Mineral Resource Economy 2 E-Book
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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
The challenges associated with the environmental impact of renewable energies are formidable and multiple. The exploitation of diffuse forms of energy will require us to reshape our lifestyles and infrastructures. Reducing their environmental impact is imperative and requires the mobilization of all available levers of action. Beyond the analysis of these challenges, this book presents an overview of the levers of action that should allow us to meet them, by crossing the fields of the human sciences, geosciences and engineering. The levers of action examined are both technical (through the substitution or use of low technology) and economic and social (through the development of recycling or decoupling). The book also addresses the question of their effectiveness and their overall impact.
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Veröffentlichungsjahr: 2021
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Table of Contents
Cover
Title Page
Copyright
Introduction
PART 1 Stakes
1 Toward a New Geopolitics of Raw Materials in the Energy Transition
1.1. Introduction
1.2. Measuring the criticality of raw materials and geopolitical risk
1.3. The geopolitics and geo-economics of raw materials in the energy transition
1.4. How can we manage strategic materials supply risk?
1.5. Conclusion: toward a new resource nationalism?
1.6. References
2 Legal Issues Regarding the Sustainable Management of Territorial and Extraterritorial Mineral Resources
2.1. National law regarding territorial mineral resources: the decisive issue of ownership
2.2. International law regarding territorial mineral resources: the central role of state sovereignty
2.3. International law regarding extraterritorial mineral resources: exploitation “for the benefit of mankind as a whole”
2.4. For a sustainable management of mineral resources
2.5. References
3 Mining and Societies
3.1. Introduction
3.2. Mines as a factor of settlement and landscape transformation
3.3. Mining in the Industrial Age
3.4. Contemporary mining transformations and challenges
3.5. Conclusion
3.6. References
PART 2 Action Levers
4 Maintaining or Even Developing the Mining of Mineral Resources in Europe: The Case of Wallonia (Belgium)
4.1. Introduction
4.2. Geological resources in Wallonia
4.3. Extension of sites/quantity of mining?
4.4. Decrease in sites/quantity of operations
4.5. Some levers for action
4.6. Conclusion
4.7. References
5 Substitution: Promises, Principles and Main Constraints
5.1. Introduction
5.2. Main economic foundations of substitution
5.3. Elements, components, systems: what are we really substituting?
5.4. The main obstacles to substitution
5.5. Other aspects to be taken into account
5.6. References
6 Resource Consumption and Decoupling
6.1. Introduction
6.2. Global use of resources
6.3. Material consumption indicators
6.4. Decoupling the economy from resource consumption
6.5. Responsibility for resource consumption
6.6. Conclusion
6.7. References
7 The Economics of Recycling: Ambitions, Myths and Constraints
7.1. The recycling economy, an ancient history
7.2. Geological and urban mines, similarities and differences in logic
7.3. Understand the definitions and indicators of recycling in order to express its performance
7.4. A limited deposit because we can only recycle what we have consumed
7.5. Multiple factors influencing recycling and its effectiveness
7.6. The technical constraints of metal recycling
7.7. Environmental benefits of recycling
7.8. Conclusion
7.9. References
8 Low-tech: A Path Toward the Necessary Metallic Sobriety?
8.1. Cornucopians versus doomsdayers
8.2. The circular economy, mission impossible?
8.3. Toward a metallic frugality
8.4. A possible and desirable transition
8.5. References
Conclusion
List of Authors
Index
End User License Agreement
List of Figures
Chapter 1
Figure 1.1.
Raw material criticality measurement factors (source: adapted from H...
Figure 1.2.
China’s foreign direct investment in the metals sector (sources: Chi...
Chapter 3
Figure 3.1.
Landscape of the Sierra de Gádor, near Almeria. Old lead mining, in ...
Figure 3.2.
Former mining site of the Carreau Wendel in the Lorraine coal basin....
Figure 3.3.
Coal basins and terminals in Australia. For a color version of this ...
Figure 3.4.
The Chuquicamata copper mine in the Chilean Andes, 1988 (source: Des...
Figure 3.5.
The Chuquicamata copper mine in the Chilean Andes in 2018 (source: D...
Figure 3.6.
The Yanacocha Gold Mine near Cajamarca, Peru (source: Deshaies (2009...
Chapter 6
Figure 6.1.
Global balance of material flows (socio-economic metabolism). The nu...
Figure 6.2.
World flows of in-use stocks, accumulated stocks and recycled materi...
Figure 6.3.
DMC and MF in tons per capita between 1990 and 2015 for different co...
Figure 6.4.
Relative and absolute decoupling of resource use from GDP. For a col...
Figure 6.5.
Relative change in DMC, MF and GDP between 1990 and 2015 for differe...
Chapter 7
Figure 7.1.
Description of material flows in the metal cycle according to the UN...
Figure 7.2.
Example of the relationship between material consumption and the con...
Figure 7.3.
