Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains1BARRIERSTOCLEANELECTRIFICATIONSERIESSUPPLYCHAINSBetter,Faster,Cleaner:SecuringcleanenergytechnologysupplychainsVersion1June2023InsightsBriefingBetter,Faster,Cleaner:Securingcleanenergytechnologysupplychains3TheEnergyTransitionsCommission(ETC)isaglobalcoalitionofleadersfromacrosstheenergylandscapecommittedtoachievingnet-zeroemissionsbymid-century,inlinewiththeParisclimateobjectiveoflimitingglobalwarmingtowellbelow2°Candideallyto1.5°C.OurCommissionerscomefromarangeoforganisations–energyproducers,energy-intensiveindustries,technologyproviders,financeplayersandenvironmentalNGOs–whichoperateacrossdevelopedanddevelopingcountriesandplaydifferentrolesintheenergytransition.Thisdiversityofviewpointsinformsourwork:ouranalysesaredevelopedwithasystemsperspectivethroughextensiveexchangeswithexpertsandpractitioners.TheETCischairedbyLordAdairTurnerwhoworkswiththeETCteam,ledbyFaustineDelasalle(Vice-Chair),ItaKettleborough(Director),andMikeHemsley(DeputyDirector).TheETC’sBetter,Faster,Cleaner:SecuringcleanenergytechnologysupplychainswasdevelopedbytheCommissionerswiththesupportoftheETCSecretariat,providedbySYSTEMIQ,andsupportfromtheEuropeanClimateFoundation(ECF).ThisreportconstitutesacollectiveviewoftheEnergyTransitionsCommission.MembersoftheETCendorsethegeneralthrustoftheargumentsmadeinthispublicationbutshouldnotbetakenasagreeingwitheveryfindingorrecommendation.TheinstitutionswithwhichtheCommissionersareaffiliatedhavenotbeenaskedtoformallyendorsethisbriefingpaper.Thisreportlookstobuilduponasubstantialbodyofworkinthisarea,includingfromtheIEAandIRENA,andETCknowledgepartnersBNEF.TheETCteamwouldliketothanktheETCmembers,memberexpertsandtheETC’sbroadernetworkofexternalexpertsfortheiractiveparticipationinthedevelopmentofthisreport.TheETCCommissionersnotonlyagreeontheimportanceofreachingnet-zerocarbonemissionsfromtheenergyandindustrialsystemsbymid-centurybutalsoshareabroadvisionofhowthetransitioncanbeachieved.Thefactthatthisagreementispossiblebetweenleadersfromcompaniesandorganisationswithdifferentperspectivesonandinterestsintheenergysystemshouldgivedecision-makersacrosstheworldconfidencethatitispossiblesimultaneouslytogrowtheglobaleconomyandtolimitglobalwarmingtowellbelow2°C.Manyofthekeyactionstoachievethesegoalsareclearandcanbepursuedwithoutdelay.Learnmoreat:www.energy-transitions.orgwww.linkedin.com/company/energy-transitions-commissionwww.twitter.com/ETC_energywww.youtube.com/@ETC_energyBarrierstoCleanElectrificationSeriesTheETC’sBarrierstoCleanElectrificationseriesfocusesonidentifyingthekeychallengesfacingthetransitiontocleanpowersystemsgloballyandrecommendingasetofkeyactionstoensurethecleanelectricityscale-upisnotderailedinthe2020s.Thisseriesofreportswilldevelopaviewonhowto“riskmanage”thetransition–byanticipatingthebarriersthatarelikelytoariseandoutlininghowtoovercomethem,providingcounterstomisleadingclaims,providingexplainercontentandkeyfacts,andsharingrecommendationsthathelpmanagerisks.AnInsightsBriefingwillbedevelopedforeachbarrier,coveringthecontextandmajorchallenges,andassessingtheimpactofdeployingkeysolutions.TheseInsightBriefingswillbeaccompaniedbyaseriesofSolutionToolkits,whichlayoutasetofkeyactionsthatneedtobetakenbythemostimportantgroupofstakeholders(e.g.,governments,renewablesdevelopers,gridoperators,civilsociety)andoutlinessupportingcasestudies.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains4ETCCommissionersMrShaunKingsbury,ChiefInvestmentOfficer–JustClimateMr.BradleyAndrews,President,UK,Norway,CentralAsia&EasternEurope–WorleyMr.JonCreyts,ChiefExecutiveOfficer–RockyMountainInstituteMr.SpencerDale,ChiefEconomist–bpMr.BradleyDavey,ExecutiveVicePresident,HeadofCorporateBusinessOptimisation–ArcelorMittalMr.JeffDavies,ChiefFinancialOfficer–L&GMr.Pierre-AndrédeChalendar,ChairmanandChiefExecutiveOfficer–SaintGobainMr.AgustinDelgado,ChiefInnovationandSustainabilityOfficer–IberdrolaDr.VibhaDhawan,DirectorGeneral–TheEnergyandResourcesInstituteMr.CraigHanson,ManagingDirectorandExecutiveVicePresidentforPrograms–WorldResourcesInstituteDr.ThomasHohne-Sparborth,HeadofSustainabilityResearchatLombardOdierInvestmentManagers–LombardOdierMr.JohnHolland-Kaye,ChiefExecutiveOfficer–HeathrowAirportDr.JenniferHolmgren,CEO–LanzaTechMr.FredHu,Founder,ChairmanandChiefExecutiveOfficer–PrimaveraCapitalMs.RashaHasaneen,ChiefProductandSustainabilityOfficer–AspenTechMs.MallikaIshwaran,ChiefEconomist–RoyalDutchShellMr.MazuinIsmail,SeniorVicePresident–PetronasDr.TimothyJarratt,DirectorofStrategicProjects–NationalGridMr.GregJackson,FounderandCEO–OctopusEnergyMr.AlanKnight,GroupDirectorofSustainability–DRAXMs.ZoeKnight,ManagingDirectorandHeadoftheHSBCCentreofSustainableFinance–HSBCMs.KirstenKonst,MemberoftheManagingBoard–RabobankMr.MarkLaabs,ExecutiveChairman–ModernEnergyMr.MartinLindqvist,ChiefExecutiveOfficerandPresident–SSABMr.JohanLundén,SeniorVicePresident,ProjectandProductStrategyOffice–VolvoMr.RajivMangal,VicePresident,Safety,HealthandSustainability–TataSteelMs.LauraMason,ChiefExecutiveOfficer–L&GCapitalDr.MaríaMendiluce,ChiefExecutiveOfficer–WeMeanBusinessMr.JonMoore,ChiefExecutiveOfficer–BloombergNEFMr.JulianMylchreest,ExecutiveViceChairman,GlobalCorporate&InvestmentBanking–BankofAmericaMr.DavidNelson,HeadofClimateTransition–WillisTowersWatsonMs.DamilolaOgunbiyi,ChiefExecutiveOfficer–SustainableEnergyForAllMr.PaddyPadmanathan,Vice-ChairmanandChiefExecutiveOfficer–ACWAPowerMr.KDPark,President–KoreaZincMs.NanditaParshad,ManagingDirector,SustainableInfrastructureGroup–EBRDMr.AlistairPhillips-Davies,ChiefExecutive–SSEMr.AndreasRegnell,SeniorVicePresident,HeadofStrategicDevelopment–VattenfallMr.MennoSanderse,HeadofStrategyandInvestorRelations–RioTintoMr.SiddharthSharma,GroupChiefSustainabilityOfficer–TataSonsPrivateLimitedMr.IanSimm,FounderandChiefExecutiveOfficer–ImpaxAssetManagementMr.SumantSinha,Chairman,FounderandChiefExecutiveOfficer–ReNewPowerLordNicholasStern,IGPatelProfessorofEconomicsandGovernment–GranthamInstitute–LSEDr.GüntherThallinger,MemberoftheBoardofManagement,InvestmentManagement,Sustainability–AllianzMr.SimonThompson,SeniorAdvisor–SeniorAdviser,Rothschild&CoMr.ThomasThuneAndersen,ChairmanoftheBoard–ØrstedDr.RobertTrezona,FoundingPartner,KikoVentures–IPGroupMr.Jean-PascalTricoire,ChairmanandChiefExecutiveOfficer–SchneiderElectricMs.LaurenceTubiana,ChiefExecutiveOfficer–EuropeanClimateFoundationLordAdairTurner,Chair–EnergyTransitionsCommissionSenatorTimothyE.Wirth,PresidentEmeritus–UnitedNationsFoundationBetter,Faster,Cleaner:Securingcleanenergytechnologysupplychains5ContentsIntroduction6Chapter1Context:Importanceofsupplychainsfortheenergytransition7Chapter2Mappingcleanenergysupplychainsandassessingrisks10Frameworkforassessingsupplychainrisks10Mappingandriskassessmentacrosstechnologies13Solar16Wind18Batteries20Grids23HeatPumps24Electrolysers26Chapter3Cross-cuttingsupplychainrisks281.Markettightnessrisks282.Environmentalandsocialconsiderations333.Highconcentrationofsupplychains37Chapter4Keyactionsandrecommendations40Chapter5Conclusion49Acknowledgements50Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains6IntroductionIntroductionThepathtoanet-zeroglobaleconomywillrequirehugegrowthincleanenergytechnologydeployment,withrapidscalingrequiredofbothcleanenergysupplyandend-usedecarbonisationtechnologies.Despitepositiverecentprogress,includingwidespreadlegislatednationalcommitmentstonet-zerobymid-century,andsomeambitioussectortargets,1severalbarrierslimitthepaceandscaleofthetransition.Theseincludeoveralluncertaintyaboutthepaceofcleantechdeploymentinsomemarkets,wheregovernment-backedincentivesormarketdesignplayakeyrole,andissuesaroundexecution–includingplanningandpermittingdelays,lackofinfrastructureavailability(e.g.,grids),andsupplychainvolatility.Ifunresolved,thesebarriersriskdelayingand/orincreasingthecostsoftheenergytransition,puttingaglobalnet-zeroemissionstrajectorybymid-centuryatrisk.AspartoftheETC’sBarrierstoCleanElectrificationseries,thisInsightsBriefingfocusesontheissueofsupplychainrisks.2TheimportanceofsupplychainissuesfortheenergytransitionhasrecentlycometotheforeinlightoftheCovid-19pandemicandRussia’swarinUkraine.In2021–2022,astheglobaleconomyre-startedfollowingthepandemicpricesforcommoditiesandrawmaterials(e.g.,steel,copper),andshippingandfreightratesshotup,leadingtocostincreasesforwindturbinesandbatteries.3Furthermore,thesedynamicshaveservedtocatalyseaseriesofpolicychoicestorelocatetheproductionofcleanenergytechnologies–suchastheUSInflationReductionAct,andtheEuropeanUnion’sGreenDealIndustrialPlan–addingfurthercomplexityandnewdynamics.Buildingresilienceandmanagingriskstoreducepotentialbottlenecksasmuchaspossibleisthereforecritical.ThisInsightsBriefingaddressestwomainquestions:•Where–andtowhatextent–couldtherebebottleneckstocleanenergysupplychains,lookingoutto2030?•Whatarethekeyactionsthatpolicymakersandindustrycantaketomitigatethese?ThescopeofthisBriefingcovers:Sixmajor‘backbone’technologiesforenergysectordecarbonisation:•solarphotovoltaics(PV)•wind•lithium-ionbatteries(forelectricvehicles,andstorage)•large-scalegrids•domesticheatpumps•electrolysersThreemajorstepsacrosssupplychains:•miningandprocessingofrawmaterials•manufactureandassemblyofkeycomponents•majortransportandlogisticsinputsWedonotcoverissuesrelatingtoconstructionandinstallation,orrelatedworkforceskillissues(whicharehighlylocalised),butforthcomingETCworkwilladdresstheseissuesastheyrelatespecificallytotheexpansionoftheelectricitygrid.Threemajorriskareasacrosssupplychains:•markettightness(i.e.theabilityofsupplytomeetdemandto2030forkeymaterialsandcomponents)•environmentalandsocialconcerns•concentrationofproductionacrosscountriesorcompaniesThisInsightsBriefingisaccompaniedbyanEUPolicyToolkit,whichsummarisestheEU’spositionacrosscleanenergysupplychainsandmajorpolicypriorities.1Forexample,commitmentstopowersectordecarbonisationintheUSandtheUKby2035.2Otherinsightsinthisseriesinclude:ETC(2023),StreamliningPlanningandPermittingtoAccelerateWindandSolarDeployment;MaterialandResourceNeedsfortheEnergyTransition(forthcoming),andGrids(forthcoming).3BNEF(2022),Lithium-IonBatteryPriceSurvey;BNEF(2022),2HGlobalWindMarketOutlook;BNEF(2022),2HWindTurbinePriceIndex.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains7Chapter11Context:ImportanceofsupplychainsfortheenergytransitionThesignificanttransformationacrosstheenergysystemrequiredoverthecomingdecadesmeansthatcleanenergytechnologiesneedtoscalerapidly.Globally,installedcapacityofwindandsolarwillneedtogrowbetween2.5–4timesby2030,andelectricvehicle(EV)salessix-fold,underanet-zeroscenario[Exhibit1.1].Theenergytransitionisalreadyunderway–in2022,windandsolarannualcapacityadditionsgrew25%onthepreviousyear,settinganewrecordforannualdeployment(350GWcombined).4Overall,theeconomicsofcleanenergytechnologiesarebecomingincreasinglyattractive.5Inpowergeneration,windandsolararenowcheaperthannewfossilincountriesrepresentingover95%ofelectricitygeneration,andcheaperthanexistingfossilincountriesrepresenting60%ofelectricitygeneration.6Acrosstheworld,manycountriessuchastheUKandtheUShavesetcleardecarbonisationtargetssupportedbyappropriatepoliciesandimplementationmechanisms,suchaslarge-scalegovernmentauctionsforrenewableelectricitybackedbylong-termcontracts.7However,thepaceandscalerequiredforthetransitionraisesanumberofchallenges.Ascleanenergytechnologydeploymentscales,strengtheningsupplychainswillbecriticaltoensuringlowcostsandavoidingdisruptions.Thesesupplychainsdemonstratevaryingdegreesofcomplexity,intensityofmaterialuse,exposuretointernationaltrade,andfootprintsacrossdifferentcountries.Butinalmostallcases,therapidgrowthindeploymentneededwillrequirealargemobilisationofcapital,resourcesandcoordinationacrossmultipleplayers.Globaleconomicandgeopoliticalvolatilityhasalreadyledtosomedisruption,makingitclearthatthecostsExhibit1.1Theenergytransitionwillrequiremassivecapacityadditionsofnewtechnologies,by2030windandsolargrow2.5–4xandEVsales~6xfromcurrentlevelsStorageandEVsSolar940GWCapacityin20221240GW10mEVsales,90GWhofstationarystorage70millionkm~0.2MtH2~200munits2400–2600GWRequiredsizein20304900–5100GW60–80mEVsales,1500GWhofstationarystorage>100millionkm>20MtH2~600munitsWindT&DGridsElectrolysersHeatPumpsx2.5x4x6x1.5x100x3Source:SystemiqanalysisfortheETC;BNEF(2023),Interactivedatatool–Powercapacity;ETC(2021)Makingcleanelectrificationpossible;ETC(2021)Makingthehydrogeneconomypossible.4BNEF(2023),InteractiveDataTool–Capacity&Generation.5Systemiq(2023),TheBreakthroughEffect:HowtoTriggeraCascadeofTippingPointstoAcceleratetheNetZeroTransition.6BNEF(2022),2H2022LCOEUpdate.7UKGovernment(October2021),PlansunveiledtodecarboniseUKpowersystemby2035;USGovernment(April2021),PresidentBidenSets2030GreenhouseGasPollutionReductionTargetAimedatCreatingGood-PayingUnionJobsandSecuringU.S.LeadershiponCleanEnergyTechnologies.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains8Chapter1andpaceoftheenergytransitionareatstake.Whilesomeofthesepatternsarenoweasing,recentvolatilityhasledtoshort-termincreasesinthepriceofwindturbinesandbatteries[Exhibit1.2];thoughthecostofequivalentfossil-fuelledtechnologiesinthesesectorshasalsoincreased.8Supplychainshockshavethepotentialtoderailtheenergytransitionbyincreasingthecostsofkeytechnologiesand,inworst-casescenarios,creatingabsoluteshortagesofkeysupplies;thisinturncouldslowdownthepaceoftheoveralltransition.9Asanexample,aprolongedincreaseinthepriceofmaterialscouldsignificantlyslowthepaceoflithium-ionbatterycostdeclines;giventheimportanceofbatterycostsintotalEVproductioncosts(around20–30%),thiscouldleadtoalater“costparity”datebetweenEVandInternalCombustionEngine(ICE)vehicles,pushingupconsumerpricesandslowingtheuptakeofEVs.10Finally,itisinterestingtonotethattheeffectsofsupplychain“shocks”forcleanenergytechnologiesdiffertothoseforfossilfuels.Forcurrentfossiluse,thechallengearoundenergysecurityrequiresensuringtheavailabilityoffuelsupplytokeepthesystemrunning–avoidingqueuesatthepump,forexample.Volatilityandshockstofossilfuelsupplythushavestrong,tangibleimpactsdirectlyonconsumers.Instead,forcleanenergytechnologies,thecurrentchallengeisaroundbarrierstobuildingoutthenewlow-carbonenergysystematpace.AtrendofincreasingmaterialpriceswouldraisethecostofanewEVorawindturbine,butitwouldnotimpacttheabilityorcostofcurrentuserstodrivetheirEVsorpowergenerationfromwindturbines.Exhibit1.2Inrecentyears,disruptioninglobalsupplychainshasledtopricerisesforwindandbatteries0510152025010020030040050060070080002010201520202025201320152017201920212013201520172019202120232025123450.00.51.01.5FORECASTFORECAST0.97–1.00141–151+3%+7%SolarPVcapexbenchmark2022$/W(DC)ModuleInverter,BoPEPCOtherSolar:slowingofpricereductionsin2022duetotightsupplyforpolysiliconandincreasedfreightcosts,alongsidehighercommodityprices,butexpectedtokeepfallingfrom2023.Windturbinepricebysigningdate2022$m/MWTurbinePriceInstallationWind:costincreasesdrivenbyincreasingpricesofcopper,aluminiumandsteelfrom2020onwards,alongsidehigherfreightandshippingcosts;however,priceshavebeenfallinginChina.Li-ionbatterysurveyprice2022$/kWh(LHS);%oftotalprice(RHS)CellPricePackPricePriceshareofcathodematerialsBatteries:first-everpricerisesin2022aspricesofcathodematerials(Li,Ni,Co)haverisensharplyinpastyear;willtakeseveralyearstorecovertoprevioustrend.Note:EPC=Engineering,procurementandconstruction.BoP=Balanceofplant.Source:BNEF(2022),4QGlobalPVMarketOutlook;BNEF(2022),Lithium-IonBatteryPriceSurvey;BNEF(2022),1HGlobalWindMarketOutlook;BNEF(2022),1HWindTurbinePriceIndex.8E.g.,LCOEsforgasturbinesandcoalroseby19%and9%,respectively,inthesecondhalfof2022.BNEF(2022),2HLCOEUpdate.9Furthermore,supplychainriskscouldalsoleadtoprofitabilityconcernsformajorsuppliers,thereforealsocontributingtobottlenecks.ThisissueiscoveredinBoxAlaterinthisBriefing.10Averagebatterypackpricesroseby~7%in2022,drivenbyhigherrawmaterialcosts.BNEF(2022),Lithium-ionbatterypricesurvey.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains9Chapter1CurrentstateToday,cleanenergysupplychainsaresetwithinthecontextofaninterdependentglobaleconomy,thoughwithalargeshareofsupplybasedpredominantlyinChina,inparticularfortheproductionofmass-manufacturedcomponentsandtechnologies(e.g.,solarpanels,batteries).China’sleadingrolegoesfarbeyonditssizabledomesticneedsandhasbeensupportedbyarangeoffactorsincluding:lowmanufacturingcosts(includinglowerenergycostsaswellas–historically–labourcosts),abundantsuppliernetworks,significantdomesticproductionofindustrialmaterials,economiesofscale,andcleardomesticpolicyforcleanenergysectors.11Aswithmostglobalmanufacturingaroundtheworldtodate,particularstagesintheproductionofcleanenergytechnologieshavebeencarbonintensive,althoughgridemissionsintensitiesaredecliningorprojectedtodeclinebytheendofthisdecade,includinginChina.12EmergingdynamicsWhilethedecadeto2020sawarelativelystableeconomicenvironmentwithinwhichseveralcleanenergytechnologiesexperiencedcontinualcostdeclines,severalrecenttrendshavecombinedtocreateamorechallengingenvironment,inparticular:•TheCovid-19pandemichighlightedthefragilityofglobalsupplychains,asbottlenecksemergedinglobaltradeduetoshutdownsinkeylocations.•Russia’sinvasionofUkraineledtorenewedfocusontheissueofenergysecurity,asRussiarestrainedgasexportstoEurope,leadingtoasurgeinenergyprices.•Amajoraccelerationisnowrequiredinthepaceofcleanenergytechnologydeploymenttomatchthewidespreadadoptionofnet-zeroemissiontargets.Thischanginglandscapeisleadingtonewstrategicprioritiesforcountriesandcompanies.Acrosstheglobe,are-thinkisunderwayaroundhowtoreinforcebothenergysecurityandindustrialcompetitiveness,inparticularthroughthepotentialfor“near-shoring”(and“friend-shoring”),definedasatransferofbusinessactivitytowithinadomesticborder.Severalpiecesoflegislationstandoutinthisregard:•InAugust2022,theUnitedStatespassedtheInflationReductionAct(IRA),ahistoricbillforclimatelegislationwhichwillallocateatleast$369billioninincentivesforcleanenergy,andalsoincludesmanyprovisionsfordomesticproductionacrossmultiplecleanenergytechnologysupplychains.13TheIRAispartofawiderpolicypackage,whichtogetherprovidesfederalandstatespendingofnearlyapproximately$1trillionoverthenextdecade.14•Inresponse,theEUhassetoutastrategytosupportitsowndomesticproduction;therecentlyannouncedGreenIndustrialDealPlan,ofwhichtheNetZeroIndustryAct(NZIA)ispart,setstargetsforincreasingdomesticsupplyacrossrawmaterialsandcleanenergytechnologies,alongwithsupportingmeasures.15Currently,thereisexistingEUsupportforcleanenergytechnologymanufacturinginplace(e.g.,viaEUInnovationFundandEuropeanInvestmentBankloans),whichsomeestimateisbroadlyinlinewithIRA-levelspendingonmanufacturingsupport;however,EU-levelsupportremainsfragmentedacrossanumberofinstruments.16EUfundingandpolicyapproachesarediscussedinmoredetailintheaccompanyingEUPolicyToolkit.