Powering the Future
Critical minerals and the geopolitics of the energy transition
Sun, wind and water are not enough to help us move past our reliance on oil, gas and coal. A variety of metals and minerals are required by the technology used to generate and store renewable energy. Wind turbines, solar panels and electric cars require large quantities of cobalt, copper, lithium and nickel. Some of these minerals, which are critical for the energy transition, are in short supply and their reserves are unevenly distributed throughout the world. Control over their extraction and processing will thus determine the geopolitics of the post-fossil age. Two new studies from the Brookings Institution take a look at two regions of global importance – China and Latin America.
The International Energy Agency (IEA) estimates that the demand for critical minerals will quadruple by 2040. Meeting global demand is therefore one of the major challenges for the energy transition – especially if it is to be done in an environmentally, socially and politically sustainable way.
China is the global leader in the processing of critical minerals. It also holds a dominant position further downstream in the supply chain, for example in the manufacturing of battery cell components and battery packs for electric vehicles. In the study “China’s Role in Supplying Critical Minerals for the Global Energy Transition”, the Brookings experts analyse how the country’s strategic position could develop in the future. They see two factors as decisive in this respect: first, the extent to which China will continue to dominate the global supply chains for critical minerals and could thus pose a risk to other countries’ energy security; and secondly, the extent to which China will tighten due diligence requirements in the relevant industries in order to minimise negative social and environmental impacts.
The global energy transition presents a unique opportunity for regions with critical mineral reserves. The second Brookings study examines one of these regions, namely Latin America. Chile, Peru and Mexico alone are home to about 40 percent of the world’s copper reserves. In addition, roughly two-thirds of global lithium reserves are located in Latin America, primarily in Bolivia, Argentina and Chile. The region also has sizeable nickel reserves: Brazil hosts 17 per cent of global reserves. In their study, the analysts describe three areas of conflict in the mining sector to which the region’s resource governance needs to respond. They concern environmental impacts, consultation with affected communities and the distribution of socioeconomic benefits. The authors then describe four potential scenarios for the future of mining in Latin America in the next ten to twenty years.
Read more in the studies “China’s Role in Supplying Critical Minerals for the Global Energy Transition” and “The Future of Mining in Latin America: Critical Minerals and the Global Energy Transition”, published in July and August 2022.
A detailed analysis of the role of critical minerals in the energy transition, including geopolitical factors, can also be found in the IEA report “The Role of Critical Minerals in Clean Energy Transitions” from 2021.
Price Caps and Relief Packages
European responses to the energy crisis
From “defence shields” to gas price caps – European governments’ attempts to shield households and businesses from soaring energy costs have resulted in a variety of measures throughout the continent. The Brussels think tank Bruegels has compiled an overview of national measures in the EU and the UK, tracking the amount of funding as well as the type of response for each country.
Energy Policy and Ukraine
Comments on the consequences of Russia’s war
Clean Skies, Clean Consciences
The path to net-zero aviation
Before the Covid-19 pandemic, global aviation was responsible for about one gigatonne of CO2 emissions – accounting for twelve per cent of global transport emissions and almost three per cent of total CO2 emissions. Aviation emissions rose by over a third between 2010 and 2019 alone and the sector could be responsible for 22 per cent of global emissions by 2050 if no efforts to reduce emissions are made. But the global energy transition poses a particular challenge for aviation. Long-haul flights, which account for two-thirds of its emissions, rely on energy-dense liquid fuels. In contrast to ground transport, electrification can thus only make a small contribution to the sector’s decarbonisation efforts. A new study by the Mission Possible Partnership and the Clean Skies for Tomorrow Coalition, backed by the aviation industry, outlines scenarios that show how aviation can still achieve net zero by 2050.
According to the study, the use of sustainable aviation fuels, or SAFs, and efficiency improvements present the main levers for decarbonising the industry. The more efficient use of fuel could reduce greenhouse gas emissions by 40-45 per cent by 2050. The contribution of SAFs is estimated to lie at 20-35 per cent for biofuels and 15-25 per cent for so-called “power-to-liquid” (PtL) fuels, which are produced from renewable energy and CO2. Hydrogen and battery-electric aircraft could make global aviation more efficient starting in the late 2030s and supply up to a third of the final energy demand in 2050. Due to their range limitations, however, they would only contribute about two per cent to the industry’s emissions reduction.
A major effort is needed for the energy transition in the skies. For instance, an average of 175 billion dollars would have to be invested annually between 2022 and 2050, and current project pipelines for SAF production would need to be scaled up by a factor of five to six until 2030. The faster the prices for renewable energy will fall, the greater the role of PtL fuels will be. But in any case, the decarbonisation of aviation will have a major impact on global energy markets, especially for the demand for sustainable biomass, but also for renewable energy and green hydrogen. A drastic increase in production capacity is therefore essential, as is prioritising the use of biomass in aviation over industries for which alternative green technologies are available, like road transport or shipping.
