July 03, 2022, By Irina Slav for Oilprice.com
The energy transition
has been set by politicians as the only way forward for human civilization. Not
every country on the planet is on board with it, but those that are have the
loudest voices. And even amid the fossil fuel crunch that is beginning to
cripple economies, the transition remains a goal. It is no secret that the
transition—at the scale its architects and most fervent proponents envisage
it—would require massive amounts of metals and minerals. What does not get
talked about so much is that most of these metals and minerals are already in
short supply. And this is only the start of the transition problems.
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 wide across
modern life,” a senior VP at MP Minerals, a rare-earth miner, told Fortune
this month. He added that “one third of the demand in 2035 is not projected to
be satisfied based on investments that are happening now.”
Because of the short
supply, prices are on the rise, as are prices across commodity sectors.
According to a calculation by
Barron’s, the price of a basket of EV battery metals that the service tracks
has jumped by 50 percent over the past year as a result of various factors,
including Western sanctions against Russia, which is a major supplier of such
metals to Europe.
The combination of
short supply and rising prices is, of course, making the energy transition even
costlier than it has been projected to be. It has also reminded us all that
because of these metals and minerals, which are exactly as finite as crude oil
and natural gas, the transition is not towards a renewable-energy future. It is
towards a lower-carbon future. And this future may perpetuate some of the worst
models of the past we want so much to leave behind.
A lot of the battery
metals that the energy transition needs are sourced from Africa, a continent
fraught with poverty, corruption, and political uncertainty. 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.
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Based on this evidence,
it appears that besides non-renewable, the energy transition appears to not be
very socially conscious. In other words, the ESG investment movement, which
focuses on transition companies, might, in fact, be a movement that rewards
companies that are neither very environmentally nor socially friendly. At least
not in Africa. And there are no white hats because, as Van Staden says, “The
entire logic of the battery metals race is to secure national prosperity at
home—not in Africa.”
It could perhaps be
argued that unlike the last time—the Industrial Revolution—this time, we have a
lot more mechanisms 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 involved don’t
want to eliminate it, which appears not to be the case with mining companies
and resource-rich African governments. That’s the problem with corruption; it
is hard to uproot. Corruption, in turn, affects environmental standards and
fair compensation for workers, and the resource curse keeps its stranglehold on
the continent.
The good news is that
all these problems with the transition were more or less taboo until recently.
Now they are being talked about more and more, and this would hopefully lead to
a readjustment of goals or at least timelines to make them more realistic.
Maybe, just maybe, the just transition idea will gather speed as well.
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