Illustrative recycling chain stages and efficiency rates. For a colo...
Figure 7.4.
Diagram of the electronic waste treatment process from UMICORE to Ho...
Chapter 8
Figure 8.1.
Comparative change in world gross domestic product (GDP), world stee...
List of Table
Chapter 1
Table 1.1.
Raw material supply disruptions due to political instability since 19...
Table 1.2.
Maximum ratio of cumulative demand for materials by 2050 to identifie...
Table 1.3.
Geographic concentration of production (P) and reserves (R) of minera...
Table 1.4.
Amount of water and energy used for ore extraction or reuse of waste ...
Chapter 3
Table 3.1.
Major coal producers in 1981 and 2017 (source: BP Statistics (2018))
Chapter 7
Table 7.1.
Comparison of contents in natural deposits and in selected wastes (so...
Table 7.2.
Concentrations of precious metals in the stream to be recycled accord...
Table 7.3.
Distribution of income in the electronic waste deposit (source: Cucch...
Guide
Cover
Table of Contents
Title Page
Copyright
Introduction
Begin Reading
Conclusion
List of Authors
Index
End User License Agreement
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SCIENCES
Energy, Field Directors – Alain Dollet, Pascal Brault
Raw Materials and Materials for Energy, Subject Heads – Olivier Vidal and Frédéric Schuster
Mineral Resources Economics 2
Issues and Action Levers
Coordinated by
Florian Fizaine
Xavier Galiègue
First published 2021 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:
ISTE Ltd
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John Wiley & Sons, Inc.
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© ISTE Ltd 2021
The rights of Florian Fizaine and Xavier Galiègue to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Library of Congress Control Number: 2021940276
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library
ISBN 978-1-78945-025-5
ERC code:
SH1 Individuals, Markets and Organisations
SH1_12 Agricultural economics; energy economics; environmental economics
PE10 Earth System Science
PE10_10 Mineralogy, petrology, igneous petrology, metamorphic petrology
Introduction
Florian FIZAINE1 and Xavier GALIÈGUE2
1 IREGE, Savoie Mont Blanc University, Annecy, France
2 LEO, University of Orléans, France
We have seen in Volume 1 of this book that the context of mineral resources involves strong interactions between the material and physical constraints of extractive industries and those of the economy and social representations. These interactions are now strong enough for us to consider that we have already entered a new geological era, the Anthropocene era, in which the metabolism of the planet is shaped by human activity. However, unlike other geological eras, if the Anthropocene generates evolutions that are unintentional consequences of human activities, these could be voluntarily influenced – on the condition that public opinion becomes aware of this and assumes the consequences of voluntarist policies in this field.
A large part of this volume, Volume 2, will be devoted to examining the leverage available to us to make the energy transition compatible with the use of our mineral resources. However, before examining them, it will also be necessary to address a number of issues related to the legal regimes governing access to mineral resources, the geopolitical interactions between producing and consuming countries and the impact of extractive activities on populations.
I.1. The stakes: between legal rules, interdependence of nations and interests of local populations
First of all, it goes without saying that the perpetuation of a growth model based on the continuous growth of raw material needs, to which will most probably be added those (perhaps one-off) of the energy transition, places resource-importing countries in a difficult situation. In this context, the multiplication of criticality studies of raw materials testifies to the growing concern of countries and companies that rely heavily on international flows of natural resources. The contribution of Emmanuel Hache and his co-authors (Chapter 1) clearly shows that these criticality studies nonetheless bias reality by displacing consumers at the mercy of all-powerful producer countries. Yet this interdependence is often mutual, and it is therefore necessary to weigh the supply risk by also analyzing the diversity of exports from producer countries. Moreover, in this giant chess game, the availability of national resources (even untouched ones), the threat of the substitution of an alternative resource or a supply route from a cooperative country can certainly reduce the risk of supply disruption even in the case of a high level of dependence. Nevertheless, the reduction of the need for resources (sobriety and material efficiency) always seems less uncertain than securing access to primary resources.
Moreover, access to mineral resources is fundamentally shaped by legal rules and regimes, as demonstrated by the contribution of Stéphanie Reich-de Vigan (Chapter 2). Important differences remain between the legal regimes in the area of territorial and extraterritorial mineral resource ownership, which are not neutral with regard to incentives to extract or protect the environment. If our socio-cultural models focus on the economic part of sustainable development, it is likely that legal regimes for resource extraction will be brought into coherence to reflect this overarching objective. This will probably be to the detriment of the environment and by accentuating anthropic pressure on the last natural areas that have been relatively spared until now (Antarctica, the seabed in international waters).
