A combination of grit, luck, and cooperation got Europe out of an energy crisis. But some fear another energy crisis is looming. This time, with batteries.
In response to Vladimir Putin’s invasion of Ukraine, Europe slashed fossil gas imports from Russia by 70% and petroleum by 80%. Warm weather, conservation, renewables, and a rerouting of fossil energy trading allowed EU countries to avoid disaster — but not without a lot of anxiety and economic discomfort.
Putin’s most powerful weapon didn’t work as planned, but some European leaders worry the bloc is trading one dependence for another.
Last September, the Spanish presidency of the Council of the EU wrote a paper outlining security vulnerabilities from a high reliance on Chinese batteries for electric cars and the electric grid.
“Without implementing strong measures, the European energy ecosystem could have a dependency on China by 2030 of a different nature, but with a similar severity, from the one it had on Russia before the invasion of Ukraine,” read the paper.
Weeks later — right on cue — China announced new export restrictions on graphite, a key material in lithium-ion batteries. The move came in response to U.S. restrictions on AI chips and increasing European investigations into Chinese electric car manufacturers.
It sent battery makers scrambling to find new supplies, and illustrated China’s dominance over the global battery supply chain.
“The numbers are just insane. They’re staggering,” said Tom Moerenhout, a research scholar at the Columbia Center on Global Energy Policy,
China refines 90% of the world’s graphite, 80% of manganese, 70% of cobalt and nickel, and 60% of lithium — all key ingredients in lithium-ion batteries. China also controls 75% of cathode production, 90% of anode production, and 75% of battery cell manufacturing, Moerenhout explained.
“Those are a lot of percentages, but I basically didn’t say anything below 60%. It wouldn’t matter if it was Australia or Canada or even Europe — those numbers are scary because you are at risk of supply chain restrictions. Of course we should care, because there are concerns that China indeed will use that leverage for geopolitical power,” he said.
The new oil?
Batteries are foundational to the energy transition. In 2023, electric vehicles took over from renewable energy as the top sector for global investment in the transition. That same year, demand for batteries in EVs and on the grid hit nearly one terawatt-hour, according to BloombergNEF.
Whoever controls critical minerals supply and battery manufacturing will wield enormous power, both figuratively and literally.
Elon Musk calls lithium batteries “the new oil.” So are we swapping dependence on a handful of oil-producing countries for dependence on a single country that dominates batteries — China? Not exactly.
“There’s a lot of facile comparisons between oil security and mineral security. And there is something to that. We want to be concerned about the dominance of any one country. But there are a lot of really important differences, too,” said Jason Bordoff, founding director of Columbia’s Center on Global Energy Policy, who writes extensively on the new geopolitics of clean energy.
For one, the economic stakes are different. According to the International Energy Agency, critical minerals revenue — from copper, lithium, nickel, cobalt, graphite, manganese, and silicon — could hit $263 billion by 2040. Current revenue from oil and gas is over $7 trillion.
“The global oil and gas industry is enormous,” said Bordoff. “Yes, we’re going to need more mining. We’re going to need more global trade in these minerals. But it really doesn’t compare to how massive the global oil and gas business is.”
Supply disruptions will also play out differently. When Russia cut off pipeline gas to Europe in the fall of 2022, there were immediate economic consequences as prices skyrocketed — and even threats to human life as winter approached. Cutting off critical minerals might not have the same acute impacts.
“We don’t burn critical minerals for energy,” said Bordoff. “If we had a disruption in some types of critical minerals, you might see delays and much higher costs for batteries. You might have to wait six months or 12 months to be able to buy a new electric vehicle. You might see delays in solar panels. It wouldn’t affect your ability to charge your electric car today or get electricity from your solar panel today. So the risks to the macroeconomy are different than they are for oil.”
The biggest risk: concentration
The risks of concentration across the battery supply chain are very real. The three top oil-producing countries — the U.S., Saudi Arabia, and Russia — make up 10% of crude oil supply. In contrast, China produces 60% of the world’s critical minerals, controls 85% of processing, and hosts three-quarters of battery cell production.
But that can change.
“Oil is partly about technology, but very much about geologic abundance. With…refining and processing, those are manufacturing plants, and you can build those in lots and lots of places,” said Bordoff.
Still, competing with China will be a heavy lift. BNEF estimates that the U.S. will need to invest $82 billion, and Europe will need to invest $98 billion in cell and battery pack manufacturing to keep up. And the European Commission says member states will need to spend more than $400 billion across battery production, from mining to manufacturing, to compete with China and avoid supply disruptions.
As a state-directed economy unafraid to wield power, China is often seen as a bogeyman in global trade. But it also deserves credit for building the industry, said Moerenhout.
“China had a vision for a battery-powered future, and they built a very successful industrial policy around it,” he said. “They had a clear strategy while other automakers and countries were — sorry for the pun — asleep behind the wheel.”
Meanwhile, the U.S. and Europe are investing tens of billions of dollars to build and protect their own domestic battery industries.
Diversification is critical to neutralizing supply threats. But as batteries become one of the most valuable sectors in the clean energy transition, the move toward more protectionism concerns Bordoff.
