The green revolution’s inconvenient truth about mining

If we are to deliver on the promise of renewable energy, we need to lift the veil off corrupt governments, dirty environmental practices and atrocious labour violations. The green revolution must come to terms with this inconvenient truth and address it head on.

The global demand for clean, renewable energy is increasing at an unprecedented pace, driven by advances in technology and declining costs. This is a story of innovation and inspiration, yet also graft and exploitation. 

Media reports detail stories of child miners toiling in unsafe conditions, polluted landscapes and predatory investors. But it does not have to be this way. 

The multi-country Energy Resource Governance Initiative (ERGI) provides countries with best practice tools so they can contribute to clean energy demand while ensuring proper standards in the mining sector. 

In a decade, the world’s middle class is projected to grow from 3.5bn today to 5.3bn. People in the middle class will demand cleaner forms of energy. This is certainly a good thing, as cleaner energy improves quality of life and the productive capacity of countries. However, some clean energy technologies are mineral intensive. 

For example, the number of electric vehicles is projected to increase from 5m today to 125m in a decade, and they use four times or more the minerals found in a normal car. 

The World Bank recognises this issue with projections that the deployment of battery technologies could increase mineral demand by more than 1,000 per cent. 

Mining is essential. Even renewable energy technologies require that a shovel hits the ground at the beginning of their lifecycle. According to the International Renewable Energy Agency, “the largest reserves of metals and minerals required for renewable technologies are found in weak states with poor governance records”. 

International media outlets are increasingly reporting on the dark side of these technologies — abhorrent, slave-like conditions, irreplaceable environmental destruction and widespread corruption. Yet, the well-intentioned drive to reduce greenhouse gas emissions rarely acknowledge these perverse results on the ground. 

This would be the worst of all outcomes. Countries would lose investment from responsible companies and feel forced into deals with predatory actors. 

The lure of bribes and quick loans can trap future generations under the weight of pervasive corruption and high interest rates, preventing a resource-rich country from attaining the long-term benefits of its resource endowment. 

Resource-rich countries would prefer to do business with world-class operators but often lack the tools to build sustainable mineral sectors. To close this gap, the United States, Canada, Australia, Peru and Botswana formed ERGI to help countries realise their ambition with best practices in the mining sector. 

We recently launched an online “Toolkit” that provides practical, actionable steps for countries to better understand their resource endowment. It describes options for mineral leasing, and details mineral asset classification using prevailing standards. 

As noted, the demand for clean energy is rocketing while support for mining is dropping. The Toolkit seeks to arrest this trend by showing governments how to set up the right enabling conditions for gaining a social licence to operate. 

The ERGI Toolkit is now publicly available, so interested companies and consumer groups can also engage transparently in advancing governance principles, sharing best practices and encouraging a level playing field in the energy minerals process. 

The US encourages others to join us in raising awareness of the scale of this issue and, if not properly managed, the very real challenges presented by the demand for these minerals. 

We should all consider how and where minerals are sourced when making purchasing decisions in the energy sector. Did they come from a mining process that is environmentally damaging or exploitative in labour practices? Did they fuel conflict or corruption? Are they supporting local communities? These questions should concern us deeply, because the environmental and societal harms from mining done poorly are serious and near term. 

Francis R Fannon is the assistant secretary, Bureau of Energy Resources, US Department of State

The Commodities Note is an online commentary on the industry from the Financial Time