There are, however, other options highlighted by the example of New Zealand. Indeed, New Zealand is one of the emblematic countries that have exploited the extension of the border, i.e. developed by relying on an adjacent geographic region exceptionally endowed with natural resources and characterized by a low human:earth ratio balance (Barbier 2011). However, when the United States continues to legally open other borders across the board – such as the treaty legalizing the private exploitation of asteroids – New Zealand opted for a different choice in 2017. Indeed, under pressure from the Iwi (Maori), who give the Whanganui River a different cultural representation from the British, the latter has been given a legal personality, allowing it to defend its interests in legal proceedings with the help of two lawyers. One can legitimately think that this will undoubtedly modify the future extractive trajectories near the river. This is again a good example of the importance of feedback from the human sciences on the opposing pressure by humans on the biosphere and the geosphere.
Within this framework, the study of the occupation of space, settlements and territories occupied by mining activity can provide adequate information on the parameters likely to modify these trajectories. This is what Michel Deshaies is trying to do in his contribution (Chapter 3). By these means, he confirms the absence of determinism on the trajectory of this anthropogenic pressure. He also notes the growing difficulties in perpetuating the current extraction model in the face of local populations increasingly hostile to mining projects. Here again, we note that conflicts related to mining projects are essentially present in North, South and Central America, even though a significant share of extraction is also located in Africa and other OECD countries. This is evidence that social organization, institutions and culture play a significant role in maintaining or inhibiting the widespread extraction of mineral resources.
I.2. The leverage for action: what can be expected and what remains to be explored
What leverage do we have at our disposal to achieve a more sober economy and sustainable development? One of the lessons that can be drawn from the previous chapters is that the existence of strong interactions between the various constraints affecting mineral resources prevents us from considering that we could free ourselves from them by resorting to univocal, purely technical, economic or societal solutions: proposing a simple solution to a complex problem is doomed to fail. In this volume, we examine what we can potentially expect from the deployment of several forms of leverage often evoked in the literature: domestic extraction, substitution, recycling, material efficiency (or decoupling) and low-tech solutions combined with sobriety.
To begin with, the maintenance or development of national or European domestic extraction is often mentioned both by certain geopolitical experts and by strategic committees, such as COMES (Comité pour les métaux stratégiques, Committee for Strategic Metals), concerned with reducing the impact of supply disruptions. This same recommendation is also sometimes made, this time in order to preserve the environment. However, although the stated objective is environmental, this leverage is rarely formulated by environmentalists themselves. We can think in particular of Guillaume Pitron’s latest work for the general public (2018) where the author calls for higher national production to avoid a delocalization of the ecological impacts of the energy and digital transition (in his chapter “The end of the last sanctuaries”). This leverage would be both an effective way to relocate negative mining externalities while reducing them significantly (thanks to more respectful local extraction conditions), and a great support to raise consumers’ awareness of the environmental cost of their lifestyle. The author even views it as a good way to increase consumer pressure on emerging countries to change their socially and environmentally disastrous extraction techniques. He criticizes environmental NGOs for not understanding the true impact of the energy transition:
Environmental NGOs are showing a certain inconsistency as they denounce the more sustainable effects of the new world that they themselves have called for. They do not admit that the energy and digital transition is also a transition from oil fields to rare metal deposits, and that the fight against global warming calls for a mining response that must be assumed. (Pitron 2018)
While the latter argument may appear to be valid in the case of an energy transition in the form of “green growth”, the argument for a national mining revival for the reasons cited above seems to suffer from at least four pitfalls:
– First, the revival of domestic mining supply suffers from multiple problems of perception by the population and stakeholders, as Johan Yans rightly points out (Chapter 4). However, the same author suggests ways to mitigate these negative perceptions;
– Second, it seems strange from an ethical point of view to expose individuals personally to a problem with the intention of raising their awareness. In the same way that we do not dump our garbage in the gardens and apartments of our fellow citizens to make them aware of sorting, it seems doubtful that we should expose them to the nuisances of mines in order to encourage them to reduce their consumption of mineral resources;
– Third, empirical statistical analyses show that countries with high domestic extraction do not consume fewer resources to support the way of life of their inhabitants – quite the contrary. The comparison of the United States and Japan presents a counter-example of lifestyle moderation through proximity to mines. If one follows the assertion described above, Japan, which has not been a major mining country since the late 19th century, should consume more material per capita than the United States, Canada or Australia, which are, on the contrary, major mining producers. However, the exact opposite is true. In 2015, Japan had a material footprint of 23 tons per capita compared to 30, 34 and 42 tons, respectively, for the three mining countries (UNEP 2016). It could be contested that these three mining countries are much less dense than Japan, which implies more consumption for the construction and maintenance of infrastructure. This is true, but does not the latter country better reflect the case of European countries? The facts are stubborn, because a study published by the PNAS (Wiedmann et al. 2015) shows, through a statistical analysis of 137 countries and controlling for land density, that the volume of mining per capita is positively correlated with the material footprint per capita and domestic consumption per capita. In other words, countries that extract more minerals and resources on their territory also consume more materials to sustain the lifestyles of their citizens (the study also shows this for the subset of metals);
– This naturally brings us to the fourth point. We must stop perceiving the energy transition as a supply problem that can only be solved by greater use of renewable energies (even if we do not disqualify the latter). With the exception of specific and local issues (such as chlorofluorocarbons for the hole in the ozone layer), supply-side policies alone have never succeeded in solving our global environmental problems (Dinda 2004), most of the time substituting one problem for another. It is also necessary to look at demand to cut off the pressure transfers downstream. Also, in the case of the upcoming energy transition, we must allow ourselves energy efficiency solutions and, above all, achieve greater sobriety.
