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As India accelerates its shift to electric mobility, the promise of sustainability is tempered by the risks of critical mineral dependence, supply chain vulnerabilities, and the possibility of locking into new forms of energy insecurity.
The transition from internal combustion engines (ICE) to electric vehicles (EVs) is considered to be one of the most fundamental transformations the automotive industry has faced in decades. The EVs are seen as a key technological innovation for reducing CO2 emissions related to the transport sector. The transport sector accounts for about 23 percent of global life-cycle CO₂ emissions (8.8 Gt), with road transport making up the largest portion (6.5 Gt). Electric vehicles are considered to be a crucial technology that would help in the abatement of carbon emissions. They are considered to be cleaner than ICE vehicles over their lifetime. Several countries have announced targets to phase out ICE vehicles by the year 2050. Considerable literature exists on how various countries have promoted the use of electric vehicles. Norway is one country that has achieved a high level of EV penetration.
A major consequence of the current energy transition is the increasing competition over critical minerals for renewable energy technologies. Critical minerals are the foundational inputs driving the clean energy transition. “Critical materials” is a broad term which is used to refer to those minerals which have no viable substitutes, and the importing countries are open to supply chain risks as the supply is dominated by one or a few countries. Critical minerals are characterised as materials which have economic and strategic significance to a particular country. They are typically linked with a low degree of substitutability, high supply risk and their production is concentrated in a few countries. There is no universal definition for critical minerals.
Critical minerals have become extremely crucial for new emerging technologies. Industries like automobile, electronics, manufacturing, defence, and aerospace today depend significantly on these minerals.
Minerals are formed as part of the process of long geological events, spanning over millions of years and are hence a finite resource. Critical minerals have become extremely crucial for new emerging technologies. Industries like automobile, electronics, manufacturing, defence, and aerospace today depend significantly on these minerals. A 2021 report by the International Energy Agency (IEA) states that to achieve the net-zero emission targets globally by 2050, the mineral requirement would be almost six times the current inputs. A major portion of mineral reserves exists in developing countries. Recently, the geopolitical supply risks of these critical minerals have increased. The cobalt supply disruption in the 1970s due to political upheaval in DRC and Chinese export curbs on Rare Earth Elements (REEs) in 2010-11 are a few examples of supply risks. After the Chinese disruption in 2010, as a response, governments looked for other suppliers. As a result, the Chinese share of REEs production dropped from 97 per cent in 2010 to 87 per cent in 2014.
The Chinese have been accused of rent-seeking behaviour. The “ minerals for infrastructure” deal between the Chinese government and the government of the DRC is cited as an example of this behaviour. Chinese state banks provided loans to DRC for infrastructure in exchange for developmental rights of copper and cobalt mines. The Chinese have been able to increase their share in the global supply of critical minerals due to cheap labour, less stringent environmental regulations, and cheaper extraction of metals. The extent of Chinese dominance can be gauged from the fact that China processes 68 percent of global nickel, 40 percent of copper, 59 percent of lithium, and 73 percent of cobalt. Notably, in 2023, nearly 60 percent of global EV sales were in China, with the EU and the US following with 25 percent and 10 percent, respectively.
The extent of Chinese dominance can be gauged from the fact that China processes 68 percent of global nickel, 40 percent of copper, 59 percent of lithium, and 73 percent of cobalt.
The structure of the Chinese economy and the scale of its processing sector make China a low-cost supplier of processed minerals. As per the USGS report of 2022, 85 percent of rare earth and around 60 to 70 percent of lithium and cobalt are refined by China. This prolonged experience has provided China with significant advantages in processing these minerals. Since 2020, the EU and the US have looked to counter the offshoring of minerals with policies aimed at strengthening domestic jobs. The Inflation Reduction Act in the US highlights clean energy and infrastructure development. The EU’s Green Deal Industrial Plan frames itself as a growth strategy.
The Government of India has a target of achieving a share of electric vehicle sales of “30 per cent in private cars, 70 per cent in commercial vehicles, 40 per cent in buses, and 80 per cent in two-wheelers and three-wheelers by 2030”. India is actively engaging in international partnerships, such as the Quad, to frame rules and norms for clean energy supply chains. It has been in talks with countries like Australia, which are rich in critical mineral resources. In 2023, India joined the Minerals Security Partnership (MSP), a group committed to building a secure supply chain for critical minerals.
However, India needs to enhance exploration within its territory and upgrade existing technology to explore subsurface deposits. India spends a negligible amount compared to China, the US and several others. While using EVs may contribute to lower emissions, when taking into account the manufacturing of EVs, emissions could be much higher than those of conventional ICE vehicles. A study found that emissions from electric vehicle manufacturing during the battery manufacturing phase negate any reduction achieved by EVs, unless the source of electricity generation is shifted from coal to renewable energy sources. A typical EV requires six times the mineral inputs when compared to a conventional car. Hybrid vehicles offer a medium-term alternative during the transition to electric vehicles.
A study found that emissions from electric vehicle manufacturing during the battery manufacturing phase negate any reduction achieved by EVs, unless the source of electricity generation is shifted from coal to renewable energy sources.
For India, securing reliable and affordable access to these minerals is not just a matter of industrial policy but also that of energy security. The global value chains remain heavily concentrated and are vulnerable to geopolitical tensions. India should enhance South-South cooperation, as it is the only developing country present in forums like MSP. It is imperative that India speaks for the Global South and ensures access and affordability of critical minerals, resists exploitative and extractivist market practices, and promotes stability and predictability in global supply chains. A coherent policy approach must focus on three themes: diversifying imports through strategic alliances, investing in domestic exploration and processing, and blending renewable energy into the EV value chain. Electric Vehicles are going to alter the geopolitics of the world.
Jatin Gora is a graduate of the School of Public Policy, IIT Delhi, and his work focuses on the political economy of energy transitions and infrastructure finance.
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Jatin Gora has researched the political economy of the power sector in Himachal Pradesh, examining the implementation of World Bank-led reforms and the sector’s evolution ...
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