COP29: The real rare earth opportunity in Azerbaijan

The world’s transition to a low-carbon economy depends heavily on rare earth elements (REEs) and critical minerals essential for renewable energy technologies and electric vehicles.  However, their extraction and supply are fraught with geopolitical tensions, environmental concerns, and socio-economic issues.  As countries strive to meet their climate commitments under the Paris Agreement, COP29 offers a unique opportunity to prioritize and address the geopolitical, environmental, and economic challenges associated with these critical energy transition resources. COP29 can play a pivotal role in shaping the future of rare earth elements and critical battery minerals by fostering improved international cooperation, promoting sustainable practices, enhancing technological innovation, and encouraging effective economic and policy measures.  Addressing these issues at COP29 will help ensure a sustainable and equitable energy transition, secure supply chains, and mitigate environmental impacts. In fact, the real rare Earth opportunity in Baku is COP29’s potential to advance global energy transition mineral diplomacy and cooperation which would have far-reaching implications for the world’s climate goals and future sustainability of green technologies.

Introduction

As the global climate emergency intensifies, there is a growing recognition of the importance of energy transition minerals in mitigating climate change and fostering sustainable development. Rare earth elements, along with other critical minerals such as lithium, cobalt, and nickel, are indispensable for the production of clean energy technologies, and demand for these materials is projected to increase by almost 400% by 2030 and more than 1,500% by 2050 as countries implement their climate action plans.  Key minerals include:

• Rare Earth Elements (REEs): Neodymium, praseodymium, and dysprosium are essential for permanent magnets used in wind turbines and electric vehicles.

• Lithium: A key component in lithium-ion batteries for electric vehicles and energy storage systems.

• Cobalt and Nickel: Critical for battery technology, particularly in high-capacity and long-life batteries.

• Copper and Aluminum: Used in massive amounts in power transmission lines.

Here are the key areas in which COP29 can advance global energy transition mineral diplomacy and cooperation:

Supply chain security and geopolitical considerations

The production and supply of REEs and critical battery minerals are heavily concentrated in a few countries, particularly China, which dominates the global market. This concentration poses risks to the global supply chain, making it vulnerable to geopolitical tensions, trade restrictions, and supply disruptions.

Discussion Points and Potential Actions at COP29:

• Diversification: Catalyzing strategies to diversify supply chains, including the development of alternative sources in other regions, recycling initiatives, and the use of substitutes.

• International Cooperation: Promoting international agreements and partnerships to ensure a stable and secure supply of energy transition minerals, fostering cooperation between producing and consuming countries. This may include establishing strategic reserves to buffer against supply disruptions, and initiating transparent supply chain monitoring mechanisms. COP29 can also prioritize the discussion of partnerships between producing and consuming countries to enhance cooperation and reduce dependency on single suppliers. Such collaborations could include joint ventures, technology transfer agreements, and shared mining and processing infrastructure investments.

• Environmental Standards: Establishing global environmental standards for extracting and processing REEs and critical minerals to minimize ecological impact and ensure sustainable practices. 

• Sustainable Development Goals (SDGs): Aligning critical mineral extraction and usage with the SDGs to ensure that mining activities contribute to sustainable development. 

• Transparency and Accountability: Implementing transparency measures and accountability mechanisms to ensure responsible sourcing and ethical practices in the supply chain.

Environmental and social impact

While the commercialization of energy transition minerals can jumpstart economic growth in the developing countries where they are found, the extraction and processing of REEs and critical minerals often has significant environmental and social impacts, including habitat destruction, water pollution, and human rights abuses. For example, extracting a single tonne of lithium takes two million liters of water, but some fifty percent of global copper and lithium production is concentrated in water-scarce areas.  

Discussion Points and Potential Actions at COP29:

• Sustainable Mining Practices: Encouraging the adoption of environmentally sustainable mining practices and technologies to reduce the ecological footprint of mineral extraction, including:

• Environmental Standards: Advocating for the development and enforcement of global environmental standards for mining and processing activities. These standards should aim to minimize ecological damage and ensure responsible waste management.

• Certification Schemes: Supporting the implementation of certification schemes for sustainably sourced minerals, similar to the Kimberley Process for conflict diamonds. These certifications can help consumers and companies make informed choices and promote ethical sourcing practices.

• Corporate Responsibility: Promoting corporate social responsibility (CSR) initiatives to ensure that mining companies adhere to ethical labor practices and contribute to local community development.

• Transparency and Accountability: Implementing measures to increase transparency and accountability in the supply chain, ensuring that materials are sourced responsibly.

• Social Issues: Spotlighting the fact that mining activities often occur in regions with weak regulatory frameworks, leading to high risks of labor rights violations, displacement of communities, and conflicts over resource control.

Technological innovation and circular economy

Advances in renewable technology can improve the efficiency of REE and mineral usage, allowing mineral users to do more with less.  Additionally, industry must find ways to use minerals longer, facilitating the development of a circular economy that can reduce reliance on new mining by repairing products more efficiently and recycling existing materials.

Discussion Points and Potential Actions at COP29:

• Recycling and Reuse: Scaling up efforts to recycle REEs and critical minerals from electronic waste and other products, thereby reducing the demand for new extraction.

• Substitution and Efficiency: Investing in research and development to find alternatives to REEs and critical minerals and to improve the efficiency of their use in green technologies.

• Innovation Hubs: Supporting the creation of innovation hubs focused on developing new technologies for recycling and efficient use of critical materials.

• Policy Support: Encouraging policies that support circular economy initiatives can help reduce the environmental footprint of critical minerals and ensure their sustainable use (World Economic Forum, 2020).

Economic and policy measures

Effective economic and policy measures are crucial to ensure the sustainable supply and use of REEs and critical minerals.

Discussion Points and Potential Actions at COP29:

• Incentives for Sustainable Practices: Implementing economic incentives such as subsidies, tax breaks, and grants for companies that adopt sustainable mining and processing practices.

• Regulatory Frameworks: Developing robust regulatory frameworks to govern the extraction, processing, and trade of REEs and critical minerals, ensuring compliance with environmental and social standards.

• Market Mechanisms: Exploring market-based mechanisms such as carbon pricing and trading schemes to internalize the environmental costs of mineral extraction and encourage sustainable practices.

International cooperation and governance

COP29 can foster new multilateral frameworks that reflect the growing importance of energy transition minerals.  

Discussion Points and Potential Actions at COP29:

• Global Agreements: Facilitating the development of international frameworks and agreements to ensure the stable and secure supply of critical minerals. These frameworks can address trade barriers, supply chain transparency, and conflict resolution.

• Establishing Dialogue Platforms: Creating platforms for dialogue among key stakeholders, including governments, industry, and civil society, to address the challenges and opportunities associated with REEs and critical minerals.

Conclusion

By advancing energy transition mineral diplomacy and cooperation, COP29 presents a rare Earth opportunity to address the complex challenges associated with rare earth elements and critical battery minerals.  By fostering international cooperation, promoting sustainable practices, enhancing technological innovation, and implementing effective economic and policy measures, COP29 can play a pivotal role in ensuring the sustainable and equitable management of these essential energy transition resources.  With the right policies and safeguards, extracting these urgently needed minerals could kick off a new era of sustainable development, creating jobs and helping countries reduce poverty.  Addressing the geopolitical, environmental, and social aspects associated with these critical minerals at COP29 will ensure a sustainable and equitable energy transition, secure supply chains, and mitigate environmental impacts. The outcome of the Baku discussions will have far-reaching implications for global climate goals and the sustainability of green technologies.