“We’re going to need more free trade agreements and more free trade partnerships, not fewer, if we want to have a clean energy transition and diversify our supply chains,” he said. “And if every country says we need to own the entire supply chain…it’s going to make the clean energy transition so much harder.”
Want to dig in further? Listen to the first episode of “The Great Battery Boom” with Dr. Melissa Lott, as she explores the complexity of battery supply chains, from mining to manufacturing.
This is partner content, brought to you by Columbia University. It borrows from an interview that appeared on The Big Switch, a Latitude Studios partner podcast.
The Big Switch is a show that explains how we can rebuild the energy systems all around us. Dr. Melissa Lott, Professor of Practice at Columbia’s Climate School, brings together historical examples, current events, and incisive analysis to give listeners a deep understanding of the solutions to climate change. Subscribe on Apple Podcasts, Spotify, or anywhere you get your shows.
Transcript
Melissa Lott: I want to tell you the story about a woman named Alessandra Carreon. Alessandra is a Renaissance woman, and I say that because she’s not only a Michigan Public Service commissioner, but also a sustainability expert, and I’m not kidding. She’s the co-owner of a verified Neapolitan pizza shop.
Alessandra Carreon: I do, in fact, co-own a pizza business. It’s a skill that will never go away.
Melissa Lott: She also has this really specific skillset in tracking battery supply chains. So we couldn’t help but ask her: does she use electric ovens at the pizzeria?
Alessandra Carreon: At the restaurant, because we were a verified Neapolitan pizzeria, we used a traditional wood-fired brick oven.
Melissa Lott: Alessandra talked to us not only in her official capacity as an energy commissioner or as a pizza lover, but as someone who had spent nearly a decade tracing the minerals and materials that make up our cars, and in particular, tracing the materials that are in our electric car batteries.
She started her career in environmental consulting, and then in 2012, she moved into the heart of America’s auto industry, which was at the start of this major transition.
Alessandra Carreon: Truly just felt called to move to Detroit, Michigan. Especially with sort of the auto industry being in a pivotal moment back in 2008 onward, I could see how much energy there was around transforming the city in the wake of a lot of change.
Speaker 3: More coverage of the financial crisis tonight. The big three US automakers are handing over their plans for the future to Congress. They’re trying to convince lawmakers to give them a bailout of $25 billion in taxpayer money. Companies say one of them might collapse without it.
Melissa Lott: So at that time, two really important stories were playing out. See, a few years earlier, America’s top automakers were struggling in the wake of the financial crisis, and they saw that the sales for some of their vehicles, particularly those big SUVs that tend to guzzle gas, well, they tanked. Hundreds of thousands of production jobs were lost, and the government ended up stepping in to help them out, pouring nearly $80 billion into GM, Chrysler, and Ford.
Speaker 4: General Motors and Ford submitted restructuring plans to Congress Tuesday. GM promises fewer brands and fewer dealers. Ford promises no managers will get a 2009 bonus, and it will speed up plans for electric cars.
Melissa Lott: As a condition for this government support, automakers agree to speed up fuel efficiency standards to encourage lighter gas-sipping models that have been deprioritized. And meanwhile, the American Recovery and Reinvestment Act, also known as the stimulus bill, created federal tax credits for different types of electric vehicles.
It included billions of dollars to support domestic battery manufacturing for the first time, and it also included this loan for a tiny electric car maker called Tesla. Alessandra stepped into this moment at Ford, where she got a job as a sustainability business analyst.
Alessandra Carreon: So that required an ability to investigate along the supply chain where materials came from, how they were being processed, who was handling them.
Melissa Lott: And Alessandra’s work was directly influenced by another very important law called the Dodd-Frank Act. This act was created in the wake of the financial crisis, and it set up a whole host of regulatory reforms and consumer protections.
Barack Obama: This reform will help foster innovation, not hamper it. It provides certainty to everybody, from bankers, to farmers, to business owners, to consumers. And unless your business model depends on cutting corners or milking your customers, you’ve got nothing to fear from reform.
Melissa Lott: There was a provision in the law that required publicly traded companies and manufacturers to report their sources of tin, tungsten, tantalum, and gold. These minerals are found in a wide range of consumer electronics, jewelry, medical equipment, and cars, and they’re often referred to as conflict minerals, because large amounts of them are mined in the Democratic Republic of the Congo, where they can fund armed conflict and also are associated with human rights abuses like child labor. Dodd-Frank ignited efforts inside large companies like Ford to investigate where these materials came from, how they were being processed, and who was handling them.
Alessandra Carreon: And there were literally thousands of spreadsheets, thousands of suppliers to sort through. It was really a first-of-its-kind moment, and so that really sparked and inspired not only for Ford, but across many industries, companies began to question, “Okay. By law, I need to think about where my tin, tungsten, tantalum, and gold is coming from, but what about my lithium? What about my nickel? What about my rubber from farms?” So I was really fortunate to be part of the industry and in this job at a moment where this activity was just scaling and expanding in an unprecedented way.
Melissa Lott: And that scale only expanded as the entire auto industry started embracing electric cars, thanks to batteries that were getting cheaper and better every single year.
Speaker 6: In a brand new plant in Michigan, the future of Ford is already rolling out. The all-electric version of the F-150, the best-selling vehicle in America, with 150,000 orders. Now, Ford tells NBC news exclusively, it is going all-in on electric, pledging that within nine years, 40% of its fleet will be battery-powered.
