Clean Energy Supply Chains

Clean energy supply chains pose several challenges and opportunities, as discussed by various experts.

Key Insights:

1. Dependence on China:

   • Overall Control: China holds significant control across the supply chain from mining to manufacturing and processing essential minerals like lithium, cobalt, and graphite, essential for EV batteries and solar panels. This has led to concerns about the potential for China to weaponize its control over clean energy supply chains, similarly to how Russia did with oil and gas 1 2.

2. Derisking, Not Decoupling:

   • It's crucial to focus on "derisking" rather than completely decoupling from China to mitigate risks that come from concentration in one country. Diversification, strategic stockpiles, and lessons from past energy crises (like the 1970s oil shock) can offer pathways to reduce dependency and buffer against potential disruptions 2.

3. Domestic Supply Chain Development:

   • There are ongoing efforts, particularly in the U.S., to build domestic supply chains for key components of clean energy technologies, such as EV batteries. However, this initiative faces hurdles like slow permit processes and the need for substantial investment 3 4 5. The Inflation Reduction Act and other policies aim to provide long-term incentives and subsidies to boost domestic production 6.

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     China's control over clean energy supply chains, including rare earth elements and critical minerals, raises concerns about potential weaponization and its impact on the energy transition. The Biden Administration and analysts worry about China's intentions and the potential leverage it holds.

     

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4. Global Supply Chain and Ethical Considerations:

   • Balancing the extraction of critical minerals within the U.S. and sourcing them from allies involves striking fair deals that avoid neocolonial exploitation. For instance, taking strategic minerals from countries like Chile and then selling back finished products raises concerns about equity and fairness 3.

5. Recycling and Alternative Sources:

   • Recycling and finding alternative sources of critical minerals is another focus. Efforts include exploring non-Chinese sources and boosting domestic processing capacities 7.

6. Offshore Wind and Vertical Integration:

   • Some companies are considering vertical integration to handle the substantial capital investment required for offshore wind projects. This includes building their own transport vessels and infrastructure to ensure the continuity of the supply chain 5.

These strategies and challenges highlight the complexity and critical importance of developing resilient, diversified clean energy supply chains to support global decarbonization efforts.