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In the same way that past industrial leaps were fueled by steam and oil, the clean energy revolution is about to be powered by technologies that we still consider emerging. There is a race to provide the crucial minerals and metals needed for future sustainable energy systems. It’s a fact that industrial batteries can’t be made without rare earth metals like copper, lithium, nickel, and cobalt.
While Europe is a global leader in electric car adoption, it falls behind in having local access to essential minerals. So, how can we make electric cars and renewable energy storage as environmentally friendly as possible? A “battery passport” will be required for every industrial and electric vehicle battery sold or put into operation in Europe by January 1, 2026. There will be an electronic record for industrial and electric-vehicle batteries with a capacity of more than 2 kWh, which “shall be unique for each battery and identifiable by a unique identifier,” according to the rule standards.
But there are certain hurdles to overcome. As long as environmental, social, and governmental (ESG) compliance problems maintain pace, mining businesses and governments can lead the transition to sustainable energy. Green credentials have become more critical to investors, as seen by the likes of Blackrock BLK -1.6 percent, which manages more than $10 trillion in assets, screening out companies with weak environmental, social, and governance (ESG) practices. ESG hasn’t been a priority for industry, business, shareholders, or governments until now.
All future decisions must be filtered via a climate lens, particularly as more and more investors get on board with the goal of net-zero emissions. It’s not a cash shortage that’s the problem; it’s a lack of bankable projects. The risk associated with climate change is investment risk. Since governments’ time frames for achieving net-zero targets are closing, investors must begin immediately changing their holdings.
What’s more, this is a global problem. Even though Australia is a significant producer of vital minerals and rare earths, the country has only used a small amount of industrial battery technology. It’s time to change this so that Europe’s supply of batteries comes from an environmentally friendly source across the globe.
By 2020, the need for batteries will increase nine to tenfold. We need to be careful with the resources we mine for batteries and electric vehicles since all governments and carmakers covet them. There are no carbon credits that we can depend on.
An increasing number of investors are asking about environmental, social, and governance (ESG) factors. With its new Battery Passport and strengthened certification by CERA and IRMA, countries like Europe are leading this transformation (Initiative for Responsible Mining Assurance). Suppliers are increasingly being asked to show that their mining practices are environmentally friendly, fair in terms of wages and working conditions, and beneficial to the local populations they influence. Major vehicle manufacturers are also requesting proof of ethical and environmentally friendly mining. Until recently, the focus was only on pricing, not quality. Buyers are willing to pay a premium for a mineral or metal that has been ethically mined, sourced, or recycled.
Investment in green technology has opened the door to innovation, such as creating alternatives for rare materials that are more available, sustainably supplied, or more readily recycled, recovered, and reused.
“Ore purity is more than simply a matter of chemical makeup. It must specify if it came from an unethical region of the globe or was produced at a great environmental cost. Produce with a provenance story is becoming increasingly frequent, especially food and clothing. The mining business must participate in the societal change.”
Carbon pricing was an important topic of debate at COP26. Others are debating whether to do so, while others have already done so. At this juncture, we must make a decision. In other words, is it OK for us to accept that the planet’s costs are too high? Another possibility is that provenance technology might be used to determine where taxes should be implemented and to identify businesses doing the right thing in terms of tax rebates or best practices?
More and more investors want to see a more equitable distribution of wealth and resources among all stakeholders. This will need certain compromises. As a result, the environment subsidizes our economic activity in some way. It will eventually lose the will to live.