Read more in the study “Making Net-Zero Aviation Possible: An Industry-Backed, 1.5°C-Aligned Transition Strategy”, published in July 2022.
Mission Impossible?
How the EU can reach its 2030 climate goal
In September, the EU Parliament backed the EU Commission’s goal of increasing the share of renewables in final energy consumption to 45 per cent by 2030. It seems almost impossible to reach this extremely ambitious target within just eight years. But given the pressing problems of the climate crisis and energy security, all efforts should be made to accelerate the European energy transition. A new study by the Paris-based think tank IFRI (Institut français des relations internationales) lays out how the EU can achieve its climate target, taking an in-depth look at the role of Europe’s leading energy companies.
In order to reach its 2030 targets, the EU needs to almost triple its current total installed wind and solar energy capacity in adding around 600 GW – an enormous challenge given the current pace of expansion, according to the French experts. In past years, Europe’s leading power sector companies have not been major drivers of investment in renewable energies. Recently, however, they have pledged more than 850 GW of additional investment at the global level by 2030 and could thus provide a major contribution in Europe as well. The IFRI study analyses the role of the 20 largest energy companies in the EU in the renewable energy sector and examines current market trends, outlining steps policymakers can take to help achieve the EU’s climate goals.
Read more in the study “The EU’s Renewables Expansion Challenge Towards 2030: Mobilizing for a Mission Almost Impossible”, published in May 2022.
Green Military
Why armed forces should decarbonize
Throughout history, the military has often been at the forefront of the development and deployment of new technologies. But in the case of the energy transition, things seem to be different. Often the military sector is not even mentioned in the context of reducing CO2 emissions, despite its big carbon footprint. For instance, if they were a nation, US forces would have the highest per-capita emissions in the world, according to a new Nature analysis. It is primarily security concerns that explain the reluctance of governments to decarbonise their military. A recent study by the International Military Council on Climate and Security (IMCCS) shows why security and climate concerns do not have to be in conflict and what the path to a climate-neutral military could look like.
Military logistics is one of the central vulnerabilities that an enemy is likely to attempt to exploit in a conflict – as we can currently observe in Ukraine. One of the three main problems of the military sector’s current dependence on fossil fuels identified by the IMCCS expert group is the susceptibility to attack of both fossil fuel supplies and supply lines. The other two problems are the dependence on fuel imports, which plays into the hands of authoritarian regimes like Putin’s, and of course, the impacts on global warming and its consequences for international security.
So far, governments have been reluctant to publish emissions data for their military sectors and commitment to climate targets remains far from a given. According to the research team from the Dutch Clingendael Institute, the French Institute for International and Strategic Relations (IRIS) and the European Leadership Network (ELN), NATO and the EU should step up their efforts to achieve a carbon-neutral military to achieve a win-win-win: minimising fossil fuel-related operational vulnerabilities, undermining petro-dictators like Putin and combating climate change.
The study analyses why the decarbonisation of the military sector is a sensitive issue, what a methodology for monitoring its emissions could look like, where the greatest technological challenges lie and what the current strategy and potential future courses of action could be for NATO and the EU.
Read more in “Decarbonized Defense. The Need for Clean Military Power in the Age of Climate Change” , published in June 2022. See also the comment “Decarbonize the military – mandate emissions reporting”, published in Nature in November 2022.
Net-Zero by 2050
A roadmap for the global energy transition
The 27th UN Climate Summit in Egypt is once again shining a bright light on the discrepancy between the jointly agreed climate goals and the measures implemented so far by the participating countries. Reason enough to take another look at the comprehensive report “Net Zero by 2050”, published by the International Energy Agency (IEA) in the run-up to last year’s climate conference. The organisation lays out the concrete steps necessary to achieve the very ambitious yet still achievable goal of global climate neutrality by 2050. As we all know, global energy markets have seen drastic changes since last year. In its new “World Energy Outlook 2022”, the IEA examines the impact of the global energy crisis triggered by Russia’s war of aggression and provides an update to its Net Zero roadmap.
The IEA’s roadmap sets out more than 400 milestones on the path to greenhouse gas neutrality. These include, for example, an immediate investment freeze on new fossil fuel supply projects, a sales freeze on cars with internal combustion engines from 2035 and a carbon-neutral power sector in 2040. The scenario also calls for a quadrupling of annual additions in solar and wind capacities compared to 2020 and annual improvements in energy efficiency of four per cent until 2030, about three times the average over the last two decades.