•Indiahasalsosetoutprovisionsacrossitstradeanddomesticmanufacturingpolicy,whichincludeProductionLinkedIncentiveschemestoboostdomesticmanufacturingforEVsandsolarPVmodules,aswellasimporttariffsonsolarmodulesmanufacturedinChina.17However,thegrowingglobalcleanenergysystemmeansthisisnota“zero-sumgame”,asthisInsightsBriefingwilldiscussfurtheron.Itiscriticalthatnationalstrategiesforsupplychainscontinuetofosterstabilityatthegloballevel,essentialforasmoothtransition.ThefinalchapterofthisInsightsBriefingoutlineskeyconsiderationsforpolicymakersandindustrythatreflectbothasetofbeneficialactionsatthegloballevelforsupplychains,aswellassomeconsiderationsfordomesticpriorities.11IEA(2023),EnergyTechnologyPerspectives.12Forexample,thehighcarbonintensityofpolysiliconproduction.Seee.g.,IEA(2022),SpecialreportonsolarPVglobalsupplychains.13BipartisanPolicyCenter(2022),Inflationreductionactsummary:Energyandclimateprovisions.14OtherpackagesincludetheIRANewLoanandLoanGuaranteeAuthority,theInfrastructureInvestmentandJobsAct,andtheCHIPS&ScienceAct.KayaAdvisory/InevitablePolicyResponse(2022),TheUSdiscoversitsclimatepolicy:Aholisticassessmentandimplications.15EUCommission(2023),Thegreendealindustrialplan:PuttingEurope’snet-zeroindustryinthelead.16Bruegel(2023),HowEuropeshouldanswertheUSInflationReductionAct.17Notethattherearealsoapprovedmanufacturerlistsandlocalcontentrequirements–butthesehavebeentemporarilysuspended.S&PGlobal(2022),India’ssolarpowerprospectscompromisedbysteepimportduty,commodityhikes;IndianMinistryofHeavyIndustries(2022);PVMagazine(2022),Indiangovernmentapprovessecondphaseofsolarmanufacturingincentivescheme.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains10Chapter22MappingcleanenergysupplychainsandassessingrisksThischapterprovidesamappingofsupplychainsacrossselectedkeycleanenergytechnologiesandpresentsanoverviewofthekeyrisksthatcouldemergeacrossthislandscapeuntil2030.Itwillcoverinturn:•Aframeworkforassessingrisksacrosssupplychains.•Anoverviewofthesupplychainstructureandriskassessmentforeachtechnology.FrameworkforassessingsupplychainrisksTheanalysisinthisreportisbasedaroundthreekeydimensionsforsupplychainrisks,allofwhichcouldleadtohigherprices,shortagesforkeyinputs,ordelaysinmanufacturinganddeployment.1.Theriskofmarkettightness,resultingfromanimbalancebetweensupplyanddemand.2.Environmentalandsocialconcerns.3.Thehighconcentrationofproductionacrossgeographies/companies.Acrossthesedimensions,theanalysisconsiderswhethertheriskisprimarilyashort-termphenomenon,likelytobedisruptiveinthenext1–3years,orwhetheritcouldbeamoresustainedlonger-termpressurepointoutto2030.Theanalysisalsospecificallyexcludessupplychainrisksarisingfromtradetensions,18whichareofteninthemselvesresponsestoperceivedrisksaroundhighconcentrationofproduction.1.RiskofmarkettightnessTheissueofmarkettightness–ortheinabilityofsupplytokeeppacewithgrowingdemand–canbepresentatdifferentsupplychainstages,frommaterials,tomanufacturedcomponents,totransportmarkets.Threefactorsdeterminetheseverityofrisk:•Demand:Whatistheoutlookfordemandto2030?Canmaterial/componentinputsbeeasilysubstitutedinresponsetohighpricesorshortages?Canmaterialintensitybereduced?Isthematerial/componentusedwidelyacrossenergytransitiontechnologiesorthebroadereconomy?•Supply:Whatistheoutlookto2030?Arethereanybarrierstoscalingupsupplyatpace,intermsofmines,factoriesforcomponents,equipment,ortransportinputs(e.g.,vessels)?Havetherebeenupwardrevisionstorecentsupplyoutlooks?Isthereanyevidenceofthemarketshowinglonglagsorunresponsivenesstopricesignals?•Timing:Howlongaremarketimbalancesexpectedtolastfor?Aretheselikelytobeshort-livedphenomenawhicharepartofglobalsupplychainvolatilityforanymarket,oraretheylikelytobeprotractedcrunchesoverseveralyears?Inturn,thereareseveralfeaturesofsupplychainswhichshapetheabilityofthemarkettorespondmorequicklyormoreslowly:•Leadtimes:Thereissignificantvariationacrossleadtimesacrossstagesofsupplychains.Broadly,miningisthemostsupply-inelasticarea,withtimescalesfornewlarge-scaleminingprojectsrangingbetween5–20years,dependingonthematerialtypeandprojectlocation.19Leadtimesforbuildingnewfactoriesforcomponentsandtransportinputsaregenerallylower,under5years[Exhibit2.1].Theremaybescopetoacceleratesuchtimescales,anddiscussionsinboththeUSandtheEUmayleadtoprovisionstospeeduptheplanningandpermittingofstrategicprojects–butthisisstillsomewhatuncertain.20•Complexityofsupplychains:Withinthecomponentspace,thereisalsosignificantvariationacrossthecomplexityandbarrierstoentryfordifferentsupplychains,whichwilldependonfactorssuchasahigher18Forexample,thelikelihoodofoneparticularcountryintroducingmeasuressuchastariffs,exportquotasorbansformaterials,componentsorproducts.19IEA(2021),Theroleofcriticalmineralsincleanenergytechnologies.20BNEF(2023),Europe’sBidtoReshoreCleanTechPullsitsPunches;Brookings(2023),Howtoreformfederalpermittingtoacceleratecleanenergyinfrastructure.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains11Chapter2numberofsubcomponents,greaterspecialisationandspecificityforcomponentsandtransportinputs,andhigherregulatoryspecificity(e.g.,differentefficiencystandardsforheatpumpsacrossdifferentgeographies).21Broadly,acrossthetechnologiesinthescopeofthisreport,therearetwodifferentlevelsofcomplexity:–Lowercomplexity,mass-producedproducts,suchassolarPVmodulesandlithium-ionbatterycells.–Morecomplexproducts,suchaswindturbines,wherespecificationscanbemoretailoredtospecificneedsandlocations,andwherethetransportandlogisticsismorecomplexgiventheneedtotransportverylargecomponents;forexample,somelargerwindturbinecomponentscannolongerbetransportedviarail.222.EnvironmentalandsocialconcernsCleanenergytechnologysupplychainscanbeassociatedwithseveralenvironmentalandsocialimpacts,includinglifecyclecarbonemissions,localenvironmentalimpacts,andincidencesofchildandforcedlabour,andlowpaidand/orartisanmining.Ifnotaddressed,thesecouldpreventminingandmanufacturingfromscalingasrapidlyasisrequired.Keyconsiderationstoassessthelevelofriskinclude:•Carbon:Whataretheembeddedcarbonemissionsofproductionacrossmaterials,components,transportsteps,andthefinalproduct?Thiscanbebestassessedusingalifecycleemissionsintensitywhichcomparestothetechnologyitisdisplacing.23•Localpollution,nature,andbiodiversity:Istheresignificantlocalairorwaterpollution,tailingsproduction,andhowwellarethesemanagedindifferentlocations?Whataretherequirementsfornaturalresources(e.g.,water),anddoesthelandfootprintofdevelopmenthaveasignificantimpactonnature/biodiversity?•Humanrightsandsocialconcerns:Arethereanyconcernsaroundtheuseofchildlabour,orforcedlowpaidlabour?Aretheimpactsonlocalcommunitiesbeingmanagedappropriately?ManyoftheseimpactsareconcentratedattheminingstageandtheETCisplanningonaddressingtheseindetailinanupcomingreportonMaterialandResourceNeedsfortheEnergyTransition.Exhibit2.1TimescalesforminingprojectsarelongerthanformanufacturingandtransportAverageobservedleadtimeforselectedsupplychainstepsYears(Min–Max)0510152025Small-scalemine(discoverytoproduction)Large-scalemine(discoverytoproduction)SolarPVmoduleproductionplantEVassemblyplantCommercialTruck(Class8)(timefordelivery)Windinstallationvessels(timefordelivery)Refinery2–105–252–50.5–21–31–22–4MiningTypicalmineleadtimesrangefrom4–7yearsforlithiumorsmaller-scaleprojects,butcanbeashighas15–20forlargenickelandcoppermines.Brownfieldexpansionscanalsobemuchfaster.Buildingnewrefiningcapacityisfasterthannewmines.ManufacturingFactoryleadtimesdependonthecomponentsbutaretypicallylessthan5years.TransportandlogisticsTypicalleadtimestobuildnewtransportinputsvarybutareveryshort,exceptforshipping.Source:IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;IEA(2023),Energytechnologyperspectives;PetavratziandGunn(2022),Decarbonisingtheautomotivesector:aprimaryrawmaterialperspectiveontargetsandtimescales.21MalhotraandSchmidt(2020),Acceleratinglow-carboninnovation.22USDoE(2022),WindEnergySupplyChainDeepDiveAssessment.23Seee.g.,IEA(2023),Energytechnologyperspectives;PowerShift(2023),Metalsfortheenergytransition.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains12Chapter23.Highconcentrationofproductionacrossgeographies/companiesThefinalriskdimensioniswhetherthereisexcessiveconcentrationofproductionatanystageinaspecificgeography,oracrossasmallnumberofcompanies(e.g.,amonopolyoroligopolymarketstructure).Keyconsiderationsforthisriskinclude:•Singlepointoffailure:Isthereasignificantconcentrationofproductioninasingleminesite,factory,country,orcompanythatcouldleadtooutsizeddisruptioniftherewasahighlylocalisedshock?•Marketconcentrationinasmallgroupofcompanies:Isthereasignificantlyhighconcentrationofproductioninalimitednumberofcompaniesthatcouldleadtodistortiononpricing?•Marketconcentrationinoneorasmallgroupofcountries:Fromaglobalperspective,diversifiedsupplychainsarelikelytobemoreresilientinthefaceofdisruptiveglobalgeopoliticaldevelopments.Highlevelsofconcentration(e.g.,around75%oraboveofproduction)inoneorfewcountriesisassessedasarisk.However,theserisksarebalancedagainstconsiderationsofenergysecurity.Whatisdefinedasan“excessive”levelofconcentrationwilldependonaspecificcountryperspective.Critically,onedimensionthatisnotconsideredariskisadiversifiedbaseofproducerswhoseownershipisconcentratedwithinasmallnumberofcountries,withinreasonablelimits(e.g.,amajorityofbatterymanufacturersareheadquarteredinAsiabuthaveoperationsglobally).Fromariskassessmentperspective,aslongasthelocationofproductionisdiversified,concentratedownershipfromasinglecountryorsmallgroupofcountriesisunlikelytoposeanymajorissues–solongasthispositionisnotanoverwhelmingproportionoftheoverallmarket.BoxAProfitabilityacrosscleanenergysupplychainsRecently,therehavealsobeenconcernsovertheprofitabilityofsomemanufacturersincleanenergysectors,forexampleintheEuropeanwindindustry.1Supplychaindynamicscanplayaroleindrivingprofitabilityconcerns–forexample,highercommoditypricesin2022haveloweredthemarginsofwindturbinemanufacturers,unabletopassonhighercoststodevelopersbasedoncurrentcontracts[Exhibit2.2].However,overallprofitabilitydependsonawidernumberoffactors,includingrevenuemodelsandmarketdesign,marketsize,timetakenfromcontracttopayment,andthecomplexityoftheproduct(e.g.,amass-producedproductwithlowerbarrierstoentrycouldleadtolowermargins).Concernsoverprofitabilitycouldalsopotentiallyimpactsupplychainstabilityinthemselvesiftheyweretoleadtobankruptciesofmajorsuppliersinthissector.Overall,thisissueisamorecomplexriskandasystematicassessmentofprofitabilityprospectsacrosscleanenergysupplychainplayersisoutsidethescopeofthisreport.1FinancialTimes(January2023),Europe’swindindustryflagsfurtherweaknessin2023despiteenergydemand.Exhibit2.2HighexposuretocommoditypriceshashelpeddriveupwindturbinepricesinpastfewyearsandhitprofitabilityMetalandtotalwindturbinepriceThousand$/MW201620172018201920202021202202004006008001,000109923921320CompressedmarginsMaterialcostSteelAluminiumNeodymiumCopperTurbineSource:BNEF(2023),Transitionmetalsoutlook.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains13Chapter2MappingandriskassessmentacrosstechnologiesExhibit2.3presentsanoverviewofsupplychainstructuresacrosssixkeytechnologiesandhighlightstrendsthatcouldinfluencetheshapeofthesesupplychainsto2030,includingthecompositionofrawmaterials,components,andtransportneeds.Thefollowingsectionscoverconclusionsfromriskassessmentsacrosseachtechnology.Sources:SolarPV:IRENA(2021),Criticalmineralsfortheenergytransition;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;FraunhoferISE(2022),PhotovoltaicsReport;BNEF(2023),Transitionmetalsoutlook;Hallametal.(2022),Thesilverlearningcurveforphotovoltaicsandprojectedsilverdemandfornet-zeroemissionsby2050;IEA(2022),SpecialreportonsolarPVglobalsupplychains;BNEF(2023),1QGlobalPVmarketoutlook;USDoE(2022),Solarphotovoltaicssupplychaindeepdiveassessment.Wind:USDoE(2022),WindEnergySupplyChainDeepDiveAssessment;BNEF(2021),WindTradeandManufacturing:ADeepDive;BNEF(2022),2HWindturbinepriceindex;BNEF(2023),Offshorewindexpansionunderthreatfromvesselshortage;BNEF(2020),35MWWindturbinestolowermaterialdemand;BNEF(2023),Transitionmetalsoutlook.Batteries:BNEF(2022),Long-termelectricvehicleoutlook;BNEF(2022),Lithium-ionbatterypricesurvey;BNEF(2023),Sodium-ionbatteriesmakeinroadsinpassengercars;McKinsey&Co.(2022),Lithiummining:HownewproductiontechnologiescouldfueltheglobalEVrevolution;USDoE(2022),Energystoragesupplychainsdeepdiveassessment;Heetal.(2021),Consideringcriticalfactorsofsilicon/graphiteanodematerialsforpracticalhigh-energylithium-ionbatteryapplications;NatBullard(2023),Decarbonization:Thelongview,trendsandtransience,netzero.Grids:BNEF(2023),Newenergyoutlook:Grids;BNEF(2020),CopperandAluminiumCompetetoBuildtheFuturePowerGrid;BNEF(2021),Powergridlong-termoutlook;USDoE(2022),Electricgridsupplychainreview;BEIS/NationalHVDCCentre(2021),HVDCsupplychainoverview;Alassietal.(2019),HVDCTransmission:Technologyreview,markettrendsandfutureoutlook.Heatpumps:IEA(2022),TheFutureofHeatPumps;BEIS(2020),HeatPumpManufacturingSupplyChainResearchProject.Electrolysers:BNEF(2022),Globalelectrolyzeroutlook2030;BNEF(2022),ElectrolysissystemCAPEXby2050–updatedforecast;EPOandIRENA(2022),Patentinsightreport.Innovationtrendsinelectrolysersforhydrogenproduction;ITM-Power(2021),GreenHydrogen:AnElectrolyserManufacturersPerspective;Bristowe,G.;Smallbone,A.(2021),TheKeyTechno-EconomicandManufacturingDriversforReducingtheCostofPower-to-GasandaHydrogen-EnabledEnergySystem;Vattenfall(2022),Vattenfallaimstobuildtheworld’sfirstoffshorehydrogenclusterintheNetherlands.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains14Chapter2Exhibit2.3SupplyChainsMappingOverviewMajorRawMaterials(MinedorProcessed)MajorComponents(Manufacturing)TransportandLogisticsFinalProductSolarPV•Steel•Aluminium•Glass•Copper•Quartz>metallurgicalgradesilicon(MGS)•Silver•Polysilicon>Ingot•Ethylenevinylacetate(EVA)•Fluorinatedpolymers(PVF,PVDF)•Wafer•Cell•PVModule•Installationsystem:inverterandmountingsystem•Internationalshipping•Localtrucking•LocalmountingandinstallationSolarplant/rooftopsolarMajortrends:SolarPVmodulesaredesignedtobehighlymass-manufacturedandcanbeeasilystacked,truckedandshipped.AroundhalfofallsolarPVmodulesmanufacturedin2021weretradedbetweencountries.Continuingefficiencyincreasesat~2%p.a.,withabsolutemoduleefficienciesexpectedtoreach25%by2030,drivecontinuousdecreasesinmaterialscontentperGWofsolarcapacityatwaferandmodulelevel,e.g.,steelcontentexpectedtofall~15%by2030,silicon~20%.Specificinnovationtodrivedownbothsiliconusageandsilverdemandfromsolarisalsotakingplace,helpingreducedemandfurther.Thin-filmtechnologieslikelytomakeuponly<5%ofsolarPVmarketto2030–thereforeanymaterialsupplyissuesforthin-film(e.g.,tellurium,cadmium,indium)unlikelytosignificantlyimpactmarket.Wind•Concrete•Steel•Iron(cast)•Glass/carboncomposites•Copper•Zinc•Aluminium•Chromium•Manganese•Nickel•RareEarthElements(e.g.,neodymium,dysprosium)•Foundation•Tower•RotorandBlades•Nacelle:Generator,Gearbox,Bearings,Semiconductors•Rail•Truck•FoundationInstallationVessels(FIV);WindTurbineInstallationVessels(WTIV);CableLayingVessels(CLV)•HeavycranesWindturbine/powerplantMajortrends:Overalltrendtowardslargerwindturbines(particularlyforoffshore)ishelpingmanufacturersdrivedownmaterialscontentforeveryMWhgenerated,butmakingmanufacturingrequirementsmorecomplex(e.g.,somecurrentfactoriesnolongerabletoproduceattheselargerspecifications),andchanginglogisticsrequirements(e.g.,sometransportbywater,road/railnotpossible,andwithspecificvesselsandcranes).Technologiesforwindturbinerotation(e.g.,gearboxesgeneratorsanddirect-drivegenerators)existthatusefewerpermanentmagnetswithREEbuttrendisnotpushinginthisdirection.Decliningcopperandaluminiumusageinonshorewindturbines,butreversetrendinoffshoreaswindfarmsarelocatedfurtherawayfromshoreandmakeuseofhigher-voltagetransmissionlines,drivingupcopperrequirements.Batteries•Copper•Lithium•Graphite•Nickel•Cobalt•Manganese•Aluminium•Steel•Lithiumcarbonate/hydroxide•Nickelsulphate•Cobaltsulphate•Manganesesulphate•Electrolyte•Polyolefins•Cell>Module>Pack:Cathodeactivematerials,Anodeactivematerials,Electrolyte,Separator,Casing•Batterymanagementsystem:Electronics/semiconductors,Sensors•InternationalshippingBatterywithmanagementsystemMajortrends:Batteriesaredesignedtobehighlymass-manufacturedandaretypicallyproducedclosetoelectricvehicleassemblyfactories.Batterychemistrychoicesanddevelopmentkeydeterminantofmaterials:•Low-cobaltnickel-manganese-cobalt(NMC)batteries>reducesdemandforcobalt,increasesdemandfornickel.•Lithium-iron-phosphate(LFP)batteries>reducesdemandfornickelandcobalt,increasesdemandforlithium.•Developmentofsodium-ionbatteries(commerciallycompetitivebylate2020s)>reducesdemandforlithium.•Substitutionofgraphitewithsilicon>increasesbatteryenergydensityandreducesdemandforgraphite.Continuingbatteryenergydensityandpackingefficiencyimprovementsthroughto2030(reaching~250Wh/kg)helpdrivecontinuousdecreasesinmaterialsneededtoachieveagivenvehiclerange,drivingdownmaterialcontentforEVs.Notes:Thiscanbeachievedthroughamixofbatterycathodeandanodechemistries,reducedvoltagelosses,orimprovingthepackingefficiencyofcellswithinapack.BNEFestimatethatbatteryenergydensityatthepackleveldoubledfrom87Wh/kgto166Wh/kgbetween2010–20,andcouldreachover240Wh/kgbytheendofthisdecade.CATLhaverecentlyannouncedasemi-solidstatebatterycapableofreachinganenergydensityupto500Wh/kg–seePVMagazine(2023),CATLlaunches500Wh/kgcondensedmatterbattery.