The transition to renewable vitality is important in combating local weather change, however it’s neither easy nor with out penalties. Whereas many assume that reaching a essential tipping level will set off a seamless shift to renewables, this perception overlooks the substantial environmental, social, and governance (ESG) challenges embedded on this transition.
It is because organising and sustaining renewable infrastructure calls for vital useful resource extraction in addition to processing which, if poorly managed, can create long-term sustainability dangers. Local weather change is usually acknowledged in passing, but its actual influence will turn into more and more plain as we strategy a essential ecological threshold.
Many who advocate for renewables could not totally grasp the disruptive realities of this shift and its myriad impacts—lots of which will likely be felt most acutely by susceptible communities and fragile ecosystems. The transition to renewables shouldn’t be a magic bullet. Fairly, it’s a fancy, ongoing course of that requires deliberate planning, moral sourcing, and adherence to stringent ESG safeguards.
This weblog publish examines the challenges inherent inside renewable vitality provide chains, underscoring the pressing want for a transition that’s each swift and sustainable.
Lithium
Relevance: Lithium batteries present high-energy density wanted to energy EVs and allow vitality storage in photo voltaic and wind methods.
The place it’s discovered: 56% of the world’s lithium reserves comes from the Lithium Triangle of Argentina, Bolivia, and Chile.
Challenges: Lithium extraction on this arid area is very water-intensive, utilizing roughly 500,000 gallons per ton of lithium extracted. The method that’s concerned depletes groundwater, disrupts salt lake ecosystems, and threatens biodiversity. Indigenous communities, who depend on these water sources, face rising challenges of their capability to simply entry clear water.
Regulatory approaches range throughout the Lithium Triangle. Whereas Chile has taken steps to enhance sustainability by way of its Nationwide Lithium Technique—addressing over 150 environmental impacts linked to lithium mining—Argentina and Bolivia lag in implementing these strong environmental pointers as a result of difficult regulatory and coverage processes in these international locations.
Moreover, the mining firms in these international locations cut back the effectiveness of their threat administration efforts by inadequately assessing cumulative impacts, utilizing inner regulatory frameworks which can be outdated, and by working with a regarding lack of transparency. For instance, environmental influence assessments (EIAs) which firms undertake earlier than a mining venture is permitted and applied typically lack complete baseline knowledge, making it tough to successfully handle the identified dangers.
Cobalt
Relevance: Cobalt enhances the vitality density, stability, and lifespan of lithium-ion batteries.
The place it’s discovered: Democratic Republic of Congo (DRC) provides round 70% of the worldwide demand.
Challenges: As much as 30% of DRC’s cobalt comes from artisanal and small-scale mining (ASM), which is infamous for baby labor, harmful working circumstances, and deadly accidents. Regardless of authorities laws to formalise ASM and company initiatives—such because the International Battery Alliance and Cobalt for Improvement (funded by BMW and Samsung) aimed toward bettering working circumstances and eliminating baby labor—systemic challenges persist.
Poverty, corruption, and weak regulation enforcement all hinder efforts to cut back or eradicate unethical practices. And governance challenges are widespread amongst worldwide mining firms and state-owned enterprises. For instance, Gécamines has confronted corruption allegations and has but to publish impartial audits, decreasing the corporate’s transparency and accountability.
Graphite
Relevance: Graphite is used within the anodes of lithium-ion batteries.
The place it’s discovered: Graphite mining and processing current main ESG dangers in Madagascar and China.
Challenges: In Madagascar, mining tasks typically lack necessary environmental and social influence assessments (ESIAs), leaving native communities susceptible. The precept of “free, prior and knowledgeable consent” shouldn’t be legally acknowledged, limiting the native inhabitants’s capability to have a say in mining tasks that may influence them. Though Madagascar has environmental legal guidelines, enforcement is weak on account of funding shortages, lack of needed manpower, and corruption.