Melissa Lott: And those lithium-ion batteries are filled with another set of critical minerals, like of course, lithium, but also cobalt, manganese, and graphite, which are mined, processed, transported, and controlled in highly complicated ways.
Alessandra Carreon: EVs represent opportunity to introduce a new way of planning for virtually new, blossoming supply chains, value chains that are responsible, that take into account social and environmental sustainability from the onset, if we plan it correctly, and the ability to introduce more transparency in those mineral supply chains that already exist for other commodities that we can in turn help improve.
Melissa Lott: And this long lead-up over more than 15 years, the stimulus act, the auto bailout, Dodd-Frank, combined with batteries getting so much cheaper, sparked interest in electric vehicles and the battery supply chains behind them.
And they led to this transformative law in 2022 that put batteries at the center of the clean energy economy. I’m talking about the Inflation Reduction Act.
Speaker 7: Well, John, there was so much attention on solar, wind, and hydrogen stocks, but battery companies also a key beneficiary of the Inflation Reduction Act.
Melissa Lott: By this point, Alessandra had left Ford, but she was still focused on EV supply chains, and the Inflation Reduction Act, also called the IRA, added a whole new set of stakes. And suddenly, government policy wasn’t just focused on discouraging conflict minerals or sprinkling some money into R&D. It was about building an industrial-scale battery industry from the ground up with tens of billions of dollars in incentives.
Speaker 7: And that includes tax credits for battery production and mineral refining. The second measure is linking the EV incentives to domestic and allied mineral production.
Alessandra Carreon: And so where the opportunity there becomes is not just where are you mining these minerals, but if you mine them, then where do you send them to make cathodes, to make anodes? And does the US want to be in the business of processing those minerals to make these cathodes and anodes that go into the batteries that we’re assembling?
Speaker 7: Over time, in order for the EV credits to be realized, more and more battery components need to be mined, refined, or recycled by the US or one of our free trade allies. John, these are complex and a lot of supply chains.
Alessandra Carreon: This question really leads to a central topic around sustainability, responsibility, and then ultimately economic development and ability to thrive and meet demand with local supply.
Melissa Lott: This is The Big Switch, a show about how to rebuild the energy systems that are all around us. I’m Dr. Melissa Lott, and I’m the senior director of research at Columbia University’s SIPA Center on Global Energy Policy.
Batteries are taking over the world. They’re finding their way into everything: cars, heavy equipment, and the electric grid. But scaling up production to meet the demands of a net-zero economy is really complicated, and it’s contentious. This season, we’re digging into the ways that batteries are made, and we’re asking: what gets mined, traded, and consumed on the road to decarbonization?
This is the first installment in our five-part series. In this episode, the geopolitical race that is transforming battery supply chains. We’ll open up a lithium ion battery, investigate what’s inside it, and ask the question: are critical minerals the new oil?
Our global quest to learn how batteries are made starts really close to home for me, right here on the campus at Columbia University where I work. More precisely, it starts at the Columbia Electrochemical Energy Center. It’s just a straightaway from my office, and it’s where Professor Dan Steingart studies how energy storage devices work by learning how they fail.
Hey, dude. How’s it going? I hear we’re going to blow up a battery?
Dan Steingart: Well, hopefully it won’t blow up, but we’re going to cut it open in a way that it’s really not meant to be cut open because we’re trained professionals. My student, Bret, is actually getting his PhD in taking batteries apart in various ways. He spends most of his time blowing batteries up, and so today’s a safe day for him. We’re giving him the day off.
Melissa Lott: Okay. So picture this. We’re in this lab, and I’m standing next to Dan and his PhD student, Bret Schumacher. And around us are these white cinder block walls that are lined with copper pipes and cabinets filled with chemicals. I’m talking cylinders, beakers, flasks, just everywhere.
And it’s in this lab that researchers are performing all these crazy kinds of experiments to stress test the batteries that go into our cars and the electric grid, so to figure out how, when, and why they fail. So why did you decide you wanted to take batteries apart for your work?
Bret Schumacher: I guess I would call it chaotic-neutral is where I live.
Melissa Lott: What does that mean? I’ve got to ask, what does that mean?
Bret Schumacher: It’s exciting and it’s also impactful, right? A lot of people work on battery performance and making batteries better, make them better with more energy, but that means a lot more bad things can happen, right? Especially in the city, you have a lot of battery fires, and a lot of people get hurt.
So the way that we can figure out how to not make that happen is to study what’s happening when that happens. So I found my little niche of battery explosions.
Dan Steingart: We spend a lot of time trying to make batteries better, and as Bret said, improve the energy density, improve the power density. Classically, anything that has high energy density, something that stores a lot of energy in a small amount of space, high-power density can give that energy very quickly. We don’t want batteries to be bombed.
So the question is, is how do we have a battery that gets us at a 300-mile range that can be charged in five minutes, that has zero danger of exploding, right? And that’s probably impossible completely, but understanding how and why they explode is something really important and tragically understudied.
Melissa Lott: Okay. Let’s go blow something up?
Bret Schumacher: Open something.