The challenges for a swift implementation of the energy transition are enormous. But the report also emphasises the economic opportunities that such a profound transformation will provide, and not only for wealthy states. 785 million people could have access to electricity for the first time and 2.6 billion people to clean cooking facilities. In IEA’s vision, the world’s energy supply in 2050 looks completely different from today: Global energy demand is eight per cent lower, but supplies an economy more than twice as large and a population that has grown by two billion. 90 per cent of electricity will come from renewable sources, of which 70 per cent will be generated from sun and wind. The share of fossil fuels in total energy supply, on the other hand, will fall from almost four-fifths today to just over one fifth.
More details and an interactive overview of the results can be found on the website of the report “Net Zero by 2050. A Roadmap for the Global Energy Sector”, published on 18 May 2021.
The “World Energy Outlook 2022”, published in October 2022, takes a look at the current situation and updates the Net Zero roadmap.
The Geopolitics of Hydrogen
New trade routes and green industrialisation
Hydrogen is one of the pillars of the global energy transition. In order to achieve the Paris climate goal and limit global warming to 1.5 °C, all sectors of the economy must greatly reduce their emissions. This task presents a particular challenge for sectors that are difficult to electrify and have so far relied on fossil fuels, such as the steel and chemical industries or shipping, aviation and heavy road transport. It is here that green hydrogen opens up new possibilities for decarbonisation. In a comprehensive study, the International Renewable Energy Agency (IRENA) analyses the role of hydrogen in the energy transition and the geopolitical consequences that it’s rise in the global energy economy will entail.
For a long time, hydrogen has stood in the shadow of solar and wind power, but in recent years it has gained a lot of momentum. An increasing number of countries now have or are planning to adopt national hydrogen strategies. According to IRENA, hydrogen could account for up to twelve per cent of final energy consumption in 2050. One third of the amount produced will be traded on international markets, half of which will be transported via pipelines and the other half shipped in the form of downstream products such as ammonia.
Countries that can generate renewable energy at low cost and produce cheap green hydrogen could become energy exporters and centres of green industrialisation. Among them are countries like Chile, Morocco and Namibia, which have so far been dependent on energy imports. For fossil fuel exporters facing the challenge of transforming their energy economy, hydrogen offers an opportunity for diversification. Meanwhile, for countries like Germany and Japan, which expect to be hydrogen importers, hydrogen is becoming an increasingly important part of their climate diplomacy.
According to the study, the geopolitics of hydrogen will go through different stages: The 2020s could see a race for technological leadership, while the cost of infrastructure and production steadily declines. Demand, however, is not expected to increase significantly until the mid-30s, in response to falling prices. By then, international trade will also become increasingly important, after the first trade routes have already been established. Overall, IRENA expects a stronger regionalisation of energy supply chains and a greater decentralisation of production in the hydrogen era.
Read more in the study “Geopolitics of the Energy Transformation: The Hydrogen Factor”, published in January 2022.
Renewables 2021
A global status report
CO2-free Electricity
How the German power sector can become climate neutral by 2035
In view of the current energy crisis and the increasingly evident effects of the climate crisis, the global energy transition is undeniably one of today’s most pressing issues. The switch to renewable energy is not only necessary to limit the rise of global temperatures, but also essential for Germany’s energy security. But a swift transformation of the country’s energy infrastructure faces major challenges. In a new study, the think tank Agora Energiewende analyses how Germany’s power sector can become climate-neutral by 2035.
The Berlin-based think tank shows in its study how the share of renewable electricity can be increased to 80 per cent by 2030 – an important milestone on the way to a climate-neutral power system in 2035. To reach this goal, the amount of renewable electricity generated today would have to be more than doubled by 2030 and more than tripled by 2035. This would require a massive addition of wind and solar capacities. Between 2026 and 2035, the annual addition of photovoltaic capacity would have to be four times as high as in 2021 and that of onshore wind power would have to be multiplied by six.
In 2035, onshore wind farms could then contribute 40 per cent to renewable net electricity generation, followed by solar energy with one third and offshore wind energy with an additional quarter. There will still be a need for gas-fired power plants in the 2030s to compensate for fluctuations in the electricity grid. But natural gas will increasingly be replaced by hydrogen, resulting in a share of natural gas in the electricity mix of only two per cent in 2035.
In order to accelerate the addition of wind and solar capacities and the expansion of electricity and hydrogen grids, policymakers need to prioritise this shift and implement faster planning and approval procedures, the authors write. Other important factors include creating favourable investment conditions, building dispatchable power plants that can run on hydrogen and enabling a flexible grid use by reforming the grid fee structure.
Read more in the study “Climate-neutral power system 2035. How the German power sector can become climate-neutral by 2035”, published in June 2022.
© Konrad-Adenauer-Stiftung e. V. 2022
Contributors to this issue were:
Team KALUZA + SCHMID Studio, Bogdan Miftakhov, Johannes Sudau, Kristin Wesemann, Chrystyna Rey
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