This year’s annual UN climate summit, COP28, is taking place in the United Arab Emirates (UAE), a host choice that will highlight the role of fossil fuel extractors in the energy transition. However, while the UAE has been greatly enriched by its fossil fuels, this has not been the case for every fossil fuel-rich country. Nowhere is this more famously the case than in Nigeria. Now, as critical minerals and cleantech replace fossil fuels as the building blocks of the world’s energy system, resource-rich Africa is keen to make sure this pattern does not repeat itself and cleantech supply chains deliver local benefits.
Already, patterns of wealth accumulation for these new resources are showing familiar ownership patterns. Energy Monitor recently identified the top ten countries by ownership of critical minerals reserves – and there is a clear mismatch with those countries that actually own the supply chain. Critical minerals such as copper, lithium, manganese and nickel are essential to the development of technologies behind solar PV, wind energy, electric vehicles (EVs) and energy storage. China, Europe and North America dominate these cleantech supply chains.
Speaking at the UN Industrial Development Organisation’s Energy and Climate Forum in Vienna earlier this month, Arunabha Ghosh, CEO of the India-based think tank Council on Energy, Environment and Water, explained that even resource-rich developing countries are currently importing cleantech they could make themselves. “For low and middle-income countries, nearly 100% have been almost entirely dependent on concentrated [single-country] imports over the past decade,” he said. “Over 60% of the manufacturing of solar PV, wind and battery technologies and components are concentrated in a single country,” he added, referring to China.
It isn’t just the components themselves, but also the intellectual property behind them. “The bulk of the patents for clean technologies are clustered in just a handful of countries,” Ghosh continued. “95% of clean energy tech patents are owned by citizens in high and middle-income countries – and they will not expire before the time we need to get to net zero.”
Amani Abou-Zeid, the African Union’s Commissioner for Energy and Infrastructure, said at the Vienna forum she wants fairer value chains to be addressed at the COP28 summit in Dubai starting at the end of this month.
“We have great opportunities [in Africa], including an abundance of renewable energy resources and development minerals, but we are not seeing development on our continent as we would have wished it to be," she said. "The challenge will be that we are smaller economies and not necessarily connected. Half of our population doesn’t have access to electricity. We are not in a discussion about transition, we are still at the level of access.”
The African Union is running programmes to try to fix this, she said, such as providing support through the African Minerals Development Center (for example, the GMIS information system mapping African minerals) and the Union’s economic arm, the African Development Bank. She elaborated with two examples: in Zambia and Congo, the US Government has started working with local governments to manufacture batteries there right after the resources are extracted, rather than exporting them for manufacture elsewhere.
“We are also working with our countries to change the policies and regulations that are put in place,” she said. “You cannot just ban [exports of critical minerals], [although] that is what started to happen. The question is how to create an environment that is conducive for technology transfer and investment attraction, so as to create this value. Banning is not a solution.” Both Ghana and Namibia have enacted outright bans on exports of unprocessed minerals like lithium.
However, Abou-Zeid said the developed world needs to work with the developing world to build these fairer cleantech supply chains, and so far this isn’t happening nearly enough. She wants to see this addressed at international level at COP28. “The idea of export for export, I think everyone is rethinking this – not only because it doesn’t create value on the ground but because it also creates other geopolitical issues,” she said.
“The domestication of these resources, creating the value chain on the ground, is starting, but it is recent. We are working with our partners to rethink the way they work with our countries. In the meantime, the African Union started the African single energy market two years ago. It will be the largest in the world, and is projected to be achieved in 2040. It is not to be self-sufficient but to create a space that is conducive to investment… across the continent.”
Ghosh agreed. “Industrial policy in the EU and US risks taking away investment from developing countries and emerging markets,” he said in Vienna. “Capital is not flowing to poor countries in part because of risks that are real but also in large part because of risks that are perceived, and are not real.” Skittishness by ratings agencies and investors creates a vicious circle, he said, with investors hesitant to invest in mineral processing and manufacturing in developing countries (rather than just investing in extraction and export) because of outdated ideas about the risks of being economically active in these countries.
Austrian Energy and Climate Minister Leonore Gewessler told the forum her country is working to forge partnerships that keep value in resource-exporting countries, particularly for renewables and hydrogen.
“[We need to make sure] that countries benefit from the renewables expansion [green hydrogen requires] – that has to be a first precondition [for exports of green hydrogen],” she said.
"Having these fundamentals in mind will help countries to harvest all the potential and also narrow the decarbonisation gap we see at the moment,” she added. She cited as an example of positive collaboration a recent workshop Austria ran in Tunisia, which looked at possibilities for renewable hydrogen technology for the steel and chemical industries in Tunisia.
While the possibility of having specific language on changing value chains is not in the draft COP28 text, several events discussing the subject are planned. These include an event hosted by the UAE economy ministry and the World Trade Organization on greening global supply chains.