Melissa Lott: Open something up. Don’t burst my bubble yet. We’re going to blow it up. No, let’s go open something, and I can’t wait to see what’s inside of this thing.
Bret Schumacher: Awesome. Yep.
Melissa Lott: Okay. So we throw on our safety glasses, and Dan and Bret take me over to a protective shield. And behind that shield, there’s this cylinder-shaped battery. It looks kind of like a AA battery, but it’s slightly larger.
It’s a cell called an 18650, and that’s battery speak for 18 millimeters in diameter and 65 millimeters in height. And this type of lithium ion cell was rumored to be used in the original Tesla Model S.
Dan Steingart: The idea that the cell that Bret is taking apart for you today would be the commodity cell when I was Bret’s age 20 years ago, seemed impossible. But through just brutally efficient engineering, it turned out to be the linchpin for enabling low-cost storage.
Melissa Lott: So Bret puts on these black protective gloves, and he starts to unravel the battery. And as he’s doing it, he’s unveiling these long strips of material that had been layered together in a tight coil.
Bret Schumacher: And so if I turn this on its head, or I guess on its belly, what it’ll look like is you see this white here, and it’s in almost a tree. It’s like a concentric ring. So this is what we call a jelly roll.
What we have actually is a really long foil of electrodes. So I can roll this all the way out, and it’s actually two electrodes that are just super, super, super long.
Melissa Lott: Dude, it’s like a fruit roll-up, but-
Bret Schumacher: Yeah, exactly. So I can roll this all the way out.
Melissa Lott: And when we rolled it all the way out, we saw four parts made up of different materials, which are sourced from all over the world.
Bret Schumacher: You have your cathode and your anode. Those are what you’re actually going to be storing your energy in. So your anode is your minus sign, if you’re thinking of a AA battery, and your cathode is your positive sign.
In these specific cells, we have what’s called nickel cobalt aluminum. Our active materials on our cobalt side, our positive side, that’s going to help store our lithium. On our opposite side, our anode, our negative side, is going to be graphite. That’s usually what is used in most conventional lithium ion batteries now.
In between those two is what we call a separator. Very simple. It keeps the two apart, right? Whenever we think of battery safety, one thing we don’t want to do is touch those two together. It’s like licking a battery, right? You get a little shock. So that’s the same thing. A separator is supposed to keep it safe on the inside, and that’ll look like a white polymer. It’s usually polypropylene, so a very common polymer.
And the way we need to make sure that these lithiums can travel between these two electrodes, so we use electrolyte. It’s not Gatorade. It is some sort of lithium salt dissolved-
Melissa Lott: It’d be so cool if it was, though.
Bret Schumacher: It’d be so awesome. Yeah. It’d be great. It wouldn’t be flammable too, which is awesome. But usually what it is, is some sort of lithium containing salt dissolved in solvents, like carbonates. It’s this clear liquid that dissolves the salt in, and that allows for the lithium ions actually to transport between the two.
Melissa Lott: All right. So we got an anode, a cathode, we got some polymer, and then we got a lot of lithium moving stuff around is basically what it’s like?
Bret Schumacher: Yeah, yeah. So when we’re charging a battery, what we’re actually doing is we’re moving lithium ions from one side of the battery to the other. So when the lithium moves over, that’s a positive ion. We get an electron, and that’s electricity. So that will go and power our cars, or our light bulbs, or something like that.
So the act of moving that lithium ion is actually pushing an electron through a circuit that we can actually harness for energy.
Melissa Lott: I’d never taken apart a battery before. So watching Bret uncoil all the materials was really cool to see. I’ll admit I was a tiny bit disappointed that I didn’t see any small explosions, but that’s a really good thing, because 20 years ago, explosions were much more common in lithium ion batteries. And the cell that we dissected, which was perfected by Tesla, was a big deal in terms of design.
Dan Steingart: When I started grad school, it was thought that the cell had to be much larger and be much fancier, and they kept on blowing up. In fact, they blew up so much that I wasn’t allowed to work on them at Lawrence Berkeley Lab, and my project had to change.
Six years later, after all of these batteries catching fire, the initial team at Tesla said, “Let’s just use cells that we know don’t explode,” which are cells that are in laptops. So the immediate predecessor to the cell that Bret took apart was used in a laptop. It looked exactly the same.
That pack was very expensive. The initial Tesla Roadster cost $150,000, and went maybe 150, 180 miles, right? So certainly not the mass market vehicle. But it set in motion the understanding that all of this stuff can be made much cheaper. And so that little cell, as premium and/or insignificant as it might be, a laptop battery designed for systems in 1996 turns out to be the crucial storage element of the energy transition.
Melissa Lott: When I was looking at this battery cell and talking to Dan and Bret, I was really hit by the scale of what I was looking at. There were about three feet of materials wrapped up inside a cell in the lab.
A Tesla battery pack hosts 10,000 of those cells just in a single car. In fact, EVs today can have hundreds and even thousands of lithium ion cells, and that means that the typical electric car on the road can have between three and four miles of really thin material, material that is mined, processed, and assembled all over the globe. So after our lab visit, I sat down with Dan in his office to run through how it all works, from beginning to end.
