Geopolitical realities of the energy transition supply chain: energy security risks and opportunities

Abstract

The market for electric vehicles (EVs) appears to be ‘unstoppable’, according to a recent article in The Economist. Moreover, BloombergNEF is forecasting that sales of EVs may skyrocket to 40 per cent of all purchases in 2030 from today’s 10 per cent. To meet that audacious number will require tens of millions of batteries that will in turn require enormous quantities of critical minerals. However, a recent essay in Foreign Affairs identifies potentially troubling realities about the world’s rush towards a green energy future. One of the key realities involves the general absence of sufficient supply chains for critical minerals, particularly as they relate to the production of EVs. Consequently, it is imperative that policymakers begin to deal with this in a serious and considered manner now, since technologies involving clean energy may drive mineral demand for critical minerals up by 400 per cent by 2040. Two key critical minerals illustrate the challenge that lies ahead. In 2040, the demand for lithium, a key mineral for batteries, may be 13 times greater than in 2020. Similarly, Standard & Poor’s, a global market research firm, has predicted that between 2022 and 2035 the demand for copper will double. All EV types use ‘considerably more copper than traditional vehicles with internal combustion engines’. Not surprisingly, these minerals are rarely found exactly where they are needed for product production. Thus, the matter of energy security – often thought about in the context of oil and gas – arises again, but in a different scenario. Historically, energy security ‘has been defined as the availability of sufficient supplies at affordable prices. But that simple definition no longer captures reality;