One can also question the role of substitution as a natural market response to the tensions that affect mineral resource markets. Could it change the mineral resources landscape in the decades to come in a sustainable way? Intra-material substitution has always existed and will probably continue to be a predominant response to local or specific problems. Permanent magnets using rare earth metals have been replaced by copper wound rotors in a number of electric vehicle engines, following geopolitical conflicts over these materials produced almost exclusively in China. However, as Florian Fizaine shows (Chapter 5), this response by substitution depends not only on the technical possibilities, of course, but also on the scale of the implementation (inter-elements, inter-components, inter-system, etc.) to which are added multiple qualitative constraints of a cultural, legal, economic, physical, etc., nature. Even if this response through substitution existed and could be mobilized at a sufficient scale, the question of the implementation of “forced” substitution raises even more legitimate doubts.
It is one thing to note that substitution takes place under the effect of “natural” forces, it is quite another to trigger this mechanism through taxes and other tools at the disposal of the States. On the one hand, the objective to be achieved is sometimes totally missed or contributes to the emergence of another problem due to poor anticipation of the behavior of agents and the complex interplay of the economy. For example, Söderholm (2011) returns to the case of Sweden, a country that has taxed the extraction of gravel produced locally and intended for export (10% price increase). Initially, the measure was aimed at protecting the landscape and maintaining the availability of clean water, for which gravel reservoirs play a major role. This very indirect measure of reduction of primary extraction via the tax is theoretically quite risky as it can fail on different pitfalls or go through other channels: a weak reaction of demand to the price of the material, an increase in imports of the material (here untaxed), an increase in recycling, a substitution toward alternative untaxed materials such as crushed rock from demolition materials. In this particular example, the feedback shows that the tax has changed the behavior of the agents by pushing them more toward the substitution of crushed rock rather than toward other forms of leverage. There has been no reduction in the use of raw materials and no real increase in recycling. Moreover, crushed rock is more energy-intensive than primary gravel extraction and the production of concrete from crushed rock requires more cement, leading Söderholm to consider the policy questionable from an environmental point of view. If the aim was to reduce extraction, the economist would have advocated using regulation as operating licenses rather than economic tools such as taxes. On the other hand, mobilizing the leverage of substitution may also face social resistance. Creating an “artificial” unavailability of a resource can thus create discontent and lead to the withdrawal of the tools at its origin under social pressure (the carbon tax comes to mind). All these reasons lead us to believe that we will not profoundly modify the mineral resource landscape of our own free will via the mechanism of substitution.
In a more macroeconomic perspective, Thierry Lefèvre (Chapter 6) develops in his contribution the questions related to the possibility of decoupling GDP and natural resources. This question of decoupling is complex and today mobilizes a large number of researchers, particularly within the United Nations Environment Programme’s (UNEP) International Resource Panel (IRP). The question of decoupling obviously refers to the tool of material efficiency, which aims to create more with less. By increasing the material productivity of our activities, we could gain in both ways: by continuing to increase GDP, while reducing our consumption of resources and the impacts left in its wake. This postulate of dematerializing the economy is an old one, notably through the concept of ephemeralization evoked by Philippe Bihouix (2019) in his latest book. We also come across it under the terms of decoupling, delinking or via the material Kuznets curve. But here again, the practical application shows poor results. Most of the time, decoupling is well below the scale effect of population and GDP per capita growth. On this point, the researcher’s contribution somewhat dashes our expectations by showing that the material footprint of most industrialized countries has grown over time.
Similarly, other studies conducted worldwide (Krausmann et al. 2017) also temper our expectations regardless of the raw materials studied. Thus, there seems to be no exception: economic growth always outweighs material productivity. Would it be enough to increase the speed of dematerialization in order to compensate for the increase in activity? Here again, the facts contradict this idea, particularly through the example of the increase in silicon productivity in the IT sector between 1970 and 2010, which, although without precedent (a factor of 10 million), has been associated with an increase in silicon consumption of a factor of 60 over the same period! Another study on sector productivity comes to the same conclusion (Dahmus 2014): sectors that have come closer (or have reached) absolute decoupling are not characterized by a high level of material productivity but rather by a low increase in their activity (scale effect). We should therefore once again either review our objectives or look at other leverage.
