Fueling Clean Energy Transitions: Addressing Value Chain Polarization In Critical Minerals

The global demand for critical minerals required in clean energy transition technologies faceschallenges due to supply chain disruptions, geopolitical tensions, and environmental costs. Theconcentration of mineral processing, refining, and manufacturing capacities within specificgeographies poses risks, prompting governance initiatives like the EU’s Critical Raw MaterialsAct and the US’s Securing a Made in America Supply Chain for Critical Minerals Act, amongothers (US Dept Treasury 2024; European Commission 2023a; White House 2022b). However,increasing domestic supply within the G7 advanced economies is costly and time-consuming in permitting approvals and setting up greenfield processing and refining facilities. This policybrief focuses on the increasing polarization occurring in the critical minerals space as nationscompete against each other to secure access to raw materials required to feed their energytransition ambitions. The policy brief argues that the G7 can leverage its existing economic andtechnological heft to align market forces to address the issue of critical minerals availabilitybetter. Ensuring supply chain restructuring through increased commercial collaborations andforging complementary and cooperative arrangements within the existing G7 frameworkswould be an added benefit. Moreover, creating a strategic reserve would reduce concernsabout supply disruption, allowing nations to leave more room for market forces.