2.2.4  Consider funding approaches

184.  The UK relies on just a few countries to supply, process, and refine many of the materials required to deliver net zero technologies and infrastructure. For example, China accounts for 75% of manufacturing and assembly of solar PV modules and electric vehicle batteries.158159 The Democratic Republic of Congo supplies more than 60% of cobalt.160 And between now and 2035 global demand for critical minerals such as lithium and cobalt will require production to quadruple and double respectively.161

Figure 2.4 - Top three producers and processers of key materials and minerals

185.  This Review heard that the UK has potential to become a global player in the critical minerals midstream market. By increasing midstream and recycling capabilities the UK could create a secondary source of critical minerals and avoid the export of materials, thus supporting a circular economy.

186.  We have already seen the success of support for critical mineral supply chain domestic capabilities in the Automotive Transformation Fund (ATF). The ATF provides up to £850 million to support the development of a zero-emission vehicle supply chain in the UK, which includes sourcing of the critical minerals used. The ATF supported the development of 'Green Lithium', the first lithium refinery which will provide over 1000 jobs, export opportunities, and reduce reliance on China.162 If this fund were to be replicated in other critical net zero technology sectors it may have a similar success in increasing the domestic resilience of critical minerals and other essential supply chains they require. For example, the British Metals Recycling Association were confident that the grant application approach would benefit domestic recycling capabilities, advising:

"The Government should consider the development/implementation of sector-specific grants to support decarbonisation projects thereby creating the first metal recycling industry to be net zero in the world"163

187.  This Review 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.