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains15Chapter2Exhibit2.3SupplyChainsMappingOverviewMajorRawMaterials(MinedorProcessed)MajorComponents(Manufacturing)TransportandLogisticsFinalProductGrids•Bauxite•Copper•Ironore•Lead•Metalalloys:bronze,stainlesssteel,zinc•Wood•Aluminium•Steel•Concrete•Polymers•Powerlines:Conductors,Towersfortransmissionlines,polesfordistributionlines,Insulators•Substations:Transformers,Switchgears,Circuitbreakers,Capacitorbanks,Busbars•SubseaInstallationVessels•Truck•Rail•HeavycranesLow/highvoltagepowerlines;DistributionsubstationsMajortrends:Gridsupplychainsarecharacterisedbyrelativeeaseofglobaltransport–substationequipmentiseasilystackedandtransported;cablesareeasilywoundintoreelsordrums.However,thereispotentiallyconstrainedsupplyofsubseainstallationvesselsforcabling(thereareonlysevenintheworld).Aluminiumandcopperaresubstitutableinoverheadlines(aluminiumoftenfavouredbecauselowercostandweightforsameconductivity),butcopperisbettersuitedforundergroundandsubmarinelinesduetohigherintrinsicconductivity,higherstrength,andbetterthermalresistance.Technologyevolutionpointingtodifferentimpactsformaterialsintensity:•Greaterundergroundingandoffshoringofpowerlineswillresultinanincreaseinaveragematerialintensity,duetoneedsforgreaterthicknessforhighertemperatures,andprotectivelayers.•MaterialsintensitymaybemitigatedbyreplacementsofHVACbyHVDClines(ACneedsthreeconductors,DCtwo).•Increaseduseofresidentialsolarandstoragecouldreduceoverallpaceandscaleofgridexpansionrequired.HeatPumps•Steel•Copper•Nickel•Aluminium•Polymers•Refrigerant•Lubricatingoil•Pumpand/orfan•Heatexchangers(evaporator,condenser)•Compressor•Expansivevalve•Wiringandchips•Insulation•Pipework•Housing•Internationalshipping•LocaltruckingHeatpumpMajortrends:Heatpumpscanbeeasilymass-manufactured(similartoair-conditioningunits)andcurrentlyhavealowerlevelofinternationaltrade,duetotheneedtoadapttolocallawswithspecificationsonrecycling,efficiency,voltageetc.,aswellasneedforcarefulhandlingtoavoidrefrigerantleakage.Somevariationamongmaterialneedsfordifferenttypesofresidentialheatpumps,suchasthemostcommontype,air-sourceheatpumps(ASHPs)(over80%ofcurrentmarket),andgroundsourceheatpumps(GSHPs).ASHPrequireslightlymoresteelandcopperthanGSHPs,butlesspolymersandcementmortarforundergroundclosedloopsystems.Naturalrefrigerants(e.g.,propane,CO2,ammonia)couldreplacesyntheticworkingfluidswithhigherGWPintensity(F-gases).Electrolysers•Steel•Nickel/Titanium•Copper•Aluminium•Zirconium•Graphite•Platinumgroupmetals(PGM)•Polymers•Electrolyserstack:Cathode,Anode,Electrolytes,Separator,Membrane,Bipolarplates,Framesandsealing•Othersystemcomponents•Internationalshipping•Rail•TruckElectrolyticH2plantMajortrends:Currentelectrolysersaremodularandeasilystackable,noissuesforglobaltrade.Plansforoffshoreelectrolysers(e.g.,byVattenfall)wouldneedtobemanufacturedforoffshoreuse,transportableincontainers.VariationamongmaterialneedsforAlkalineandProtonexchangemembrane(PEM)technology(alkalineis~80%ofthemarket).Alkalinerequiresnickel,zirconium;PEMrequiresPGMtitanium.Ongoinginnovationtoreduceandadaptmaterialsrequirements:•Developmentofhybridanionexchangemembrane(AEM)electrolyserswithoutPGMandwithhigherperformancethanalkaline.•DevelopmentofSolidOxideElectrolyzers,requiringnocopper,graphite,polymers,titaniumorPGM,lessnickelandmorezirconium,scandiumandyttrium.Mightgain~5%marketshareby2030.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains16Chapter2SolarSolarPVsupplychainsarecharacterisedbystrongdemandforfourkeymaterials(silicon,aluminium,copper,andsilver),andahighlycompetitivemanufacturingvaluechainwithsignificantChineseproductionatallstages.Thecurrentmanufacturingpipelinecouldbesufficienttoproduceupto1TWofsolarby2030.24Solarpanelsareeasilytradedglobally,withlargevolumesofimportsfromChinatoEuropeandIndia,whiletheUSmainlyimportsfromotherSoutheastAsiancountries,followingabanonChineseimports.25Thefollowingsectionpresentsconclusionsfromtheriskassessmentforsolaracrossthethreemaindimensions:1.Therecouldbepossiblemarkettightnessacrosskeymaterials(copper,silver),butthemanufactureofsolarcomponentsshouldbeabletoscalerapidly.Therecouldbepressureleadingtohighpricesforsilver(assolardemandis>10%ofthemarket,andthiscouldincreaseassolardeploymentrisesrapidly)aswellascopper.26Thepotentialforhighcopperpricesisdiscussedinmoredetailinthenextchapter,asitaffectsallcleanenergytechnologies.Polysiliconshortagesarenotaconcern.Supplyofpolysilicon(thehigh-purityversionofsiliconusedinsolarPV)hasexperiencedtwomajorboom-bustcyclesinthepastfifteenyears,impactingthecostofsolarPVmodules.27Themostrecentpricecycle,wherepricesrosefive-foldbetweenearly2021toyear-end2022,ledtoasubsequentrapidexpansioninpolysiliconproductioncapacityandanensuingfallinpricesthroughoutearly2023.28Althoughsuchpricecycleshaveleadtoashort-termslowingofpricedeclinesforsolarPVmodules,theyhavetendednottodisruptlong-termcostdeclines[Exhibit2.4].29Akeycomponentofsolarpanelsaretheencapsulantandbacksheetlayersofamodule,whichrelyonethylenevinylacetate(EVA)andfluorinatedpolymerssuchasPolyvinylfluoride(PVF)orPolyvinylidenefluoride(PVDF).30Thoughthereisnoshortageofthesematerials,highnaturalgasprices(whichleadtohigherinputcosts)togetherwithrapidlyrisingdemandfromsolarcouldleadtohighpricesforbothsetsofmaterials–buttheseonlymakeupasmallfractionofoverallsolarmodulecosts.31Althoughshippingandfreightcostsrosesharplyin2021–22,thesehavenowfallenbacktopre-pandemicprices.Futureblockagesarealsolikelytobeshort-termtrends,ratherthanlongertermdisruption.Exhibit2.4Althoughpolysiliconshortagesleadtoshort-termpricecycles,solarmodulepriceskeepfallingregardlessSolar-gradesiliconspotprice(LHS);Solarmoduleprice(RHS)LHS=$/kg,logscale;RHS=$/W,logscale0.11.010.01101001,0002005POLYSILICONSHORTAGEPOLYSILICONSHORTAGE2010201520202023Solar-gradesiliconspotprice(LHS)MonocrystallineSimoduleprice(RHS)Source:BNEF(2023),Interactivedatatool–Solarspotpriceindex;BernreuterResearch(2023),PolysiliconPriceTrend;OurWorldinData(2023),SolarPVModulePrice.24IEA(2023),Thestateofcleantechnologymanufacturing.25IEA(2022),SolarPVglobalsupplychains.26Hallametal.(2022),Thesilverlearningcurveforphotovoltaicsandprojectedsilverdemandfornet-zeroemissionsby2050.27Seee.g.,BernreuterResearch(2023),Polysiliconpricetrend.28BNEF(2023),1QGlobalPVmarketoutlook.29BNEF(2022),4QGlobalPVmarketoutlook.30PVFandPVDFarepolymerswithhighresiliencewhichhaveacomplexvaluechain,startingfromfluorsparminingandhydrofluoricacidproduction.Seee.g.,ThunderSaidEnergy(2022),Solar:capacitygrowththrough2030and2050?31ThunderSaidEnergy(2022),Ethylenevinylacetate:Productioncosts?;ThunderSaidEnergy(2022),Solar:capacitygrowththrough2030and2050?Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains17Chapter22.Environmentalandsocialconcernsaresevereacrossthesolarsupplychain,particularlyinrelationtopolysilicon.PolysiliconproductioninXinjiangmakesuparound30%oftotalsupply,wherethereiscurrentlyveryheavyuseofcoalpower,leadingtohighlife-cycleemissionsfortheproductionofsolarPVmodules(althoughrapidrenewablesdeploymentshoulddecreasethisincomingyears).32Further,therehavebeenallegationsoftheuseofforcedlabourandhumanrightsabusesinboththesupplyofcoalpowerandtheproductionofpolysiliconinthisregion.33ThisissueisdiscussedinmoredetailinChapter3.3.Thesolarsupplychainishighlygeographicallyconcentrated.ThesolarsupplychainishighlyconcentratedinChina,frompolysiliconproductionthroughtomoduleassembly.Thecurrentwafer-to-modulevaluechainisveryhighlyconcentratedinChina,withover70%of2021manufacturingcapacityforwafers,cellsandmodules[Exhibit2.5].34ThepastfiveyearshaveseensomediversificationtotherestofSoutheastAsia,withincreasedproductioninMalaysia,Vietnam,andThailand,buttogetherthesemakeuplessthan10%ofthemarketandarefocusedonlyonthesimplestproductionstageofmoduleassembly.AlthoughalargefractionofChineseproductionistomeetdomesticdemand,35theveryhighlevelsofconcentrationcouldbeacauseforconcerniftradetensionsariseincomingyearsorifproductioncomesunderstraininkeyregions.36Fromacompanyperspective,themanufacturingcapacityofsolarmodulesisquitediversified,withstronglevelsofcompetitionthroughoutmostofthevaluechain;thetop-fivemodulemanufacturerscontrolledaround45%oftotalcommissionedcapacityin2022.37Exhibit2.5Thankstohighereconomiesofscaleandlowercosts,ChinahasprogressivelygrownitsshareinthePVmodulesupplychainPolysilicon:costcompetitivenessofglobalmanufacturingplantsYaxis:polysiliconvariableproductioncost($/kg);Xaxis:2022estimatedproduction(t)020406080100PolysiliconWafersCellsModules024681012141618200200,000400,000600,000800,0001,000,0001,200,0001,400,0002022estimatedproduction(t)Weightedaveragecost:8.2Lowcostsdrivenmainlybycheapelectricityco-locatedwithproduction,aswellaslargeeconomiesofscale.PVsupplychain:shareofglobalmanufacturingcapacitybygeographyandsupplychainstepShareofglobalsolarPVmanufacturingcapacity,2021,%~40%of2021capacityinstallswereinChina.ChinaAPACN.AmericaEuropeIndiaRoWSource:BNEF(2023),1QGlobalPVmarketoutlook;IEA(2022),SolarPVglobalsupplychains.Polysiliconvariableproductioncost($/kg)32IEA(2022),SolarPVglobalsupplychains.33TheBreakthroughInstitute(2022),Sinsofasolarempire;Murphy&Elimä/SheffieldHallamUniversity(2021),Inbroaddaylight.34IEA(2022),SolarPVglobalsupplychains.35Chinesedomesticinstallationswereapproximately70GWin2021,comparedtoapproximately180GWofinstallationsand350GWofmanufacturingcapacity.IEA(2023),Energytechnologyperspectives.36Forexample,in2022factoryfiresinXinjiang,anddroughtsthroughoutSichuan,bothledtotemporarydecreasesinproduction.Seee.g.,PVMagazine(2022),Chinapolysiliconproducershutsdownfactoryduetofire;Bloomberg(2022),PowercrunchinSichuanaddstoindustry’swoesinChina.37BNEF(2023),Interactivedatatool–Solarequipmentmanufacturers.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains18Chapter2WindWindsupplychainsarecharacterisedbystrongdemandforsteelandaluminium,andaneedforrareearthelementsinpermanentmagnets.Crucialcomponentsareturbinebladesandthenacelle,whichhousesthegearboxandgenerator.Theproductionofwindturbinesisfairlydistributedgeographically;forexample,bothEuropeanandChinesedomesticcapacityissufficienttomeettheirrespectivedomesticdemand.381.Shorter-termperiodsofpricevolatilityaremorelikely(astheglobalwindindustryiscurrentexperiencing),drivenbyhighexposuretocommoditypricevolatilityandasupplychainincreasinglycharacterisedbyhighercomplexitycomponents.Over90%oftotalmaterialmassforturbinesissteel,wheretherearenoavailabilityorsupplyconcerns,39thoughitcandrivealargefractionoftotalcostsandareexposedtocommoditypricevolatility.Thespikeinsteelpricesthroughout2021–22hascontributedtoariseininputmaterialcostsforwindturbinesandtightermarginsformanufacturers[BoxA].Demandforrareearthelementsfromturbinesisalsoexpectedtogrowsharply,raisingsomescopeforsupplyrisks.Mostwindturbinesneedsignificantamountsofneodymium(aswellasdysprosiumandpraseodymium),withthehighestdemandarisinginpermanentmagnet-basedwindturbines–thesematerialsareusedinhigh-performancemagnetsthatconverttherotationofturbinebladesintoelectricity.40Thereispotentialtoshifttolessrareearth-intensiveturbinedesigns,41butotherfactors(e.g.,performance)typicallydominatedesignchoice.SupplyofrareearthsfromChinacanexpandrapidlyinresponsetohighprices,andthereisalsonewsupplyexpectedinMyanmarandtheUSA.42Specialisedwindturbinesandvesselscouldbeabottlenecktooffshorewindgrowthinthecomingdecade.Thegrowingsizeofoffshorewindturbinesiscausingfleetoperatorstoholdbackinvestinginnewvessels,astheywaitforcertaintyaroundwhatsizeandtypewillberequired.BNEFcurrentlyexpectshortagesoffoundationinstallationvesselsfrom2027onwards,whereasthereshouldbeenoughturbineinstallationvesselsthroughto2030.43Thiscouldholdbackapproximately10GWofinstallationsinChinaby2030,andapproximately25GWacrosstherestoftheworld,equaltoaround15%ofexpectedoffshorewindinstallationsby2030.4438BNEF(2023),WindDataHub.39Forexample,windpowercurrentlymakesupapproximately1%ofglobalsteeldemandandisexpectedtoriseto5–6%atmostovercomingdecades.BNEF(2023),Transitionmetalsoutlook.40EUCommissionJointResearchCentre(2020),Theroleofrareearthelementsinwindenergyandelectricmobility.41Forexample,byusingsynchronousgeneratorsorinduction-basedgenerators.Seee.g.,IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.42IEA(2023),Energytechnologyperspectives.43BNEF(2023),Offshorewindexpansionunderthreatfromvesselshortage;seealsoH-BLIX/WindEurope/PolishWindEnergyAssociation(2022),Offshorewindvesselavailabilityuntil2030:BalticseaandPolishperspective.44Ibid.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains19Chapter22.Environmentalandsocialconcernsarelowforwindpower.Eventhoughwindturbinesuselargeamountsofconcreteandsteel,life-cycleemissionsforwindpowerareverylow(<5gCO2e/kWh),45withlargepoweroutputofindividualturbines,longoperatinglifetimes(>25years),andrisingcapacityfactorsleadingtoveryshortcarbonpaybacktimescales.Environmentalconcernsaremainlylinkedtotheminingofrareearthelements.ThiswashistoricallypoorlyregulatedinChina,andislinkedtoproductionoftoxicwasteandlocalairpollution,46butenvironmentalstandardsinChinahaveimprovedinrecentyearsfollowingtightergovernmentregulation.473.RareearthsupplychainsarehighlyconcentratedinChina,andwhilewindcomponentmanufacturingisdiversified,allrecentgrowthhasbeeninChina.MiningandrefiningofrareearthelementsishighlyconcentratedinChina.Chinaaccountsforaround60%oftheworld’srareearthmining,90%percentofrareearthprocessing,and95%ofhigh-strengthrareearthpermanentmagnetproduction.48TurbineproductioncapacityinChinaandEuropeissufficienttomeetdomesticdemandovercomingyears[Exhibit2.6].However,muchoffuturemanufacturingcapacityisbeingbuiltinChina.AccordingtoBNEF,allnewinvestmentandannouncedinvestmentin2021and2022forwindturbinescamefromtheAsia-Pacificregion.49Exhibit2.6Windturbinemanufacturingtendstoberegionallydistributed,withEuropeandChinaabletomeetcurrentdomesticdemand,butsomeconcentrationexistsforkeycomponentsWinddemandanddomesticproductioncapacityGW20225555203034232030777320221622100%Nacelle14368%8%1559%59%Blade11319%49%Tower5032%38%Generator4335%47%Gearbox6914%33%BearingChinaEuropeWinddemandDomesticproductioncapacityShareoftotalnumberoffactoriesforwindturbineparts,2021%ChinaEuropeIndiaUSBrazilOtherNote:2030capacityadditionsaretakenfromBNEF’sshort-termforecast;manufacturingcapacityistakenfromBNEF(2023),Interactivedatatool–Windturbinemarketshares,andisassumedtoremainconstantfrom2025–30.Source:BNEF(2023),Interactivedatatool–Windturbinemarketshares;BNEF(2021),WindTradeandManufacturing:ADeepDive.45UNECE(2021),Lifecycleassessmentofelectricitygenerationoptions;Pehletal.(2017),Understandingfutureemissionsfromlow-carbonpowersystemsbyintegrationoflife-cycleassessmentandintegratedenergymodelling.46Seee.g.,Ali(2014),Socialandenvironmentalimpactoftherareearthindustries;BBCFuture/TimMaughan(2015),Thedystopianlakefilledbytheworld’stechlust.47Shenetal.(2020),China’spublicpoliciestowardrareearths,1975–2018.48IEA(2023),Energytechnologyperspectives;WoodMackenzie(2022),CantherestoftheworldrepelChina’smagneticpulloverrareearthmetals?49BNEF(2023),Europe’sBidtoReshoreCleanTechPullsitsPunches.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains20Chapter2BatteriesMostfuturedemandforbatterieswillcomefromelectricvehicles,withamuchsmallersegmentfromstationaryenergystorage[Exhibit2.7].Batteriesvarywidelyintermsofchemistries,withmostcurrentlyrelyingonfivekeyrawmaterials:lithium,graphite,nickel,cobalt,andmanganese.50EVsalsohavehighrequirementsforcopperandrareearthelements,aswellassemiconductorchips.CurrentbatterymanufacturingisconcentratedinChina,withEVassemblyspreadacrossChina,theUSA,andEurope.Batteriesfacethreesignificantchallengestoscalingrapidly,alongsidearangeofmoreminor,specificrisks:1.Pricespikesduetotightmarketscouldbeanissueforsomekeybatterymaterials,althoughinnovationisadriverinreducingrequirementsforsomeminerals;therearefewconcernsaroundscalingbatterymanufacturing.Mining:Thelithiummarketcouldbetightthroughto2030–theremaybeshortagesofhigh-purityrefinednickel,butcobaltdemandshouldnotbeaproblem.Supplyofbothnickelandcobalthasexpandedrapidlyinthepastfewyears,althoughsupplyofhigh-purityclass1nickelcouldstillbeablockage.51Therapidshifttolow-cobaltNMCandcobalt-andnickel-freeLFPbatteriesisreducingthescaleofthechallenge,especiallyforcobalt[Exhibit2.8].52However,theriskoflithiumshortagesishigh:demandisdifficulttosubstitute(sodium-ionbatterieswilllikelyonlyhaveasignificantmarketsharepost-2030,andeventhenmaylikelybelimitedtosmallervehicles)andsupplyneedstoexpandevenmorequicklythancurrentpipelinessuggest[seealsodetaileddiscussioninChapter3,andExhibit3.3].Components:Expandingcathodematerialproductionatpacecouldprovechallenging.Significantcapacityexpansionsareplanned:theIEAestimatearound14Mtperannumofcathodeproductionin2030,andBNEFestimateatotalpipelineofupto24Mtofannouncedprojects–wellinexcessofpotentialdemandof10–12Exhibit2.7Demandforbatterieswillgrowten-foldto2030,drivenbyadoptionofpassengerbatteryelectricvehicles,thoughthisremainsbelownet-zerotrajectoryAnnualbatterycapacitydemandTWh012345672015202020252030~11TWhannouncedbatteryproductioncapacityinpipeline.Passengervehiclesmakeup>65%ofbatterydemandin2030.BEV–passengerStationarystorageBEV–commercialOther(Consumerelectronics,E-buses,2/3-wheelers)Additionaldemandrequiredfornet-zerotrajectoryNote:DemandforecastisforBNEF'sEconomicTransitionScenario,whichisdrivenbytechno-economicsandcurrentmarkettrends.Source:SystemiqanalysisfortheETC;BNEF(2022),Long-termelectricvehicleoutlook;BenchmarkMineralIntelligence(2022),Lithiumionbatterygigafactoryassessment–November.50Thescopeofthisanalysisfocusesonlithium-ionbatteriesasthedominanttechnologyforcleanenergy(e.g.,inEVsandstationarystorage).51BNEF(2022),2HBatterymetalsoutlook.52NMC=Nickel-Manganese-Cobalt;LFP=Lithium-Iron-Phosphate.