Europe’s green transition hinges on strategic trade partnerships

Last week, gas started flowing once again through the Nord Stream 1 pipeline connecting Russia and Germany. The ten-day interruption in gas supply – which Moscow attributed to routine maintenance –has fuelled European fears that the Kremlin is gearing up for a full shutdown to pile pressure on Western countries to lift economic sanctions and halt military aid to Ukraine.

Understandably, Europe has sought to counter this energy security threat by striking a range of deals with countries from Algeria to Azerbaijan to partially replace Russian gas. Beyond the short-term energy crunch, however, Putin’s threats underline the importance of accelerating progress on the EU’s ecological commitments and long-term goals of dramatically boosting renewable energy production. To do so, Europe must make headway on building and strengthening strategic trade partnerships with countries that have large stockpiles of the minerals and materials which will be vital to the green transition.

Making up for lost ground

Striking new deals to replace Russian gas is a priority if Europe is to meet its short-term energy needs. Long-term objectives, however, are equally important; when unveiling the ‘REPowerEU’ strategy in May, the Commission was unequivocal: not only does Europe need to free itself from Russian threats to its energy security, it must use this critical juncture to hasten the green transition and secure its energy independence.

Taking these commitments from paper to reality will inevitably require massive investment in green energy infrastructure. Thankfully, there is already significant progress being made in this direction. What is still missing, however, is a sufficiently ambitious plan for Europe to secure the raw materials needed to make this transition happen, from the rare earth metals needed to construct wind turbines to the minerals required to produce electric batteries.

According to a recent report by KU Leuven researchers, the demand for key materials such as copper, lithium, nickel and cobalt, is set to rise sharply before 2050 as countries around the world seek to transition to electric vehicles and clean sources of renewable energy. “The 21st century”, one specialist forecasted, “will be the century of metals”. The EU’s twenty-seven member states alone are projected to need a shocking 3500% more lithium and at least 35% more copper than today.

By consuming around 20% of the world’s metal volume while only producing 3% domestically, however, the European market is heavily reliant on imports to meet demand. In order to secure enough materials to pursue its green goals, Europe needs to urgently beef up existing trade arrangements with key exporting countries.

Critical trading partnerships

One of the most important materials for Europe’s green transition is undoubtably lithium, essential to produce rechargeable lithium-ion batteries that are powering the growing number of electric vehicles and store energy from renewable sources. With the EU market for electric vehicles experiencing a 26% rise in demand year-on-year in 2021, securing a stable supply of lithium appears to be increasingly urgent. Already, the EU appears to be moving in this direction by seeking to tighten its trading relationship with Australia, which produces around 50% of the world’s supply of lithium. Indeed, there is optimism that negotiations between Australia and the EU for a free trade deal, which started in 2018, could result in a agreement by 2023.

Another critical element for Europe’s green transition is cobalt, which last year alone experienced a 22% year-on-year rise in global demand. While the EU imports the majority of its raw cobalt from the Democratic Republic of Congo (DRC) – which sits on the largest reserves in the world– by 2050 Europe is projected to need three times the amount it consumes today. This means that the EU would do well to redouble efforts to build a strong partnership with the DRC. And now would seem the right time to act, since talks with the DRC would find a favourable interlocutor.

Since his election in 2019, when he completed the country’s first peaceful democratic transition of power, President Félix Tshisekedi has governed through a reformist agenda aimed at improving the DRC’s economic outlook. A central pillar of his strategy has been to counter corruption within the mining sector, which has traditionally prevented the country from fully benefiting from its cobalt riches. To this end, Tshisekedi committed last year to audit and, if necessary, renegotiating all existing mining contracts. With the DRC now putting its full weight fighting corruption in its mining sector, the EU can have greater confidence in the country as a reliable trade partner.

Lastly, Europe should concentrate on trading partnerships that could give it access to copper, which is required in large quantities to produce wind, solar and nuclear power plants. Unfortunately, the EU is likely to face a series of obstacles to achieving this goal, since mining in the two largest exporters of copper – Peru and Chile – is being threatened by recent political developments. In Peru, weeks of protests have brought copper mining to a standstill, with President Castillo resorting to calling the army to restore production. In Chile, instead, the recent election of the far-left President Gabriel Boric, who plans to increase taxation and royalties for mining activities, has caused unease for companies operating in the region. Even if the political trajectory in both countries seems to put mining exports at greater risk, the EU can still turn to Australia, the DRC, and the United States, which are all sitting on large untapped reserves of copper.

Regardless of what the political challenges may be, if Europe is serious about turning the energy crisis caused by Russia’s invasion of Ukraine into a seminal moment for its green transition, it cannot merely think about the short-term. Transforming carbon reduction targets into reality mean the EU must start now securing the raw materials and minerals it will need to build clean energy infrastructure and electric batteries. Crafting strategic partnerships and closer trade agreements with key exporting countries is therefore the biggest investment the EU can make for its green future.

Follow EU Today on Social media:

Gary Cartwright

Gary Cartwright

Gary Cartwright is publishing editor and Brussels correspondent of EU Today.

An experienced journalist and author, he specialises in environment, energy, and defence.

He also has more than 10 years experience of working as a staff member in the EU institutions, working with political groups and MEPs in various policy areas.

In October 2021 POLITICO described Gary as "the busiest man in Brussels!"

He is a of member the Chartered Institute of Journalists, a professional association for journalists, the senior such body in the UK, and the oldest in the world having been founded in October 1884

Gary's most recent book WANTED MAN: THE STORY OF MUKHTAR ABLYAZOV: A Manual for Criminals on How to Avoid Punishment in the EU is currently available from Amazon

https://www.amazon.co.uk/WANTE...

Related posts