So if we break down how you make a battery, what are the big steps to actually taking a bunch of raw stuff and turning it into a battery?
Dan Steingart: Well, first you have to get the raw stuff. You’ve got to dig it out of the ground, you have to find the right things. Almost everything that’s in a battery by mass that is a significant amount of money is a metallic or a metal-like element.
Melissa Lott: The most commonly used minerals are lithium, cobalt, graphite, manganese, nickel, and copper, and it’s important that we know where these minerals come from. So 80% of lithium comes from Australia, China, and Chile, where 70% of cobalt comes from the Democratic Republic of Congo.
60% of manganese comes from South Africa, China, and Australia, and China sources 80% of the world’s graphite. Indonesia is the world’s dominant nickel producer, and Chile and Peru are the world’s top copper producers.
Dan Steingart: We get the minerals like we get any other metals, we mine them out of the ground, and then we have to take extra care in purifying them. And as batteries have found their way into bigger applications, cars, and now the grid, the cost of that purification has dropped substantially.
And this should have been predictable to me because I saw it happen 10 years earlier with silicon, but I said, “Oh. This can’t happen with batteries.” And it turned out that luckily it could, and so it’s a great thing.
Melissa Lott: And just like it does when it comes to silicon, for semiconductors and solar cells, China dominates here as well. In fact, China controls 85% of all critical minerals processing and refining. So after we mine and purify, we get to synthesizing the material as a part of the battery production process, which is incredibly sophisticated and precise.
Dan Steingart: The synthesis makes sure the elements are exactly in the right order. It’s not just good enough to have nickel, cobalt, and manganese in some ratio mixed together. Hope it works out. You want the nickel in one layer, and then a layer of oxygen, and then a layer of manganese, and then a layer of cobalt.
And there’s not the same amount of nickel, manganese, and cobalt in the electrode. And so nickel has to be every other layer, and the manganese and the cobalt will be interspersed every fourth layer, and then it could be every eighth layer and so forth. This level of control is frankly amazing.
Melissa Lott: This whole process makes me think of Goldilocks and the three bears, like getting it just-just right, except for we’re talking about getting it right at the atomic level?
Bret Schumacher: That’s right. Yep.
Dan Steingart: At the atomic level. And ideally, I would place every atom, but again, this has to be really cheap, and I have to make millions of tons of it a year. So with a computer chip, I don’t need millions of tons of computer chips. They can be these precious little gems relative to a battery. So I need the kind of control. Ideally, I want the kind of control I have in a computer chip, but made at the scale of dog food.
Melissa Lott: In case you aren’t keeping count so far in this episode, we’ve referred to jelly rolls, fruit roll-ups, Gatorade, the three bears, porridge, and Goldilocks, and now dog food. And we’ve got one more for you.
Now that we’ve mined, purified, and synthesized the material that we need, we have to layer it to make something that looks like baklava. And yes, I’m talking about that amazing and slightly sticky dessert that many of us have enjoyed.
Dan Steingart: Now, imagine you go to your favorite bakery, and you say you have to make kilometers of baklava. The separator spacing between the anode and the cathode is about 15 microns, and so not only are these layers precise within themselves, but they have to be precisely aligned over these distances.
Melissa Lott: So you’ve got mining, then you’ve got purifying, and then you’ve got a lot of different steps that go into a bucket that could be called manufacturing. And so at this stage, we have a cell. What happens next?
Dan Steingart: This is the part I love, because now we have the Legos. The cell is really hard to make, right? A lot goes into it.
Manufacturing know-how over the industrial revolution, from the industrial revolution to 2023, is about doing one thing, and doing one thing over and over again, and then having that be a building block.
Melissa Lott: At this point in the process, the difficult chemistry is behind us, and the assembly process is all about stringing the cells together into packs. Up to 10,000 cells in a single pack. It’s still pretty difficult, but you no longer need specialized clean rooms, and you can do it virtually anywhere.
Dan Steingart: You can ship these cells. They’re formed, they can be crated. And so while we want to produce more cells in the US, the fact that these cells can be made with these precisions in Korea, in China, in Japan. That’s where most of the manufacturing happens. There’s a good amount happening in the US. There has to be a lot more.
But once these cells are made, you can do what we call pack-out, making the modules, making the packs wherever. It’s really incredible.
Melissa Lott: So that is a snapshot of how lithium ion batteries are made. The process is really sophisticated, and every single step is expanding quickly as the world’s appetite for batteries increases. And that means that we’re going to need more of everything that goes under them.
Tom Moerenhout: The needs by 2040 are scary, but by 2030, they might be even scarier, because mining and processing takes a lot of time. So for lithium, that’s about seven to eight times more by 2030. Nickel and cobalt needs to double, and copper about 50% more, which are gigantic amounts.
Melissa Lott: Tom Moerenhout is a research scholar here at the Center on Global Energy Policy, and when Tom thinks about decarbonization, he looks at it through the lenses of trade, investment, and industrial policy.
According to McKinsey, the global supply chain for batteries in 2022 was around $85 billion. And by 2030, it’s expected to be worth $400 billion, thanks largely to demand for things like electric cars, and also storage on the electric grid. Whoever controls that supply chain has enormous power, so who currently wields it?