Another form of leverage is deemed as highly promising, that of recycling. Alain Geldron’s very comprehensive contribution (Chapter 7) on the subject of metal recycling appears enlightening from several points of view. First of all, far from the sometimes blissful optimism shown by the environmental press on urban mining and the circular economy, there is a wide gap between the discourse and the empirical facts: recycling rates are still far from circularity for base metals, and are even almost zero for minor metals. Indeed, there are several fundamental differences between the extractive metal economy and the metal recycling economy, which explain why we cannot switch from one to the other without major adjustments.
First of all, the returns to scale derived from the size of the stakeholders and the volume of deposits are quite different between the two activities, clearly contributing to the domination of the first over the second. Moreover, the share of the informal sector is still very significant in the recycling economy, whereas it remains very marginal in the extractive economy, at least when we look at the volumes supplied. Second, the qualities of the materials from primary and secondary deposits differ considerably (Fizaine 2020), again with a marked disadvantage for secondary activity (dispersed deposits, highly variable and fluctuating metal concentrations, metal complexity and diversity and coexistence with carbon chains). Finally, we find the opposition between stock management and flow management as a decisive dividing line between the old extractive economy and the new secondary economy, an opposition that is not without a reminder of the same antagonistic pattern that exists in energy production. However, it is legitimate to think that the management of a flow is more complex and less flexible than that of a stock, even more so when there is significant uncertainty about the former.
To sum up, recycling research is still marked by significant gray areas. As there is now a willingness to include recycling in a comprehensive circular economy policy, together with other tools such as the reduction of primary materials (efficiency) or their reuse, it seems that we cannot simply optimize recycling procedures independently of other circular economy measures (Berlingen 2020). In this case, there is indeed a strong chance of crowding out effects between measures. The outcry over the recycling deposit measure proposed by the Secretary of State to the Minister for the Ecological and Inclusive Transition in France, Brune Poirson, for plastic bottles is a good illustration of this. This measure is contested by local authorities, which would then be deprived of the collection and resale of this waste, for which they have already invested significant amounts in recycling infrastructures. According to the environmental associations, this project would also hamper environment preservation because the deposit for reuse is in this situation more efficient than the deposit for recycling.
Another illustration is the reduction of the precious metal content of electronic cards, for reasons of cost and efficiency, which has considerably reduced the attractiveness of recycling these cards, and also of all the minor metals that accompany them (Cui and Roven 2011; Adie et al. 2016). These two examples present possible incompatibilities between circular economy measures, which require careful study of the interaction effects when several measures are launched in parallel. We must also, in each situation, favor certain forms of leverage rather than generating their use across the entire circular economy.
Finally, we can see that sobriety is still the overlooked aspect of environmental policies. Often referred to in the reports of international organizations and in the wishes of companies to make their environmental balance sheet greener, moderation is not often put into practice and rarely deployed in the field or in implementing decrees. Philippe Bihouix’s contribution (Chapter 8) explores this possibility through a combination of objectives such as ecodesign (recyclability and product durability), “moderate use of machinery” in his terms, the resizing of activities and work on the desirability of change (highlighting the gains associated with change). Using numerous examples, he describes what could be an alternative to the search for green growth, which is confronted with complexity and often leads to rebound effects. Indeed, as we have seen in Volume 1 of this book, efficiency (providing the same economic service with less material/energy) rarely results in a decrease in consumption because this is in any case outweighed by the increase in the volume of activity. Renunciation and moderation could thus intervene where efficiency fails, by cutting off at source the primary cause of the exponential increase in the consumption of natural resources. Nevertheless, as is often forgotten, sobriety is not business-friendly and the stagnation (or even decline) in the volume of activity does not go without posing problems in terms of budget balance, debt sustainability and the financing of pension systems, notwithstanding its effects in terms of employment and unemployment. These are the questions that arise at the opening of Volume 2 of this book, which is devoted to the issues at stake and, above all, to the leverage that can provide a response to the various challenges that must be taken up in order to achieve the sustainable growth mentioned in Volume 1.
I.3. References
Adie, G.U., Sun, L., Zeng, X., Zheng, L., Osibanjo, O., Li, J. (2017). Examining the evolution of metals utilized in printed circuit boards. Environmental Technology, 38(13–14), 1696–1701 [Online]. Available at: doi 10.1080/09593330.2016.1237552.
Barbier, E.B. (2011). Scarcity and Frontiers: How Economies Have Developed through Natural Resource Exploitation. Cambridge University Press, Cambridge.
Berlingen, F. (2020). Recyclage, le grand enfumage : comment l’économie circulaire est devenue l’alibi du jetable. Éditions Rue de l’échiquier, Paris.
Bihouix, P. (2019). Le bonheur était pour demain. Le Seuil, Paris.
Cui, J. and Roven, H.J. (2011). Electronic waste. In Waste, Letcher, T., Vallero, D. (eds). Academic Press, Cambridge.
Dahmus, J.B. (2014). Can efficiency improvements reduce resource consumption? Journal of Industrial Ecology, 18(6), 883–897.