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains21Chapter2Mtin2030.53However,newprojectscouldbedelayedduetothehighcomplexityofengineering,production,procurementandconstruction,coupledwithpotentialbottlenecksforkeyequipmentsuchaskilns.ThesedelaysaremostlikelyinEuropeandNorthAmerica,wherearapidexpansionincapacityisplannedovercomingyears,startingfromalowbase.Manufacturing:Thereareveryfewconcernsaroundscalingbatteryassembly.Announcementsofplannedproductioncapacityfor2030adduptoover10TWh,whichiswellinexcessofdemandimpliedevenbyanet-zeropathway.54Asignificantproportionofthiscapacitymaynotbebuilt,assomebatterycompaniesfailtogainEVmanufacturersupplynominationsand,asaresult,cannotattractfinance.However,giventheintensityofcompetition,theneedforEVmanufacturerstosecuresupply,andthescaleofpublicsubsidiesavailable,itisunlikelythatbatteryproductioncapacitywillbeaseriousconstraintonEVsupply.2.Miningofbatterymaterialshassomeenvironmentalandsocialrisks–butthesearebeingaddressedbymanufacturersthroughoutthesupplychain.Eachmaterialhasaparticularsetofchallenges,includingwateruse(forlithium),carbonintensity(lithiumandnickel),andlinkstohumanrightsabusesandchildlabour(cobalt).ThisisdiscussedinmoredetailinChapter3.Therearealsoconcernsaroundembodiedcarbonemissionsfurtherdownthesupplychain,astherefiningofmaterialsintokeyprecursors(e.g.,lithiumcarbonate)oftenrequiressignificantenergyinputsandhightemperaturesabove800oC,leadingtohighemissionsincoal-intensivegrids.Manufacturingofbatteriesisalsocurrentlyemissions-intensive,partlyduetoheavycoaluseinChinesepowergrid.Exhibit2.8Li-ionbatteryindustryisshiftingrapidlytolowercobaltandlowernickelchemistries,drivingdowndemandprojectionsPassengervehiclebatterymarketshare%0%25%50%75%100%2015202020252030203505010050%reductioninforecastdemandduetotechnologyandmaterialssubstitution150200250300350202020222024202620282030NMC(111)NMC(532)NMC(622)NMC(811)NMC(721)NMC(955)N(M)CAL(N/M)OL(M)FPProjectedfuturecobaltdemandThousandmetrictonnes2019BNEFforecast2020BNEFforecast2021BNEFforecast2022BNEFforecastNote:N=Nickel,M=Manganese,C=Cobalt,F=Iron,P=Phosphate,O=Oxygen,A=Aluminium.Source:BNEF(2022),Long-termelectricvehicleoutlook.5310–12Mtassumesroughly1.5kgofcathodematerialperkWhofbatterycapacity,basedonamaximumbatterydemandof~7TWhin2030.SeeIEA(2023),Energytechnologyperspectives;BNEF(2023),Interactivedatatool–Equipmentmanufacturers.54BenchmarkMineralIntelligence(2022),Lithiumionbatterygigafactoryassessment–November;BNEF(2023)Interactivedatatool–Batterycellmanufacturers.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains22Chapter2Itshouldbenotedthatelectricvehiclesalreadyhavelowerlife-cycleemissionsthancombustionvehicles,evenwhenusingemissions-intensivebatteriesandgrids.55Thereisthepotentialtodecarboniseproductionthroughoutthesupplychainincomingdecades,bothfromelectrifiedhigh-temperatureheat(forrefining),andthedecarbonisationofthepowergrid(forbatterymanufacturing).Thisisalreadyoccurring–includinginChina–butmusthappenfaster.Thereisaclearopportunityforthecominggenerationofrefiningandmanufacturingtosethighstandardsforenvironmentalandsocialperformancewhilstmeetinggrowingdemand.563.HighconcentrationofsupplychaininChinaacrossallstages.Therearerisksaroundtheconcentrationofrawmaterialsupplyandprocessing:theminingofcobalt(70%DRC),nickel(45%Indonesia),lithium(50%Australia,26%Chile)isheavilyconcentrated.57Thesameistrueattherefiningstage,whereChinadominatesthesupplyofrefinedandprocessedformsofthesematerials.58Whilstthedistributionofreservesissomewhatphysicallyconstrainedduetoresourceendowments,thereisalargeropportunitytore-balancethelocationofrefiningoperations,forexampleasincentivisedbyrecentpolicyannouncementsintheUSandEurope.Furthermore,thedownstreamsupplychainisalsohighlyconcentratedinChina,whichproducesover80%ofthemarketforanodes,cathodes,electrolytesandbatterycells[Exhibit2.9].59Eventhoughalargefractionofthisproductionistomeetgrowingdomesticdemand,suchahighlevelofconcentrationleavesindividualcompaniesandcountriesexposedtosole-supplierrisks,andcouldleadtosupplyblockagesiftradetensionsworsen.Itisworthnotingthatmanufacturingofinnovativecathodechemistrieswithlowercriticalmetalrequirements(notably,LFPandNa-ion)iscurrentlyalmostentirelyinChina–meaningshiftingproductionofthesenewtechnologiestotheUSorEuropecouldbeevenmorechallenging.60SimilartothecaseforsolarPV,thereisintensecompetitionacrosscompaniesinthebatterysupplychain.ThelargestbatterymanufacturerisCATL,whichcontrolsaround18%ofcurrentglobalmanufacturingcapacity,andthetenlargestmanufacturershavearound60%ofthetotal.61Exhibit2.9ChinaholdsmajorshareacrossEVsupplychainCountrymarketshareofproductionstage,2022%SeparatorElectrolyteAnodeCathodeCellEVproduction89%84%58%10%26%90%94%94%OtherS.KoreaJapanEuropeUS/N.AmericaChinaSource:BNEF(2022),Localizingcleanenergysupplychainscomesatacost;BNEF(2023),Interactivedatatool.55Seee.g.,RicardoEnergy(2020),DeterminingtheenvironmentalimpactsofconventionalandalternativelyfuelledvehiclesthroughLCA.56Seee.g.,Minviro(2021),Shiftingthelens.57USGS(2023),Mineralcommoditysummaries.58IEA(2022),GlobalsupplychainsofEVbatteries;IEA(2023),Energytechnologyperspectives.59BNEF(2023),Interactivedatatool–Batteryequipmentmanufacturers.60TherearecurrentlyonlytwoLFPcathodemanufacturersinN.America,andoneinEurope–BNEF(2023),Interactivedatatool–Batteryequipmentmanufacturers.61BNEF(2023),Interactivedatatool–Batteryequipmentmanufacturers.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains23Chapter2GridsGridsupplychainsarecharacterisedbyhighmaterialneedsforcopperandaluminium,globallycompetitivemarketsforcomponents,andrelativeeaseofglobaltransport.62Overall,gridsupplychainsarenotexpectedtofaceanymajorimpedimentstoscaling,thoughtherecouldbeahigherriskofbottlenecksinsomespecialisedareas.1.Somemarkettightnessrisksexistduetocopperrequirementsandtheneedtorapidlyscalemorespecialisedcomponents.Therecouldbeconstraintsincoppersupply;however,thisissubstitutableinoverheadlines.Forthemorecommonoverheadpowerlines(representing70–80%ofnewpowerlineadditionsto205063),aluminiumhasbeenfavouredgivenitslowercostandlowerweightforthesamelevelofconductivity.Forundergroundandsubmarinecables,whicharegrowinginshare,otherpropertiesofcopper–higherintrinsicconductivity,higherstrength,andbetterthermalresistance–makecopperbettersuited.64Thepotentialforhighpricesofcopperisdiscussedinmoredetailinthenextsection.Thesupplyoflarge-scaletransformersandsubseahigh-voltagecablingcouldslowdowntheexpansionofpowergrids.•High-power,large-scaletransformersareseeinglongerleadtimesandrisingcosts,especiallyintheUnitedStates–totheextentthatthesewereincludedintheDefenseProductionActpassedbyPresidentBidenin2022tospurproductionofkeytechnologies.65Manufacturingofthiscomponentrequireslabour-intensivespecialiseddesign,withasingleunitcostingatleast$4million,andasurgeindemandisexpected–intheUnitedStates,manyoftheseunitsareoperatingpasttheirtechnicaldeadlines.66•Forhigh-voltagesubseacabling,challengesarisebothintheproductionofthecables,andlownumbersofsubseacableinstallationvessels(thereareonlysevenintheworld).672.Therearesomeconcernsaroundtheuseoffluorinatedgases(F-gases)ingridinfrastructure,butregulationisalreadypushingforreduceduse.F-gasesarewidelyusedasinsulationthroughoutthegridsystem,includingintransformers,substationsandswitchgear.However,F-gaseshaveaverystrongimpactasgreenhousegasesiftheyleak.68Innovationisongoingtodevelopequipmentwithlower-GWPgases,69andregulationisalsobeingintroducedtohelpthephase-outofF-gases.3.Thereissomelevelofconcentrationacrossproductionofkeygridequipment,butnotatthelevelofothercleanenergytechnologies.Acrossconductorsandtransformers,China,CentralandEasternEurope,andMexicoarenetexportersofkeygridequipment,whileWesternEuropeandNorthAmericaaredependentonimports.70Asmentionedintheintroduction,whileoutofscopeforthisreport,thereareimportantpotentialskillconstraintsinelectricitygridexpansion,whichwillbeassessedindetailinourforthcomingworkonissuesrelatingtotransmissionanddistributiongriddevelopment.62Thescopeof“grids”forthisanalysiscoversmajorphysicalinfrastructurefortransmissionanddistributioninfrastructure,includingpowerlines(overhead/underground/submarine;low-voltagetohigh-voltage),mountingstructures(towersandpoles),andsubstations(e.g.,transformers,switchgears,etc).Microgridsareexcludedfromthisanalysis.63BNEF(2021),Powergridlong-termoutlook.64BNEF(2021),Copperandaluminiumcompetetobuildthefuturepowergrid.65USDoE(2022),Electricgridsupplychainreview;T&DWorld(2022),Transformativetimes:UpdateontheUStransformersupplychain;E&ENews(2022),Howatransformershortagethreatensthegrid.66E&ENews(2022),Howatransformershortagethreatensthegrid.67USDoE(2022),Electricgridsupplychainreview;BEIS/NationalHVDCCentre(2021),HVDCsupplychainoverview;Alassietal.(2019),HVDCTransmission:Technologyreview,markettrendsandfutureoutlook.68Forexample,SF6hasaglobalwarmingpotential(GWP)around23,000timeshigherthancarbondioxide.USEnvironmentalProtectionAgency(2022),SulfurHexafluoride(SF6)Basics.69Seee.g.,SchneiderElectric(2020),SchneiderElectricwinsindustrialenergyefficiencyawardatHannoverMesseforSF6-freemediumvoltageswitchgear;SiemensEnergy(2023),Thepathtozero:F-gas-freepowertransmission.70OEC(AccessedFebruary2023),Electricconductors,nes<80volts,withconnectors;OEC(AccessedFebruary2023),Electricaltransformers.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains24Chapter2HeatPumpsHeatpumpsupplychainsarecharacterisedbyacommonmanufacturingbasewiththeairconditioningindustry,andahighlyregionalmarketwheremostheatpumpsareproducedlocally(thoughbyglobalcompanies).Indeed,manyheatpumpunitsaresoldas“reversibleheatpumps”,capableofdeliveringbothheatingandair-conditioningneeds.Overall,heatpumpsupplychainsareassessedaslowerriskthanothercleanenergytechnologies.1.Therearenoinherentbarriersfromamaterialsperspectiveortoscalingnewmanufacturingcapacity–thoughthelatterwillhavetoexpandrapidlytomeetgrowingdemand.Anybottlenecksthatcouldemergearoundcomponentmanufacturingarelikelytobeshort-lived.Overall,adiversifiedandcompetitivemarketacrossTier1andTier2manufacturersiswellpositionedtorespondtomarketdemandsignals.Giventhesynergieswiththeairconditioningindustry,therearelargermanufacturers(e.g.,Daikin,Mitsubishi,Midea)whocanproduceatscale,andrepurposingofproductionlinescanincreaseheatpumpmanufacturingintheshort-term.Itisimportanttonote,however,thatthemarketforcompressors(acriticalinputtoallheatpump/ACunits)islimitedtofewer,morespecialisedproducers.71Intheshort-term,therecouldbesometemporarybottlenecksaroundheatpumpcomponentmanufacturing,includingduetorequirementsforspecialistkitsuppliers.Thereissomechallengearoundevolvingregulationsonpermittedrefrigerants(especiallyF-gases),althoughcompaniesarealreadydevelopingthenextgenerationofrefrigerantstomeetrequirements.Thereisanincreasingregulatorydriveagainsttheuseoffluorinatedgases(F-gases)asrefrigerantsinheatpumpsduetotheirveryhighglobalwarmingpotential.Alternativegasessuchascarbondioxideorpropaneareanoption,withheatpumpmanufacturersalreadyadapting,althoughtherearesometechnicalandcostchallenges–andregulatorycertaintyisrequiredforthemtobeabletoplanaheadsufficientlyforthese.722.Themajorenvironmentalconcernregardingheatpumpsistheircurrentuseoffluorinatedgasesforrefrigeration,whichareaclassofgaseswithveryhighglobalwarmingpotential.Leakageofrefrigerantscancontributeupto40%oflife-cycleemissionsassociatedwithheatpumps,73whichhaspromptedastrongregulatorypushtoruleoutuseofhigh-GWPF-gases.3.Therearenoconcernsovermarketconcentrationforheatpumps,giventhediversifiedmanufacturingbaseacrosscountriesrelativetocurrentdemand,ashighlightedinExhibit2.10.Exhibit2.10Heatpumpsarenotwidelytraded–regionalmanufacturingcapacityissufficienttomeetsupplyacrosstheworldHeatpumpmanufacturingcapacitybycompanyHQsandplantlocation,andinstallations,byregion,2021ThermalGWEuropeNorthAmericaChinaJapanKoreaROWWorldTotal151920143530354733865254120120994797EuropeandN.Americacanmeetdomesticdemandwithlocalmanufacturing–butmuchofthisisownedbycompaniesheadquarteredoutsideofregion.Japanese-headquarteredcompaniesmakeupoverone-thirdofglobalmanufacturingcapacity–mostofitoutsideofJapan.GlobalmanufacturingcapacityofcompanieswithHQinregionManufacturingcapacitywithinregionInstallationsinregionNote:Globalmanufacturingcapacityin2021exceededinstallations.Thisistypicalofmanymanufacturingindustriesandisduetoarangeoffactorsincludingdemandforproducts,factoryutilisationratesandmanufacturingoperatingcosts.Source:IEA(2023),EnergyTechnologyPerspectives2023.71Forexample,Danfoss,BitzerorEmersonCopeland.BEIS(2020),HeatPumpManufacturingSupplyChainResearchProject.72IEA(2022),Thefutureofheatpumps.73Ibid.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains25Chapter2Whileoutofscopeforthisreport,akeychallengearoundbuildingheatpumpsatscalearetheskillsandlabourrequiredtocarryouthighvolumesofinstallations,especiallyatresidentiallevel[BoxB].BoxBDevelopingtheskilledworkforcetoenableheatpumpdeploymentTherapiddeploymentofheatpumps,aswellasaccompanyingefficiencymeasures(suchasinsulation,whichenablesheatpumpadoption),willrequiremajorgrowthinaskilledtechnicalworkforce,inparticulargiventhedispersednatureoftheresidentialmarket.Employmentintheheatpumpindustryspansseveraldimensionsincludinginstallation(abouthalfthetotalglobalheatpumpworkforce)andoperationsandmaintenance.Giventheneedtoscalefromasmallbase,rapidgrowthinthenumberofinstallersisrequired[Exhibit2.11].MeetingREPowerEUtargets,forexample,wouldrequirethenumberofinstallersintheEUtogrowfromaround40,000in2019to110,000in2030.1TheUKClimateChangeCommitteecitesestimatesthattodecarboniseresidentialheatingintheUK,around200,000newfull-timejobswillbeneededby2030,withthevastmajorityinheatpumpinstallation.2Leadtimesfortrainingskilledworkersintheseoccupations(eithervianewentrantsorreskilling,e.g.,fromboilerinstallers)cantakemultipleyears,astheyrequireobtainingspecificcertifications,inparticularduetotheneedtohandlerefrigerants.However,ifre-trainingofplumbingandheatingengineersisanoption,thiscaninsomecasesbeveryfast–ontheorderofdays,ratherthanyears.3Otherspecialisationpointsincludebeingabletoconductpropertyassessments,calculationofheatlossestodesigntheinstallation,andupdatingpartsoftheexistingheatingsystemandelectricalwiring.4TheEUiscurrentlyalreadyfacingashortageofworkersinoccupationsrelatedtoheatpumpinstallations,suchasplumbers,pipefitters,air-conditioningandrefrigerationmechanisms,andelectricians.5Unlessclearsignalsaresetaboutthenet-zerotrajectoryandheatpumpdeployment–andthereforefutureworkopportunities–workersmaybedissuadedfrompursuinglengthyandonerouscertificationschemes.1IEA(2022),TheFutureofHeatPumps;2UKClimateChangeCommittee,IndependentAssessment:TheUK’sHeatandBuildingsStrategy;3Ecuity/WestofEnglandCombinedAuthority(2021),Retrofitskillsmarketanalysis;4IEA(2022),TheFutureofHeatPumps;5IEAanalysisbasedonELA(2021).Exhibit2.11EvenunderIEA’sAnnouncedPledgesScenario,heatpumpinstallerswillneedtogrowby3.5timesacrosskeygeographiesEmploymentinheatpumpsbyregion/countryinAPS,2019and2030Thousandemployees010020030040020192030201920302019203020192030x2.5x2x3x4.5EuropeanUnionUnitedStatesChinaOtherkeycountriesO&MWorkersInstallersNotes:TheAnnouncedPledgesScenarioreferstoannouncedambitionsandtargets.ThisdiffersfromtheIEA'sNetZeroScenario,whichshowsapathwayfortheglobalenergysectortoachievenetzeroCO2emissionsby2050.ANet-Zeroscenariowouldfurtherincreaseskilledworkerneeds.EuropeanUnionestimateaccountsforREPowerEUtargets,O&M=operationsandmaintenance.Otherkeycountries=Australia,NewZealand,Canada,Japan,Korea,EurasiaandtherestofEurope.Source:IEA(2022),FutureofHeatPumps.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains26Chapter2ElectrolysersElectrolysersupplychainsarecharacterisedbydifferingrequirementsforthetwomajortechnologies:AlkalineandPEM(ProtonExchangeMembrane)electrolysers.Alkalineelectrolyserstacksrequirenickelandzirconiumaskeymaterials,whilePEMelectrolyserstacksrequireplatinumgroupmetals(PGMs,especiallyiridium,palladium,platinumandruthenium)andtitanium.Comparedwithothercleanenergytechnologies,electrolysersareatamuchearlierstageofdevelopment,whichmeansthatsupplychainswillneedtogrowevenmorerapidlyfromtheircurrentbase[Exhibit2.12].Riskconsiderationsacrossthethreedimensionsare:1.TechnologychoicebetweenPEMandAlkalinewilldeterminedemandpathwaysformaterialsandcomponents,butnomajorbarriersareexpectedoneithersideasinnovationcanreducematerialneeds.Whiletheelectrolysermarketisatveryearlystages,announcedmanufacturingcapacityhasbeengrowingrapidly.Therearesomepotentialsupplychallengesforrapidlyincreasingdemandfornickel(Alkaline)andplatinumgroupmetals(PEM).•Onnickel,however,demandfromelectrolysersismuchlowerthanfrombatteries,andlesshighpuritynickelisrequired,easingpotentialsupplyconcerns.•ForPGMs,althoughdemandmightriserapidly,totalvolumeswillbemuchlowerthancurrentdemandfromICEcatalyticconvertors.74Furthermore,themarketshareoutto2030islikelytobedominatedbyAlkalineelectrolysers,makingup~80%ofcurrentmarket[Exhibit2.12],easingthepaceofdemandgrowth–andinparallel,rapidinnovationistakingplacetoreducePGMintensityofPEMelectrolysers.75Fortotalmanufacturingcapacity,theextremelyrapidpaceofpotentialdemandandsupplygrowthforgreenhydrogenmakeitdifficulttojudgehowthebalancebetweensupplyanddemandwillevolve:•Until2022,wellbelowonemilliontonnes(Mt)ofhydrogenperannumwasproducedviaelectrolysis(outofabout95Mtperannumtotalproduction)andelectrolyserproductionhas,untilrecently,beenasmall-scalebusinesscharacterisedbyunautomatedprocessesandhighcosts.76By2050,ETCestimatessuggestthattotalglobalhydrogendemandcouldExhibit2.12Electrolysermarketissmallbutgrowingrapidly–manufacturingcapacityisn’taconcernbutPEMvs.Alkalinetrade-offswillbekeythekeymarketdynamicgoingforwardsAnnualelectrolyserinstallationsGW202212023320246202510202617202724202838202957203085x8550GWofmanufacturingcapacityexpectedby2025Alkalineelectrolysersrequire:Nickelfortheelectrodecatalystsandbipolarplatescoatings.Zirconiumforthemembrane/diaphragm.PEMelectrolysersrequire:PlatinumGroupMetals(Pd,Pt,Ir,Ru)fortheelectrodecatalystsandbipolarplatescoatings.Titaniumfortheporoustransportationlayersandbipolarplates.AlkalinePEMSource:BNEF(2022),Globalelectrolyseroutlook2030.74E.g.,currentautocatalystdemandisforplatinumisapproximately100tonnesperyr,anddeployingapproximately100GWofelectrolysersin2030withaloadingofapproximately0.3kgperMWofplatinumwouldgiveannualdemandofatmost30tonnesperyear.75Seee.g.,Kiemeletal.(2021),CriticalmaterialsforwaterelectrolysersattheexampleoftheenergytransitioninGermany.76IEA(2022),Globalhydrogenreview.