For a while now, some politicians have been warning that China would use its position as a global supplier of minerals needed for electric vehicles (EVs) to leverage influence against nations that are pursuing EVs. In a not-at-all-surprising development, China has moved to limit its exports of metal needed for EV batteries. This follows a decision made earlier this year to limit exports of other minerals. Past Low-Energy Fridays have covered why this creates an “energy security” risk as well as what to do about it, but, this week, we will explain how this makes achieving a global clean energy transition more difficult.

In analyses explaining how to decarbonize energy, the predominant solution to light-duty vehicle (LDV) emissions is electrification. The most prominent net-zero global emission analysis is the International Energy Agency’s (IEA) Net-Zero Emission (NZE) study, which estimated that 86 percent of cars, 79 percent of buses, 84 percent of vans and 59 percent of heavy trucks would have to be electric by 2050. This study isn’t alone, and a meta-analysis of 177 net-zero emission scenarios stated that “electrify everything” was the predominant solution for LDVs.

These studies, though, sometimes run into problems when analyzed further. For example, net-zero emission scenarios are not predictions. The authors are tasked with getting to a predetermined outcome, and the exercise itself requires authors to assume how LDV emissions—which are about 10 percent of global emissions—can be eliminated. But because there are currently very few commercially viable, low-carbon LDV solutions and electrification is the most advanced and scalable at present, analysts simply assume that it is how LDV emissions can be abated. But what is outside of the scope of these analyses—and the real problem—is the question of whether it is economically feasible to reach these targets. This is where China and its minerals come in.

The potential mineral demands for a global electrification of LDVs is enormous, and perhaps severely underappreciated. To achieve the IEA’s NZE, production of energy-related minerals would have to increase by 40-fold, and much of that production would have to come from China. A policy push for EVs, such as the domestic EV subsidies or the Environmental Protection Agency’s (EPA) proposed zero-emission vehicle (ZEV) mandate, increases the demand for EV minerals globally. If production does not keep pace with demand, or if China restricts the export of those materials, the price of EV batteries will rise, which delays the point at which EVs would be more economical than combustion-engine vehicles.

Even if the United States were to force some transition to EVs through policy, it is important to keep in mind that climate change is a global phenomenon, and other countries are unlikely to adopt the same policies as the United States if they incur costs. There is also a problem with domestic policy where proposed rules, like the EPA’s ZEV rule, are justified based on hypothetical mineral production and cost reductions for EVs that may or may not materialize.

From a policy perspective, the real takeaway is that the world is a lot messier than net-zero analyses hypothesize, and Chinese mineral export restrictions are just the latest wrench in the works. For this reason, policymakers should always push for agnostic methods of achieving pollution abatement rather than focusing on specific solution sets.

It’s still too early to see how much of the global LDV market will comprise EVs, but the latest news highlights just how many things must go right to track with the IEA’s projections.

This represents the fundamental challenge with forward-looking net-zero analyses; by their nature they must simplify the complexities of the real world to show how an end-state can be achieved, and, as a result, make policy solutions appear deceptively simple. This is also why market-based policy, which can adapt to developments like a Chinese mineral embargo, is so much more effective than centrally planned policy that must rely on imperfect analyses.

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