Dinda, S. (2004). Environmental Kuznets curve hypothesis: A survey. Ecological Economics, 49, 431–455.
Fizaine, F. (2020). The economics of recycling rate: New insights from waste electrical and electronic equipment, Resources Policy, 67 [Online]. Available at: https://doi.org/10.1016/j.resourpol.2020.
Krausmann, F., Wiedenhofer, D., Lauk, C., Haas, W., Tanikawa, H., Fishman, T., Miatto, A., Schandl, H., Haberl, H. (2017). Global socioeconomic material stocks rise 23-fold over the 20th century and require half of annual resource use. PNAS, 114(8), 1880–1885.
Pitron, G. (2018). La Guerre des métaux rares : la face cachée de la transition énergétique et numérique. Les Liens qui libèrent, Paris.
Söderholm, P. (2011). Taxing virgin natural resources: Lessons from aggregates taxation in Europe. Resources, Conservation and Recycling, 55, 911–922.
UNEP (2016). Global material flows and resource productivity. An assessment study of the UNEP International Resource Panel. United Nations Environment Programme, Paris.
Wiedmann, T.O., Schandl, H., Lenzen, M., Moran, D., Suh, S., West, J., Kanemoto, K. (2015). The material footprint of nations. PNAS, 112(20), 6271–6276.
PART 1Stakes
1Toward a New Geopolitics of Raw Materials in the Energy Transition
Emmanuel HACHE1,2, Gondia SOKHNA SECK1, Charlène BARNET1, Samuel CARCANAGUE2 and Fernanda GUEDES1
1 IFP Énergies nouvelles (IFPEN), Rueil-Malmaison, France
2 Institut de relations internationales et stratégiques (IRIS), Paris, France
1.1. Introduction
The question of access to so-called strategic materials1 (Weil et al. 2009; Helbig et al. 2016) has always been central to economic analysis, in particular because of the random nature of the presence or absence of resources in a given territory.
While authors of the first classics, such as Malthus (1766–1834) in his An Essay on the Principle of Population, published in 1798, raised the question of the relationship between demographic growth and the increase in natural food resources, it was not until the mid-19th century that the notion of dependence on foreign territories was introduced. In his famous essay The Coal Question, William Stanley Jevons thus took an interest in the evaluation of the United Kingdom’s coal reserves to study the country’s probable dependence on imported coal and the possible geopolitical consequences of its decline. In the 20th century, questions about the exhaustion of natural resources were raised by the constitution of the Club of Rome in 1968. The Club’s reflections were to break with the optimism of growth without environmental externalities and expose, for the first time, the risks of systemic collapse on the basis of long-term scenarios. Thus, the report “The Limits to Growth”, published in 1972, the result of simulation work by the Massachusetts Institute of Technology (MIT), was the first to propose trajectories of resource depletion, excess absorption of pollutant emissions and system collapse.
In the field of geopolitics, raw materials have most often been analyzed as a source of international conflicts, as a factor of industrial and military power or from the point of view of scarcity (Haglund 1982). Alex and Matelly (2011) proposed a more geo-economic angle by focusing on raw materials that they consider strategic by nature, due to the functioning and structure of markets and due to the involvement of a multitude of stakeholders with different objectives. These three levels of analysis remain relevant in the context of the energy transition. Indeed, investments in renewable energies (REs) are generally associated with a double dividend, since they reduce CO2 emissions and result in a decrease in fossil fuel imports (Criqui and Mima 2012). This partial emancipation from the economic and geopolitical stakes of traditional energy security, particularly the issues of availability and accessibility, must however be analyzed in a more global logic by taking into account the materials necessary for the construction and implementation of low-carbon technologies (solar, wind, storage, electric vehicles, etc.) in national energy systems. Indeed, the necessary volumes of investment in these technologies could lead to a marked increase in the demand for materials or metals and generate major economic and geopolitical transformations in the various raw materials markets.
However, the latest UNEP-BNEF2 report highlighted that, between 2010 and 2019, the investments already made in renewable3 energy reached 2,600 billion dollars. The capacity of electricity generation based on renewable energy has thus increased from 414 GW to 1,650 GW in 10 years. To limit global warming to below 2°C by 2100, these investments will have to increase significantly in the coming decades.
Due to their higher material content than traditional technologies (power plants and thermal vehicles), the new needs in low-carbon technologies could thus upset the geopolitics of raw material markets. Indeed, the latter will have to integrate an additional layer of complexity related to the new relationships generated by the demand for materials in the energy transition. The geopolitics of strategic raw materials conceals a double dimension, whether one is a producer country with the main issue being the development of its resources or a consumer country for which the question of securing supplies is central. In addition to this double prism, there is also a dimension of management of resources or deposits by states and/or companies. In this context, the mineral markets are affected by issues that generally go beyond the sole prism of the economy to include geo-economics and geopolitics.
