Why partnerships are critical to accelerating energy transition

Confucius said, “the man who moves a mountain begins by carrying away small stones.” Our shared mission to decarbonize the global economy can often feel just as Herculean. And while we have begun to move small stones from the foothills, great boulders remain. The sheer size and scope of the challenge ahead is daunting, and no one actor can shift the dial. No one nation alone can deliver the green energy transition. If we are to truly decarbonize our economies and realise a nature positive, equitable and fair climate future, we must work together.

To ensure proper and durable risk management, coordinated efforts across supply chains, together with public and private sector collaboration, must become the order of the day. From the upstream producers of critical raw materials (CRMs), to downstream manufacturers, to merchants, financial markets, and consumers, we all have an important part to play in the green energy transition. Moreover, it is incumbent on each national government and supranational institution, to work in close partnership with one another, to further the policy commitments laid down in the Paris Agreement.

I am encouraged by the policy commitments made by some of the world’s most important actors. In June, the Chinese government announced a $72.3 billion stimulus package to maintain purchase tax exemptions for consumers, stimulating growth within domestic markets whilst boosting the nations’ electric vehicle (EV) export capacity.

In the US, the Inflation Reduction Act (IRA) has established production and investment tax credits for EV batteries and other renewables. The IRA makes new and used EVs more affordable for consumers whilst enabling manufacturers to retool existing facilities and build new battery manufacturing and critical mineral processing plants.

And in the EU, the Critical Raw Materials Act (CRMA), proposes that by 2030 the EU should extract 10% of the minerals it requires from domestic markets, boost recycling capacity for those materials to 15%, and be able to process 40% of its annual needs of each strategic raw material.

Such policy initiatives from the world’s preeminent EV producing nations and regions are indeed welcome, but there can be no doubt that these actions can only be considered as small stones on the decarbonization mountainside. While we can expect regulatory support to continue to gather pace across the world, there is a real danger that in the face of technological and economic competitiveness, cooperation could fall away.

Of course, there is the siren song of the short-term win: protecting your own proprietary material, granting an economic advantage over market rivals. But the perilous global backdrop of today demands a different course of action. Instead, the green energy transition requires a new coalition of willing nations, partners, and actors, to develop truly circular energy value chains, and to guarantee the supply chains of critical minerals that make their way across the world’s highways and oceans.

And whilst supply chain security will always be paramount, it cannot be forgotten that the production of CRMs will remain the most important driver of the energy transition. Indeed, failure to meet minerals and metals demand could have a seismic negative impact on global EV production and adoption rates. It is my firm belief that all mining companies should not just find greater cause to work together, but also find greater courage in exploring new, higher risk jurisdictions. There are not enough active minerals supplier nations.

By supporting exploration programmes in locations such as Saudi Arabia, Indonesia and India, the global mining industry can support supply chain diversification and consequently create greater confidence in our vitally important CRM supply chains. In this regard, cross-sector collaboration will be key. Over the next three decades, only public-private sector partnerships can deliver new, technology driven, land and sea infrastructure networks with the capacity to support the growing demand for CRMs.

The green energy transition will require one of the biggest feats of industrial scaling in human history. Though, industrial scaling cannot be realised at the expense of the communities that live and work in proximity to mining, processing, and manufacturing operations. It is an imperative that our guiding environmental, social, and corporate governance (ESG) policies and commitments continue to determine our actions. We must look at scaling up supply in a way that is ESG compliant – encouraging investment in the sector and giving consumers confidence that the product they buy is contributing to the sustainable development of the global economy, rather than detracting from it.

The IEA predicts that mineral requirements will need to be quadrupled to create enough clean energy technologies so that we may realise the Paris Agreement goals, by 2040. Each of us has a part to play. Whether a government, a business, or a charity, it is incumbent on each of us to take a stand and work together to deliver the green energy transition. And in doing so, collectively achieve net-zero.

This blog is part of a series, written by members of the Securing Minerals for the Energy Transition (SMET) initiative, led by the World Economic Forum. The initiative seeks to identify and characterize the risks related to the increasing gap between the demand and supply of critical minerals needed for the energy transition and to propose strategies for their collective management.