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How to Break China’s Hold on Batteries and Critical Minerals

October 9, 2023

by James Hyland, MiningIR

The security of clean energy is easier to manage than the security of oil

By Brian Deese, a fellow at MIT and former director of the U.S. National Economic Council, and Jason Bordoff, a columnist at Foreign Policy and a dean at the Columbia Climate School.

The rapid growth of electric vehicle sales finally makes real the prospect of curbing the United States’ addiction to oil, as former President George W. Bush called it, limiting climate change, and reducing the geopolitical influence of petrostates such as Russia. Yet concerns about China’s dominance of the supply chains for EVs have prompted some to warn against swapping energy insecurity in oil for insecurity in the minerals and metals used to make EV batteries. This January, for example, a resolution introduced in the Wyoming state legislature called for ending the sale of EVs by 2035, citing threats to mineral supplies as one of the justifications.

While supply chain concerns are justified, the United States should view critical minerals as a challenge that can be solved with diplomacy, investment, and innovation—not an excuse for delaying electrification and clean energy deployment. In reality, the risks of import dependence for energy storage needs are not nearly as severe as those for oil, for at least three reasons.

First, energy storage is a technology problem that can benefit from the power of innovation. Nearly 50 years ago, during the oil crises of the 1970s, physicist Amory Lovins wrote a seminal article advocating a “soft path” to meeting U.S. energy needs. The “hard path,” he wrote, meant investing in capital-intensive centralized power systems and costly, technically challenging drilling and mining to extract resources from rocks through brute force. The “soft path,” by contrast, involved more efficiency, conservation, and renewable energy.

Lovins’s insight was that people do not want oil or electricity but rather cold beer and warm showers, and there are easier ways to deliver those. Similarly, our goal today is not more lithium or copper—although we will surely need both. Rather, our goal is the ability to store energy so cars can run on electricity and the grid can handle much more energy from solar and wind that is not always available and therefore needs a backup source of power. As was true a half-century ago, there is a soft path to meeting the challenges of energy storage by reducing the need for critical minerals in the first place.

Rather than cram ever-larger and more mineral-intensive batteries into cars to extend driving range to 500 or 700 miles, for example, fast-charging that allows drivers to charge in minutes combined with more abundant charging infrastructure could allow drivers to embrace cheaper cars with smaller batteries and less range. Rather than use more and more minerals, technological innovation can reduce the amount and types of metals and other minerals needed for batteries, such as chemistry that replaces the need for lithium and copper with more plentiful sodium, aluminum, and manganese. New electrolytes can enable getting more energy out of the same mineral content in lithium-ion batteries so range can be extended without larger and more mineral-intensive batteries. Up to 10 percent of critical mineral needs can be met with improved recycling, according to the International Energy Agency (IEA). And there are promising technological approaches in energy storage, such as pumped hydropower and compressed air, that avoid the use of batteries—and critical minerals—altogether.

To be sure, even on a soft path based on harnessing the power of technological innovation, the world will need to significantly increase the supply of critical minerals to achieve net-zero emissions. According to the IEA, achieving net-zero emissions by 2050 requires a sixfold increase in the world’s supply of critical minerals from new and existing mines. Even if innovation can cut that demand sharply, ramping up global supply in less than 30 years is a daunting task.

But the second reason that critical mineral needs can be met without sacrificing energy security is that supply can be boosted and diversified more easily than it was ever possible for oil.

Despite often erroneously being labeled “rare,” most of the critical minerals that go into batteries and other technological applications are abundant. The deposits of many necessary minerals are also far more dispersed geographically than those of oil. Consider also that more than 80 percent of the world’s oil reserves are located in OPEC countries, whereas roughly 80 percent of lithium reserves are located in democracies. In August, researchers identified what may be the world’s largest deposit of lithium on the Nevada-Oregon border, a discovery that could alter the global lithium market. Two-thirds of nickel reserves and half of copper reserves are also located in democracies.

Critically for energy security, China’s current dominance of mineral supply chains is not in possessing the resource—like Saudi Arabia’s or Russia’s geological abundance of oil—but in the refining and processing of minerals mined elsewhere. Today, China performs around 60 to 90 percent of the refining and processing of most minerals. But that manufacturing activity can be done in a broad array of locations around the world, although it takes time and investment. The same is true for the batteries that contain the minerals, which are currently manufactured predominantly in China—and it is increasingly true for electric cars themselves.

Finally, the macroeconomic impact of disruptions in the supply chain for minerals and batteries is not nearly as severe as with oil. Minerals and batteries are inputs to manufactured products, not the daily flow of energy that keeps our lives running. China’s dominance is not over the electricity that powers Americans’ electric cars but the technology that stores it. If there were a disruption in mineral or battery supplies, there would be supply chain bottlenecks, delays, and price spikes for clean energy products, such as solar panels and EVs, but people would still be able to drive their cars and light and heat homes. Politically, the sting of high gas prices that has constrained U.S. long-term policy planning for decades does not exist with minerals. Price disruptions would be a distraction, not a debilitating force.

Of course, prudently meeting the world’s needs for energy storage will require smart and ambitious policy. The United States will need to sustain support for research and development to continue to drive innovative breakthroughs enabling more efficient storage and recycling techniques. Permitting laws will need to be reformed in order to expand domestic mining and processing of lithium, copper, and rare earths while still protecting key environmental and tribal equities. And Washington will need to prioritize a multiyear international strategy to diversify supply chains for mining, refining, and processing of minerals with allies and partners around the world. None of these steps is easy, but all are well within the United States’ reach. Now is the time to embrace the minerals challenge as a solvable element of one of the paramount opportunities of this century to bring about a more resilient, secure, and sustainable clean energy transition.

Brian Deese is an innovation fellow at the Massachusetts Institute of Technology and former director of the U.S. National Economic Council under the Biden administration. Twitter: @BrianCDeese

Jason Bordoff is a columnist at Foreign Policy, a co-founding dean at the Columbia Climate School, the founding director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, a professor of professional practice in international and public affairs, and a former senior director on the staff of the U.S. National Security Council and special assistant to former U.S. President Barack Obama. Twitter: @JasonBordoff

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MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR