Fuller View of Green Transition Economics and Its Impact on Africa Is Needed

Technical experts at a conference underway in Bonn this week are working tirelessly to craft draft language for the upcoming COP28 summit in Dubai later this year.

Whilst the bulk of the focus in Africa has been on the financing issues that generated the most heated discussions and coverage in the press, like the continued failure of Global North countries to make good on climate finance pledges, and the contentious “loss and damage” fund, an equally critical channel for Global South support introduced by the Paris Agreement is the so-called “Technology Mechanism” (TM).

Through the TM, geoeconomically weaker countries, like most African nations, are supposed to be assisted to integrate into global green technology (Greentech) value chains vital to both the goals of better adaptation to climate change and mitigation of its worst effects.

Central to the broad aspirations of Greentech is the production of energy systems with minimal, zero or even negative carbon (more technically, “Kyoto gases”) emissions.

As fate would have it, the clean and renewable energy transition so critical to meeting the Paris Agreement is also heavily dependent on certain minerals, often dubbed “green minerals”, such as cobalt, lithium and nickel. Besides the increase in demand that comes from shifting away from fossil fuels in general, experts estimate that the actual intensity of minerals in energy production is increasing. It now takes 50% more minerals to produce a unit of power.

Some argue that this is precisely where the big opportunity lies for Africa. Such experts urge Africa to aggressively leverage its perceived green mineral wealth wisely, effectively redeeming the centuries of poor outcomes in its history of mining.

The United Nations (UN), the African Union (AU), and other multilateral bodies and development agencies have advocated for policies and initiatives to position Africa as a green minerals hub.

Anchored on green value chains

Of course, currently known reserves of green minerals in Africa are concentrated in only a few countries like the Democratic Republic of Congo (DRC) and South Africa, which are truly significant global players. Truth be told, there aren’t that many pundits egging African countries on to merely form cartels to limit competition and increase prices of minerals by creating artificial shortages. Most have loftier goals in this area for the continent.

All the serious strategies being discussed revolve around the emergence of processing and value addition chains. Which is precisely where AfCFTA – Africa’s single market blueprint – comes in (read about the Forum’s thinking on AfCFTA here). AfCFTA, experts suggest, could be anchored on green value chains such as the planned battery hub centred around Zambia and the DRC.

There is no gainsaying the technical ingenuity and sheer analytical imagination currently being expended on the green value chain vision in Africa, and the role that critical minerals could play in accelerating it at a time of geopolitical interest in the theme. We feel, however, that a fuller picture of the emerging transition economics is required, without which some vital elements of the analysis will fall through the cracks.

Resource circularity

An oft-marginalised dimension of green minerals value chains and their interplay with low-carbon energy systems is the increasing attention being paid to so-called “circular economy” principles. Resource circularity promotes the minimising of virgin or primary mining by recycling end-products such as batteries to extract valuable minerals whilst exploring the use of globally abundant materials, and doubling down on component miniaturisation. All these separate and independent factors are increasingly conjoining and cumulatively transforming the future of the mining industry.

Scientists have now come up with ways of recycling lithium-ion battery components that actually improve performance. Apple has committed to using 100% recycled cobalt in all its devices in just two years’ time. Some 68% of all nickel in consumer gadgets today is currently recycled. These trends can only be amplified by new laws demanding extended producer responsibility and business model practices that encourage consumers to return more and more stuff to retail outlets in the Global North.

It is true that some experts argue that this is merely a short- to medium-term adjustment that will correct again in due course. But there are other corroborating forces at play. Miniaturization is leading to the reduction of mineral content in the wider electronics industry. Concerns around multiple ESG (environmental, social and governance) risks are leading to a ferocious search for alternative minerals, some of which are more widely distributed around the globe.

Consider that 70% of the world’s cobalt is produced in the DRC, and that in recent years, a seasonal drop in demand has been known to cut nearly 7% of mining GDP. Then imagine a primary cobalt-free world followed by similar cuts in demand for copper. Some 90% of the country’s exports and up to half of government revenues would be threatened.

Clearly, a fuller picture of global green transition economics and its impact on Africa is urgently needed. Some activists and social entrepreneurs are in the early stages of building new protocols that address the need for a transitional adjustment mechanism for the continent. Perhaps, creative ways can be found to funnel some of the economic gains from enhanced recycling back to African mining communities, even as efforts to integrate Africa more strategically into a carbon-positive trade and manufacturing ecosystem without endangering present economic prospects continue.

At any rate, some of the very same solutions needed to better grasp and tackle the unintended consequences of circularity are needed even more urgently to tackle the ongoing extraction of Africa’s mineral riches (at least $30 billion in 2016), and to abate some of the ESG concern around blood minerals, child labour and local environmental hazards, which are accelerating Africa’s potential marginalization even in the pre-green materials value chain.

In short, a more radical and comprehensive lens is required to better appreciate the risks and opportunities presented by the green transition and the critical minerals boom facing Africa.

Original Source: World Economic Forum