Tom Moerenhout: I think the obvious candidate is China, right? So China is definitely building geopolitical leverage with their control over those supply chains. I think other countries are currently reacting to it.
Speaker 11: China leads the EV race in part because it controls the supply chain of raw materials for batteries: 28% of the world’s lithium, 41% of cobalt, through stakes in mines on five continents.
Tom Moerenhout: The biggest concern is that they would use their supply chain dominance to basically gain geopolitical leverage. That’s the biggest challenge, and I think that that risk is very real.
Melissa Lott: Why should we care about China controlling so much of the world’s battery supply chains? Why does this matter?
Tom Moerenhout: So there are two sides to the answer. The first one is that we should care because the numbers are just insane. They’re staggering, right? On the refining side, China controls 80% of manganese refining, more than 70% of cobalt and nickel refining, more than 60% of lithium refining.
And then you get to the most valuable components: the cathodes, the anodes, right? China controls more than 75% of cathode production, more than 90% of anode production. And then eventually, with respect to battery cells, they control more than 75%. Now, those are a lot of percentages, but I basically didn’t say anything below 60%.
It wouldn’t matter if it was Australia or Canada or even Europe. Those numbers are scary because you are at risk of supply chain restrictions due to things like extreme weather events, local conflicts, right? That’s the first part. The second part is of course we should care because there are concerns that China indeed will use that leverage for geopolitical power.
Melissa Lott: China is perceived as almost a kind of boogeyman in international trade, and there are clear reasons why. It’s a state-directed economy that often uses businesses and export restrictions to retain its dominance in a wide variety of technology sectors, and batteries are no different.
So just as an example, China refines 90% of the world’s graphite, and at the end of 2023, China restricted graphite exports in an effort to protect its own supply. And this restriction sent battery makers scrambling.
But they can also be wrongfully bashed. So early on, China saw the strategic importance of technologies like solar and batteries, and they acted on it, building some of the most competitive technologies in the world.
Tom Moerenhout: China had a vision for a battery-powered future, and they built a very successful industrial policy around it. That is partially evidenced by control over supply chains, but also by technology.
If you look today at the best type of batteries, the best cathodes in the world, that is Chinese technology, and that has developed over a number of years, one, two decades at least, where they had a clear strategy, while other automakers and countries were, sorry for the pun, but asleep behind the wheel.
Melissa Lott: And while China dominates a lot of the world’s battery supply chains, many other countries, like China, are establishing their own trade restrictions. One example is the Inflation Reduction Act here in the US. This is America’s green industrial policy, and it gives some real advantages to US companies. I’m talking about domestic incentives that angered even America’s close European allies.
This green industrial race has added to an already tense trade relationship between the West and China, and batteries are one of the reasons why.
Tom Moerenhout: The last few years have been very, very, very bad, and there’s two drivers to that. First, you have battery prices that are plummeting, and that’s a great thing for the energy transition, right?
But all of a sudden, all automakers have to electrify in the United States, in Europe. If you don’t do it now, you fall behind, and you have no future in the electric vehicle industry. Which means that all of a sudden, all of the stuff that China was producing, we now really need a lot of it, right?
So that came at the same time as COVID, so you have a lot of stimulus packages, right? So you have a lot of subsidies that are now trying to encourage, “Hey. Let’s do more of that stuff: EVs, battery cells, cathodes, anodes, and so forth at home,” right?
And there, I think those two have gotten us to a level where there is a lot more sensitivity. And where we have seen the US stand up and say, “If you want to play a game of export restrictions, which you have been doing in the last basically decade, decade and a half, we can play ball,” right?
And so you have seen the CHIPS Act, where the United States actually prohibits recipients of subsidies to expand business in China. That is a very aggressive protectionist measure, in theory. And I think we’ve seen the same thing coming from China, where they say, “Look, now if you export gallium and germanium,” which are two very important elements for chips, “You need to have a license from the government,” which of course gives them the control over exports as well. And so there we have gotten now to the situation of pure competition.
Melissa Lott: I think it’s fair to state that China is not unique in using trade as a geopolitical tool. Lots of countries use it. Do you have a couple of examples that stand out to you actually of that point of countries using trade restrictions within, I mean, specifically the battery supply chains, as some type of geopolitical tool?
Tom Moerenhout: Absolutely. As a geopolitical tool, and I would say as a local industrialization tool, right? To jump on industrialization. So geopolitics is one thing. And for me, when you talk about geopolitics, a lot of it is also about achieving foreign policy goals, right? Or having a specific type of influence in that sector.
I would say with respect to industrialization, a lot of countries, what we see today are trying to use export restrictions to also add more valuable sectors to their economy. So if you are a nickel producer, what happened before is that you just export it. And the more value-added segments, like processing, cathode manufacturing, and so forth, were happening elsewhere. China specifically.
We now see countries doing that differently, right? So Indonesia, for example, implemented a nickel export ban over several years to force investment into Indonesia’s processing capacity, and that worked very well. Other countries are looking at that and are saying, “Hey, we might want to do the same thing.”
Several African countries, for example, Zambia and DRC, with respect to cobalt. Chile has recently nationalized its lithium industry. It’s a big word, but basically they’re going to require any private sector company to get into a joint venture with a Chilean state-owned enterprise. So we’re seeing a lot of countries doing that. Whether that will work, that’s a big question.
