The supposedly ongoing Energy Transition would most probably be jeopardised in the developing countries as demand for all fossil fuels is projected to grow by two-thirds by 2050. The reasons are that the electric vehicle revolution would have difficulty reaching, let alone solving the climate crisis and creating opportunities for developing countries.
Achieving an equitable energy transition would fail short unless the interests of developed and developing countries are better aligned.
Can the electric vehicle revolution solve the climate crisis and create opportunities for developing countries?
Electric vehicles (EVs) are confidently expected to decarbonize road transportation, contribute substantially to the net zero agenda, and so help to solve the climate crisis. But as Ben Jones points out in a recent WIDER Working Paper, a rapid growth of global supplies of minerals and rare metals is a prerequisite. This in turn opens new prospects for mineral-abundant countries, many of which are less developed economies.
Tony Addison, former Chief Economist of UNU-WIDER, and myself explored these prospects in a series of high-level UN Roundtables over the course of 2021 — an opportunity to communicate our ideas to many critical stakeholders in all continents. Here, and in a related blog, I lay out the opportunities, and risks, that took centre stage during these discussions.
But, there are doubters and their doubts do have some substance.
There are several complicating factors that can compromise the promise that EVs are said to offer. These risks should be considered carefully before any country — and particularly any developing country — puts too much skin in the game.
First, there are the high costs of installing sufficient accessible charging points, especially in countries with low levels of electricity access (access levels below 40% are quite common). Second, there are question marks about battery longevity and the costs and technical challenges of both replacements and recycling. Third, the engineering complexities and the task of upskilling mechanics trained on conventional internal-combustion engines (ICEs) need to be considered. Fourth, the greater weight of EVs caused by their heavyweight batteries is a particular concern for low-income countries that already struggle to maintain road infrastructure.
And finally, charging EVs with largely coal-fired power — which would especially be the case in the most populous countries of India and China — will not much reduce carbon emissions.
Indeed, a substantial share of today’s global reserves of the key metals needed in quantity for the transition to clean energy are located in lower-income countries. Examples include 68% of lithium, 47% of manganese, 34% of nickel, 40% of platinum, 70% of titanium, 41% of zinc, 46% of copper, and 68% of cobalt.
A recent WIDER Working Paper by Ericsson and Löf ranks 40 lower-income countries that have some potential to take advantage of their endowments of these and other metals. The deeper analysis of this potential in their study is suggested reading for anyone who wants to learn more.
However, the realization of the alleged potential of EVs for developing counties will be far from plain sailing. Here are some of the risks for developing countries hoping to take advantage:
To make EVs renewable, they need to be charged using renewable energy. It is not clear that the additional renewable energy needed will keep pace with demand for EVs, and this will strain global critical metal supplies even further.
Environmental lobbies and governments might well go cold on EVs, as they did previously on diesel vehicles. The overall carbon-reducing credentials of EVs are already under question because of the substantial emissions and other environmental harm associated with the mining and processing of their metallic inputs.
Some of the countries most richly endowed with critical metals are also well-known for unacceptable human rights practices in their mining sectors. The DRC is perhaps the leading example. It provides almost 70% of the global supply of cobalt — a critical battery metal — with an estimated 15–30% of this produced in small-scale artisanal mines that use child labour and environmentally disastrous methods. The discussions at the 2021 UN Roundtables revealed this to be a matter of universal concern.
Another word of caution for resource-endowed developing nations
It is a common political assumption that the mere presence of a critical mineral resource justifies large investments in downstream processing to enhance national value-added. But this can be a seriously misleading assumption. Experience confirms the inherent problems of building viable domestic processing: certainly no developing country can assume that a rich endowment of any critical mineral will lead inexorably to the eventual emergence of a commercially-sustainable industrial output based on those minerals. In a related blog, I probe more deeply into some of the challenges faced to develop such national value-added, using Bolivia’s efforts to capitalize on its extremely rich endowment of lithium as one example.
Strategies for harnessing the potential in developing countries
Many low- and middle-income countries that are already highly dependent on extractive resources have learned how difficult it is to cope with the inherent instability of the prices and the markets in which these resources are traded. The WIDER working paper by Ericsson and Löf referenced above confirms that a large sub-set of those countries have the potential to significantly increase their mining output to meet the new demands for the global energy transition. But, partly for the reasons articulated above, prospects for doing so face uncertainties which are probably even more acute than encountered in the past.
What strategies can help address such uncertainties?
Two modest suggestions can be offered. First, acting on good evidence is vital. High-quality data on mineral endowments is needed — not only their volumes, but also whether they are of marketable quality, commercially viable, and at what price? The geological record underpinning such data is merely the first part of this requirement. Further, all potential supplying countries need to be very well informed about global trends in both EV uptake and above all competing suppliers.
Second, it is important to develop a deep and regularly updated awareness of the market and its uncertainties, and use this to maintain a grounded macroeconomic forecast. This includes the need to be cautious about increasing tax rates on mining products when, in the short term, there are high prices and bullish forecasts of future demand. These are rapidly changing markets; today’s competitive positions can easily disappear.
