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Policy Briefs

Fueling Clean Energy Transitions: Addressing Value Chain Polarization in Critical Minerals

Task Force: Future of the Global Economy
Authors: Emre Hatipoglu, Daniel Gros, Jitendra Roychoudhury
Pubblication Date: May 2024


The global demand for critical minerals required in clean energy transition technologies faces challenges due to supply chain disruptions, geopolitical tensions, and environmental costs. The concentration of mineral processing, refining, and manufacturing capacities within specific geographies poses risks, prompting governance initiatives like the EU’s Critical Raw Materials Act and the US’s Securing a Made in America Supply Chain for Critical Minerals Act, among others (US Dept Treasury 2024; European Commission 2023a; White House 2022b). However, increasing domestic supply within the G7 advanced economies is costly and time-consuming in permitting approvals and setting up greenfield processing and refining facilities. This policy brief focuses on the increasing polarization occurring in the critical minerals space as nations compete against each other to secure access to raw materials required to feed their energy transition ambitions. The policy brief argues that the G7 can leverage its existing economic and technological heft to align market forces to address the issue of critical minerals availability better. Ensuring supply chain restructuring through increased commercial collaborations and forging complementary and cooperative arrangements within the existing G7 frameworks would be an added benefit. Moreover, creating a strategic reserve would reduce concerns about supply disruption, allowing nations to leave more room for market forces.