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains27Chapter2reach500–800Mtperannum,ofwhichalargemajority(e.g.,approximately450–700Mt)willlikelybeproducedviaelectrolysis,implyinganeedforabout3,500–8,000GWofelectrolysercapacity.77•Comparedwiththiseventualneed,estimatesforthegrowthofelectrolyserinstallations,reaching85GWperannumby2030andcumulativeinstallationsof240GWbytheendofthisdecadearestillmodest[Exhibit2.12].However,thisreflectstheexpectationthatgreenhydrogendemandislikelytodevelopsomewhatmoreslowlyinthe2020s,beforegrowingdramaticallyinthe2030s.78Announcedplansforacumulative50GWofglobalelectrolysermanufacturingcapacityby2025,withcontinuedgrowthcertainthereafter,wouldthereforeseemsufficienttomeetdemandduringthisdecade.79•However,withinthisglobalpicture,therearesignificantregionaldifferences.ElectrolysermanufacturingcapacityisgrowingrapidlyinChina,andelectrolyserpricesinsideChinahavefallentoaround$400perkWorstilllower.80InEurope,pricescontinuetobefarabovethislevel,andpotentialearlyusersofgreenhydrogenreportthatpricequotesforgreenhydrogenorelectrolysersupplyinthemid-2020sarehigherthanexpected.SomeforecastssuggestthatEuropeanelectrolyserpriceswillstillbeintherangeof$400–500perkWby2030.81Severalfactorsthatmayberestrictingeffectivecapacityincludereducedcapacityforcellmanufacturinginsomeplants,aswellasalackoftrackrecordofsomeelectrolysermanufacturers.822.TherearesomeenvironmentalandsocialconcernsforelectrolysersupplychainsaroundPGMs.VeryloworegradesforPGMsleadtohighwaterandcarbonintensityofproductionforPGMmining.However,volumesusedinelectrolysersarelikelytobelowerthancurrentdemandfromtheautoindustry.3.UseofPGMsleadstosomerisksaroundconcentrationofsupply,butthisiscontained.SupplyofPGMsisheavilyconcentrated,withSouthAfricaaccountingforover70%ofplatinumsupplyand40%ofpalladium,andRussiamakingupanother40%ofpalladium.8377Therangeillustratedassumesanefficiencyof45kWhperkg,implyinganeedfor~21,250–31,500TWhtoproduce450–700Mt,andaveragecapacityutilisationbetween4,000–5,500hoursperannum.Capacityutilisationmaybehighwheregridelectricityisused,butwillbemuchlowerwhereelectrolysersrunondedicatedrenewableelectricitysupply,orwheregridelectricityisonlyusedwhentimespecifictariffsarelow.78TheETCestimatesthatlow-carbonhydrogendemandcouldbe40–60Mtin2030,butthengrowveryrapidlyto500–800Mtby2050–fromlessthan1Mtcurrently.SeeETC(2021),Makingthehydrogeneconomypossible.79BNEF(2022),Globalelectrolyseroutlook2030.80BNEF(2022),Electrolysissystemcapexby2050–Updatedforecast.81Ibid.;USDepartmentofEnergy(2023),PathwaystoCommercialLiftoff:CleanHydrogen.82BNEF(2023),1H2023HydrogenMarketOutlook.83USGS(2023),Mineralcommoditysummaries.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains28Chapter33Cross-cuttingsupplychainrisksTheprevioussectionmappedcleanenergysupplychainsandassessedthepotentialareasofriskacrosskeytechnologies.Overall,whiletherearenofundamentalbarriersatthegloballeveltoensurethesupplyofkeyinputscanmeetgrowingdemand,therearelikelytobesomeareasofpotentialbottlenecks,whichlinktothreecross-cuttingrisks:1.Acrosssomesupplychainareas,morefrequentpricevolatilityisexpectedduetomarkettightness.Inparticular,thisisthecasefortechnologieswhichpresentmorecomplexmanufacturingvaluechains(e.g.,wind,grids,batterycathodes),andforspecificrawmaterials(e.g.,copper,lithium)wherelongerminingleadtimesandfewersubstitutionoptionsmeanthatthemarketislikelytobetightforlonger.2.Therearecurrentlysomewiderenvironmentalandsocialconcernsaroundminingandmanufacturingthatneedtobeappropriatelyaddressed,whichcouldposesupplychallengesforcompanies.Theseincludeconcernsaroundlabourandhumanrights,environmentalimpactssuchaswateraccessandbiodiversity,andconsiderationsaroundcarbonintensityandlifecycleGHGemissions.3.SupplychainsforsolarPVandbatterymanufacturingarehighlyconcentratedgeographicallyatseveralstages,whichcouldleadtofrictionsforsupply.Futuregrowthexpectationsforcleanenergymarketsmeantheprospectofsupplygrowtharoundtheworldisnota“zero-sumgame”,providingopportunitiesacrossregionsandindustries.However,actiontonear-shoreproductionwillinvolvesometrade-offsbetweencostsandotherpriorities(e.g.,localjobsormanufacturing,contentrequirements).Inthischapter,weaddressindetaileachofthethreeareasabovetoillustrateareasofconcerns.WealsodiscusstheseareasofriskinthespecificcontextoftheEUinouraccompanyingEUPolicyToolkit.1.MarkettightnessrisksTheissueofmarkettightnessandsupplybeingabletokeeppacewithdemandgrowthismoresevereatsomesupplychainstagesthanothers.Theupstreampartofsupplychains–miningandmaterials–presentsthemostsignificantconcernsduetomoreinelasticsupplyresponses,aswellaslimitedsubstitutionoptionsinsomecases.Broadly,themanufacturingstageislessofaconcernthankstomuchshorterleadtimesforfactories.Whileoutofscopeinthisreport,technology-basedassessmentsalsohighlightthatfurtherdownstream,towardsinstallation,therecouldbegreaterriskforbottlenecksaroundsufficientskilledlabourtoinstalltechnologiesatpaceinparticulargeographies(e.g.,forheatpumps).ManufacturingAnalysisofrequireddemand,possiblesupplyandleadtimesforthedevelopmentoffactorycapacityandtransportcapabilitysuggeststhatthesupplyofmanufacturedinputsisunlikelytofaceinsurmountablebarriersataglobalscale.Buttheprecisepicturedifferssignificantlybyspecificproduct:•InthecaseofsolarPV,ETCanalysis84suggeststhattheworldwillneedtobeinstallingatleast600GWperannumby2030tobeonapathtonet-zero,whileexistingorannouncedcapacitycouldbecapableofproducingalmost1,000GWeachyear.85This,togetherwithimprovedpanelefficiency,islikelytodrivestrongcostandpricereduction,enablingafasterrateofinstallationthanourminimumestimatedrequirement.•Forbatteries,rapiddevelopmentisdrivenbythestructureoftheindustry;globalscaleEVmanufacturershavemadestretchingcommitmentstolaunchbatteryEVs,andmadefirmoff-takecommitmentstobatterycompanieswhoarethenabletofinancefairlyrapidplantconstruction,aidedinsomecasesbygovernmentsubsidies.Currentlyannouncedplansindeedcouldimplyasmuchas10,900GWhperannumcapacityby2030–faroutstrippingexpecteddemandevenforanet-zeroalignedscenario.ButmanyoftheseannouncedplanswillnotgetimplementedsincesomebatterycompanieswillfailtogainEVmanufacturernominationsinahighlycompetitivemarket.84ETC(2021),Makingcleanelectrificationpossible.85Forexample,existing,announcedandunder-constructionmodulemanufacturingcapacityisapproximately994GW.BNEF(2023),Interactivedatatool–SolarPVequipmentmanufacturers.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains29Chapter3•Foronshoreandoffshorewindturbines,currentcapacityiswellshortofthe180GWand90GWperannumlikelytoberequiredby2030,butthetimescalesrequiredformanufacturingplantconstructionwouldallowforadequatelyrapiddevelopmentprovidedtherewereclearsignalsthatfuturewouldbeforthcoming.•Similarly,theleadtimesforconstructingelectrolyserandheatpumpfactoriescouldmakepossible100GWofelectrolyseroutputand320GWofheatpumpoutputgloballyby2030.Onecross-cuttingriskforcleanenergytechnologiesarisesfromtheirintensiveuseofsemiconductors,oftenforpowerandelectronicsmanagement.86Ongoingshortagesrelatedtocapacitybuild-upandproductiondevelopmentleadtimes87couldaffecttheenergytransition,withrisksparticularlyconcentratedintheautomotivesectorwherethetransitiontoEVswilldrivemuchhigherrequirementsforsemiconductorchips.88Furthermore,widertraderisksarealsoprevalent,ashighlightedbyongoingrestrictionsontradeinsemiconductorequipmenttoChina.89Europeappearsparticularlyexposedonthisfront,givenitaccountsforonly10%ofglobalproductioncapacityandisstronglyreliantonimports,especiallyfromChinaandTaiwan.90Finally,acrucialpointtoconsideristhecomplexityofparticulartechnologies,orofcomponentsandequipmentrequiredintheirmanufacture.Delaysinobtainingparticularpiecesofequipment,suchaskilnsforbatterycathodematerials,orcleanroomenvironmentsforsolarPVorgridtransformers,canleadtodisruptionsforparticularlycomplexstagesofmanufacturing.Linkedtothisisthespeedoframp-uptofullcapacityformanufacturing:factorieslocatedingeographies,orrunbycompanies,withsignificantexperienceinaparticularindustrywillbeabletoachieveafasterramp-uptohigherutilisationfactors.Exhibit3.1Solarandbatterymanufacturingcapacityislikelytobesufficienttomeetgrowingdemand;wind,electrolyserandheatpumpcapacitywillhavetoexpandsignificantlyShareofexisting,announcedandremaininggapto2030inmanufacturingcapacityforcleanenergytechnologiesGW/GWhLeadtimeformanufacturingplant(years)0.5–21–51–42–51–32–3OnshoreWindGW18090-90OffshoreWindGW2078027-53SolarGW600650325975BatteriesGWh1,7009,2006,80010,900HeatPumpsGW10020320120-200ElectrolysersGW15388553-32Existingcapacityin2022AnnouncedorunderconstructionDemandNotes:SolarPVinstallationscouldsignificantlyexceed600GWp.a.in2030,andsomemanufacturingcapacitywillneedtobereplacedorupdatedbythisdate–thereforethetotalmanufacturingcapacityof975GWp.a.shouldnotnecessarilybeseenasdrasticovercapacity.Notallannouncedbatterycapacityislikelytobeconstructed.Sources:ETC(2021),Makingcleanelectrificationpossible;ETC(2021),Makingthehydrogeneconomypossible;BNEF(2023),Interactivedatatool;BNEF(2022),Globalelectrolyzeroutlook2030;IEA(2023),Energytechnologyperspectives;IEA(2022),Thefutureofheatpumps.86Ballentineetal.(2008),Theroleofsemiconductorsincleanenergy.87IEEESpectrum(2023),Howandwhenthechipshortagewillend,in4keycharts.88Electricvehiclescanrequireanywherefromtwotoeleventimesasmanysemiconductors,relativetoICEvehicles.BNEFestimatethat~9millionvehicles(bothEVandICE)werenotbuiltin2021duetosemiconductorchipshortages.BNEF(2021),Understandingtheautomotivesemiconductorshortage;BCG(2022),Trackingthenextphaseoftheautomotivesemiconductorshortage.89Seee.g.,NYTimes(2022),Withnewcrackdown,BidenwagesglobalcampaignonChinesetechnology;Silicon(2022),TSMCwarnsitwillcloseoperationsifChinainvadesTaiwan.90Deloitte(2022),AnewdawnforEuropeanchips.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains30Chapter3MaterialsIngeneral,moresignificantrisksaroundmarketbalancesarelikelytooccurattheupstreamstage,aroundmaterialsandresources.Firstly,itisimportanttostressthattherearesufficientmaterialresourcestomeetthedemandsoftheenergytransition.Globalland-basedresources91arewellinexcessofthecumulativedemandforprimary(mined)materialsfromtheenergytransitionandothersectorsbetween2020–50[Exhibit3.2].92Thereisnolackofresourcesofenergytransitionmaterials,eitherofmajorindustrialmaterialsorspecialistmaterials.However,themainchallengeisaroundscalingsupplyofkeyenergytransitionmaterialsfastenoughtomeetdemand.Thisisabiggerissueforsomematerialsthanothers,andherewehighlightfivekeymaterialsneededacrosscleantechnologies[Exhibit3.3].Thelargestconcernsareforcopperandlithium,wherestronggrowthto2030couldleadtoinsufficientsupplypipelines–spurringhighpricesandpotentialshortages.Copper:Givenitsexcellentconductiveproperties,copperisthe“materialofelectrification”,usedinallenergytransitiontechnologies.Demandisexpectedtoriserapidly,drivenpredominantlybytheexpansionofpowergrids,andby2030,uptohalfofcopperdemandcouldcomefromproductsandprojectsrelatedtotheenergytransition.93Thisrapidgrowthcouldleadtoanundersuppliedcoppermarketassupplystrugglestoexpandatthesamepaceincomingyears.Threekeychallengesaroundsupplyarepotentiallylongleadtimesfornewcopperprojects,decliningoregrades,andfallingproductionfromexistingmines.94Thereissomepotentialforhighpricestoincentivisegreaterthrifting,substitution,andincreasedsecondarysupply,butthescaleofpotentialprimarydemandreductionsislikelytobemuchlowerthanrapidlyrisingoveralldemand.95Exhibit3.2Thereareenoughresourcestomeettotalmaterialsdemandbetween2020–50,includingdemandfromboththeenergytransitionandothersectorsCumulativedemand2020–50,andestimatedresourcesBillionmetrictonnes(Industrialmaterials);Millionmetrictonnes(Keyenergytransitionmaterials,Othermaterials)IndustrialmaterialsKeyenergytransitionmaterialsOtherimportantcleanenergytechnologymaterials7023016651,3005,600190300228612251708003004661.11.70.010.1GraphiteAnodesNeodymium(REEs)(Poly)SiliconSilverPalladiumandPlatinumCopperNickelLithiumCobaltSteel(Iron)Aluminium(Bauxite)SiliconiswidelyavailableCumulativedemand(allsectors)2020–50EstimatedresourcesNotes:Frombothenergytransitionandnon-energytransitionsectors;Graphitereserves/resourcesrefertonaturalgraphite,donotincludesyntheticgraphite;Noestimatedreservesforsilicon,butthisiswidelyavailableinmostgeographies.Source:SystemiqanalysisfortheETC;USGeologicalSurvey(2023),Mineralcommoditysummaries.91“Resources”definethetotalamountofamineral/commoditythatisgeologicallyavailableonlandinsufficientconcentrationsthatextractionispotentiallyfeasible.“Reserves”areaworkinginventoryofeconomically-extractableminerals/commoditiesthatarecurrentlyrecoverable.92TheETCwillbediscussingthistopicinmoredetailinanupcomingreportonMaterialandResourceNeedsfortheEnergyTransition.93SystemiqanalysisfortheETC;S&PGlobal(2022),Thefutureofcopper;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.94IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;S&PGlobal(2022),Thefutureofcopper;GoldmanSachs(2021),Copperisthenewoil.95Forexample,BNEFestimatethatcoppersubstitutioningridscouldamountsto~0.4Mtperannum,andGoldmanSachsestimatetotalsubstitutionpotentialreaching~0.7Mtperannumby2025.BNEF(2021),Copperandaluminumcompetetobuildthefuturepowergrid;GoldmanSachs(2021),Copperisthenewoil.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains31Chapter3Exhibit3.32030supplyforecastsforcopperandlithiumshowtightermarketbalanceDemandandsupplyforecastsforkeyenergytransitionmaterialsin2030Nickel,Copper=Millionmetrictonnes;Cobalt,Lithium,Neodymium=Thousandmetrictonnes;Supplyshouldexpandby2030–butlargerangeofforecastsDemandinbaselineandnet-zerooutlookseasilyoverlapssupply0100200300400500600Supply‘22‘30‘30‘30DemandSupply‘22‘30‘30‘30DemandSupply‘22‘30‘30‘30DemandSupply‘22‘30‘30‘30DemandSupply‘22‘30‘30‘30Demand0123456780501001502000102030405002004006008001,000CobaltDemandforecastsfallingsharplyaftershifttolow-cobaltNMC.SomeuncertaintyoverstabilityofDRCsupply.NickelCanshifttoLFPbatteriestoreducedemand.RapidsupplyexpansioninIndonesia.NeodymiumRisingbutuncertaindemandgrowthfromwind+BEVs.Supplycanrespondtohighpricesquickly.CopperUsedinallcleanenergytechnologies,demanddifficulttosubstitute.Supplyexpansiontrickyduetooregrades,lowinvestment.LithiumNoviablesubstitutionacrossbatterychemistriesatthemoment.Supplyexpandingbutnotquicklyenough–gapslikelythroughto2030.Evenwithsupplyexpansions,futuredemandgrowthforcopperandlithiumwouldexceedsupplyin20302022–Supply2030–Supply2030–Net-ZeroDemand2030–BaselineDemandRangesSource:SystemiqanalysisfortheETC;IEA(2023),EnergytechnologyperspectivesandIEA(2022),WorldEnergyInvestments;BNEF(2023),TransitionMetalsOutlook;ICF/RMI(2023),Netzeroroadmapto2050forcopper&nickelminingvaluechains;S&PGlobal(2022),Thefutureofcopper;S&PGlobalMarketIntelligence(2022),Lithiumprojectpipelineinsufficienttomeetloomingmajordeficit;BenchmarkMineralIntelligence(2023),Albemarle’sturbo-chargeddemanddatashowcaseslithium’sgrowingsupplyproblem;Albemarle(2023),Strategicupdate;McKinsey&Co.(2023),Bridgingthecoppersupplygap;McKinsey&Co.(2022),Lithiummining:HownewproductiontechnologiescouldfueltheglobalEVrevolution.ktMtktMtMtBetter,Faster,Cleaner:Securingcleanenergytechnologysupplychains32Chapter3Lithium:Lithiumisusedacrossallcurrentlithium-ionbatteries,wheretherapidriseofEVsisexpectedtodrivestronggrowthindemandto2030.Lithiumishardtosubstituteawayfrom,withalternativesodium-basedbatterychemistriesunlikelytoplayamajorrolebefore2030.96Giventhis,thereissignificantpressureonsupplytoundergoveryrapidexpansionfromarelativelysmallbase,especiallyfromkeyproducinglocationsinAustralia(forhardrockmining)andSouthAmerica(forbrine-basedextraction).Eventhoughsupplyprojectionshaveincreasedinrecentyears,97mostmajorsupplyoutlooksseeasupplydeficitin2030,acrossboth“business-as-usual”andnet-zeroalignedpathways[Exhibit3.3].98Ongoingdevelopmentofnewextractiontechniques,notablyDirectLithiumExtraction(awaytoremovelithiumfrombrinesbybondingittoanextractionmaterial),mayunlockfurthersupplyexpansionsandhelpeaseconcerns.99Supplyofrefinedlithium(carbonateorhydroxide)isalsoexpectedtogrowrapidlyandislessofarisk,withrefiningcapacitygrowingfasterthanminedsupply.100Fornickel,cobalt,andneodymium,aseriesoffactorsmeansmarketbalancesareunderlesspressure:Nickel:Demandfornickelhasrisenrapidlyinrecentyears,drivenpredominantlybyitsuseinEVbatteries.Nickelisalsousedinhydrogenelectrolysersandinsteelalloysusedacrossothercleanenergyandothersectors.Anongoingshiftawayfromcobalt-richNMCbatterieshasledtoincreasingnickeldemand–butthisislikelytobecounteredbytherapidriseofnickel-freeLFPbatteries.ThegrowthinmarketshareofLFPbatteries(approximately35%ofpassengerEVmarketin2021)hasthepotentialtostronglyreducegrowthinnickeldemandoverthecomingdecade.101Onthesupplyside,verystronggrowthinproductioninIndonesiainthepastfewyearshasexceededexpectations,aidedbyacceleratedpermittingandadministrativeprocedures–andmoderatedconcernsaroundpotentialsupplyshortagesincomingyears.102Therecouldbeshortagesofhigh-purityclass1nickel(bothnickelsulphateandpowders/briquettes)overtheshort-to-midterm,duetorapiddemandgrowth.103However,thereisalsopotentialforlower-than-expectedstainlesssteelproductiontounlockgreaterquantitiesofclass1nickelforbatteries.104Cobalt:Althoughstillusedinawidevarietyofbatterychemistries,rapidinnovationhasgreatlyreducedprojectionsoffuturedemandgrowthforcobalt.Theongoingshifttolow-cobaltNMCandcobalt-freeLFPbatterieshavehelpedcutdemandprojectionsfor2030by50%.105Thus,althoughsomegrowthinsupplywillbeneededto2030,thiswouldonlybeslightlyfasterthangrowthfromthepastdecade.106MuchofthisgrowthwouldcomefromtheDemocraticRepublicoftheCongo(DRC),theworld’slargestproducer,butexpandedsupplycouldalsocomefromIndonesiaandAustralia.Supplyofcobaltsulphateisalsoexpectedtobemorethansufficienttomeetdemandfrombatteries.107Neodymium:Neodymiumisusedinhigh-strengthpermanentmagnets,whicharecrucialtoconvertrotationintoelectricity(andvice-versa)inbothwindturbinesandelectricvehicles.Demandisexpectedtogrowquicklyto2030,althoughthereissomeuncertaintyaroundboththetypeofelectricmotorsusedinEVs(somecanbefreeofrareearthelements),andcertainwindturbinemodelshavemuchlowerrareearthelementrequirements.108Supplyofneodymiumisnotconstrained,withproductionexpectedtoexpandquitequicklyinChina(thelargestcurrentsupplier),aswellasinMyanmar,Australia,andtheUSA.TheseviewsaresummarisedinExhibit3.3,whichhighlightsthehigherriskpotentialforlithiumandcopper.Finally,theissueoframp-upandcapacityutilisationisalsoacrucialoneforminingandrefiningoutput.Thiscanaffectexistingprojects,forexampleviaunexpectedequipmentfailuresormaintenanceclosuresleadingtodown-time,109orsteeper“learning-by-doing”requirementsinregionswithlessexperienceinminingorrefiningleadingtoslowerramp-uptofulloutputonceprojectsarecommissioned.96BNEF(2022),TechnologyRadar:Sodium-ionbatteries.97E.g.,BNEF’s2H2020BatteryMetalsOutlookprojectedsupplyofapproximately340ktoflithiumin2030;thishassincerisentoapproximately510ktoflithiuminthemostrecent2H2022BatteryMetalsOutlook.98Seee.g.,IEA(2023),Energytechnologyperspectives;McKinsey&Co.(2022),Lithiummining:HownewproductiontechnologiescouldfueltheglobalEVrevolution;BNEF(2023),Transitionmetalsoutlook.99McKinsey&Co.