity till date and energy transition is the response to the same. Across stakeholders, the trend has picked up the interest globally again, after a 2 years’ diversion due to Covid-19. We all fought quite well with the pandemic and now we are back to overcome bigger challenge. In last one-year energy transition has scored quite significantly in google trends (please check the image below). It touched the score of 100 as favourite word of Google in the month of November 2022 i.e. during United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, more commonly referred to as COP27.

On side notes, it is more searched in developing nations and popularity decreases as we move towards affluence. https://trends.google.com/trends/explore?q=energy%20transition 

Historically energy transition is to move from less economical and efficient form of energy to more efficient and more economic form i.e. wood/biomass to coal and then to oil and finally the emergence of gas and nuclear. Earlier transitions were more because of commercial incentive which bolstered economic growth and also allowed greater energy access to broader population.

Nevertheless, this energy transition is different and is clearly driven by the need to meet climate targets, meet the challenge of environmental change and essentially the need to decarbonize the global energy system.

According to IRENA, https://www.irena.org/Energy-Transition/Outlook, capacity additions to the global power mix have been consistently dominated by renewables in recent years. In 2020, new renewable capacity addition reached 82% of the total installed capacity, compared to 73% in 2019.

This transition would require to harness the non-fossil sources of energy like the sun and the wind. And to generate the energy from these sources we obviously need to build technologies such as solar panels, windmills, batteries etc. Further all these require to mine huge quantities of non-renewable materials which would need bigger mines as compared to what we have today for coal or any other mineral.

Our ticket to green growth, in other words, is digging deep in the environment. Now we know that mining can have grave impacts for local ecosystems and populations. But the point is how much and where we’re going to have to dig, and what that means for climate security and for geopolitics.

History tells us that when the dominant source of energy changes, power relations change as well. Countries that can transform energy to their own advantage, can gain the upper hand economically and politically, and then can put themselves at the centre of the global order. Think of the United Kingdom and coal, for instance, or how oil determined the ascendance of the US to a global superpower.

What that tells us is that the access to and processing of energy literally materializes into the ability to shape geopolitical power dynamics. And today, we’re facing the challenge of implementing the biggest energy transition in the history of humankind under a ticking climate clock. The race is on for a new generation of power. At the heart of which we have all of the critical materials that we need to decarbonize on the one hand and digitalize on the other.

So what’s happening with them? On the demand side we’re at the beginning of an exponential demand curve. If you take lithium as a proxy, a key component for batteries, global production already increased by just short of 300 percent between 2010 and 2020. Isn’t it a good news? It means that decarbonisation is in motion.

The not so good news is that our “clean” future is going to be more materially intensive than before. If you take a simple measure for it, the International Energy Agency (IEA) https://www.iea.org/ study indicates that with the current level of innovation, an electric car requires six times more mineral inputs than a conventional car. And this is only the start. The World Bank https://www.worldbank.org/en/home tells us that with the current projections, global production for minerals such as graphite and cobalt will increase by 500 percent by 2050, only to meet the demand for clean energy technologies.

Now let’s look on the supply side Who currently exploits and processes minerals and where deposits to meet future demand are located tell us exactly how the transition is going to change geopolitics. So if you look at a material such as lithium, countries like Chile and Australia tend to dominate extraction, for cobalt, the Democratic Republic of Congo dominates extraction, for nickel, countries like Indonesia and the Philippines tend to dominate extraction and for rare earths, China dominates extraction. For all aforementioned extractions, China dominates processing. So, whole global balance of power is getting rehauled with this transition which is off course natural phenomenon.

China is currently trying to gain access to more mineral resources through its Belt and Road Initiative. The United States and Europe are both thinking of reshoring critical mining and processing and orienting some of their international partnerships to facilitate access to more mineral resources. Japan is exploring some of its oceanic marine reserves to build strategic reserves. Now at first sight, Russia’s invasion of Ukraine has nothing to do with whatever is being mentioned above. But Ukraine happens to be mineral rich. It also happens to be one of only two countries that had struck a partnership with the European Union to diversify and develop supply chains for critical raw materials. That partnership was specifically designed to help the EU decarbonize and in the process to better integrate with Ukraine from a political and economic perspective. Eight months after the partnership was struck, the invasion took place. Now, mineral resources may not explain everything about the war. But they certainly can’t be ignored in analyzing the events.

Because when it comes to the race for critical raw materials, what’s actually happening is that we’re headed right back into a new scramble for resources, at the heart of which you find all of the big players eyeing countries with vast mineral deposits. And yet so many of these countries that are located, for the most part, in Africa, in Latin America, in Central Asia and in the Indo-Pacific. The International Institute for Sustainable Development (IISD) https://www.iisd.org/story/green-conflict-minerals/ produced a map representing all of the different materials that we need in order to decarbonize, their geographic location and their deposit size. As it so happens, a lot of the deposits are located in countries that rank fairly high on corruption indices.

Another map was published by Notre Dame Institute https://kroc.nd.edu/ which shows the countries that are climate vulnerable are also the ones that are resource endowed. Also, those big ecosystems that we need to protect and regenerate in order to stabilize the global climate regime? To reboot the hydrological cycle and to protect biodiversity? Many of these big ecosystems are located in the same fragile countries that were mentioned in map of IISD. They also happen to sit on vast mineral deposits. Changing or eliminating these ecosystems through mining, through deforestation or anything else would undermine ecological integrity.

So, the big question – is this fight against climate change pushing environment and humanity towards more dangerous path?

Our modern economies have advanced and grown for two centuries through the gigantic blind spot of fossil fuel exploitation and its unintended consequences. The big lesson here is that we can’t afford to just shift to a different set of energies, technologies and materials without paying attention to the unintended consequences. The stakes are too high. They involve our future and bigger question is they also involve our humanity and nature.

Decarbonisation is the way forward. There’s not one single doubt allowed about this. But the way forward also demands of us that we start imagining our future beyond decarbonisation already. A climate-safe future is a necessary condition for peace. But we won’t achieve a climate-safe future without peace among ourselves and with environment. And to build peace, we need to shake things up in international politics and in the way that we do business and economics.

So where do we start?

• Science. Science can tell us exactly where it is safe to mine and where it isn’t, from an ecological perspective. Where it is not safe to mine, we need to act as though these minerals did not exist and establish protected areas under which no mining licensing can take place. Where mining does take place, we can integrate socioeconomic and ecological regeneration within business models.
• Global public good regime. If decarbonisation is a matter of human survival, then the materials that we need in order to decarbonize should be managed collectively under a global public good regime. The alternative is conflict and planetary breakdown. So while we figure out exactly how to design this regime, the countries at the heart of the scramble for resources should receive adequate support, competent and coherent support to face off the joint challenges of geopolitical competition and climate disruptions on the other hand. In other words, investing into conflict resolution, into the fight against corruption and into context-specific resilience, should be top priorities of our global energy transition.
• New ways to do business and economics. We can’t just switch from one energy system to another. What we need instead is to reduce our need for energy and for materials. And that starts with massive public and private investments into circular economic models that favour recyclability and material substitution. Followed by developing ecological assessments for supply chains that account for greenhouse gas emissions, but also for water, soil, biodiversity, material and energy footprint all at once.

• Innovation. All of this can only happen if we start shifting our thinking about innovation. Innovation in our times is about bringing back economic footprint within planetary boundaries. Anything else, even the coolest of new products, if it isn’t aligned with that goal, it’s not innovation, it’s business as usual.

So, successful energy transition entails a regime which can engulf everything which comes under social, political, economic and most importantly environmental security.