The raw truth of Europe’s raw materials – POLITICO | Popgen Tech
Admiral Dennis Blair is the chairman of SAFE, a nonpartisan energy security organization, and a former US director of national intelligence and commander of the US Pacific Command. Robbie Diamond is SAFE’s founder and CEO.
While the world’s eyes were on the United Nations Climate Change Conference COP27 in Egypt, a more low-key bureaucratic gathering took place in Brussels, working to grow the industrial supply chains needed to wean the continent from the most carbon-intensive fuel for both environmental and national security reasons.
Indeed, European Materials Week is now imbued with an added sense of purpose and urgency as Russia’s invasion of Ukraine, and some European Union members’ subsequent inevitable turn to coal to get through the winter, has exposed Europe to the harsh realities of energy security.
Being dependent on unreliable and hostile actors increases the strategic imperative to avoid new dependencies for the critical materials needed to power the green transition with solar panels, advanced batteries and wind turbines – an opportunity and challenge that is likely to be historic. constitutes an inflection point currently being shaped by various converging trends and events.
For one, as a result of recent landmark transatlantic legislation, the United States will now spend hundreds of billions of dollars on sustainable energy initiatives, technologies and supply chains. However, there is understandable consternation that the purchase of tax credits for electric vehicles (EVs) through the new Inflation Reduction Act (IRA) will benefit countries that share a free trade agreement with the United States – excluding those in the EU.
This is unnecessarily restrictive, and the US should include preference for EU and NATO members – however, this does not mean that Europeans should not play a significant role, and reap significant benefits, from partnering with North America to improve its supply chains for raw to diversify material.
The EU currently spends tens of billions of euros to subsidize the purchase of EVs, most of which are heavily dependent on Chinese-dominated mining and processing resources. Getting serious about “Made In Europe” means also getting serious about these supply chains. Europe has significant mineral processing capacity, and this could be expanded to loosen China’s grip on — and possible weaponization of — this important phase of the EV battery supply chain.
For example, the EU is already second in global processing capacity for nickel, cobalt and manganese, according to Benchmark Mineral Intelligence. Meanwhile, with limited mining and processing available domestically, many U.S. automakers are now looking for alternative sources of such raw materials so they can qualify for the IRA tax credit. Minerals however withdraw from IRA compliant countries (North America or US Free Trade Agreement partners). process in ever-growing quantities in Europe, and the resulting EV batteries will continue to qualify for the tax credit within the US
In addition, information technology such as blockchain is becoming increasingly available, enabling governments, businesses and consumers to track where materials and components come from – as well as how they are extracted and processed. Thus, democratic nations can agree to condition market access on shared human rights, labor and environmental requirements, effectively creating a “race to the top”, turning high standards into competitive advantage.
Together, the EU and North America account for nearly 45 percent of global GDP, providing enormous leverage. Other nations must either meet these standards – thus increasing their costs and limiting their price advantages – or be excluded. Given today’s supply chain imbalances, the early stage of that transition will not be easy. But if the world’s technologically advanced democracies have the will, and stick together through the preliminary turmoil, the means do exist.
European Commission President Ursula von der Leyen made the same point in her State of the Union address earlier this year, noting that Europe with “like-minded partners” can also ensure labor and environmental standards beyond its borders. We have models of cooperation to build on this – such as the former Trilateral discussions (including the EU, US, Japan – and now also Canada and Australia), which address what “responsible” mining and permits really look like.
Finally, the consequences of Russia’s aggression in Ukraine have also exposed the risks of discarding existing sources of energy too early in the transition to a carbon-neutral economy. Even the most climate-friendly power generation systems will require enormous amounts of energy – mainly electricity. And in this capacity, the US, UK, Canada and Norway have huge natural resources to help end the EU’s dependence on Russia, even if we recognize that this is not a sustainable solution.
These priorities are all consistent with recent European policy initiatives, of REPowerEU – a plan to rapidly reduce dependence on Russian fossil fuels – to the Critical Raw Materials Act. They require widening the opening of our thinking and working together on a comprehensive approach to deliver the EU’s Green Deal and strategic autonomy
President von der Leyen led her speech by calling Russia’s aggression “a war against our energy”, as part of a wider assault on Europe’s economy, values and future. And getting our energy response right will require a shared transatlantic approach to critical raw materials, addressing today’s requirements as part of – and not in conflict with – a prosperous, carbon-neutral future