Alan Roe is a Non-Resident Senior Research Fellow at UNU-WIDER. He has written extensively in both books, academic journals and for other outlets including the first full-scale statistical analysis of flows of funds in the UK. His publications have also included early papers on interest rate policies in developing economies and on the particular problems of monetary management in Africa.
“Get an electric vehicle!” This might be the first idea that comes to mind when considering how to reduce carbon dioxide (CO2) emissions from transportation at the community level. Fossil fuels are widely recognized as a significant source of emissions due to the large amount of CO2 they produce when burned, but what about the emissions associated with electric vehicles (EVs)?
Globally, people have shifted toward electric cars in an effort to “go green” and support the universal goal of net-zero emissions by 2050, and to limit global warming to no more than 1.5°C, as called for in the United Nations’ Paris Agreement. Additionally, the World Bank Group has advocated for the decarbonization of the energy and transport sectors by halting investments in upstream oil and gas (2019), and pledging to invest 50% of climate finance in the Middle East and North Africa (MENA) region in interventions that help to build resilience, guided by regional and country-specific demand.
In line with these goals, governments in the MENA region have been motivated to encourage their populations to purchase EVs instead of conventional ones that run on gasoline. The UAE, for instance, has launched a regulatory policy for EV charging infrastructure and established the “EV Green Charger Initiative,” a free network of charging stations across the country. As a result, the popularity of EVs in Dubai has risen over the last seven years, with the total number in operation increasing from just 71 to 5,107. The Kingdom of Saudi Arabia has seen similar growth and is currently ranked in the top 50 countries worldwide according to the AlixPartners Automotive Electrification index, indicating 36% growth in the sale of EVs.
If the increasing popularity and demand for EVs is driven by a consumer and state-level desire to reduce CO2 emissions, it’s important to understand that they store and consume electricity that was generated from other sources, including fossil fuels and natural gas.
The MENA region is actively working on an energy transition plan that shifts away from fossil fuels, oil, and natural gas, all of which still account for the majority of energy generation portfolios for countries across the region. For example, until 2020, renewable energy and low-carbon sources accounted for less than 1% of total energy generation in Saudi Arabia, meaning EVs in the country likely relied overwhelmingly on fossil fuel-generated electricity. This is also the case in Morocco, often regarded as the region’s climate leader, even though renewables account for just two-fifths of the nation’s electricity capacity. So, the question becomes: Are EVs really as “green” and as environmentally friendly as their reputation suggests?
Regional governments are undertaking extensive efforts to shift energy production toward environmentally cleaner technologies for the benefit of both the climate and public health, but how quickly is that initiative progressing? What is a realistic timeline for green and renewable technologies (e.g., wind and solar) to become the dominant source of energy generation? And in the meantime, how should the international community view their environmental credentials?
The “green” reputation of EVs seemingly disregards the environmental impact of producing them, especially the key component that enables them to store electricity: their batteries. These batteries are manufactured from various metals that must be mined. For instance, lithium-ion batteries (Li-ion), considered the top of the line for EVs and used by Tesla, require a number of metals besides lithium, such as cobalt, nickel, manganese, and copper.
The mining of these components comes with environmental concerns. In the long term, does the earth hold enough of these minerals and materials to support a full global shift to EVs? In the short term, the rapid increase in demand for batteries has created a new challenge of ensuring an adequate supply of natural resources. Some of these materials are already in short supply, due to supply chain issues associated with the global pandemic and the Russia-Ukraine conflict. This creates an artificial shortage and gives rise to opportunistic price gouging, whereby car dealerships are selling EVs at double their list price while manufacturers are heavily reducing their production.
Putting the price and supply dynamics aside, manufacturing these vehicles creates a tremendous environmental burden, as the process requires digging up and processing around 500,000 pounds of the earth’s crust to produce one battery.
While there is a broad range of lithium extraction methods available, the primary ones —including hard-rock mining and extraction of lithium from brine water — require large amounts of energy. These processes disturb the natural water table, local biodiversity, and the ecosystem of nearby communities. For example, nickel mining and refining practices have already resulted in documented damage to freshwater and marine ecosystems in Australia, the Philippines, Indonesia, Papua New Guinea, and New Caledonia.
Pollution from these operations not only impacts oceans and ecosystems but also induces environmental hazards throughout the battery lifecycle from mining materials for their production to disposing of old batteries at landfills, creating health risks for workers and affecting nearby communities due to the toxicity of heavy metals such as lithium.
Taking these issues into consideration, just how much do EVs really limit overall emissions? And are they a path to net-zero emissions for the MENA region? Considering the environmental costs of EV production and usage, it might be more prudent for regional governments to first prioritize and achieve sustainable energy transitions before fully advocating for the use of EVs.
Athra Khamis is a Non-Resident Scholar with the Climate and Water Program at the Middle East Institute. Her areas of expertise include climate change scenarios, atmospheric composition, water resource analysis, environmental ecosystems, and sustainability.
The above featured image is a Photo by Tom Dulat/Getty Images
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