Melissa Lott: Can the energy transition actually happen on the timeframes and at the scale we’re talking about without cooperation with today’s major players in battery supply chains, including China?
Tom Moerenhout: No. Zero chance. Not at all. Not in a million years.
Melissa Lott: So it sounds like the future of battery supply chains is global. Is that fair?
Tom Moerenhout: Absolutely. Yeah. The future of battery supply chains is global for sure. We’ll see some more investment happening, right? Very similar to refineries. But the amount of demand we’re going to have for batteries is off the charts, and we’ll only be able to supply it with integrated global supply chains.
Melissa Lott: We need to electrify a lot of the global economy if we want to hit net-zero emissions by 2050. The International Energy Agency says that growth in annual electricity demand will need to double through the middle of the century, and that’s going to require a lot of batteries to electrify transport, and more batteries in our buildings, and even more batteries across the entire grid to balance out vast amounts of wind and solar.
And so this brings us to a really central question about the battery economy. Are we just going to swap out dependence on petroleum for dependence on critical minerals from China? Elon Musk has called lithium the new oil. Is he right?
Jason Bordoff: We’re going to need a huge increase in mining and minerals, but we should put it in proper context in the scale of global oil gas trade.
Melissa Lott: Jason Bordoff is the founding director of Columbia University’s SIPA Center on Global Energy Policy where I work, but I’ve known Jason since 2009 when we were working together in the White House, and I turn to him whenever I have questions about the geopolitics of the energy transition.
Jason was special assistant to President Barack Obama and senior director for Energy and climate change at the National Security Council. So he knows a thing or two about the oil and gas transition.
Jason Bordoff: Oil and gas are incredibly important strategic and economic commodities, and we’ve seen that time and again over the last 100, 150 years.
Melissa Lott: I spoke to Jason almost to the day of the 50th anniversary of the Arab Oil Embargo. It was striking that we were discussing China’s dominance in the clean energy sector right at that moment of that anniversary.
I wanted him to explain the differences and the similarities between the battery economy and the fossil fuel economy. When we think about the massive quantities of materials and minerals that we’re going to need to get to net-zero emissions, how do they compare to oil and gas?
Jason Bordoff: The global oil and gas trade is massive. One of the EIA’s scenarios that gets you sort of close to 1.5 degrees, if not all the way, has critical mineral revenue growing from 41 billion in 2019 to 263 billion by 2040. Again, that’s not all the way to 1.5, maybe 1.7 or 8.
By comparison, annual revenue from oil and gas this year is over $7 trillion, and a lot of this is just volume. The volume of critical minerals needed to power the global economy in the clean energy world are not as big as they are for oil and gas. Even on a net-zero pathway, critical minerals demand does not top 30 million metric tons in 2040, according to the EIA. And by comparison, to 30 million metric tons, oil production last year was 4.4 billion metric tons, coal was 7.5 billion tons.
So the global oil and gas industry is enormous, and yes. We’re going to need more mining, we’re going to need more global trade in these minerals, but it really doesn’t compare to how massive the global oil and gas business is.
Melissa Lott: And when we think about the geopolitics of all this, how are minerals the same and different from oil?
Jason Bordoff: I think there’s a lot of sometimes facile comparisons between oil security and mineral security. And you hear some politicians say things like, “I don’t want to go from dependence on the Middle East for oil to dependence on China for minerals.”
And there is something to that. We want to be concerned about the dominance of any one country, particularly one that is not always playing by free and fair rules of global trade, or that the US has significant and Europe has significant tensions with, like China.
But there are a lot of really important differences too. These are not the same from the standpoint of scale or from the standpoint of the energy security risks. Oil is the daily flow of energy. If we were to see any cutoff in the daily flow of oil, your ability to heat your homes in some parts of the country, to power our transportation sector would grind to a halt, or prices would go through the roof.
If you saw a disruption in critical mineral supplies, that wouldn’t affect your ability to get energy from, say, electricity, or to power your home. It would cause shortages, delays, cost increases in the supply chains for minerals. So critical minerals are an input to a manufactured good that can produce energy or store energy. It is not energy. We don’t burn critical minerals for energy.
And so if we had a disruption, and some types of critical minerals, you might see delays and much higher costs for batteries, you might have to wait six months or 12 months to be able to buy a new electric vehicle, you might see delays in solar panels. It wouldn’t affect your ability to charge your electric car today or get electricity from your solar panel today. So the risks to the macroeconomy are different than they are for oil.
Melissa Lott: It’s really important that we don’t downplay the risks in battery supply chains. Although the fossil fuel economy actually dwarfs the battery economy in volume, there are ways in which critical minerals create even more concerns about energy security than oil. And the biggest risk is concentration.
Jason Bordoff: So the top producers of oil in the world, the US, Saudi Arabia, and Russia, each produce roughly 10% of global crude oil supply. The top producer of lithium, of cobalt, of rare earths, each of the top producers, each of those produces more than half, and in some cases, up to 70% of global supply. So there’s much more concentration today in who produces these so-called critical minerals.
