Climate transition is not just about switching to new, zero-emission energy sources. It’s also about basing the global economy on new materials and supply chains. The question is whether the world won’t repeat its old mistakes.

When, in 1973, Arabic states imposed an oil embargo on Western countries supporting Israel in the Yom-Kippur War, the world faced the first global energy crisis. The key energy resource, which is petrol, ceased to be cheap and available – it became a scarce good, requiring to be rationed.

How to empty one’s tank

In many European countries car traffic has been restricted and petrol station opening hours have been reduced. A number of European cities resigned from festive illuminations for Christmas of 1973. In turn, oil thieves who emptied car tanks at night became a plague in the US.

Those sacrifices came as a shock for many societies – as an instance for reaction to this, there appeared modern environmental movements calling for a break with fossil fuel dependency and an energy transition. For it was understood that an over-reliance on carbohydrates – mostly imported – could have negative consequences not only for the climate, but also for politics.

The energy transition, devised in 1970, leading to decarbonisation is already well under way. Its proponents point out that it’s being implemented mainly out of fear of the state of the atmosphere. The greenhouse gas emission-induced climate change was recognized a phenomenon requiring immediate and far-reaching political and economic action. As a result, countries responsible for nearly 90% of the world's CO2 emissions have already set their climate neutrality targets.

SIGN UP TO OUR PAGE In 2001 alone the world allotted USD 1,1 trillion to the pursuit of this state; the leader in these expenditures is China, which spent as much as USD 546 billion, which is more than the EU and the US combined (USD 180 and USD 141 billion, respectively). These amounts will only grow, because the powerful machine of climate policies is just getting started, and its goal is to build a new economic paradigm based on the principle “who emits – has to pay”.

Fresh memory of Russia’s blackmail

The pursuit of global economic giants towards decarbonisation is also often presented as a way to break with dangerous import dependencies in the sphere of energy resources and fuels. It is true – and this thesis is based both on the memory of 1973 and on the fresh experience of Russian military and energy aggression in 2022. However, there is a risk that on the way to climate neutrality, humanity will fall into further pitfalls of dangerous trade relations. As it turns out, each era and industrial revolution has its economic drug.

A world trying to move away from the burning of fossil fuels is a world that is becoming increasingly electrified. Electric power is considered a remedy for emissions, because electricity can be obtained on a large scale from renewable or nuclear sources, which do not produce greenhouse gases. Therefore, modern climate policies assume broad and deep electrification. People are to travel in electric vehicles, warm themselves with electric heat sources and use products produced mainly thanks to electricity.

Storage for electricity

However, for this to be possible, storage of this energy is needed. So far, natural forms of storage have mainly been used, i.e. energy trapped in the form of a lump of coal, a barrel of oil or a cubic meter of gas. Decarbonisation combined with electrification forces the creation of artificial storage facilities – primarily batteries, colloquially, although sometimes imprecisely called “accumulators”. And that’s where the hard part begins.

The global battery industry, which is critical to the success of the climate transition, depends on three key materials: nickel, lithium and cobalt. Nickel makes it possible to increase the so-called energy density of the battery, thus enabling the production of more powerful units. Lithium is needed to generate voltage. In turn, cobalt protects the cathodes from overheating and extends battery life.

Fantastic! It’s just that the acquisition of each of these raw materials also creates completely new difficulties and dependencies.

Of the three above, the least problematic (so far) is the nickel market. It is extracted mainly in Indonesia, which means that its production has a fairly high carbon footprint – Indonesian energy is based mainly on coal (60% of the generation mix) and gas (20% of the mix). Various environmental activist groups also raise allegations that waste from nickel mining often ends up in the waters of the Indian and Pacific oceans. However, both Indonesia’s energy sector and the standards of its mining industry can be improved relatively efficiently and quickly. However, it is not possible to quickly solve the problems regarding the other two key battery raw materials.

Nationalization of lithium?

