What they are and why they matter
An important environmental trade-off to manage in the energy transition towards renewables is ‘green conflict materials’. These include nickel, cobalt, and lithium, which are particularly crucial for batteries and other equipment in wind and solar farms – demand for which is increasing rapidly in line with renewable deployments. Extracting and using these inputs is forecast to be significantly damaging from an environmental perspective as identified metal and mineral reserves are proving increasingly difficult to extract. There is also potential to fuel social conflict and inequalities where reserves are found, including in countries such as the Democratic Republic of Congo, which holds the world’s largest share of cobalt reserves. Mineral development is now encroaching into remote and often little-disturbed locations, from mountain tops to beneath ice sheets. Decisions are about to be made on beginning commercial deep-sea mining for minerals used extensively in minerals; seabed mining techniques are new, and the extent and severity of the potential impacts on deep ocean ecosystems are not yet fully understood.
The traceability of green conflict materials is important from a supply chain regulation perspective. Governments are considering both sealing off and increasing access to fragile ecosystems that may host conflict minerals (e.g., oceans, glaciers, salt flats), potentially sparking social tensions. This could impact business and industry players in renewable energy deployments, as well as other supply chains that use these materials. Regulators may consider addressing supply chain risk by increasing requirements to trace raw materials to sustainably and ethically produced sources, which could increase compliance costs for businesses. Many producer countries, including Chile, are also developing plans to nationalise the production of key minerals, such as lithium, with greater state control expected to boost production and protection of biodiversity while potentially introducing greater barriers to production at scale and more red tape. Circularity requirements may also be imposed; for instance, extended producer responsibility (EPR) frameworks to reuse green conflict minerals at a product’s end-of-life stage. Regulatory positions are currently unclear and nascent, as are the underlying science and economics behind using such minerals at the scale required to meet decarbonisation objectives.
An opportunity for business leadership
These developments could have significant implications well beyond the mining sector. This applies both from the perspective of increasing the share of renewables in private companies’ direct business and supply chains, as well as in the wide variety of products that could contain green conflict minerals. There is a clear window for end-users of green conflict minerals to be thought leaders in this space and provide perspectives on best practice policies, circular business models, and traceability schemes to address potential risks, as well as to understand the long-term economic impact of different scenarios for demand and supply of these inputs.
Circular models in renewables may also present an opportunity for private sector firms to develop new product strategies. For instance, a large potential opportunity from the collection, repair, resale, and recycling of critical metals used in renewable energy could be available after 2030, once sufficient materials from the first wave of used materials recovered from older solar plants and wind farms built in the 2000s and early 2010s becomes available. By some estimates, waste arising from end-of-life clean energy infrastructure is projected to grow up to 30-fold over the next 10 years, presenting significant opportunities to reduce the consumption of scarce raw materials by recycling metals and other valuable resources back into production systems. For instance, materials used in Solar PV cells that could be profitably recovered include silicone, plastic, copper, cobalt, and lithium. In the short term, substituting rare earth materials with alternatives that are more environmentally sustainable and available may have the most impact. Following the 2010 price peak in neodymium (a critical material in wind turbines and electric vehicles), for example, producers found ways to either need less neodymium or substitute it with other materials, such as lanthanum and cerium, including by developing and deploying rare-earth-free turbines.
How Access Partnership can support advancing this agenda
Access Partnership works with a variety of clients to provide diversified support in this rapidly evolving space, including:
- Understanding the long-term economic impact of using green conflict minerals: We have the tools and expertise to develop new thought leadership in this space that provides a quantitative factbase on the economic, environmental, and social implications of using green conflict minerals, as well as the impact of potential regulations and new business models.
- Monitoring regulations in relevant jurisdictions: We support our clients with policy monitoring in key producer jurisdictions and commodity supply chains, regularly tracking the latest developments through briefing documents that outline the implications for their regulatory engagement and business strategy.
- Developing a regulatory position and advocacy pitch: Leveraging policy monitoring, we have deep expertise in working with our clients to better develop policy advocacy that supports better management of the risks and opportunities arising from green conflict materials, both directly with governments and via multilateral platforms such as COP conferences and APEC.
- Prepare for change: We work with our clients to understand material risks in their supply chains to help prepare for changes in sourcing regulations, with a view to building supply chain resilience in the long term. We also support our clients in working with local producer communities to manage the impact on livelihoods and mitigate conflicts.
Interested in working with us? Reach out to Shivin Kohli at [email protected] to learn more.
Sources
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International Institute for Sustainable Development (2018), Green conflict minerals: The fuels of conflict in the transition to a low-carbon economy. Available at: https://www.iisd.org/system/files/publications/green-conflict-minerals.pdf
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Temasek, WEF and AlphaBeta (2021), New Nature Economy: Asia’s Next Wave. See pg. 42. Available at: https://alphabeta.com/wp-content/uploads/2021/09/210917-new-nature-economy-asia_high-res_spread.pdf
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European Environment Agency (2021), Emerging waste streams: Opportunities and challenges of the clean-energy transition from a circular economy perspective. Available at: https://www.eea.europa.eu/publications/emerging-waste-streams-opportunities-and
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WEF (2022), Decision-Making on Deep Sea Mineral Stewardship: A supply chain perspective. Available at: https://www3.weforum.org/docs/WEF_Decision_Making_on_Deep_Sea_Mineral_Stewardship_2022.pdf
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Atlantic Council (2023), “Lithium drives the energy transition. Will Chile’s plan to nationalize production be a speed bump?” Available at: https://www.atlanticcouncil.org/blogs/new-atlanticist/lithium-drives-the-energy-transition-will-chiles-plan-to-nationalize-production-be-a-speed-bump/
