The challenge of securing access to minerals for the green transition

Chuquicamata, Chile

COP26 came to a close in Glasgow this weekend, with activists and developing country governments disappointed in the global ambition as laid out in the final agreement text. On the one hand, the final document reflects commitments to cut on methane, doubling of monetary compensation for adaptation measures, and the need for cooperation between the United States and China—the two largest carbon emitters—to set out a roadmap to keep warming below 2 degrees Celsius. On the other hand, developing countries criticized rich countries for evading the language of loss and damage—compensation that recognizes that the countries most affected by climate change have contributed the least to planet-warming greenhouse gases.

Crucially, the language on coal was also changed from ‘phasing out’ to ‘phasing down,’ which underlines the reticence of emerging market economies like India, China, and South Africa to end coal dependence for electrification and commit to halting public subsidies for fossil fuels in many countries.

The outcome appears even more lackluster when put in the context of the rich countries’ failure to meet 2020 climate finance goals.

The climate crisis is a compelling challenge brings both industrializing Asian economies and their Western counterparts to the table. One emerging solution to the climate crisis involves securing investments and prioritizing financial commitments towards clean technologies and shifting towards renewable energy. However, there are vast differences in terms of motivations and strategies to address the climate question. While Japan, Korea, and China see the climate agenda as an opportunity for their domestic companies to internationalize and to produce clean technologies through supportive industrial policies as part of their strategy to promote eco-developmentalism, the European Union (EU) views the energy transition as an opportunity to demonstrate its leadership in global environmental politics demonstrated by its emphasis on the circular economy.

Often missing from both discussions, however, is how increased demands for the critical raw materials that power the green transition are likely to exacerbate—and create—inequalities between resource-rich (developing) and consuming (developed) countries. The International Energy Agency’s latest report says that to meet the Paris Agreement goals, the total demand for clean technologies by 2040 will require an increase of more than 40 percent for copper and rare earth elements, 60 to 70 percent for nickel and cobalt, and almost 90 percent for lithium Some of these minerals are heavily concentrated in only a few countries, such as Chile, Bolivia, and Argentina for lithium; Brazil for niobium; Democratic Republic of Congo for cobalt; South Africa for platinum-group metals; and China for REEs and other critical minerals. As detailed in a recent Wilson Center report, unequal sharing of primary mineral production will yield to new forms of dependencies and problems, including the externalization of the environmental costs of clean technology.

The current climate change narrative absolves polluters and puts pressure on developing countries

The discourse on climate change has largely framed the political narrative as a race for human survival and an existential threat, leading to an apparently inevitable choice: To address climate change, we must accelerate efforts to build bigger wind turbines, to power electric grids using solar panels, and to shift from traditional fossil-fuel towards electric vehicle cars.

The blindspot in this narrative is that the industrialized world is largely absolved from their political culpability in perpetuating the crisis, and developing countries face increased pressure to extract their natural resources for the green transition. By framing climate change as a collective action dilemma requiring ‘global efforts,’ existing inequalities between countries and communities are set aside.

A second problem relates to the imbalance between the supply and demand solutions on the table. Currently, the narrative inadvertently justifies an emphasis on the supply side of the resource access problem—namely, finding technological solutions to make extraction more efficient and to substitute one technology with another to solve fossil fuel dependence. For example, wind turbines are now reliant on a gearbox that uses permanent magnets as opposed to older models that used copper. But with Japan and China controlling the production of permanent magnets, the green transition is dependent on the willingness and capacity of these countries to process rare earth elements and supply for the whole world.

A further problem arises: this type of technocratic approach positions leaders and industrialized societies as ‘problem-solvers,’ with an underlying assumption that we can save the planet without making substantive adjustments in the consumption-driven lifestyle we inherited from the 19th century Industrial Revolution.

Environmentalists, for example, are often caught in conflicting positions. On the one hand, campaigns against new mining projects in Europe are commonplace—the so-called ‘not in my backyard’ (NIMBY) attitude—given the high socio-environmental costs of mineral extraction. Green parties all over Europe have won seats with an agenda of greening the economy. On the other hand, there is strong support for switching to renewable energy, which requires more intensive and extensive extraction of a range of natural resources. Thus, the logical conclusion is to extract minerals in the developing world. One cannot have renewable energy and leave the costs external to Europe and United States.

Three principles to incorporate issues of justice into the climate change discourse

To address the climate crisis effectively, there are at least three principles to which we need to adhere. First, we need to accept that someone must pay for the green transition. The question is whether the global community can agree with a fair distributional arrangement of these costs. Here, the EU Commission has constantly raised the issue of investing in primary mineral production within the continent—a proposition that, while politically controversial, must be discussed by the public and policymakers.

Second, given the history of colonialism, imperialism, and extractivism by Europe, the United States, and Japan, future reforms of global rules must accommodate the right to economic development of developing countries. For 500 years, developing countries were mineral economies integrated in the world economy to supply for the industrialization of the West. In the course of history, mineral dependence has co-produced ineffective governance institutions, reinforced elite capture of rents, and exacerbated societal inequalities.

To abate the disproportionate impacts of mining on the Global South, the global architecture of trade, investment, and finance must accommodate developing countries’ policy space to design new growth strategies aimed at fueling inclusive development. Part of the discussion might involve rethinking whether norms supporting the free market and unfettered international trade are beneficial for developing countries, or whether these exist as instruments of power and domination exercised by rule-makers to maintain hierarchy and inequality.

Finally, we need a comprehensive climate agenda that entails far-reaching reforms beyond environmental policy. This agenda is needed to support African, Latin American, and Asian resource producers’ efforts to industrialize, not just serve as raw material suppliers to the Global North.

In the United States and European academia and mainstream media, China is increasingly portrayed as a threat, often highlighting its illiberal centralized regime as a challenge to the democratic order. For many developing countries, however, China opens new doors of alternative trade, finance, and investment. And perhaps more importantly, China’s experience of selective liberalization and heavy-handed state guidance through industrial policy serves as an inspiration for experimentation of different strategies beyond the straitjacket imposed by free market ideology. For instance, industrial policy and national development planning have returned in the developing world, most of which are patterned after in-depth exchanges and studies between East Asia and Africa. While learning between late industrializing countries and the rest of the Global South is important, we must remain clear-eyed about any efforts to find a single blueprint or magic bullet to achieve structural transformation.

While many leaders now accept the need for a green transition, there are many competing strategies regarding which policy instruments to deploy, whether to rely on the private sector (and if domestic or foreign firms can do a better job), and how to solve market failures. There is no blueprint to address these questions. What is clear, however, is that developed countries must acknowledge and accommodate the reality that developing countries want and deserve a say on their own environmental policies and transition to clean technology.

 

This article was originally published on newsecuritybeat.org.