The net zero transition will only succeed if it is underpinned by secure and resilient supply chains. This security is threatened when only a small number of nations dominate the sourcing, production, and processing of minerals and materials. It is vitally important that government, industry, innovators, and consumers have a clear understanding of the supply chain requirements for each of the sectors critical for delivering net zero. Once this direction is clear, steps can be taken to ensure these supply chains are internationally diverse and, where possible, contributing to a growing domestic circular economy. The Critical Minerals Strategy goes a long way to progress this, but government can and should do more to ensure the same is being applied across all relevant supply chains critical for delivering materials to meet net zero by 2050. This section recommends that the Government should, by autumn 2023, undertake net zero infrastructure and technology critical supply chain analyses to inform decisions at the next Spending Review on where support akin to the Automotive Transformation Fund could add value. |
176. In the longer term, energy security will look different. As we transition to net zero we will encounter new concerns relating to the resilience of our critical supply chains (including, critical minerals). The International Energy Agency's World Energy Outlook 2022 highlighted the need to manage new vulnerabilities as one of the key principles needed to enable a secure transition. It is therefore vital that the UK ensures our net zero supply chains are resilient.
177. The UK's supply chains for critical minerals are not as resilient as they could be.
Stakeholders from across sectors including Rolls-Royce plc, Imperial College London, Royal Academy of Engineering, and participants attending a critical minerals roundtable hosted by the Review were clear that the UK could experience limited access to critical minerals necessary for the delivery of net zero technologies and infrastructures. Many net zero technologies and infrastructure - from batteries to offshore wind farms - rely on the incorporation of critical minerals such as lithium, graphite and cobalt. A typical electric car alone requires six times the mineral inputs of a conventional car.151 Moreover, extraction and processing of critical minerals required for decarbonising technologies are highly concentrated globally. This has bottle-neck potential and geopolitical implications. Disrupted supply chains and rising mineral costs created through limited diverse suppliers could increase the cost of clean energy technologies and slow deployment.152
"...emerging "import dependency" on critical minerals required in key decarbonisation technologies should be a priority energy security question. Ensuring stable access to these resources, and the development of alternatives where appropriate, to manufacture products such as electric vehicles and wind turbines is essential to maintaining net zero progress and momentum. The failure to secure appropriate supply risks slowing the transition, with associated risks to technology development and innovation and price if it is not possible to produce or deploy at scale."- Royal Academy of Engineering153