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To decarbonise the global economy by mid-century countries must rapidly expand their deployment of clean energy technologies. By 2030 the International Energy Agency says wind and solar capacity additions have to quadruple to be on track for net zero emissions. Electric cars, which currently make up 5 per cent of all vehicle sales, must also expand to 60 per cent of the market share by the end of the decade. But hitting these targets will require a ready supply of raw materials and the capacity to assemble equipment quickly and cheaply.
As the pandemic and Russia's war in Ukraine have shown, fragile supply chains pose a big challenge to greening the economy. China, for example, is the world's linchpin producer of polysilicon, a key material for solar panels. Strict Covid restrictions and power shortages in the country have sent polysilicon prices to their highest in a decade. Prices for battery metals have also soared, with lithium prices reaching all-time highs due to under-investment in supply and surging demand.
These challenges haven't escaped the attention of companies and policymakers. This year, both Tesla and Volkswagen have warned of supply chain threats to the expansion of electric vehicles. President Joe Biden has used his powers to funnel vast amounts of federal resources into building out the country's clean energy manufacturing base. It's part of his administration's effort to catch up with China, who currently dominates in the processing of material seen as critical to the future of global economic competitiveness.
But even as countries ramp up manufacturing capacities, their supply chains won't be entirely secure. The largest vulnerabilities lie upstream, in the mines and plants raw materials are sourced, places often far away from countries that make the final product. This risk has sparked a global race to mine and secure raw material supplies.
China has invested billions in mining projects in Africa and South America. In response, the US has formed strategic partnerships with the UK, Australia, Canada, Japan, and other countries to secure the supply of critical minerals and combat Beijing's dominance. Who wins this new great race for green resources will have large consequences for combating climate change, ensuring global energy security, and the balance of economic power for decades to come.