(2022),Lithiummining:HownewproductiontechnologiescouldfueltheglobalEVrevolution;Veraetal.(2023),Environmentalimpactsofdirectlithiumextractionfrombrines.100BNEF(2022),2HBatterymetalsoutlook.101BNEF(2022),Long-termelectricvehicleoutlook.102IEA(2023),Energytechnologyperspectives;S&PGlobal(2022),Nickelindustrymarginssurgedin2021amidstrongernickelprices;S&PGlobal(2022),Commodities2022:Analystshavemixedviewsfornickelmarket.103BNEF(2022),2HBatterymetalsoutlook.104Ibid.105SeeS.115inNatBullard(2023),Decarbonization:Thelongview,trendsandtransience,netzero;BNEF(2022),Long-termelectricvehicleoutlook.106Productionofcobaltgrewapproximately60%between2010–20,andwouldneedtogrowbyapproximately100%between2020–30.IEA(2023),Energytechnologyperspectives;McKinsey&Co.(2022),Theraw-materialschallenge.107BNEF(2022),2HBatterymetalsoutlook.108Seee.g.,IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;Electrek(2023),Teslaisgoing(back)toEVmotorswithnorareearthelements.109Seee.g.,S&PGlobal(2022),Thefutureofcopper.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains33Chapter32.EnvironmentalandsocialconsiderationsAcrossbothminingandmanufacturing,thereareareasthatpresentconcernsaroundenvironmentalandsocialissuesincertainsupplychains.Addressingtheserisksiscrucialinorderto:•Mitigateandreducetheenvironmentalandsocialimpactsassociatedwiththemanufacturinganddeploymentofcleanenergytechnologies.•Ensurebuy-infortheenergytransitiononthepartoflocalcommunitiesandwidersociety.•Avoiddisruptionstoproduction,e.g.,viaoppositiontonewprojects,siteclosures,orlackofaccesstofinance,allpotentiallyduetopoorenvironmentalandsocialstandards.Asmentionedinthepreviouschapter,themostsignificantissuesrelatetotheconcentrationofthepolysiliconsupplychaininXinjiang,andbatterysupplychainsgiventheircurrenthighenvironmentalandcarbonfootprint.CarbonfootprintofproductionAlthoughtheoperatingemissionsassociatedwithcleanenergytechnologiesarefarlowerthantheirfossil-fuelbasedalternatives(e.g.,windandsolarvs.gasandcoalforelectricityproduction,110orbattery-electricvehiclesvs.combustion-enginevehicles111),thereisstillanopportunitytolowertheembodiedcarbonemissionsfromthesupplychainsofcleanenergytechnologies.Itisimportanttokeepinmindthatalargefractionofembodiedemissionsfrommanufacturingarisefromelectricityconsumption.Asgridsdecarboniseacrosstheworld,manufacturingwillinturnhavelowerassociatedemissions.Inmanycases,newmanufacturingsitesarealreadybeingpairedwithrenewablepower-purchaseagreements,ensuringthatloweremissionsarebeinglockedinthroughoutaproject’slifetime.Formostmaterialsmine-siteemissionsmakeupasmallshareofemissionsassociatedwithmaterialproduction,112withrefiningtypicallybeinganemission-intensivestep.Therefiningandprocessingofarangeofenergytransitionmaterialsrequireshightemperaturesandthereforelargeamountsofenergy,oftenprovidedbypowergridswhicharecurrentlydominatedbycoalgeneration,e.g.,inChinaandIndonesia.Thisisespeciallyaconcernforthreematerials:•Nickel,wherefutureproductionofnickelwilllikelybedominatedbylateriteores,whoseproductionprocessentailstwo-to-sixtimestheemissionsintensityofcurrentsulphide-basedsupply.113•Lithium,wherethenow-dominantextractionmethodstoproducelithiumcarbonateandhydroxidefromhardrockarethree-to-fivetimesmoreemissionsintensivethanbrine-basedproductionoflithiumcarbonate.114•Polysilicon,whereproductionisheavilyconcentratedinXinjiang,withmanufacturingplantsoftenco-locatedwithcoal-firedpowerplants[Exhibit3.4],leadingtoveryhighassociatedemissions–althoughrapidrenewablesdeploymentintheregionshoulddecreasethisincomingyears.115110UNECE(2021),Lifecycleassessmentofelectricitygenerationoptions;Pehletal.(2017),Understandingfutureemissionsfromlow-carbonpowersystemsbyintegrationoflife-cycleassessmentandintegratedenergymodelling.111RicardoEnergy(2020),DeterminingtheenvironmentalimpactsofconventionalandalternativelyfuelledvehiclesthroughLCA;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.112Lessthan50%ofthecarbonfootprintofcopper,and15%ofthecarbonfootprintofnickel,areduetomine-siteemissions.CopperAlliance(2023),Copper–thepathwaytonetzero;IFC(2023),Netzeroroadmapto2050forcopperandnickelminingvaluechains.113EmissionsintensityofClass1nickelfromsulphideoresisapproximately10tCO2epertonneofnickel,vs.approximately19forlateriteextractionusinghigh-pressureacidleaching,andapproximately60forlateriteextractionviaintermediatestepsofmatteandnickelpigiron.IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.114IEA(2021),Theroleofcriticalmineralsincleanenergytransitions.115IEA(2022),SpecialreportonsolarPVglobalsupplychains;Hallametal.(2022),Apolysiliconlearningcurveandthematerialrequirementsforbroadelectrificationwithphotovoltaicsby2050.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains34Chapter3Althoughthesteelandaluminiumsectorsalsohavelargeassociatedemissionsandareoftenusedacrosscleanenergytechnologies,theenergytransitionaccountsforalowershareofthetotaldemandforthosesectors,andclearstrategiesforsectoraldecarbonisationarebeingdeveloped.116Severalcleanenergytechnologiesalsohavehighcarbonfootprintsassociatedwithdownstreammanufacturing,withthetwotechnologiesofhighestconcernbeingsolarpanelsandbatteries.Themanufacturingofingots,wafersandcellsforsolarmodules,andofcathodes,anodesandbatteryassembly,isveryelectricity-intensive.CombinedwiththecurrentlyhighcarbonintensityofthepowergridinChina,wheremostproductioniscurrentlyconcentrated(seebelow),thisleadstohighembodiedemissionsforproductionofsolarpanels[Exhibit3.4],andalsoofbatteries.117However,thereisaclearopportunityfordecarbonisingsupplychainsviaeither:•Decarbonisationwithincountrieswhereexistingmining,refiningormanufacturingcapacityisconcentrated.Chinese-basedsupplyforinstancecouldbedecarbonisedviaashifttodedicatedlowcarbonelectricitysupply,andwilleventuallydecarboniseevenwheregridelectricityisused,asChina’smassiverenewablesinvestmentsreduceitscarbonintensity.Similarly,RicardoEnergyestimatethatfuturebatteryproductioncouldhaveapproximately75%loweremissionsthankstoimprovedproductionefficiencyanddecarbonisedpower.118•Ashifttonear-shored/morediversifiedsupplylocations.AsExhibit3.5illustrates,shiftingsolarpanelorlithiumrefiningtocountrieswithlowergridcarbonintensitycouldhelpsignificantlydecarboniseproduction.119Eithershiftcouldbeencouragedbyregulationswhichrequirereducedlifecyclecarbonemissionsforkeyproducts(e.g.,batteriesandsolarpanels)orbycarbonpricingcombinedwithcarbonborderadjustments.Exhibit3.4PolysiliconproductioninChinacurrentlyreliesonlargeamountsofcoalpower,especiallyinXinjiangGlobalpolysiliconproductioncapacityshare,2022%051015QinghaiXinjiangInnerMongoliaSichuanUSAMalaysiaGermany3.10.21.12.33.314.71.129%54%17%China(Ex-Xinjiang)XinjiangUS,Europe,RoWPolysiliconproductionelectricityconsumption,2021TWhCoalGasHydropowerWindandSolarSource:TheBreakthroughInstitute(2022),Sinsofasolarempire;MurphyandElimä/SheffieldHallamUniversity(2021),Inbroaddaylight;IEA(2022),SpecialreportonsolarPVglobalsupplychains;BNEF(2023),Interactivedatatool–Equipmentmanufacturers.116Seee.g.,MissionPossiblePartnership(2022),Makingnet-zerosteel/aluminiumpossible.117Seee.g.,IEA(2022),SpecialreportonsolarPVglobalsupplychains;FaradayInstitution(2021),TheUK:Alowcarbonlocationtomanufacture,driveandrecycleelectricvehicles.118SeeFigure5.60inRicardoEnergy(2020),DeterminingtheenvironmentalimpactsofconventionalandalternativelyfuelledvehiclesthroughLCA.119Similarly,analysisbyMinviroforlithiumproducerLiventshowsthatshiftingoflithiumhydroxiderefiningfromChinatotheUSAcouldreduceassociatedemissionsby20%.Minviro/Livent(2022),2021SustainabilityReport.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains35Chapter3Exhibit3.5ProductionofsolarPVorrefinedbatterymaterialscouldbedecarbonisedbyusinglow-carbonelectricityinChina,orbyshiftingproductiontocountrieswithlesscarbon-intensivegridsModulemanufacturingemissionsintensitytCO2e/MW050100150200250300350GermanyChina(Import)50%reduction45–50%reductionUSAMalaysia(Import)Vietnam(Import)020406080LithiumCarbonateminedandrefinedinArgentinaLithiumHydroxideminedinArgentinaandrefinedinUSALithiumHydroxideminedinArgentinaandrefinedinChina15029517032526557031022%reductionthankstocleanergridPolysiliconWafersCellsModulesTransportLife-cycleglobalwarmingpotentialofrefinedlithiumproductstCO2e/tonofcontainedlithiumCarbonateHydroxideNote:Assumingfinalproduct(solarPVmodule)istransportedfromproducingcountrytoGermany/USA.Source:Minviro/Livent(2022),2021SustainabilityReport;RicardoEnergy(2020),DeterminingtheenvironmentalimpactsofconventionalandalternativelyfuelledvehiclesthroughLCA;IEA(2022),SpecialreportonsolarPVglobalsupplychains.ImpactsonnatureandbiodiversityTheimpactsofcleanenergytechnologyproductiongobeyondemissions:miningandrefiningofkeyenergytransitionmaterialsisassociatedwithimpactsonwaterconsumption,localairpollution,land-usechange,andbiodiversity.TheETCwillcovertheseconcernsindetailinanupcomingreportonResourceandMaterialRequirementsfortheEnergyTransition,butherewehighlightafewoftheareasofpotentialrisk:•Waterconsumptionfrommining,althoughverysmallatagloballevelcomparedwithotherusesandinparticularagriculture,willlikelyincreaseovercomingdecades,drivenbythehighwaterintensityoflithium,nickelandcopperextraction–exacerbatingwaterscarcityinkeyregions(e.g.,northernChile,partsofAustralia).120•Airandwaterpollution,arisingfromdustandparticulategenerationduringmining,theemissionofsulphurdioxideandnitrogenoxidesduringsmeltingandrefiningprocesses,andthekeyissueofacidminedrainagefromminetailingsorslagheaps.Onthisfront,theworstoffenderisoftencopper(excludinggold,whichhaslittlerelevancetotheenergytransition).121Akeyaspectistheappropriatemanagementofwasteandtailings,122whichifnotdonetohighstandardscanleadtolocalenvironmentalimpacts,andintheworstcasestolocaltailingsdamcollapses,withdevastatinglocaleffects.123120Meissner(2021),Theimpactofmetalminingonglobalwaterstressandregionalcarryingcapacities–AGIS-basedwaterimpactassessment;IFC(2023),Netzeroroadmapto2050forcopperandnickelminingvaluechains.121InternationalResourcePanel(2019),Globalresourcesoutlook;Izydorczyketal.(2021),Potentialenvironmentalpollutionfromcoppermetallurgyandmethodsofmanagement.122Seee.g.,ICMM(2022),Tailingsreductionroadmap.123Forexample,theMarianaminingdisaster.Seee.g.,France24(2016),TheMarianaminingdisaster.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains36Chapter3•Impactsonlocalland-usechange,natureandbiodiversity.Althoughdirectmininglanduseisverylow(miningusesapproximately0.1%ofglobalhabitableland),124theindirectimpactsfromminingondeforestationandbiodiversitylosscanbesignificant.125Akeyissuehereare“secondary”orinducedimpactsbeyondtheminesite,wherewiderlocaldevelopmentcanleadtoaccelerateddeforestationorotherimpacts.Thelocalenvironmentalimpactsassociatedwithrunningandoperatingcleanenergytechnologiesarebeyondthescopeofthisworkbutarealsolikelytobelow,withforexamplelowgloballanduserequirementsforsolarandwindfarms,andlowassociatedbiodiversityimpacts.126HumanrightsandsocialconcernsTwoareasofcleanenergytechnologysupplychainsstandoutfortheirimpactonhumanrights:productionofpolysiliconinXinjiang,andthesupplyofcobaltfromtheDemocraticRepublicofCongo(DRC).ConcernshavebeenraisedregardinghumanrightsissuesinXinjiang,coveringboththeproductionofpolysiliconandthecoalminingandelectricitygenerationusedtopowerpolysiliconproduction.127GiventhelargemarketshareofXinjiangpolysiliconproductionandthecommonuseofblendingofpolysiliconfrommultiplesuppliersintoingots,manydownstreamsolarmanufacturersmaybeusingpolysiliconfromXinjiang.ThesupplyofconflictmineralsfromtheDRChavebecomeaheadlineissuesincethemid-2000s,withalonghistorylinkedtotheongoingconflictandarmeduprisingsintheeasternpartsofthecountry.128Arangeofreportshavehighlightedconcernsrangingfrompoorworkingconditions,humanrightsabuses,lowstandardsforhealthandsafety,andtheuseofchildlabour.129Giventhestronginter-linkagesbetweenarmedconflictandlocalartisanalandsmall-scaleminingoperations,aswellasallegationsofcorruption,theseconcernshavestruggledtobeaddressedbyinterventionsfromgovernments,includingregulationonconflictminerals,orindustry.130Effortstoformaliseaspectsoftheartisanalandsmall-scaleminingsectorhavehadsomesuccesses,131butthesocietalimpactsoflocalconflictanditsinteractionwithresourceextractionremainsevere.Therearealsootherspecificinstancesofhumanrightsconcerns,oftenlinkedtopoorlyregulatedorillegalmining.Forexample,unpermittedminingofrareearthelementsinMyanmarhasbeenlinkedtolocalmilitiagroupsandchildlabour,132andtherapidexpansionofnickelmininginIndonesiahasbeenlinkedtoextensivecorruption.Theseexamples,alongsidethoseabove,showtheimportanceofenforcingregulationatnationalandinternationallevel,andofexpandingtheuseoftraceabilityinordertotrackimpactsacrosssupplychains(discussedfurtherinChapter4).Morebroadly,itisclearthatthecostofmanyoftheenvironmentalandsocialimpactsofmaterialextractionandcleanenergysupplychainswouldfallalmostexclusivelyonlocalcommunitiesimpactedbymining,alongsideotherconsiderationsaroundcorruption,workingconditions,consentandmore.Thereisariskthattheglobalbenefitsofdecarbonisationareunfairlytradedoffagainsthighly-concentratedlocalcostsassociatedwithscalingsupplychainswithoutaproperregardforsustainableandresponsiblesourcing.124Existingminesitescoverapproximately100,000km2.Mausetal.(2022),Anupdateonglobalmininglanduse.125Sonteretal.(2017),MiningdrivesextensivedeforestationintheBrazilianAmazon;Giljumetal.(2022),Apantropicalassessmentofdeforestationcausedbyindustrialmining.126Seee.g.,ETC(2021),Makingcleanelectrificationpossible;ETC(2023),Streamliningplanningandpermittingtoacceleratewindandsolardeployment;Hollandetal.(2019),Theinfluenceoftheglobalelectricpowersystemonterrestrialbiodiversity.127UNOHCHR(2022),AssessmentofhumanrightsconcernsintheXinjiangUyghurAutonomousRegion,People’sRepublicofChina;TheBreakthroughInstitute(2022),Sinsofasolarempire;MurphyandElimä/SheffieldHallamUniversity(2021),Inbroaddaylight.128Seee.g.,AmnestyInternational/AfreWatch(2016),Thisiswhatwediefor:HumanrightsabusesintheDRCpowertheglobaltradeincobalt;TheEconomist(2022),TheworldshouldnotignorethehorrorsofeasternCongo.129Business&HumanRightsResourceCentre(2021),TransitionMineralsTracker:2021Analysis;Mancinietal.(2018),Socialimpactassessmentintheminingsector:Reviewandcomparisonofindicatorsframeworks.130USGovernmentAccountabilityOffice(2022),OverallpeaceandsecurityinEasternDRChasnotimprovedsince2014.131WorldEconomicForum(2020),Makingminingsafeandfair:ArtisanalcobaltextractionintheDRC.132GlobalWitness(2022),Myanmar’spoisonedmountains;Tempo(2023),Illegalnickellaundering.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains37Chapter33.HighconcentrationofsupplychainsTheconcentrationofexistingsupplychainsinparticulargeographiesorcompaniesisnotinherentlyanegative.However,highlevelsofconcentrationdopresentapotentialriskinthecaseofexogenousshocks(asseenwiththeCovid-19pandemic),orsuddenchangesinpolicyandinternationalrelations(asseenwithhistoricalbansorquotasontheexportofIndonesianickelorrareearthelementsfromChina)–bothofwhichcanimpactsupplyoververyshorttimescales.Thus,concentrationofsupplychainsshouldbeviewedbypolicymakersandbusinessleadersthroughthelensofriskmanagementaboveallelse.Concentrationisanissueacrossthreedistinctsupplychainsteps:1.Mining:a)Geographicconcentration.Currentminedsupplyofkeyenergytransitionmineralsishighlyconcentrated,mostnotablyinthecaseofcobaltminingintheDRC,lithiumsupplyfromChileandAustralia,andtheminingofrareearthelementsinChina[Exhibit3.6].Evenformorediversifiedcopper,thefourlargestproducingcountriescontrolover50%ofglobalproduction.Reservesandresourcesofmineralsaremoregeographicallydistributed,andsupplyisexpectedtocomeonlinefromnewgeographiesincomingyears.133However,longleadtimesof5–20yearsimplythatamajorre-distributionofminedproductionisunlikelyintheperiodto2030.b)Companyconcentration.Miningtendstobequitediversifiedacrosscompanies,althoughsmallermarketsforcertainmetalscanleadtohigherconcentration.Mostnotably,miningofcobaltisdominatedbyGlencoreandCMOCGroup(previouslyChinaMolybdenumCompanyLtd.),withthetwooperatingthreeofthelargestcobalt-producingmines(Katanga,Mutanda,andTenkeFungurume)andtogetherareexpectedtoproducearound90ktofcobaltin2023–around40%ofthemarket.1342.Refining:Currentrefinedsupplyofkeyinputmaterialsismoreheavilyconcentratedthanminedminerals,withChinadominatingsupplyacrossfivekeyenergytransitionmaterials[Exhibit3.6].Exhibit3.6Miningandrefiningofkeyrawmaterialsishighlyconcentrated,exposingglobalmarketstosupplydisruptionrisksShareofglobalminingandrefiningproductionbycountry,2022%0204060801000%20%40%60%80%100%CobaltCopperGraphite(Natural)LithiumNickelNickelRareEarthsRareEarthsPlatinumCobaltSulphateCopperLithiumCarbonateMiningRefining68%24%73%40%74%35%87%15%10%25%10%65%47%48%74%11%70%30%15%10%9%DRCIndonesiaChilePeruAustraliaChinaSouthAfricaRussiaOtherSource:USGeologicalSurvey(2023),MineralCommoditySummaries;IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;BNEF(2022),Localisingcleanenergysupplychainscomesatacost.133USGS(2023),Mineralcommoditysummaries;IEA(2023),Energytechnologyperspectives.134BNEF(2023),GlencoresettolosecrownastopcobaltminertoChina’sCMOC.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains38Chapter33.Manufacturing:a)Asoutlinedabove,thehighestlevelofgeographicconcentrationindownstreamcleanenergytechnologysupplychainsisinthecaseofsolarPVandbatteries.However,Exhibit3.7showsthatconcentrationisanissueacrossothercleanenergytechnologiesaswell.AlargeproportionofmanufacturingcapacityinChinaisdedicatedtodomesticdemandfromtheimpressivepaceofdeploymentofcleanenergytechnologies.However,theveryhigh(over75%inmanycases)shareofproductionlocatedinChinacouldposerisksforspecificcompaniesorcountriesifsuddenshocksappear–ashappenedwithdiminishedmanufacturingcapacityfollowingtheCovid-19pandemicandassociatedlockdowns.b)Furthermore,thereisalsoamorelimitedriskaroundcompanyconcentrationofkeymanufacturingsteps.Thisismuchlessofariskinsimpler,assembly-typemanufacturingstages(e.g.,batteryorsolarmoduleassembly),wherebarrierstoentryarelow.However,companyconcentrationbeariskforsmallermarketswithhighlycomplexorcustomisedequipmentandhigherbarrierstoentry,suchasHVDCcabling,polysiliconproduction,ormanufacturingofoffshorewindturbineinstallationvessels.Lookingahead,therapidgrowthacrossallcleanenergytechnologiespresentsaclearopportunityforawiderangeofcompaniesandcountriesovercomingdecades.Forexample,theincreaseinbatterymanufacturingcapacityoverthecomingdecadecouldseeanearforty-foldincreaseincapacityinEurope–astaggeringopportunityforcompaniesandcountriestotakepartinagrowingmarket[Exhibit3.8].Thus,theissueoflocationofsupplychainsshouldnotbeseenaszero-sum:diversificationcanrepresentanopportunitybothtoreducerisksandspreadtobenefitsoftheenergytransitionmorebroadly.Exhibit3.7Today,ChinahasmajorshareindownstreamcleanenergytechnologysupplychainsShareofglobalmanufacturingcapacityforcleanenergytechnologiesandcomponents,2021/22%0%20%40%60%80%100%WafersCellsModulesBladeNacelleTowerBladeNacelleTowerElectricCarBatteryAnodeCathodeFuelcelltrucksFuelcellstacksHeatpumpsElectrolysersPolysiliconSolarPVOnshoreWindOffshoreWindBatteryEVsFuelCellTrucks492GW539GW657GW98GW100GW88GW25GW26GW18GW10.5mvehicles1,700GWh0.8Mt1.3Mt14,000trucks19GW120GW11GW1,129ktChinadomesticdemandin2022~105GWGW~44GW~5vehicles~6mEuropeAPACC.