Striking the Balance: China’s Path to Merging Development Ambitions with Sustainability through the Management of Essential Minerals for Clean Technologies
Striking the Balance: China’s Path to Merging Development Ambitions with Sustainability through the Management of Essential Minerals for Electric Vehicles
The paper aims to analyze how China can balance its development goals with sustainability by managing the demand for key minerals essential to clean technologies over the next three decades. The research highlights the following key points:
- There is an anticipated significant increase in demand for key minerals, particularly Lithium and Cobalt, driven by the growth in electric vehicles (EVs) and battery storage technologies. Lithium demand, for example, is projected to grow by over 40 times by 2040 under a scenario of aggressive clean technology deployment.
- The surge in demand for these minerals presents challenges related to sustainable mining practices, supply chain resilience, and environmental impacts. Therefore, sustainable mining practices and regulations are vital to minimize ecological damage and ensure responsible sourcing.
- The analysis includes exploring projected demand for key minerals under various development scenarios and identifying minerals critical to China’s sustainable technology sector. It also discusses strategies China can employ to mitigate the environmental impact of its development. These include innovations in recycling, supply diversification, and policy measures.
- The paper concludes with reflections on the importance of integrating sustainability into China’s development strategy, offering recommendations for future actions to ensure the sustainable supply of key minerals.
Introduction
During the 75th United Nations General Assembly in 2020, Chinese President Xi Jinping delivered a speech in which he announced that China would enhance its nationally determined contributions with the aim of peaking carbon emissions before 2030 and striving to achieve carbon neutrality before 2060. This latest commitment represents a significant step forward for China in demonstrating its climate ambition. Implementing the “dual carbon” strategy, with its core being the transformation of the energy system, places China in a particularly special position as the world’s largest emitter of greenhouse gases and its second-largest economy. In 2022, China’s greenhouse gas emissions accounted for 29.2% of the world’s total, while the United States and the European Union accounted for 11.2% and 6.7%, respectively. China’s per capita emission level is also 1/5 higher than that of the European Union, and its total historical cumulative emissions are approaching the combined total of the 27 EU countries. Meanwile, for the first time in decades, it looks like China’s economic sprint is seriously slowing down. According to the World Bank, China’s growth is projected to slow to 4.5 percent in 2024. The outlook mentioned carries significant downside risks. The duration of the real estate market’s downturn may be longer than anticipated, potentially affecting consumer confidence and spending and putting pressure on upstream suppliers and creditors. This could further squeeze local government revenues and dampen public investment. Additionally, climate change and the increasingly frequent extreme weather events it has caused over the past few decades also pose downside risks. Therefore, the paper aims to analyze how China can balance its development goals with sustainability by managing the demand for key minerals essential to clean technologies over the next three decades.
Analysis
The data reveals a significant increase in demand for key minerals, particularly Lithium and Cobalt. The demand for lithium and cobalt, as primary raw materials for electric vehicle batteries, is a direct reflection of the future development of the electric vehicle (EV) market. The anticipated growth in the EV industry is expected to significantly increase the demand for these critical minerals. This surge is primarily due to the pivotal role these batteries play in powering electric vehicles, with lithium and cobalt being essential for their high energy density, efficiency, and longevity. As the EV market expands, driven by global efforts to reduce carbon emissions and transition towards cleaner energy sources, the demand for lithium and cobalt will correspondingly rise. For example, Lithium demand is projected to grow by over 40x by 2040 under a scenario of aggressive clean technology deployment, as shown below.
library(here)
here() starts at /Users/zhenglinyi/Desktop/24 spring/sustainable finance
── Column specification ────────────────────────────────────────────────────────
Delimiter: ","
chr (4): mineral_name, indicator, scenario, unit
dbl (2): year, value
ℹ Use `spec()` to retrieve the full column specification for this data.
ℹ Specify the column types or set `show_col_types = FALSE` to quiet this message.
cobalt_data <-subset(filtered_data, mineral_name =="Cobalt")lithium_data <-subset(filtered_data, mineral_name =="Lithium")# Cobalt Bar Chartcobalt_bar_plot <-ggplot(cobalt_data, aes(x=as.factor(year), y=value, fill=scenario)) +geom_col(position="dodge") +labs(title="Demand for Cobalt Over Years", x="Year", y="Demand (kiloton)",caption="Source: IEA Critical Minerals Market Review 2023") +theme_minimal() +scale_fill_brewer(palette="Set1")# Lithium Bar Chartlithium_bar_plot <-ggplot(lithium_data, aes(x=as.factor(year), y=value, fill=scenario)) +geom_col(position="dodge") +labs(title="Demand for Lithium Over Years", x="Year", y="Demand (kiloton)",caption="Source: IEA Critical Minerals Market Review 2023") +theme_minimal() +scale_fill_brewer(palette="Set2")print(cobalt_bar_plot)
Rows: 1368 Columns: 5
── Column specification ────────────────────────────────────────────────────────
Delimiter: ","
chr (3): EV_name, indicator, scenario
dbl (2): year, value
ℹ Use `spec()` to retrieve the full column specification for this data.
ℹ Specify the column types or set `show_col_types = FALSE` to quiet this message.
cobalt_data <-subset(EV_data, indicator =="Cobalt")lithium_data <-subset(EV_data, indicator =="Lithium")# Cobalt Bar Chartcobalt_bar_plot <-ggplot(cobalt_data, aes(x=as.factor(year), y=value, fill=scenario)) +geom_col(position="dodge") +labs(title="Demand for Cobalt Over Years Driven by EV", x="Year", y="Demand (kiloton)",caption="Source: IEA Critical Minerals Market Review 2023") +theme_minimal() +scale_fill_brewer(palette="Set3")# Lithium Bar Chartlithium_bar_plot <-ggplot(lithium_data, aes(x=as.factor(year), y=value, fill=scenario)) +geom_col(position="dodge") +labs(title="Demand for Lithium Over Years Driven by EV", x="Year", y="Demand (kiloton)",caption="Source: IEA Critical Minerals Market Review 2023") +theme_minimal() +scale_fill_brewer(palette="Set4")
Cobalt is a crucial raw material for producing cathode materials for batteries, with lithium batteries representing a significant consumption field for cobalt. Specifically, in the Chinese market, the demand for lithium batteries has maintained rapid growth over the past three years, reaching 658 GWh in 2022, a year-on-year increase of 101.22%. In 2023, the demand grew by 35% compared to the same period in 2022. As China continues to advance its “Dual Carbon” strategy, the demand for shipments of power and energy storage batteries will continue to rise, which will also drive the continuous release of demand for upstream materials in the industrial chain. As a crucial resource for producing battery cathode materials, the demand for cobalt will continue to increase, offering broad market growth potential.
However, unlike the case with its abundant lithium reserves, China, despite being the largest consumer and refiner of cobalt, has only 1.7% of the world’s cobalt reserves. Consequently, a substantial amount of cobalt used in China is sourced through imports. (I’ll put consuming and import graph here) This situation underlines the strategic importance of cobalt in China’s supply chain for electric vehicle batteries and other technologies requiring cobalt, emphasizing the country’s vulnerability to external market dynamics and the need for diversifying its cobalt supply sources.
Therefore, the three most important aspects for China are the diversification of metal import sources, the control of carbon emissions during the refining of non-ferrous metals, and how to leverage the international market demand for metals to promote economic development.