Melissa Lott: That concentration brings a whole bunch of concerns about supply shocks due to things like export restrictions, extreme weather, or even another pandemic. But when I spoke to Jason, he said that all things considered, he’d rather have the critical mineral security problem to solve than the oil security problem to solve.
Jason Bordoff: Oil is partly about technology, but very much about geologic abundance. Some countries have oil in the ground and some don’t. With critical mineral dominance that China has, most of that is about refining and processing. Those are manufacturing plants, and you can build those in lots and lots of places.
And so if we’re concerned about the dominance of any one country in the supply chain for geopolitical reasons, or just because you want to diversify, you might see a hurricane or a typhoon hit a certain country. You see that with Apple now, which is trying to increasingly build iPhones in India, not just China.
It’s just good business practice, especially we’ve been reminded after the pandemic, to diversify supply chains. We can build those refining and processing plants in many places.
Melissa Lott: I know that you were a part of the Aspen Institute report that was called A Critical Minerals Policy for the United States. And in that report, you and others outlined a bunch of recommendations for US policy around critical minerals.
Could you step us through just the most important steps that governments can take? And where, if anywhere, is there some low-hanging fruit that we could go ahead and move on soon? And what steps are actually going to be a lot more difficult?
Jason Bordoff: There’s a lot that the US government should be doing to expand critical mineral supplies and increase security of supply. First, we will need more we mining, and if you’re going to diversify supply chains away from countries like China, we’re going to need permitting reform to make it easier to do mining projects in the United States.
You need to do that incredibly carefully. We spent a lot of time in the report talking about the risks to Native American communities. Many of these resources are located within a short distance of federal lands, public lands, sensitive areas, Native American communities. And so you need to be really careful about how you do that.
But right now, it takes, according to the EIA, an average of 16 years to bring a new mining project to development. We have to shorten those timeframes. And we can also put in place measures on the demand side to reduce how much minerals we need through technology and through other measures that might actually allow us to get to the same place with fewer of these critical mineral inputs.
Second, we spent a lot of time in the report and engaging with tribal communities and Indigenous communities to make sure that any energy transition and any dramatic increase in critical minerals, mining, refining, and processing, is done in a way that is just and equitable. And the mining industry does not always have a great track record in this regard. So in particular, we talked about the need to clarify and enforce Indigenous sovereignty through the so-called concept of free prior and informed consent, with consent directly from impacted tribal communities, and how that needs to be a prerequisite for critical mineral development.
And then third, we talked about the importance of trade, that we can’t do this alone. We can’t do this on a path of isolationism and protectionism. We need a lot of partners. First, there’s almost no scenario where China does not remain in a very important part of these supply chains, albeit maybe less dominant than today. And you need to think about the tools to de-risk that, to reduce the risks of that dependence and put in place tools to deal with shocks, geopolitical or otherwise.
And then we need to diversify supplies. In order to do that, we need to build stronger partnerships with lots and lots of other countries in Africa, and Latin America, and Southeast Asia. That’s really important, because right now, protectionism is on the rise on both sides of the aisle and in many parts of the world.
And we’re going to need more free trade agreements and more free trade partnerships, not fewer, if we want to have a clean energy transition and diversify our clean energy supply chains. And if every country says, “We need to own the entire supply chain because we want all of those economic benefits,” it’s going to make the clean energy transition so much harder.
Melissa Lott: The battery economy is here, and it is shaping so many things. I’m talking about global trade, geopolitical relationships, domestic industrial policies, climate targets.
But battery supply chains also matter to every single one of us. There are millions of jobs at stake, and there are environmental and human costs to mining, and the availability of batteries has direct impacts on the health of the grid and the affordability of mobility and electricity. And people like Alessandra Carreon, who now serves as a public service regulator in Michigan, are grappling with the real-world consequences of how battery supply chains are structured.
Alessandra Carreon: I can’t imagine how we can justify ongoing investment in aging infrastructure that has served us to date, without thinking about the role of new and increasingly affordable technologies like batteries or energy storage systems to meet that charge, especially as they become more accessible and distributed, and therefore can help promote equitable, affordable access to more energy service customers. Yeah. It’s not that far removed from where I sit now to think about how battery supply chains matter.
Melissa Lott: Coming up this season, we’re going to visit all the steps in the battery supply chain, from mining, to processing, to manufacturing, to recycling. And we’ll ask, what are the benefits and trade-offs for the economy, the environment, and human wellbeing?
The Big Switch is produced by Columbia University’s SIPA Center on Global Energy Policy in Partnership with Latitude Studios. If you appreciate the reporting and storytelling that we’re doing here, you can rate and review the show at Apple and Spotify, and you can also send a link to a colleague or a friend who you think would like it. You can find all of our back episodes, along with this current season, wherever you get your pods.
This show is produced by Daniel Woldorff, Mary Catherine O’Connor, Anne Bailey, and Stephen Lacey. Anne Bailey is our senior editor; Sean Marquand wrote our theme song and makes the episode; and thanks to Austin Cope for field producing.
A special thanks to our Columbia team: Harry Kennard, Natalie Volk, Kyu Lee, Jen Wu, Liz Smith, and Tom Moerenhout. This show is hosted by me, Dr. Melissa Lott. Thank you so much for listening. Stay tuned for episode two next week.
â
