such as pipelines or liquefied natural
gas tankers.
The exhaustibility of natural resources,
and the potential for infringements on
national security, provide two potential
justifications for trade restrictions under
WTO rules, although these must be
implemented in a non-discriminatory way.
In recent years, several key raw material
suppliers have used export controls.
Indonesia has introduced a ban on exports
of unprocessed ores. Vietnam has also
imposed restrictions on iron ore and copper, and export taxes have recently been
debated in Brazil and India. In 2012, the
USA, EU and Japan lodged complaints
with the WTO over Chinese export quotas
of rare earth minerals, and the quota system
was withdrawn in late 2014. There have
been various proposals for voluntary
avoidance of export restrictions in times of
crisis or extreme price volatility, which
such restrictions tend to exacerbate.
With the shift from molecules to electrons,
and the large-scale deployment of low-carbon
energy technologies, new energy security concerns are emerging. First is the security of critical
metals and minerals supply chains, and second is
the availability of and access to new technologies
in metals and minerals production, processing
and recycling.
Many metals and minerals are important
inputs to low-carbon energy technologies, but the
extent to which they are critical depends on a
variety of factors. Criticality is dependent on a
commodity’s importance to economic growth,
combined with risks to supply shortages, and will
vary between different consumer countries. Take
the example of electric vehicles (EV); increasing
EV uptake is of growing importance to China in
terms of tackling urban air quality, but it is also
critical to China’s structural transition and its role
as a leading country in high-tech industries,
including EV manufacturing.
With EV sales likely to surpass 2 million per
year by 2020, there are growing concerns as to
how markets and supply chains will respond to
increased demand for EV-critical metals such as
lithium, cobalt, nickel and manganese. As these
materials are difficult to substitute, governments
are keen to safeguard against supply shortages.
While no physical scarcity currently exists, supply risks are associated with the concentration of
resources within a handful of countries and
regions.
8.1 Cooperation Opportunity
Ensuring the security of metals and minerals for
scaling up clean energy technologies will mean
engaging with a range of new supply chains and
producers. As the largest producer, consumer and
trader of metals and minerals, and the largest
manufacturer of renewable energy components,
China is uniquely placed to lead on the establishment of multilateral metals and minerals
institutions and policy processes. It also has the
most to gain from stable markets; for example, a
1% shift in the price of iron ore could have cost
China $800 million in 2013.
Targeted outcome: Greater global coordination and cooperation on the supply and demand
of critical metals and minerals help mitigate the
risks of disruption to the deployment of clean
energy technologies.
To achieve such an outcome, China could
adopt two distinct strategic cooperation pathways:
(1) avoid supply-side shortages and trade disputes in the global supply chain of critical
metals and minerals required for clean
energy technology deployment; and
(2) minimise the need for additional extraction
capacity by enabling countries to lower their
dependency on the global supply of critical
metals and minerals
652
W. Jigang and P. Webb
gas tankers.
The exhaustibility of natural resources,
and the potential for infringements on
national security, provide two potential
justifications for trade restrictions under
WTO rules, although these must be
implemented in a non-discriminatory way.
In recent years, several key raw material
suppliers have used export controls.
Indonesia has introduced a ban on exports
of unprocessed ores. Vietnam has also
imposed restrictions on iron ore and copper, and export taxes have recently been
debated in Brazil and India. In 2012, the
USA, EU and Japan lodged complaints
with the WTO over Chinese export quotas
of rare earth minerals, and the quota system
was withdrawn in late 2014. There have
been various proposals for voluntary
avoidance of export restrictions in times of
crisis or extreme price volatility, which
such restrictions tend to exacerbate.
With the shift from molecules to electrons,
and the large-scale deployment of low-carbon
energy technologies, new energy security concerns are emerging. First is the security of critical
metals and minerals supply chains, and second is
the availability of and access to new technologies
in metals and minerals production, processing
and recycling.
Many metals and minerals are important
inputs to low-carbon energy technologies, but the
extent to which they are critical depends on a
variety of factors. Criticality is dependent on a
commodity’s importance to economic growth,
combined with risks to supply shortages, and will
vary between different consumer countries. Take
the example of electric vehicles (EV); increasing
EV uptake is of growing importance to China in
terms of tackling urban air quality, but it is also
critical to China’s structural transition and its role
as a leading country in high-tech industries,
including EV manufacturing.
With EV sales likely to surpass 2 million per
year by 2020, there are growing concerns as to
how markets and supply chains will respond to
increased demand for EV-critical metals such as
lithium, cobalt, nickel and manganese. As these
materials are difficult to substitute, governments
are keen to safeguard against supply shortages.
While no physical scarcity currently exists, supply risks are associated with the concentration of
resources within a handful of countries and
regions.
8.1 Cooperation Opportunity
Ensuring the security of metals and minerals for
scaling up clean energy technologies will mean
engaging with a range of new supply chains and
producers. As the largest producer, consumer and
trader of metals and minerals, and the largest
manufacturer of renewable energy components,
China is uniquely placed to lead on the establishment of multilateral metals and minerals
institutions and policy processes. It also has the
most to gain from stable markets; for example, a
1% shift in the price of iron ore could have cost
China $800 million in 2013.
Targeted outcome: Greater global coordination and cooperation on the supply and demand
of critical metals and minerals help mitigate the
risks of disruption to the deployment of clean
energy technologies.
To achieve such an outcome, China could
adopt two distinct strategic cooperation pathways:
(1) avoid supply-side shortages and trade disputes in the global supply chain of critical
metals and minerals required for clean
energy technology deployment; and
(2) minimise the need for additional extraction
capacity by enabling countries to lower their
dependency on the global supply of critical
metals and minerals
652
W. Jigang and P. Webb