The clean energy transition is heralded as one of the greatest economic opportunities since the Industrial Revolution, according to global energy policy expert Jason Bordoff. In 2022, investments in renewables reached a record high of $1.3 trillion, marking a 70% increase from the pre-pandemic levels of 2019. This surge is expected to continue as the world races to cut greenhouse gas emissions and limit global warming to 1.5°C above pre-industrial levels.
Speaking at the World Economic Forum’s Special Meeting on Global Collaboration, Growth and Energy for Development, Bordoff, the Founding Director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, emphasised that the increasing pursuit of renewables could shift the global power centre. He discussed the economic opportunities and the urgent need for sustainable investment in green infrastructure, highlighting the evolving geopolitics of the energy transition.
Bordoff explained that the transition will require a significant amount of critical minerals, with certain countries naturally having an abundance of these resources. Currently, the largest suppliers of oil and gas – the US, Russia, and Saudi Arabia – each produce between 10% and 20% of the world’s supply. However, the production of critical minerals such as lithium, nickel, cobalt, copper, and rare earth elements is concentrated in specific countries, with some producing more than half of the world’s supply of these elements.
Mining today is concentrated in certain places, with more than half of cobalt coming from the Congo, lithium from Australia, and rare earth elements from China. This concentration gives a few countries a significant position in the global supply chain. Despite the rapid growth of clean energy, Bordoff cautioned that the current scale and magnitude of growth are insufficient to drive down emissions and fossil fuel demand to meet the Paris Agreement targets.
The demand for critical minerals is projected to surge, with lithium demand expected to increase ten-fold or more, according to a whitepaper from the World Economic Forum on the future demand for these minerals. Bordoff noted that countries like China have recognised the economic opportunity presented by green technology and have secured a dominant position in the supply chain, not through geological abundance but by refining and processing capabilities. This dominance, however, can be eroded over time with policies to build industrial capability elsewhere.
Despite the significant presence of these minerals worldwide, mining currently occurs in a limited number of places. Bordoff warned that the adoption of green technology and the transition to a net-zero economy would bring geopolitical risks and challenges. He stressed the need to be mindful of the foreign policy, national security, and geopolitical implications of the transition to avoid exacerbating existing geopolitical problems.
Bordoff called for governments and multilateral organisations to collaborate and enable the rapid deployment of capital needed for the sustainable roll-out of green technology while minimising geopolitical risks. He emphasised the importance of supporting countries with an abundance of the metals and minerals needed for the energy transition. Developed countries, he suggested, should increase assistance and financial support to these nations.
In conclusion, Bordoff highlighted that tax mechanisms, regulation, and mandates that enable investment in clean energy can help realise the energy transition opportunity. This approach would ensure that companies see even greater returns from clean energy investments compared to hydrocarbons.
Alkemy Capital Investments plc (LON:ALK) is focussed on developing projects in the energy transition metals sector. Tees Valley Lithium is developing a state of the art lithium hydroxide plant at Teesside, UK. Tees Valley Graphite is developing the UK’s first natural graphite active anode material processing facility at the ‘plug-and-play’ Wilton International Chemicals Park.