The objective of this chapter is thus to study the new economic or geopolitical dependencies that may appear in the dynamics of the global energy transition. In the first section, we present the concept of criticality established to measure the dependence of states on strategic materials and we insist on the difficult consideration of geopolitical aspects. In the second section, we then define, on the basis of our assessments of the demand for raw materials, an indicator of geological criticality, which we discuss in the light of geo-economics and geopolitics. In the third section, we examine the public policies of states to manage this new geopolitical situation.
1.2. Measuring the criticality of raw materials and geopolitical risk
1.2.1. Criticality, strategic materials and risks
The economic literature on the question of criticality is important, but the field of analysis remains extremely poorly defined. Indeed, while the concept of criticality can be conceptualized in a general way as an approach based on an assessment of the risks related to the production, use or end-of-life management of a raw material (Graedel and Nuss 2014), many studies focus on different disciplinary fields (economics, environment, business strategy, lifecycle analysis, etc.), use various indicators to measure criticality (R/P ratio, presence of substitutes, risk, environmental externalities, etc.) and work over multiple time horizons (from the short to medium to very long term), which make any comparison hazardous at first glance.
Behind the term “criticality”, there are many risks related to the question of raw materials in the energy transition: geological risk (lack of availability of materials due to demand pressure), geopolitical risk (concentration of production in the hands of a few producing countries), economic risk (embargoes, policies of trade restrictions, market manipulation, etc.), production risk (under-investment, joint production, etc.) and environmental or social risk (emissions of pollutants related to production, health consequences, etc.).
1.2.2. The absence of a homogeneous theoretical framework
The starting point of any criticality study is to know from which point of view one is trying to position oneself to determine whether or not a raw material may or may not be critical. The first consideration is geographic. The assessment of criticality depends on the scale adopted, whether it is global, regional or national. There is therefore no universality of criticality. The second consideration is that of the nature of the entity consuming the raw material. In the broadest sense, this can be the economy as a whole. In a more restricted way, it will be a question of an industry, a company or even a technology. The third consideration is temporal. Indeed, technical progress, production processes and the introduction of new products on the market generate, over time, variations in the input and output of different materials on the international and national markets.
Once the framework has been defined, the studies seek to distinguish between the risks on the supply of raw materials on the one hand, and the economic and technical importance of the latter on the other hand. A third dimension has more recently been added in criticality studies: the environmental consequences linked to the production of the raw material (Graedel et al. 2012). Each of these three dimensions is quantified using different indices that can be aggregated according to several methods.
1.2.3. Criticality matrices
Criticality analyses are historically linked to the use of risk assessment matrices, which represent the intensity of a risk in two dimensions: the probability of occurrence of the risk and its severity. The first risk assessment matrix was only established in the United States in 2008 (National Research Council 2008) based on a double criterion: the economic importance of the resource and the potential risk of supply restrictions.
This methodology has been adopted by the European Commission (EC) to assess the criticality of elements in its reports published since 2011 (European Commission 2011, 2014, 2017). A major limitation of criticality analyses is the plurality of indices and their aggregation modes used to quantify the concepts of supply risk, economic importance and, when this dimension is taken into account, environmental consequences (Helbig et al. 2016). Among the indicators most often used in the literature are the Herfindahl Hirschman Index (HHI) of producing firms and/or producing countries (measurement of production concentration), the World Governance Index and the Global Political Risk Index (measurement of country risk), the reserves and resources still available (measurement of geological scarcity), dependence as a by-product, projections of increased demand, recycling rates of the raw material, the degree of substitutability by other materials (evaluated qualitatively) and the price of the raw material (whose volatility is sometimes preferred as a measure of market risk). The indicators are then aggregated in most cases by using weighted averages (the values of the weights vary from one study to another), by retaining only the strongest indicator, or by multiplying the indicators. Given the sensitivity of the results to methods and data, it is difficult to reach a consensus on the supply risk associated with a raw material, on the vulnerability or on the environmental consequences of the production of the material (Graedel et al. 2012). In this methodological framework, the ecological stakes are represented on a third axis which completes the criticality matrix. The ecological consequences of the production of a material include, on the basis of lifecycle analysis inventories, the impacts on ecosystems and human health (Graedel et al. 2012, 2015) (Figure 1.1).
A last gap in the existing methodology on criticality lies in the understanding of the geopolitical dimension, understood as the study of international power relations. This is generally included in the evaluation of supply risk through various indicators: the two most common are production concentration (based on the HHI) and political stability, mostly evaluated using the World Governance Index.
Figure 1.1.Raw material criticality measurement factors
(source: adapted from Helbig et al. (2016))
Production concentration has been found to be the most commonly used indicator in criticality studies (Frenzel et al. 2017). The underlying geopolitical context for the assessment of production concentration is as follows: the larger the market share of an exporting country, the greater the risk that this country will be tempted to use this position to exert political or economic pressure on the importing country(ies). The geopolitics of hydrocarbons is a significant example in this regard.