&S.AmericaN.AmericaEurasiaChinaRoWSource:IEA(2023),Energytechnologyperspectives;BNEF(2023),Interactivedatatool–Equipmentmanufacturers;BNEF(2022),Localizingcleanenergysupplychainscomesatacost.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains39Chapter3Exhibit3.8Cleanenergymanufacturingcompetitiondoesnotneedtobezero-sum:rapidly-expandingmarketpresentsopportunityforallmajorplayersCountrymarketshareofbatteryproduction,2022vs.2030%Europeproduction:~1500GWhEuropeproduction:~140GWhAvailableforexport50–55%Domestic15–20%9%13%8%84%2022:1700GWh2030:10,900GWhAlthoughEuropeanmarketsharewouldonlygrow1.5x,totalproductioncapacitywouldincreaseover10x.LargeshareofChineseproductionisforgrowingdomesticEVmarket–butmorethanenoughcapacitywouldbeleftoverforexport.ChinaS.KoreaJapanUnitedStatesEuropeOtherNote:Announcedcapacity–itisunlikelythatallannouncedprojectswouldreachfinalinvestmentdecision.Source:SystemiqanalysisfortheETC;BenchmarkMineralIntelligence(2022),Lithium-ionbatterygigafactoryassessment–August;BNEF(2023),Interactivedatatool–Batterycellmanufacturers;McKinsey&Co.(2023),Battery2030:Resilient,sustainable,andcircular.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains40Chapter44KeyactionsandrecommendationsThisInsightsBriefinghasfocusedonidentifyingwhereglobalsupplychainconstraintsandenvironmentalimpactsmightbemostsignificant.Thissectiondescribespublicpoliciesandindustryactionswhichcanreducetheriskthattheseconstraintsandimpactsmightlimitthepaceoftherequiredenergytransition.Overall,theassessmentinthisreportconcludesthattherearesomeareasofpotentialbottlenecksincleanenergysupplychains,drivenbymarkettightness,environmentalandsocialconcerns,aswellashighconcentration.Ataglobalscale,theserisksdonotposeafundamentalbarriertoscalingcleanenergytechnologies.Insomeinstances,however,managingthesechallengesmayinvolvesometrade-offsbetweenthespeedofthetransitionandreducingenvironmentalandsocialimpacts,orlocalisationproduction.Firstandforemost,ensuringclarityofvisionovertheshapeandpaceoftheenergytransitionwillbecriticaltoreallocateresourcesandfinancingtounlockbottlenecksanddeploycleanenergytechnologies.Themorethatthebroadshapeandtimelineofthefuturetransitionisclear,thegreatertheextenttowhichsupplychainchallengeswillbesolvedbymarketcompetitionandprivateinvestment.Thereisanimportantdistinctionbetweencountriessettingaclearnet-zerovision,whichiscritical,andanysupportingindustrialpolicy,whichacountrymaychoosetoadoptbasedonotherobjectives:•Aclearstrategicvisionfortheoverallenergytransitionisrequiredtoensuresmoothdeploymentofglobalcleanenergytechnologysupplychains,viacleartargetsforkeysectors(e.g.,powersectordecarbonisationtargetsovertime,renewableenergyandnucleardeploymenttargetsspecifyingGWinstalledbyfuturedates,datesforICEphase-outandbansetc,targetsforheatpumpinstallationanddatesforphasingoutofresidentialgasboilers).•Industrial,manufacturingandtradepolicymayadditionallybeusedtoachieveseparatedomesticproductionobjectives,whichwilldependontheparticularpolitical-economicprioritiesofspecificgovernments.Inaddition,specificpublicpoliciesandindustrydrivenactionsshouldseektoaddressthethreemajorriskareaswhichcouldleadtobottlenecks[Exhibit4.1]:1.Ensuringasbestpossiblethatsupplyanddemandforkeyinputsdevelopinaconsistentfashion.2.Reducingtheadverseenvironmentalimpactandimprovingthesocialimpactofsupplychaindevelopments–drivenbyincreasingtrackingandtraceabilitythroughoutsupplychains.3.Ensuringdiversified,resilient,andsecuresupply.Inparticular,actionstoachievelessconcentratedandmoresecuresupplychainscouldentailsomemoresignificanttrade-offs–forinstance,betweenshort-termcostanddegreeoflocalisation.ThisisespeciallythecaseintheEUandNorthAmerica,whereinmanycasesmanufacturingandminingis(re-)startingfromalowbase.Thissectionthereforeprovidesabriefsummaryoftheactionsrequiredondimensions1and2,whichwillalsobedescribedinmoredetailintheforthcomingETCreportonMaterialsandResourcesNeedsfortheEnergyTransition.Itwillthendiscussthetrade-offsentailedinthepursuitofincreasedenergysecurity,andpolicyapproacheswhichcanhelpachieveanoptimalresult.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains41Chapter4Exhibit4.1High-levelrecommendationsforgovernmentsandindustryFundamentaldriver:astrategicvisionfortheenergytransitionestablishedbygovernments,includingnet-zerotargets,supportingsectoraltargets(e.g.,GWcapacitydeployment,ICEphaseoutbandates),policiesthatsendclearsignalsonthepaceandscaleofcleanenergydeployment,andclearvolumeneeds(e.g.,Mtofcopperlikelytoberequired).1Addressingsupply-demandimbalances•Demand:Accelerateimprovementsinmaterialsandtechnologyefficiencythroughtargetedincentivesandresearchanddevelopment,aswellassupportforcirculareconomybusinessmodels.•Demand:Createeconomicincentivesforscalingrecyclingandthesecondarysupplyofcriticalmaterials.•Supply:Acceleratepermitting,expandandde-riskinvestments,andengagewithlocalcommunitiestoexpandsupplyfromtheminesitetomanufacturing.•Internationalengagementanddatasharingtounderstanddemandandsupplyforecastsandpotentialconstraintsandincreasetransparency,e.g.,viaIEAoutlooksandround-tableswithgovernmentsandindustry.2Developingsustainableandresponsiblesupplychains•Strongregulationsonenvironmentalandsocialimpactsofcleanenergytechnologies,startingwithcarbonintensity.Aimtodecarboniseanddecreaseimpactsattheminesiteandthroughoutmanufacturingvaluechains,bydrivingcleanenergyprocurement,increasedprocessefficiencyandbest-practiceenvironmentalstandards.•Usepurchasingpowertodriveprojectswithhighenvironmentalandsocialstandards.•Defineandadopthigh-qualityvoluntaryenvironmentandsocialstandards.•Improveandrequiresupplychaintraceabilitythroughindustry-wideengagementandtrustedthird-partyauditors.3Ensuringdiversified,resilientandsecuresupply•Adoptstrategiestodiversifysupplyformining,refiningandmanufacturing:–Thiscanincludefriend-shoring,signingjointventuresandoff-takeragreements,andagreeingstrategicpartnershipswithkeycompaniesandcountries.–Focusactiononlocationofproduction,notownership–toallowstrongcompetitionacrossmarkets.•Wherenear-shoringisassessedasstrategicallybeneficial,developasuiteofactionstomaximisebenefitsofnear-shoringofvaluechains,includingalignmentofnear-shoredindustrieswithdomesticgrowthareas.1.Addressingsupply-demandimbalancesActionstoalleviatesupply-demandimbalancescaneitherreducethescaleoftherequireddemandgrowth,facilitategrowthinsupply,orimproveunderstandingoffuturelikelysupply/demandbalancesgivencurrenttrends.Theycouldbeparticularlyimportantinrelationtolithiumandcopper,butarerelevantacrossalltheinputsweconsideredinChapters2and3.Industry,andinparticularpolicyactions,cansupportfourobjectives:ReducingdemandviaimprovementsintechnologyandmaterialefficiencyIndustry:Industryshouldcontinuedrivingtechnologicalprogresstoimprovetheefficiencyoftechnologiesandofmaterialuse,respondingtoexpectedimbalancesinfuturesupplyanddemand(e.g.,theexampleofsubstitutionawayfromcobaltandnickelinbatterytechnologytonewchemistriesdiscussedinChapter2).Thereshouldalsobeaconcertedpushfromindustrytodevelopcircularbusinessmodels(includingaroundsecondlife,refurbishment,andmodalshift)whichcanreduceoverallmaterialintensity,includingbysupportinginnovation.135Governments:Publicpolicycangivefurtherimpetusbydeliberatelysupportingtechnologicaldevelopmentswhichaddresslikelyfuturesupplyconstraints(forexample,thedevelopmentanddeploymentofsodium-ionbatteriesorothertechnologiestomoderatefuturelithiumdemand,ortechnologicalinnovationstoreducecopperrequirementsintransmissionanddistribution).Policytoolscouldincludetargetedincentives,R&Dsupport,135Systemiq(2021),Everything-as-a-Service.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains42Chapter4andprizesfor“breakthrough”improvementsinperformance.Forinstance,theAustralianNationalRenewableEnergyAgencyrecentlysetatargettoimprovesolarcellefficienciestoover30%,andreducethecostofsolarmodulestobelow$0.3perW,by2030.136Furthermore,publicpolicyshouldsupportthedevelopmentofcircularbusinessmodelswhichreducematerialandtechnologyintensityforcleanenergy,includingviaeconomicandmarketinstruments(e.g.,adaptingtaxframeworksthatfavourrepairsandrefurbishments),aswellastargetedfundingmechanismsandregulation(e.g.,regulationwhichrequiresproducerstocoverend-of-lifecostsviaextendedproducerresponsibility).137ReducingprimarymaterialsdemandviamaximumrecyclingIncreasedrecyclinghashugepotentialtoreducelong-termdemandforprimarymaterial–althoughitwilltaketimeforlargevolumesofmaterialstoreachend-of-life.Thelongtimescalesassociatedwithstock-turnoverofcleanenergytechnologiesmeanthatstrongactiontoputinplaceinfrastructure,logisticsandregulationforrecyclingshouldstartnow.Industry:Industryshouldtakeactiontodevelopgreaterrecycling,inparticulardrivenbymarketforcesincaseswhererecycledmineralsupplycanbelowercostthanprimarysupply–learningfromindustrieswhererecyclingiscurrentlywidespread,suchasplatinumgroupmetalsfromautocatalystsandindustry.138Furthermore,industryshouldworktoincreaseinnovationaroundmoreadvancedrecyclingtechnology(e.g.,shredders)andprocesses(suchasdirectrecyclingforEVbatteries).139Governments:Publicpolicyshouldstronglyencourageandrequiremaximumrecycling,drivingthescaledevelopmentwhichwillreducerecyclingcost.Forexample,proposalsintheEuropeanBatteryRegulationsettargetsforcollectionofbatteriesatendoflife(reaching73%in2030),recoveryratesforspecificmaterials(e.g.,recovering80%oflithiumby2031),aswellastargetsforrecycledcontentforbatteries(e.g.,6%lithiumby2035,12%by2030),toensurethereishigh-qualityclosed-looprecycling.140FacilitatingprimarymineralsupplyandmanufacturingcapacitydevelopmentIndustry:Promptedbypricesignals,companiesshouldseektogrownewsupplyandmaximiseexistingsupplysourcesandoperations,supportedbytechnology,includingdigitaltechnologies.Forexample,forcopper,newreagentscouldbeusedtoextractfurthercoppersupplyfromtheleachingprocess;andartificialintelligenceandmachinelearningcouldbedeployedtoassistinidentifyingnewdeposits.141Fornewsupplyprojects,industryshouldalsoengagewithlocalcommunitiestoensurestrongtrust-buildingandactiveconsentinprojects.Governments:Acrucialpriorityforpublicpolicywillbetoacceleratepermittingprocessesforbothminingandmanufacturingdevelopments,supportedbytheengagementwithlocalcommunitiestoensuremaximumpossiblesupport.ProposalsintherecentEuropeanNZIA,forexample,includethestreamliningofadministrativerequirementsandfacilitatingpermitting,withmanufacturingprojectsforcleanenergytechnologiesgivenprioritystatus.142Governmentsshouldalsoseektode-riskinvestmentsinnewminingandmanufacturingprojects,includingincreasingthescopeforMDBstopartnerwithprivatecapitalonminingprojectsinlower-incomecountries.Enhancingsupply/demandtransparencyviaimprovedinformationTheenergytransition,likeallpreviouswavesoftechnologicalchange,isboundtoleadtosurgesofdemandandsupplywhichresultinlargepriceswingsupanddown:perfectcoordinationwillneverbeachieved.Butmaximumtransparencyofavailablesupply-anddemand-relateddataandhighqualityanalysisoffuturepotentialtrendscanatleastmoderatethevolatility.Industry:Collaborationthroughroundtablesandexpertpanels,inpartnershipwithgovernments,coulddrivegreatertransparency,suchastheUKCriticalMineralsExpertCommittee.Governments:RecentpublicationsfromtheInternationalEnergyAgencyandWorldBank,143andarecentagreementbetweenCanadianandUKgovernmentstocollaborateoncriticalminerals,aregoodinitialsteps.136ARENAWire(2023),Solarresearchfundingtodrivecostslower.137Systemiq(2021),Everything-as-a-Service.138Recycledplatinumandpalladiummakeuparound50%ofannualsupply,seeHagelukenandGoldmann(2022),Recyclingandcirculareconomy–towardsaclosedloopformetalsinemergingcleantechnologies.139Science(2021),Adeadbatterydilemma.140EUCommission(2022),GreenDeal:EUagreesnewlawonmoresustainableandcircularbatteriestosupportEU’senergytransitionandcompetitiveindustry.141TheEconomist(2023),Copperisthemissingingredientoftheenergytransition;Reuters(2022),Billionaire-backedKoBoldMetalstoinvestinZambiacoppermine.142EUCommission(2023),Netzeroindustryact;CarbonBrief(2023),Q&A:HowtheEUwantstoracetonet-zerowith‘GreenDealIndustrialPlan’.143Seee.g.,IEA(2021),Theroleofcriticalmineralsincleanenergytransitions;IEA(2022),SpecialreportonsolarPVglobalsupplychains;IEA(2022),GlobalsupplychainsofEVbatteries;IEA(2023),Energytechnologyperspectives;WorldBank(2020),Mineralsforclimateaction.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains43Chapter42.DevelopingenvironmentallyandsociallysustainablesupplychainsGovernmentsandindustrymusttakeactiontominimisethecarbonemissionsfrommining,refiningandmanufacturingactivities,toreduceadverselocalenvironmentalimpactsandtoaddresssocialissues.Theseactionsshouldcombine:Strongregulationoflife-cyclecarbonemissionsThiswillrequireestablishingstandardsforScope1,2and3emissionsmeasurementanddisclosure–andshouldbefocusedonsolarpanels,batteriesandEVs.Thiswillenablecarbonintensityofproductstobeassessedandcompared,whateverthelocationofsupply.Governments:Thereareseveralregulatorymodels:•Publicregulationorprocurementrequirementscancreateincentivesforlowcarbonproduction.Forinstance,theFrenchgovernmenthasintroduceda“SimplifiedCarbonAssessment”toenableembodiedcarbonemissionstobecomeasignificantfactorintenderapplicationsfornewsolarPVprojects.144•Publicregulationcanmandatealowcarbonintensityforallsupply,whetherdomesticallysourcedorimported.Bymakingclearthatthiswillbetheendpointofregulatorydevelopment,governmentscancreatestrongincentivesforthedecarbonisationofsupplychainsacrosstheworld.Industry:Industrycouldputforwardvoluntaryrequirements(e.g.,imposedbyEVmanufacturersonbatterysuppliers).Inresponsetothis–aswellaspolicylevers,supplierswillneedtotakeactionstoreduceandeventuallyeliminatecarbonemissionsinboththeirownoperationandtheirsupplychains,inparticularviatheuseofdedicatedzero-carbonelectricitysupplyorpowerpurchaseagreementsincountrieswheregridelectricityisstillcarbonintensive.StrongregulationaroundwiderenvironmentalandsocialimpactsGovernments:Governmentsshouldsetbindingduediligencelegislation.Forexample,existingregulationssuchastheUSUyghurForcedLaborPreventionAct,ortheEUdirectiveoncorporatesustainabilityduediligence,aregoodfirststepsonthisfront.However,actionisneededtoensurebroaderadoptionacrossmorecleanenergytechnologiesandtoensurestrongenforcement.UsingpurchasingpowertoensurehighlocalenvironmentalandsocialstandardsIndustryandgovernments:Majorcompanies,governmentpurchasersormajorinvestorscanincluderequirementsforhighsustainabilitythroughoutsupplychains,potentiallyassociatedwithparticularvoluntarystandardsoraudits.Definingandadoptinghigh-qualityvoluntaryenvironmentalandsocialstandardsIndustry:AdoptionofvoluntarystandardssuchastheCopperMark,IRMA,orTowardsSustainableMiningcanhelpcompaniesaccelerateactiononsustainablesupplychains–ascanstrongcorporategovernancethatprioritisesemissionsreductionsandresponsiblesupply.Forexample,Nexans–amajorgridmanufacturer–hasjoinedtheCopperMarktopromotesustainablecopperproductionpractisesandincreaseitsuseofduediligenceinitssupplychain.145ImprovingandrequiringsupplychaintraceabilityIndustry:Industry-wideengagementandtrustedthird-partyauditorsshouldpushforsupplychaintraceability.Promotinglarge-scaletrialsofsupplychainauditingcanhelpcompaniesunderstandimpactsacrosssupplychains:companiessuchasCirculor,theongoingdevelopmentoftheBatteryPassportbytheGlobalBatteryAlliance,andtheBatteryPassConsortium,aretakingpromisingstepstowardsimplementationoffulltraceability.Thereisanopportunityforthecominggenerationofmining,refiningandmanufacturingtoreapcommercialrewardsforhighenvironmentalandsocialstandardsingeographieswhereregulationincentivisesthis,asanareaofcompetitiveadvantage.144UltraLow-CarbonSolarAlliance(2021),Reducingthecarbonfootprintofsolar:theFrenchmodel.145Nexans(2021),NexansjoinstheCopperMarktopromoteresponsiblecopperproduction.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains44Chapter43.Ensuringdiversified,resilientandsecuresupplyFacedwiththeconcentrationinsupplychainswhichChapter2and3described,manycountries–andinparticulartheUSandtheEU–arenowseekingtodevelopmorediverse,resilientandsecuresourcesofsupply.Whilsttherearenaturallygreaterconstraintstorelocatingminingoperationsduetonaturalresourceendowments,theremainderofvaluechainsfromrefiningandprocessingthroughtomanufacturingcanmoreeasilyberelocated.Inaddition,manyindividualcompaniesareseekingtodevelopsupplychainswhicharelessvulnerabletoanyfutureeconomicorgeopoliticaldisruptions.Thesupplychainstrategiespursuedincludetheobjective(inparticularintheUS)of“near-shoring”or“friend-shoring”keysupplychainelements–withasignificantshareofmining,refiningormanufacturingcapacitylocatedwithinthecountry,innearbycountriesorincountrieswhichareconsideredgeopoliticalallies.Thisreflectsbothadesiretoreducevulnerabilitytoanyfuturepoliticalrisksandtofosterdomestictechnologicaldevelopmentandeconomicandemploymentgrowth.Exhibit4.2describessomeofthepoliciesalreadyinplaceornowbeingputinplaceinChina,theUS,theEUandIndia.TheimpetustodevelopmorediversifiedandsecuresupplychainsisaninevitableresponsetothedegreeofconcentrationwhichChapters2and3illustrated;andinprinciple,lessconcentratedsupplychainscouldbedesignedinwayswhichacceleratethepaceoftheenergytransitionandreducetheriskofdisruption.Exhibit4.3identifiesaseriesofactionsthatcanbetakentodiversifymining,refiningandmanufacturing,withoutaspecificfocusondomesticrelocationofproduction.Existingexamplesinclude:•ManufacturerssuchasTeslaorGMmakingdirectinvestments,verticalintegrationorsigningstrategicpartnershipsformineralsupply.146•Batterymanufacturersopeningnewfactoriesacrossdifferentgeographies,tomeetlocaldemandandparticularregulatoryrequirements(e.g.,localcontentrules).147•Governmentssigninginternationalpartnershipstosecuresupply,suchastheMineralsSecurityPartnership,ledbytheUSgovernment,whichincludesanexplicitfocusonhighenvironmentalandsocialstandards.148Intermsofmaximisingthebenefitsofmoreextensiveactiontorelocateproductiondomestically,thiswillrequire:•Recognisingthepotentialtrade-offsinvolvedinbuildingmorelocalisedsupplychains.Therecouldbetrade-offsbetweenachievingpoliticalprioritiesacrossjobs,manufacturing,tradeandenergysecurity,versusincreasedcosts(e.g.,capexforabatteryplant,orhigherenergyprices).