In China, processing battery-grade graphite entails hazardous chemical substances like hydrofluoric acid (HF). Staff uncovered to HF can undergo extreme burns and respiratory injury, and the realm’s pure sources threat contamination. Whereas latest knowledge on HF burns in China’s graphite processing business is missing, obtainable data present an elevated variety of HF burns in western China, significantly in Zhejiang Province, from 2004 to 2013.
Manganese
Relevance: Manganese enhances battery efficiency in lithium-ion and sodium-ion batteries. It additionally strengthens wind turbine parts and may doubtlessly function an economical catalyst in hydrogen manufacturing.
The place it’s discovered: Kalahari Manganese Mining Fields in South Africa maintain practically 25% of world manganese reserves.
Challenges: The mining course of entails “dewatering” underground aquifers to forestall flooding in open-cast pits, resulting in the groundwater being depleted, decreasing entry to scrub water in surrounding communities. Moreover, the chemical pollution that end result from the extraction processes typically seep into native water sources, inflicting contamination that poses extreme well being dangers. For instance, elevated nitrate ranges from mining actions can result in methemoglobinemia, a situation that impairs oxygen transport within the blood and may be deadly for infants.
Though firms like BHP and Vale have launched water recycling and dirt suppression measures, weak enforcement, poor neighborhood engagement, and inadequate monitoring proceed to be main challenges.
Nickel
Relevance: Nickel enhances battery effectivity, serves as a catalyst in electrolysis, and supplies sturdiness in vitality methods.
The place it’s discovered: Indonesia holds 19.6% of the world’s reserves.
Challenges: Indonesia’s nickel business has grown quickly since banning uncooked exports in 2020, however this enlargement has led to extreme environmental points. Deep-Sea Tailings Disposal (DSTD) is often used within the area’s poorly regulated mining operations. DSTD has brought about water air pollution, fish depletion, and heavy metallic contamination, significantly within the Indonesia’s South and Central Sulawesi and Obi Islands waters. And nickel smelting has polluted each the air and the water in Morowali Industrial Park which covers 3,000 hectares.
Whereas firms like BHP, Vale, and Anglo American have applied ESG safeguards, most efforts concentrate on decarbonization relatively than addressing the broader social and environmental dangers from their mining actions.
Platinum Group Metals (PGMs)
Relevance: Platinum Group Metals (PGMs) are indispensable for hydrogen gasoline cells and proton alternate membrane (PEM) electrolysers, which drive inexperienced hydrogen manufacturing.
The place they’re discovered: South Africa holds roughly 90% reserves of those metals.
Challenges: In South Africa, mining these metals poses vital environmental and social dangers. The extraction and refining processes devour large quantities of vitality and water. And pollution resembling SO2 and dirt contribute to elevated greenhouse gasoline emissions, significantly as lower-grade ores demand extra vitality for processing. Together with this air air pollution, wastewater discharge, and floor runoff additional contaminate the surroundings, impacting each native populations and the ecosystems wherein they dwell.
Main PGM producers resembling Anglo American Platinum, Impala Platinum, and Sibanye-Stillwater have launched numerous safeguards to handle ESG dangers. Nevertheless, the focus of PGM manufacturing in South Africa exacerbates different challenges resembling shortages within the nation’s electrical energy provide, safety threats from organized crime syndicates, labor conflicts, and normal financial instability. These points additional complicate operations, delaying tasks together with these aimed toward renewable vitality integration.
Uncommon Earth Parts (REEs)
Relevance: REEs are a bunch of chemically related metallic parts. Regardless of their identify, they aren’t significantly uncommon when it comes to abundance, however they’re not often present in concentrated deposits, making them tough to mine economically. Neodymium and Dysprosium improve wind turbine turbines, and Lanthanum and Cerium enhance electrolyser effectivity for hydrogen manufacturing. Neodymium, Praseodymium, and Terbium energy high-performance EV motors.
The place they’re discovered: China controls over 85% of processing capability for REEs.