However, we follow Gemechu et al. (2016) in their attempt to refine and quantify “geopolitical risk” by setting aside the HHI and defining the “geopolitical risk” attributed to a producer country as the sum of the risks proportionally related to its contribution to an importing country’s imports (net import dependence) and its political stability. Helbig et al. (2016) weight this new index by including in the calculation the domestic production of the importing country, which may (or may not) compensate for a possible supply disruption. In other words, beyond market concentration, which is generic, the “geopolitical risk” is more specific since it is based on the net dependence of a client country’s imports on a supplier country, an indicator that is curiously less frequently used (Frenzel et al. 2017). Going further, in a context of geopolitical tensions marked by “trade wars”, the assessment of supply risks would be significantly enriched by taking into account the evolution of export restrictions, as suggested by Blengini et al. (2017). At the borderline between market and political logics, restrictions have indeed more than quadrupled between 2009 and 2014 and concern 20 of the EU’s critical materials.
Table 1.1.Raw material supply disruptions due to political instability since 1967
(source: Hatayama and Tahara (2018))
Metal
Year
Duration in days
Country
Effects
Cobalt
1975
–
Angola
Negligible or unknown
Cobalt
1977
60
DRC
Decline in production
Cobalt
1978
60
DRC
Suspension of production
Cobalt
1991
60
EWC
Decline in production
Titanium
1995
–
Sierra Leone
–
Copper
2004
19
DRC
–
Gold
2009
3
Argentina
Price increase
Nickel
2009
7
Papua New Guinea
Price increase, suspension of the production
Lead/zinc
2010
–
Bolivia
Development lead times
Nickel
2011
–
Philippines
Negligible or unknown
Nickel
2011
–
Indonesia
Decline in production
Nickel
2014
2
Brazil
–
Gold
2015
–
Mexico
Suspension of production
Gold
2015
30
Honduras
Suspension of production
The indicator of political stability, the second most widely used indicator (Frenzel et al. 2017), is most often evaluated according to the World Governance Index or the Policy Perception Index (PPI). Apart from the fact that the concept of political stability is relatively vague and subject to all kinds of bias and that the relationship between good governance and political stability is not entirely linear, the causal relationship between political instability and supply risks deserves further empirical research. The case of the Democratic Republic of Congo, where the links between mineral exploitation and chronic political instability appear to be complex to say the least, illustrates this need for further investigation. Moreover, if one looks at the causes of disruption in the supply chain of 22 raw materials since 1967, only 3% are related to political instability, understood as “domestic conflict and attacks by anti-social groups” (Hatayama and Tahara 2018) (Table 1.1). The fact that political stability is a constantly used indicator in criticality studies, without being completely effective, hides in reality an analytical gap in geopolitical matters.
Indeed, a qualitative analysis of the complex and evolving nature of the relations and the balance of power between the client country (or the country in which the entity/company under consideration has its interests) and the supplier country, which is difficult to transpose into an index, is essential to assess the criticality of an ore.
The latest United States Geological Survey (USGS) methodological document on the establishment of the list of critical materials (USGS 2018) is particularly evocative from this point of view. It begins by stating:
Most entries in the table are materials for which production concentration and net import reliance are high (typically HHI greater than 2,500 and Net Import Reliance (NIR) greater than 50 percent for either the years 2016, 2017, or both). Entries that are below the chosen threshold based on one metric or the other, but for which a case for inclusion can be made on grounds of particularly critical applications, also are included. The latter is based on the judgment of subject-matter experts of the Critical and Strategic Mineral Supply Chain (CSMSC) Subcommittee.
It is therefore understandable that the designation of final criticality will depend on a qualitative a posteriori analysis, based on the potentially sensitive uses of certain ores. However, the text goes on to say:
The largest foreign suppliers of these targeted mineral commodities have been included in addition to the NIR to provide broader strategic context, which highlights that not only does the United States require foreign supplies, but that 12 out of the 26 commodities with high United States NIR are sourced primarily from China. However, high NIR should not be construed to always pose a potential supply risk. For example, three of the commodities deemed critical or near critical are primarily imported from Canada, a nation that is integrated with the United States defense industrial base.
Despite the cryptic formulation, it is understandable that criticality (or at least a form of “perceived criticality”) depends largely on the identity of the supplier country, in this case China, which dominates the strategic minerals market and with which the current US presidential administration has a strained relationship. Moreover, the USGS’s dependence on Canada for certain critical minerals does not explicitly appear to be a political or even economic issue. This observation leads us to question a more robust methodology in terms of criticality, which would include the political and strategic relationships between the different players in the markets studied. The interdependence relations between exporting and importing countries should also be studied, for example by developing an index of net dependence on exports for producer countries, which would weigh the index of market concentration or net dependence on imports of the client country.