In the case of lithium, the problems relate not so much to the present as to the near future. Currently, Australia accounts for almost half of the production of this raw material, but its largest documented deposits are located in Chile, i.e. in the country which is the second largest producer of lithium. Meanwhile, this South American country is currently undergoing deep political turbulence, affecting internal stability and international trust.

Following a wave of tumultuous protests in 2019-2020, the strongly left-wing government of President Gabriel Boric took power in Chile, making the nationalisation of copper and lithium deposits and the mining industry associated with these raw materials one of its key economic demands. The first steps in this regard have already been taken, which means that the Chilean state may soon take control of the largest lithium deposits.

This raises significant concerns about the possible political repercussions: what if the government in Santiago imposes a lithium embargo like the one in 1973? As much as 71% of the production of this raw material is consumed by the battery industry – this means that a blow to this critical supply chain will also be a blow to the global transformation.

Background for Greta Thunberg

The biggest problem, however, concerns cobalt. This is mainly due to the geographical distribution of the deposits of this raw material. One country, the Democratic Republic of the Congo, accounts for 75% of the world’s cobalt production. A country that is deeply politically unstable, with regular local clashes between government forces and regional warlords. Regions where cobalt is mined are particularly troubled.

Moreover, the production of this raw material itself is a humanitarian scandal: out of about 250,000 cobalt miners in the DRC as many as 40,000 are children. Most people have the opportunity to see it, for example, by looking at the memes created by opponents of the energy transition, in which Greta Thunberg’s angry face is juxtaposed with the blurred figures of muddy ten-year-olds carrying carriers with the output.

Whether all these photos actually come from the Congo is questionable, but the mere hiring of 10-year-olds for the gruelling work is beyond doubt. It results, among other things, from the demographics of Congo itself: as much as 46% of the country’s population is under 14 years of age.

But it’s not just about the scandal of employing 10-year-olds in the mines. Experts are already predicting that the world’s cobalt supply will soon prove insufficient to meet demand. According to the article Battery technology and recycling alone will not save the electric mobility transition from future cobalt shortages, published in 2022 in the scientific journal “Nature”, in the years 2028-2033 the global economy will be facing a cobalt crisis. Its size may vary, but the disproportion between demand and supply of this raw material seems certain. The authors of the article indicate that even the recycling of cobalt and the production of cobalt-free batteries will not prevent disruption (although they can of course minimize it).

There will be no tranquillity

In other words, the world after the decarbonisation dreamed of by many may not be free from strong and dangerous import dependencies. And yet the above-mentioned risk factors are only the tip of the iceberg. Economic and political strategies should also take into account factors such as control over individual mines of key raw materials for the transformation. Increasingly, both mines and the regions in which they are located turn out to be the object of economic expansion of countries such as China or Russia. The challenge will be the appetite of politicians to build new competitive advantages on the basis of and with the help of climate policies: in Poland, the EU’s “Fit for 55” is often the subject of debates and political games, and the American IRA is much less frequently mentioned.

Of course, there will also inevitably be a race for unique deposits in politically unstable countries. This includes not only the geographically distant countries of Central Africa (although this is becoming less and less relevant in the context of modern globalisation), but also Serbia, for example.

This in turn means that the climate transformation – although in the eyes of its enthusiasts it is aimed only at protecting the atmosphere, and a much wider group sees it as an opportunity to modernize and improve the energy sector – also means a brutal economic game. And it is already known today that it will be governed by the same rules that had controlled the coal, oil and gas markets for decades.

– Jakub Wiech
– Translated by Dominik Szczęsny-Kostanecki

TVP WEEKLY. Editorial team and jornalists

The author is the chief editor at Energetyka24.pl. He was a recipient of the James S. Denton Transatlantic Fellowship Program. In addition to the volume of conversations with the creators of the Independent Student’ Association (“Independent in the Time of Slavery”), he published two books on the energy transition and contemporary economic changes: “Energiewende: nowe niemieckie imperium” (2019) and “Globalne ocieplenie: podręcznik dla Zielonej Prawicy” (2020), distinguished in the competition of the Identitas Foundation as “the first work of this kind created east of the Oder River”.

Photo of the author: PAP / Tomasz Gzell