Prices of lithium carbonate have risen almost tenfold this year. Cobalt is up by 150pc, and nickel futures have almost doubled. The IEA calculates that the “cathode materials” in battery packs for electric cars have jumped from 5pc to 20pc of the total cost in less than a decade.
Nato secretary general Jens Stoltenberg issued equally stark warnings in Davos over the risks of sleep walking into an invidious dependence on China, arguing that the invasion of Ukraine had exposed the pitfalls of naïve free trade with antagonistic powers that do not pull their punches. There must be no equivalent of the Nord Stream 2 pipeline debacle in dealings with Beijing.
“This is not just about Russia but also about China, another authoritarian regime that does not share our values, and that undermines the rules-based international order. We should not trade long-term security needs for short-term economic interests, “he said, implicitly signalling that Nato is evolving into a global military alliance aimed at containing Xi Jinping’s “wolf warrior” China.
“We all have learned a lesson: free trade has brought a lot of prosperity and wealth to all of us but it has a price. I am not arguing against trade with China, but the control of 5G networks is of vital security importance, and we can’t just say that in the interest of profits and free trade we open up the networks, ”he said.
“Nato’s technological edge has always been fundamental for our security. Now we see new and destructive technologies – artificial intelligence, quantum computing – that are integrated into all the new weapons systems. If we just share that technology we may earn some money … but it’s dangerous, ”he said.
The EU has hyper-ambitious goals for green energy as it seeks to replace all imports of Russian gas under its € 200bn post-invasion energy plan, which raises its renewable target to 45pc of total energy supply by 2030. Planning permits will be rushed through in one year instead of an average of seven to eight years.
Frans Timmerman, the EU’s green deal chief, said in Davos that the Mediterranean region would ultimately become the center of the world’s clean-energy system, with green hydrogen from extremely cheap solar and wind in North Africa providing green hydrogen at vast scale. “The energy is almost limitless,” he said.
Over the next eight years, Europe aims to double solar capacity to 600 gigawatts (GW) – much of it on home rooftops – and double wind power to 480 GW, as well as putting 30m electric cars on the road.
This requires a staggering amount of critical minerals and a complex global supply chain that is almost entirely beyond the EU’s strategic reach. It must do this in competition with China, which is electrifying its economy at an even faster pace.
Zhigang Zhang, head of China’s state grid, said in Davos that his country is making an epic push for renewable expansion. It is the central thrust – along with nuclear power – in Xi Jinping’s plan to break dependence on seaborne energy imports and develop safer home-grown sources. “The scale is growing exponentially,” said Mr Zhigang.
Daniel Yergin, energy guru at IHS Markit, said the mystery is where the world will find the copper for so much electrification. “Electric vehicles need two-and-half to three times as much copper as a combustion engine car. There is a gap. How is it going to be closed? ” he said.
Demand creates its own supply in the end, within limits, but Europe has woken up very late to the global scramble for critical materials. It will inevitably find itself down the pecking order as supply tightens. Brussels is issuing large plans and launching all kinds of alliances but may struggle to deliver on its green deal targets.
Some have likened its new penchant for collective purchases of supplies – first vaccines, then natural gas, and now minerals – to Soviet centralization of the economy, akin to Gosplan methods of management, and all in the name of rational efficiency.
This may beat down the average price, but as became clear in the vaccine saga, the EU can all too easily lose sight of the main imperative in the process. The reflex has its own latent dangers.