Problem: The manufacturing of REEs entails the usage of radioactive parts, that are extraordinarily harmful to folks and the surroundings. The Bayan Obo mine in China, the world’s largest REE mine, has brought about in depth environmental injury by contaminating soil, air, and water. Native communities undergo from elevated most cancers charges and different extreme well being circumstances, whereas polluted water threatens the Yellow River.
In response, China applied environmental laws beginning in 2010, introducing air pollution management requirements and consolidating uncommon earth enterprises to enhance business oversight. The federal government additionally intensified its crackdowns on unlawful mining operations, particularly in Jiangxi Province, to attempt to promote extra sustainable practices.
Regardless of these home efforts, China stays concerned in unlawful REE mining in Myanmar’s Kachin State. Chinese language-backed companies function unregulated mines, resulting in unsurprising outcomes: a destroyed surroundings, contaminated groundwater, and displaced native communities. The dearth of regulation has additionally led to human rights abuses, resembling subjecting staff to poor working circumstances and even compelled labor.
Renewable vitality firms like Vestas, Siemens Gamesa, GE, and Bloom Power are minimizing their reliance on uncommon earth parts by adopting various applied sciences, recycling, and more-responsible sourcing. Nevertheless, a serious problem for the worldwide provide chain is the over-reliance on China for REEs, which makes desired diversification tough.
Balsa Wooden
Relevance: Balsa wooden is prized in wind turbine manufacturing on account of its distinctive strength-to-weight ratio, making it ideally suited for light-weight but sturdy turbine blades.
The place it’s discovered: Ecuador stands because the world’s main provider of business balsa wooden, contributing roughly 90% of world manufacturing.
Challenges: The worldwide demand for renewable wind vitality has elevated the necessity for balsa wooden, primarily sourced from secondary forests in Latin America, typically on indigenous lands and smallholder farms. In Ecuador, audits are generally carried out by the identical establishment that points licenses, resulting in points round transparency. In Peru, eight key firms management 80% of the market, elevating professional issues in regards to the legality of their operations.
Efforts to enhance traceability have primarily centered on major forests, neglecting agroforestry and indigenous practices which unlawful loggers exploit. Balsa wooden logging harms ecosystems and communities, exacerbating issues like human trafficking and drug trafficking. The dearth of transparency within the timber provide chain makes verifying legality tough, though certifications just like the Forest Stewardship Council (FSC) are used to make sure sustainability.
Firms like Siemens Gamesa interact solely licensed suppliers and disclose annual balsa wooden consumption. Nevertheless, certification labels have been criticized for not addressing deforestation and never selling extra sustainable forest administration.
The Want for Accountable Provide Chains
Regardless of efforts to mitigate ESG challenges, weak regulatory frameworks, restricted enforcement, and a scarcity of transparency proceed to threaten needed moral and environmental adjustments to the provision chains for renewable vitality. In lots of mineral-rich areas, socio-economic instability and safety dangers create further challenges for the sustainable sourcing of vitality sources.
From a scarcity of transparency and points with knowledge monitoring to the complexity of the provision chain, all of those challenges influence the well-meaning efforts to make sure extra moral sourcing practices. Moreover, excessive market focus in a particular area, a rising demand for essential supplies, or elevated financial pressures on producers typically causes firms to undertake higher-risk and fewer accountable manufacturing strategies.
Addressing these cross-cutting points requires that mining firms, regulatory our bodies, governments, and another entity concerned on this business to decide to—and implement—simpler regulatory oversight and extra stringent due diligence measures. Briefly, there must be a extra strong dedication by your complete business to sustainable and accountable sourcing of the supplies required for renewable vitality.
With out significant motion, the transition to renewable vitality dangers being undermined by the very provide chains that allow it. To really obtain a greener future, clear vitality should not solely be renewable, it should even be responsibly sourced.
For extra insights and steerage on renewable vitality, provide chains, inexperienced investing, local weather change and different associated points, keep tuned to our weblog for future updates and skilled analyses.
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