Energy Transition

Why supply chain resilience is key to the energy transition

Resilient and responsible mining supply chains are essential to the energy transition.

Resilient and responsible mining supply chains are essential to the energy transition. Image: Unsplash.

Maximilian Schnippering
Head, Sustainability, Siemens Gamesa Renewable Energy SA
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  • The energy transition is crucial in the fight against irreversible climate change.
  • Critical raw materials play a key role in expanding the renewables industry.
  • Resilient supply chains are needed to manufacture clean energy technologies.

In the fight against the climate emergency, knowledge of the dangers, the causes and the ways to slow, mitigate or halt the climate emergency have long been understood. The actions to implement these measures – to decarbonize energy systems and shift behaviour both in society and whole industries – have been piecemeal at best and not reflective of the level of threat.

The growth of the renewables industry and its work to make wind power one of the cheapest utility-scale forms of power generation all happened in less than 10 years. We know what is required to decarbonize the electricity sector, as well as how to get there. Governments have pledged significant build-out targets across Europe. The share of renewables in the global electricity generation has reached close to 30%, but we need to take the next step and install more turbines than ever, thereby synchronizing knowing and doing.

Have you read?

Energy transitions are the cornerstone of the fight against irreversible climate change. This means decarbonizing energy generation and decarbonizing almost everything, from air travel to internet provisions.

Furthermore, we know how to deliver a sustainable energy transition for the power sector. Groundbreaking work by manufacturers within the wind power industry has not only accelerated the wind turbine recyclability close to 100%, but also delivered accurate estimates of all the material needs for a full energy transition in Europe.

Powering the wind industry

A wind turbine requires only a limited number of raw materials for its construction. These range from the commonplace to the rare, from centuries old to newly discovered. Furthermore, the quantities needed to deliver the EU energy transition are known and manageable.

For example, steel has been around for approaching 4,000 years and is one of the largest industries worldwide. It is also the most abundant commodity in wind turbines, more than all the other raw materials combined. To deliver Europe’s energy transition through onshore and offshore wind turbines across all European nations by 2050, 120 million tons of steel would be required. This is a remarkably large amount to conceive, but it’s just 6% of annual global steel production.

At the other end of the scale are rare earth metals. Misleadingly named, rare earth metals are relatively abundant, though mining and refining them to the point of use is complex and difficult. For a successful energy transition in Europe by 2050, only 0.1 million tons of rare earth metals would be required. However, this represents 36% of the global production volume for one year.

Since the required level of rare earth metals is a significant proportion of current global production, and the wind industry is not the only competitor for it, diversification and resilient supply chains are essential.

Accordingly, the wind industry is promoting the development of responsible mining activities across the globe to foster supply chain resilience and a sustainable growth of mining activities.


How is the World Economic Forum facilitating the transition to clean energy?

Developing resilient supply chains for energy transition

Recently, for example, agreements with rare earth mining companies based in Australia were concluded, all of which are critical to developing resilient supply chains. This is because, over the past years, multiple threats to supply chain disruptions have emerged. Whether it’s the COVID-19 pandemic, the war in Ukraine or catastrophic events related to climate change, supply chains are becoming more vulnerable, and a clear supply chain localization concept is needed to manage the factors beyond a company’s control.

At first sight, supply chains can be successfully diversified by removing the reliance upon a single corporation. However, truly successful supply chain diversification requires factors ranging from geo-political vulnerability to shipping routes. Without these considerations, vulnerabilities – such as the benign but inconvenient lodging of a ship in the Suez Canal, to the difficult possibility of a government refusing to grant export licences – threaten supply chain stability.

The implications of disruption are clear: without a supply chain, there’s no manufacturing. Without manufacturing, there’s no energy transition. And without the energy transition, the climate emergency continues. This rapidly became understood by the industry and mitigations were put in place.

Next to steel and rare earth metals, wind turbines mainly consist out of copper, aluminium, fibres and some minor quantities of other materials. Here the same holds true: the amounts of raw materials needed are comparably low. However, raw material availability and processing capacity will be crucial to sustain a successful energy transition. Moreover, resilient and responsible mining supply chains will be essential.

Having outlined the parameters, threats and opportunities known, now everything necessary can be done.

This blog is part of a series, written by members of the Securing Minerals for the Energy Transition (SMET) initiative, led by the World Economic Forum. The initiative seeks to identify and characterize the risks related to the increasing gap between the demand and supply of critical minerals needed for the energy transition and to propose strategies for their collective management.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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Energy TransitionClimate Action
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