There is a glaring problem in the energy transition that not many people are acknowledging.
It is being built on the back of finite resources, and the mining industry is already warning that there aren’t enough metals for all the batteries the transition will require.
Because of the short supply, prices are on the rise, as are prices across commodity sectors.
Politicians have declared that the energy transition is the only way forward for human civilization.
Not every country on the planet supports it, but those that do are the most vocal.
Even as the fossil fuel crisis threatens to cripple economies, the transition remains a goal.
It is no secret that the transition, at the scale envisaged by its architects and most ardent supporters, would necessitate massive amounts of metals and minerals.
What is rarely mentioned is that most of these metals and minerals are already in short supply.
And this is only the beginning of the transition issues.
Mining industry executives have been warning that there is not enough copper, lithium, cobalt, or nickel for all the EV batteries that the transition would require. And they have not been the only ones, either. Even so, the European Union just this month went ahead and effectively banned the sales of cars with internal combustion engines from 2035.
“Rare earth materials are fundamental building blocks, and their applications are very broad across modern life,” said a senior VP at rare-earth miner MP Minerals this month.
He went on to say that “one-third of the demand in 2035 is not expected to be met based on current investments.”
Prices are rising across commodity sectors as a result of the scarcity of supplies.
According to Barron’s calculations, the price of a basket of EV battery metals tracked by the service has increased by 50% in the last year as a result of various factors, including Western sanctions against Russia, a major supplier of such metals to Europe.
The combination of limited supply and rising prices, of course, makes the energy transition even more expensive than anticipated.
It has also reminded us all that the transition to a renewable-energy future is hampered by these metals and minerals, which are as finite as crude oil and natural gas.
It points to a lower-carbon future.
And this future may perpetuate some of the worst models of the past that we so desperately want to abandon.
Many of the battery metals required for the energy transition are sourced from Africa, a continent riddled with poverty, corruption, and political unrest.It is also a continent that is currently threatened by a new sort of colonialism because of the energy transition.
In a recent analysis for Foreign Policy, Cobus van Staden, a China-Africa researcher from the South African Institute of International Affairs, wrote that the dirty secret of the green revolution is its insatiable hunger for resources from Africa and elsewhere that are produced using some of the world’s dirtiest technologies.
More importantly, van Staden added, “What’s more, the accelerated shift to batteries now threatens to replicate one of the most destructive dynamics in global economic history: the systematic extraction of raw commodities from the global south in a way that made developed countries unimaginably rich while leaving a trail of environmental degradation, human rights violations, and semipermanent underdevelopment all across the developing world.”
It is difficult to argue with this forecast if you know the history of resource exploitation in Africa. Sometimes called “the resource curse” and commonly used for oil, it has been in fact, a notable feature of the colonial and post-colonial period. Van Staden notes human rights violations, corruption, and the perpetuation of low labor and environmental standards, and he also notes that pretty much all foreign businesses in Africa’s mining sector are doing all this.
Based on this evidence, it appears that, aside from being non-renewable, the energy transition is not very socially conscious.
In other words, the ESG investment movement, which focuses on transition companies, may in fact reward companies that are neither environmentally nor socially friendly.
Not in Africa, at least.
And, as Van Staden puts it, “the entire logic of the battery metals race is to secure national prosperity at home—not in Africa.”
It could be argued that, unlike the previous time—the Industrial Revolution—this time there are far more mechanisms in place to protect human rights.As true as that may be, there hasn’t been a lot of progress on that in the Democratic Republic of the Congo, for example, a huge country that is key for the transition because of its cobalt wealth.
Even with these mechanisms, there is no way to eliminate corruption unless all parties involved are unwilling to do so, which appears to be the case with mining companies and resource-rich African governments.
That is the problem with corruption; it is difficult to eradicate.
Corruption, in turn, has an impact on environmental standards and worker compensation, and the resource curse maintains its stranglehold on the continent.
The good news is that until recently, all of these transition issues were considered taboo.
They are now being discussed more frequently, which should lead to a revision of goals or, at the very least, timelines to make them more realistic.
Maybe, just maybe, the idea of a simple transition will gain traction as well.