Written by Ryan McGuine //
There is a profound shift taking place in the way the world produces and consumes energy — from sources with high power densities and high carbon intensities, toward low power densities and low carbon intensities. In order to achieve such a transition fast enough to prevent the worst effects of climate change, a simultaneous reduction of existing fossil fuel assets and buildout of clean energy assets is needed. However, clean energy technologies still depend on natural resource extraction (technologies like wind turbines and solar panels are less energy dense than fossil fuels, so they actually need even more physical materials per unit energy than fossil fuels). As such, the transition from a world where energy is embedded in a resource, to one where technology is the resource, might be better conceptualized as a shift toward the extraction of different resources, rather than the extraction of fewer.
Today, most of the energy consumed globally is in the form of either fossil fuels directly, or electricity generated from fossil fuels. Going forward, the energy system will depend less on fossil fuels, and more on electricity generated by solar panels and wind turbines, and stored with large batteries. All of those technologies depend on a range of metals and minerals. Demand for graphite, lithium, and cobalt could increase by 450% by 2050 compared to 2018 levels, and prices for cobalt jumped by 5 times between 2016 and 2018 reflecting the rapid growth. Supply for cobalt has since responded to bring the price back down, but such volatility has spurred concern by companies and governments about the short-term supply of these critical metals and minerals.
Fossil fuels are extracted in a variety of ways, depending on the fuel. For example, oil is drilled from the ground in conventional wells on a large scale, on a smaller scale by individual well-heads, and sometimes via fracking. Coal is mined in gaping open pits or deep underground, while natural gas is extracted as a byproduct of crude oil drilling, or via fracking of shale oil and tight oil formations. On the clean energy technology side, some minerals like copper and cobalt are mined in large open pit mines, while lithium is extracted by pumping brine to the surface, where it undergoes alternating periods of soaking, evaporation, and filtration. One unique aspect of mineral extraction is that a large portion of total supply is extracted by small-scale “artisnal miners.” This informal mining is usually done under the nose of governments because it involves sketchy equipment and close contact with toxic chemicals.
The world has extracted a lot of natural resources over the last 50 years, but “reserves” of most metals, minerals, and fuels are higher today than they were in the 1970s due to semantics — reserves are merely a working inventory of how much resource is thought to be economically extractable at one moment in time. The constantly-shifting economics of natural resources is an important phenomenon: while the total amount of some resource in the earth cannot change, the depletion of certain reserves, coupled with innovation in both extraction and consumption, causes resources once deemed subeconomic to become economic over time. Thus, while there should be work done to identify the critical metals and minerals in shortest supply, concern about their long-term supply is probably overblown.
Clean energy materials involve pollution at both ends of their life cycle. At the beginning, mining creates both local and global pollution. For example, open pit mining involves heavy machinery scraping and driving over the ground, generating lots of particulate matter; rocks containing metal ore are often high in sulfides, and exposing them can acidify water and soil near mines; processing rare earth elements uses hazardous chemicals, creating both solid waste and wastewater; and brine mining can damage water quality and reduce water levels. Further, mining is very energy intensive, accounting for about 4-7% of global carbon dioxide emissions, and expanding mining operations can negatively impact biodiversity. At the end of their lifetimes, clean energy technologies leave behind a substantial amount of scrap materials that need to be disposed of. The waste from solar panels alone could reach 90m metric tons by 2050, or roughly twice the current global volume of e-waste.
The two main ways of reducing environmental degradation from mining are either instituting environmental regulations, or adopting new technologies like air quality control systems on smelting furnaces, recycling waste water and layering tailings paste, and increasing focus on energy management. The only environmental regulations currently in place are national ones (some free trade agreements include environmental measures, but the arbitration process is often grueling). However, since both regulations and technology tend to be better in wealthy countries, they should collaborate with poor countries to establish sets of best practices, and help create an international protocol coordinating existing national environmental laws to simplify compliance. To fix disposal issues, merely getting the incentives right in rich countries would be a big step forward because secondhand markets can make the economy more circular on their own. Governments should prevent manufacturers from making electrical equipment irrepairable, ban materials which cannot be recycled, and invest in research into new materials which can be recycled more.
Mineral wealth can also cause social problems within countries. Production of critical minerals today is more concentrated than oil or natural gas, and many of those countries have poor governance and low levels of state capacity. When coupled with economies dominated by natural resources, a condition known as the “resource curse” can arise. Due to economic distortions associated with a booming sector, as well as political conflict for the unearned resource income, countries rich in natural resources often experience worse development outcomes than their peers. Today, most of the world’s mining is conducted by just a handful of massive companies, and informal artisnal mining operations can deprive governments of taxes and finance violence.
There are also a whole host of strategic and geopolitical issues associated with minerals. Historically, OPEC, Russia, and the USA have been crucial players in maintaining a regular flow of fossil fuels. In addition to the fact that the large reserves of critical minerals are located in different countries than fossil fuel reserves, though, the entire energy security paradigm is different for minerals. Whereas fossil fuels are consumed continuously, minerals are one input of a complex manufacturing process, so future influence will come from either the possession of raw resources or innovation in the final technology. Additionally, the manufacturing portion of the mineral supply chain is relatively longer than that of fossil fuels. As such, there is less risk from high prices due to supply constraints, but more risk from insufficient manufacturing capacity or slow infrastructure construction.
When it comes to preventing materials sourced from mines that violate human rights, or illegally recycled materials, from reaching global markets, transparency is a good start. But even though the diamond industry has done this successfully, it is harder to do so with batteries because their supply chains are more complex. What is ultimately needed is a stronger, more unified set of policies agreed to by all countries in the clean energy supply chain, as well as collaboration between governments and mining companies to provide basic services like education, healthcare, and infrastructure. Further, rich countries should place more emphasis on manufacturing than material supply. While clean energy infrastructure does not scale according to Moore’s Law, many integral components do. Thus, the attributes necessary for energy dominance in the future will be similar to technology more broadly — entrepreneurship, innovation, and dynamism. By rapidly scaling up manufacturing capacity, countries can win influence abroad by leading the world in clean energy innovation and deployment, while generating increasing returns and creating loads of jobs.
In many ways, the current energy transition represents a tradeoff between one set of environmental and social challenges for another. Yet, it bears reiterating that replacing fossil fuels with carbon-free alternatives will have much lower impacts compared to the status quo. In order to deploy clean energy technologies as swiftly as possible, investments into mining must keep up with demand growth to keep prices low, but in doing so, it is important not to lose sight of the concerns surrounding them.