•Focusinglocalisationstrategiesonthemostappropriatesectorsandimplementingtheminanoptimalfashion.Theremaybefeasibilitychallengestobuildingnewprojects,covering:morestringentenvironmentalandsocialstandards,quotasonlocalcontent,slowerpermitting,difficultyaccessingfinanceandagenerallowerinvestmentriskappetite.146Seee.g.,C&EN(2023),GMtoinvest$650millioninNevadalithiummine;FinancialTimes(2020),TeslatobuycobaltfromGlencorefornewcarplants.147Forexample,LGEnergySolutionhasannouncedprojectsinPolandandtheUS.PulseNews(2022),LGEnergydoublesbatterycapacityinPoland;EnergyStorageNews(2023),LGEnergySolutionbuildingUSfactorywith16GWhdedicatedtobatterystorage.148USStateDepartment(2023),MineralsSecurityPartnership(MSP)PrinciplesforResponsibleCriticalMineralsSupplyChains.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains45Chapter4Exhibit4.2PolicymeasurestorespondtonewdynamicsarealreadybeingsetoutChina•Long-standingstatesupportfordeploymentandmanufacturingoflow-carbontechnologies,especiallysolarandbatteries•E.g.,developmentofgovernmentFiveYearPlans,largefinancialsupportfromChinaDevelopmentBank,early-stageBrightnessProgramforruralelectrificationusingsolarPVtogrowdomesticdemand,localgovernmentsupporttoestablishindustrialparksetc.USA•USInflationReductionActpassedinAugust2022,includestaxcreditsforlow-carbonelectricitygenerationanddomesticmanufacturing•Widerpolicypackageoncleanenergytechnologiesandindustrialcompetitiveness,e.g.,Infrastructure,InvestmentsandJobsAct,CHIPS&ScienceActEU•CommissionworkonEUGreenDeal,includingCriticalRawMaterialsAct,NetZeroIndustryAct•EmissionsTradingSchemeandproposalsforCarbonBorderAdjustmentMechanismtocoverhigh-emissionsmanufacturingandindustryIndia•ProductionLinkedIncentiveschemestoboostdomesticmanufacturing,includingonelectricvehicles(~$3.2bn)andsolarPVmodulemanufacturing(~$2.4bn)•ImporttariffsonsolarmodulesmanufacturedinChinaSource:IEA(2023),Policiesdatabase;BNEF(2022),Localizingcleanenergysupplychainscomesatacost;Harvard/FairbankCenterforChineseStudies(2022),HowChinaiswinningtheraceforcleanenergytechnologies;GregoryNewet(2023),Howsolarenergybecamecheap;KayaAdvisory/InevitablePolicyResponse(2022),TheUSdiscoversitsclimatepolicy:Aholisticassessmentandimplications;EUCommission(2023),Greendealindustrialplan;EUCommission(2021),Carbonborderadjustmentmechanism;S&PGlobal(2022),India’ssolarpowerprospectscompromisedbysteepimportduty,commodityhikes;IndianMinistryofHeavyIndustries(2022);PVMagazine(2022),Indiangovernmentapprovessecondphaseofsolarmanufacturingincentivescheme.Exhibit4.3Ensuringdiversified,resilientandsecuresupply–diversifiedsupplyandincreasedenergysecurityAdoptstrategiestomanagesupplydependenceformining,refiningandmanufacturing:KeyActorsIndustryPolicymakersSecuringsupplyfromdifferentminesites/manufacturers,todiversifysupplychain–strikingabalancebetweenfulldiversificationandsinglepointsoffailure.Manufacturersstartingjointventures,carryingoutverticalintegration,signingoff-takeragreementstosecurefuturesupply.Agreeingstrategicinternationalpartnershipsand‘friend-shoring’,toensureadiversifiedbutalignedsourceofsupplywhererelevant.Ensuringproduction,contentanddiversificationtargetsarefocusedonlocationofproduction,notownership–toallowstrongcompetitionacrossmarketsandsupplychains.PriorityAreas:Ensurethatanyonecountryorcompanydoesnotprovide>80%ofsupplyforaparticularmaterial/product;ensurediversifiedandfreeflowoftradeforcleanenergysupplychains.Priorityareasareminingofcobaltandrareearths;refiningofallenergytransitionmaterials;manufacturingsupplychainofsolarandbatteries.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains46Chapter4Trade-offsinsupplychainlocalisationPolicychoicesaroundnear-shoringwillbeinpartdrivenbygeopoliticalconsiderations.Butitisimportanttounderstandthepotentialtrade-offstoguideanoptimalpolicyapproach.Re-locatingproductioncouldinmanycasesimposeaninitialincreaseinthecostofkeytechnologiesasproductionshiftsfromlocationswhichcurrentlybenefitfromlargeeconomiesofscaleandacquiredexperience.Forexample,BNEFestimatesthatthecapitalcostsofbuildingoutsolarPVmanufacturingcapacityfrompolysiliconthroughtomodulesarecurrentlyalmostfourtimeshigherintheEUandtheUSthaninChina.149Thiseffectcanbethoughtofas“restricting”acleanenergytechnologytoaparticularregionormarket,pullingitbackwardsandupalongitscostcurve,or“learningcurve”[BoxC].Localisationstrategiesshouldthereforebedesignedtoensurethattheoverallglobaleffectdoesnotseverelyimpactcostsofthetransition.Theyalsoneedtoreflectrealisticassessmentoftrade-offsinvolvedacrossthreedimensions.•Localvalueadd,withlocalproductiongeneratingadomesticGDPcontributionandtaxrevenues.However,thiswouldneedtobeweighedagainstanysubsidiesrequiredtosuccessfullyrelocateproductionawayfromleast-costlocations.•Employment,withpotentialtoincreasedomesticjobsinmanufacturing.However,asmanufacturingisincreasinglyautomated,thetotalemploymentimpactmaybelimited;inmanycountriesindeed,domesticemploymentcreationinresidentialbuildingretrofitandinstallationislikelytobemoresignificantthaninmanufacturing(forexampleasnotedinBoxBforresidentialheatpumpinstallation).•Geopoliticalconsiderations,withlocalisationreducingimportdependencywhichmightcreatevulnerabilitiesinperiodsofgeopoliticalstress.Furthermore,settingoutstrongmeasurestorelocaliseproduction(e.g.,theUSIRA)couldbeusedasatooltoshapeglobaleconomictradeandinvestmentdecisionsinlinewithacountry’spolicypreferences.However,whilesomediversificationwillbepossible,countriesandcompaniescannoteliminatealldependencieswithoutincurringsignificantcostincreases.BoxCDefininglearningcurvesManytechnologiesgothroughaprocessofcostdeclineovertime,asincreasesincapacityseescaleeffectsreducethecostsofmanufacture.Therateatwhichthisprogresstakesplaceiscapturedviaa“learningrate”,definedasthereductionincostforeachdoublingoftechnologycapacitydeployment.Forexample,learningratesforsolar,batteriesandwindoverthepastdecadehavebeen28%,17%,and13%respectively.1,2,3“Learningcurves”areagraphicalrepresentationofthelearningrate.Foramoredetaileddiscussionandexamplesacrosscleanenergytechnologies,seeMalhotraandSchmidt3,andWayetal.4Intermsof“near-shoring”,asmentioned,thiscouldrestrictacleanenergytechnologytoaparticularregionormarket,pullingitbackwardsandupalongitslearningcurve.Followingthisinitialincreaseincosts,thepaceoffuturecostdeclineswoulddependonamixofpolicychoicesandmarketdynamics[Exhibit4.4].Therearetwopotentialscenarios:1.Aslowdownindeploymentandpermanentlyhighercosts,duetoamixof:•Higherongoingcosts(labour,energy,financing).•Morerestrictiveregulationswhichconstrainrapidscale-upofmining,refiningormanufacturing.•Finitesizeofmarketatregional/nationalscale,settingalimittoeconomyofscaledrivencostreductions.•Overly-stringentrequirementsforlocalisationallcomponentsupplies,evenwhereadditionalcostsarehighandrisksfromimportreliancelimited.2.Anacceleratedshiftbackdownalonglearningcurveresultingfrom:•Companiessharinglearningbetweenfactoriesindifferentregions,acceleratingproductivityimprovementsregardlessoffactorylocation.•Globalsharingoffasterinnovation,incentivisedbyparticularpoliciesorindustrialstrategiespairedwithnear-shoring.•Morerobust,lessvolatilesupplychainsthatarenotasdisruptedbyexternalshocks.•Anoverallfasterthanexpectedgrowthincleanenergydeploymentasallcountriespursueaggressivedecarbonisationandascompaniesinallcountriespursuetechnologicalleadership.1BNEF(2022),4QGlobalPVmarketoutlook;2BNEF(2022),Lithium-ionbatterypricesurvey;3MalhotraandSchmidt(2020),Acceleratinglow-carboninnovation;4Wayetal.(2022),Empiricallygroundedtechnologyforecastsandtheenergytransition.149BNEF(2022),BuildingsolarfactoriestorivalChinawon’tbecheap.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains47Chapter4Exhibit4.4Near-shoringwouldleadtohighercosts,movingbackandupthelearningcurve;butamixofpolicyandmarketdynamicscouldbringrapidcostdeclinesafterafewyearsSolarExample:Initially,near-shoringdynamicscanbeseenasmovingbackandupacleanenergytechnology‘learningcurve’,andarangeoffactorswillinfluencehowcostscomedowninfutureyearsSolarlearningcurve:US$/W(Y-axis);MW(X-axis)1,000,00010,0001001Deployment0.010.10101100Price1,000,00010,0001001Deployment0.010.10101100Price213B3A212Initially,highercapitalandotherinputcostsmayleadtohigherprices/LCOEs.Near-shoring‘restricts’acleanenergytechnologytoaparticularregion,pullingitbackwardsalongthedeploymentcurve.23AAslowdownindeploymentandpermanentlyhighercostsfrom:•Higherongoingcosts(labour,energy,finance)•Slowerregulation,increasedbureaucracy•Smallermarketsizeatregional/nationalscale•Protectionistpolicies/tradebarriers23BAnacceleratedshiftbackdownalonglearningcurvecouldbedueto:•Globalsharingoffasterinnovation•Companiessharinglearningbetweenfactoriesindifferentregions•Morerobust,lessvolatilesupplychains•Afaster-than-expectedgrowthincleanenergydeploymentsHistoricalprices28%LearningcurveSource:BNEF(2022),4QGlobalPVmarketoutlook;Helvestonetal.(2021),Quantifyingthecostsavingsofglobalsolarphotovoltaicsupplychains;Wayetal.(2022),Empiricallygroundedtechnologyforecastsandtheenergytransition.FocusinglocalisationstrategiesandeffectiveimplementationSupplychainlocalisationstrategiesarelikelytobemosteffectiveiftheycarefullyconsiderkeysectorsandimplementation[Exhibit4.5],includingthatthey:•Reflectthedifferentmarketdynamicsandsupplychaincomplexityofdifferentsectors.SolarPV,batteryandelectrolyserproductionwillbeconcentratedinverylarge-scalefactoriesdrivinglargeeconomyofscaleandlearningcurveeffects;simpleproductionsubsidiescanbeeffectiveininfluencinglocationdecisions,butitisimportanttoensurethatthesedonotcomeatexpenseofglobaltechnologytransfer.Windturbinesupplyandinstallation(particularlyoffshore)entailamorecomplexsupplychainbutonewhichisinherentlylocal;thechallengeisthereforelesstoinduceashiftinproductionlocation,thantoensurethatthesupplychaindevelopsfastenoughtosupportdeploymenttargets.•Arealignedwithacountry’sdistinctiveenergytransitionpathwayandnaturalcomparativeadvantage.Forexample,giventheUK’sfocusonoffshorewind,developingastrongdomesticsupplychainshouldbeakeypriority.Similarly,theverywidespreaduseoftwo-andthree-wheelersinSoutheastAsiancountriescreatesabigopportunitytobuildlarge-scalelocalmanufacturingcapacityinelectrictwo-andthree-wheelersandrelatedbatteries.•Focusonthelocationofproductionandrelatedsupplychainsratherthantheownershipofcompanies,thusmaximisingthepotentialforglobaltransferoftechnologyandknow-howwhileachievingtheeconomicandsecuritybenefitsofincreasedlocalproductionandreducedimportreliance.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains48Chapter4Exhibit4.5Ensuringdiversified,resilientandsecuresupply–trade-offsofnear-shoringWherenear-shoringisstrategicallybeneficial,developasuiteofactionstomaximisebenefitsofnear-shoringofvaluechainsKeyActorsIndustryPolicymakersDevelopingastrategicvisionofmaterialandcleanenergytechnologyrequirementsbygovernmentstoplanrequiredsupplychainbuilt-outaheadoftime,e.g.,bysettingoutgovernmentstrategyoncriticalrawmaterialsorconveningexpertforumsfordiscussionwithindustry.Thiscouldincludeunderstandinglinkswithothersectors(e.g.,defence),andimport/exportvolumes.Understandclearlytheconsiderationsofnear-shoringtrade-offsforaparticulargeographyorcompany,includingassessmentsoflocalindustrialstrategy,policyregime,energyandlabourcostsetc.Near-shoringshouldfocusonareaswherethereisstronggrowth/potentialinaparticularcountry,e.g.,electrictwo-wheelersinIndonesia,offshorewindinUK.Fortechnologiesearlieralongdeploymentpaths,clearpolicytargetsshouldprovidecertaintyforlarge-scalegrowthindomesticdemand,aheadofascale-upindomesticsupplychains(e.g.,ICEbans).Onlyusinggradualbuild-upsindomesticproduction/contentrequirements,toallowdomesticsupplychainstoscaleatareasonablepace.Providingincentivesforconstructionofdomesticproductioncapacity,tiedtoacceleratedpermittingalongsideexplicitrequirementsforhigherenvironmentalandsocialstandardsthaninexistingproduction.Thisshouldgowithcommunityengagement,toachievelocalconsentfornewprojects.PriorityAreas:Ensurethatnear-shoringisalignedwithareasofgrowth/strengthforacountry;governmentincentivesfornear-shoringshouldnotdistortmarketandcompetition.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains49Conclusion5ConclusionSupplychainvolatilityhasemergedasanimportanttrendinthecleanenergylandscape,withtheCovid-19pandemicandglobaleconomicrecovery,aswellasRussia’sinvasionofUkraine,feedingintohigherprices.Securingresilientsupplychainswillbecriticaltoensuringasmoothprogressionoftheenergytransition.Thisanalysishasshownthatwhile,atthegloballevel,therearenoinherentbarrierstothescale-upofsupplychains,clearactionsfrompolicymakersandindustrymusthelptonavigatechallenges.Threemajorcross-cuttingchallengesemerge:•Therecouldbetightmarketsforsomekeyinputmaterials,notablyforsomerawmaterials(lithium,copper)aswellasshorter-livedvolatilityordelaysforsomemorecomplexcomponents.•TherearespecificenvironmentalandsocialrisksespeciallyrelevanttosolarPVandbatteries.•Thereisahighdegreeofconcentrationofproductionacrossmanystepsofcleanenergytechnologysupplychains.Insomeinstances,managingthesechallengesmayinvolvesometrade-offsbetweenthespeedofthetransitionandreducingenvironmentalandsocialimpacts,orlocalisationofproduction.Acriticalpriorityforgovernmentsistosetoutaclearstrategicvisionfortheenergytransition,supportedbysectoraltargets.Overall,themoreclarityovertheshapeandtimelineofthefuturetransition,themorelikelythatsupplychainchallengescanbesolvedbymarketcompetitionandprivateinvestment.Furthermore,governmentscanplayanimportantroletoshapeincentivesandintroduceregulationthatreducesmarketbalancechallenges,andmustalsosetoutregulationtoensurethatsupplychainsforthegrowingcleanenergysectorminimisesocialandenvironmentalrisks.Overall,theroleofindustryindrivinginnovationtoreducethescaleofthechallengewillbekey–onethathasalreadybeendemonstrated,suchasintheevolutionofbatterytechnologyawayfrommaterialsperceivedtohavehighersupplychallenges(e.g.,cobalt).Industrymustalsoleadresponsiblyonsocialandenvironmentalriskstoensurethatthetransitioncontinuestohavebuy-inacrosssociety.Asthecurrentpoliticaldiscussioncentresonopportunitiesaroundrelocationofcleanenergysupplychains,thisInsightsBriefinghasoutlinedclearstepstoensurethatanyeffortaroundrelocationiscarefullyconsidered.Thepaceandscaleofcleanenergydeploymentmeansthatallcountriesshouldbeabletobenefitfromgrowingmarketsandgraspnewopportunitiesaroundindustrialcompetitivenessandenergysecurity.However,insomecases,relocationofproductionislikelytoentailshort-termcostincreasesfortheenergytransition–whichwillrequirecarefulbalancingagainstpoliticalpriorities.Ensuringabalancedapproachthatcansupportalow-cost,fast-pacedglobalenergytransition,aswellasmeetingdomesticpoliticalpriorities,isvital.TheaccompanyingEUPolicyToolkittothisInsightsBriefingtakesacloserlookatthekeyissuesandrequiredresponsesfromaEuropeanperspective.TheenergyandgeopoliticalcrisisresultingfromRussia’sinvasionofUkrainehasacceleratedEurope’simperativetoturnawayfromfossilfuels,andthereforetheneedtoensurethatcleanenergydeploymentisnotheldbackbysupplychainissues.Furthermore,Europeiscurrentlyinapositionofimportdependencyacrossmanypartsofcleansupplychains,inparticularwithhigherexposuretowardstheupstreamsector(importingrawmaterials)150–ariskthatisbeingaddressedthroughpolicyproposalsaspartoftheGreenDealIndustrialPlan.150EUJointResearchCouncil(2023),SupplychainanalysisandmaterialdemandforecastinstrategictechnologiesandsectorsintheEU–Aforesightstudy;Eurometaux(2022),Metalsforcleanenergy:PathwaystosolvingEurope’srawmaterialschallenge.Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains50AcknowledgementsAcknowledgementsTheteamthatdevelopedthisreportcomprised:LordAdairTurner(Chair),FaustineDelasalle(Vice-Chair),ItaKettleborough(Director),MikeHemsley(DeputyDirector),ElenaPravettoniandLeonardoBuizza(Leadauthors)withsupportfromHugoStevens,Anne-WietjeZwijnen,LaureneAubert,HannahAudino,CarlKühl,PhilipLake,ElizabethLam,HugoLiabeuf,TommasoMazzanti,ShaneO’Connor,ViktoriiaPetriv,CarolineRandle(SYSTEMIQ).TheteamwouldalsoliketothanktheETCmembersandbroadernetworkofexpertsfortheirinput:CliveTurton(ACWAPower);ElkePfeiffer(Allianz);NicolaDavidson(ArcelorMittal);AbydKarmaliOBE(BankofAmerica);AntoineVagneur-Jones(BNEF);GarethRamsay(bp);DavidMazaira(CreditSuisse);TanishaBeebee(DRAX);AdilHanif(EBRD);SarahO’Brien,RebeccaCollyerandMélissaZill(EuropeanClimateFoundation);EleonoreSoubeyran(GranthamInstitute,LondonSchoolofEconomics);MattGorman(HeathrowAirport);AbhishekJoseph(HSBC);FranciscoLaveron(Iberdrola);ChrisDodwell(ImpaxAssetManagement);BenMurphy(IPGroup);GaiadeBattista(JustClimate);JaekilRyu(KoreaZinc);FreyaBurton(LanzaTech);SimonGadd(L&G);KhangzhenLeow(LombardOdier);JazibHasan(ModernEnergy);SteveSmith(NationalGrid);RachelFletcher(OctopusEnergy);EmilDamgaardGann(Ørsted);RahimMahmood(Petronas);VivienCaiandSummerXia(PrimaveraCapital);JamesSchofield(Rabobank);ManyaRanjan(ReNewPower);JonathanGrant(RioTinto);CateHightandGregHopkins(RMI);EmmetWalsh(Rothschild&Co.);DanielWegen(RoyalDutchShell);EmmanuelNormant(SaintGobain);VincentMinier,ThomasKwanandVincentPetit(SchneiderElectric);BrianDean(SEforAll);MartinPei(SSAB);AlistairMcGirr(SSE);AbhishekGoyal(TataGroup);SomeshBiswas(TataSteel);AKSaxena(TERI);ReidDetchon(UnitedNationsFoundation);MikaelNordlander(Vattenfall);NiklasGustafsson(Volvo);RasmusValanko(WeMeanBusiness);RowanDouglas(WillisTowersWatson);JenniferLayke(WorldResourcesInstitute);PaulEbert,GregPittandDaveOudenijeweme(Worley).Better,Faster,Cleaner:Securingcleanenergytechnologysupplychains51