Critical minerals and the clean energy transition: the role of innovation across the supply chain

Eugenie Dugoua and Joëlle Noailly

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Reaching net zero emissions by 2050, a goal now endorsed by many countries, requires the rapid and massive deployment of clean energy systems. However, this transition hinges on a new form of dependence. The technologies required to decarbonise depend on a small set of critical minerals like lithium, cobalt and rare earth elements that have highly concentrated supply chains marked by heavy environmental footprints and challenges regarding labour and community rights. This paper presents a simple framework to explore how innovation can strengthen critical mineral supply chains. It examines technological, digital and organisational solutions across the full lifecycle — from mining exploration and processing, to manufacturing, reuse and recycling. The authors examine what drives or hinders innovation, including price volatility, industrial policy, environmental regulation, firm strategies (such as vertical integration), market size and rising demand from competing sectors like AI and defence. They highlight that a portfolio of innovations is essential for reconciling the growing demand for critical minerals with climate, economic and geopolitical priorities. Innovation can reduce the costs of reform, allowing governments to pursue security and sustainability simultaneously. The challenge is not simply to secure more materials but to build a system that is resilient, circular and adaptive.

Keywords: critical minerals; innovation; clean energy transition; supply chain; mining; rare earth elements; batteries; industrial policy; circular economy (search for similar items in EconPapers)
JEL-codes: L72 O31 Q55 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2024-12-04
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