OP-ED | Minerals for the Energy Transition: Can We All Work Together?

20 sept. 2024

Connie Hedegaard is former EU Commissioner for Climate Action; Jason Bordoff is former White House Director for Energy and Climate Change and Director and Founder of the Center on Global Energy Policy at Columbia University; Ma Jun is Director of the Chinese Institute of Public and Environmental Affairs; Izabella Teixeira is Co-Chair of the International Resource Panel and former Minister of the Environment in Brazil; Juan Carlos Jobet is former Minister of Mines in Chile; Bogolo Kenewendo is former Minister of Investment, Trade and Industry in Botswana; Kandeh Yumkella is former Special Representative of the UN Secretary-General for Sustainable Energy for All; Bruno Oberle is former Director of the International Union for Conservation of Nature; Sheila Khama is Non-Executive Director, Base Resources and The Metals Company.

As the world races toward a future powered by renewable energy, critical minerals have never been so sought-after. These essential components — including copper, cobalt, lithium and rare earth elements — form the backbone of technologies driving the green revolution. But geopolitics and a divided world get in the way: while the potential lack of minerals threatens our collective capacity to achieve that energy transition, we face export restrictions, competing initiatives excluding one another, divergent regulatory standards and investments that are scattered at best, absent at worst. We know that no country can go it alone and that climate change can only be tackled globally, but there is a continued lack of collective will to solve these challenges.

Why ask for more global collaboration towards more action, more norms, and more oversight? Some might argue that the free market will resolve these issues – let the “invisible hand” of Adam Smith do its job: demand will increase, prices will rise, and supply will adjust. And yet textbook market failures abound: unaccounted negative externalities, far from perfect competition in some markets, information asymmetry leaving it in the hands of opaque traders and high transaction costs.

The cloud of reputational risk hanging around the mining industry certainly doesn’t help. Beyond the economic costs, feeble returns and uncertainties that already make risk-averse investors recoil, there is the historical legacy of such mines: cases of soil pollution, human rights abuse and water stress all make the necessary social license to operate precariously. And what about at the end of the mining cycle? What about closure and rehabilitation? How does the market work to cover those costs? 80,000 inactive and unused mine sites across Australia, around 82% potentially requiring rehabilitation. That could await us in the future on a global scale without purposeful and coordinated global action. Fragmenting global supply chains, financing mining projects without addressing negative externalities, and trading minerals on opaque markets are inefficient and costly approaches for all stakeholders.

There is a need to find consensus, reconcile diverging voices and interests, and nudge the world towards our collective goal: a sufficient supply of responsible minerals to achieve the energy transition at the global level. Doing this will require strengthened international collaboration on five aspects:

Despite their crucial role in our future, no international agreement, agency, platform, or fund is solely dedicated to transition minerals. Addressing these challenges will mean creating new frameworks and tools.
There is a dire need for increased investment, whether through public-private partnerships, international funds, or other instruments to assuage risk-averse actors and secure requisite funds for projects along the supply chain. It has been estimated that US$1.7 trillion over the next 15 years in mining investment will be needed to achieve the energy transition, and we are far from reaching that target.
The participation of developing resource-rich countries in this work is crucial. We need to find ways to assist them in transforming their mineral resource wealth into economic development. Value-added wealth creation cannot be isolated; it requires essential conditions such as infrastructure, rule of law, transparency, and skilled workers. Capacity-building practices and incentives will be vital in establishing these pre-existing conditions.
The market for minerals will grow, and more transparency, regulation, and oversight will be needed to build trust and develop existing derivatives markets.
Finally, global cooperation should be enhanced on environmental and social sustainability issues. This may involve harmonising existing standards, ensuring the economic viability of green minerals, or developing a global framework for circularity. The energy transition must not come at the expense of biodiversity and social conflict.

We all recognize the immense challenges surrounding critical minerals and the energy transition. These issues demand urgent and concerted action, echoing across continents and sectors. In response, we launched the Global Council for Responsible Transition Minerals on June 10th, in Ben Guerir, Morrocco, a multi-continental, high-level, and independent body.

This Council is not just another committee. It represents a diverse and autonomous coalition of leaders from governments, civil society, and the private sector, united by a common mission: to forge a more sustainable and cooperative future. The Council aims to break down silos and foster genuine collaboration by identifying shared interests, shaping the conversation with insightful policy recommendations, and leveraging the collective expertise and influence of its members.

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