By Mehmet Enes Beşer
The widespread adoption of clean energy technology in recent years has brought about considerable changes in electricity generation and in the extraction, processing, and trade of mineral resources. In ASEAN, an important supplier of minerals to global supply chains, the adoption of clean energy systems and devices like solar photovoltaic cells, wind power, electric vehicles, and battery storage facilities has had an increasingly prominent impact on mineral markets. While clean energy technology seeks to minimize carbon emissions and strengthen energy security, it creates increasing demand for strategic raw materials like nickel, lithium, cobalt, copper, rare earths, and aluminum. These are required for clean energy production, and thus increased demand has brought changes to the extraction, trade, investment, and environmental regulation of minerals in ASEAN member states. Clean energy transitions are intrinsically mineral-intensive.
Unlike fossil fuels, which rely on hydrocarbon-based sources, clean energy technology uses minerals to build infrastructure able to generate, store, and distribute clean power. Production of an ordinary electric car is estimated to use six times as many mineral inputs as an equivalent internal combustion car. One wind turbine alone contains several hundred kilograms of rare earth elements. Solar panels require polysilicon, aluminum, and copper in order to function at their maximum capacity. Lithium ion batteries used for electric vehicles and grid storage necessitate a supply chain of critical minerals including lithium, cobalt, nickel, and graphite. Many ASEAN countries find themselves strategically placed in these mineral supply chains.
Indonesia is the largest producer of nickel, one of the key minerals in high-nickel battery chemistry used in electric vehicles. With a long history of downstream processing in order to move up the industrial value chain, Indonesia is a leading nation in electric vehicle production. Following its 2020 export ban on raw nickel ore, Indonesia accelerated investment in its refining, smelting, and battery manufacturing industries in collaboration with Chinese, South Korean, and Western companies to build nickel processing facilities in Kalimantan and Sulawesi. Similarly, despite large reserves, the Philippines’ extraction of nickel has been relatively slow to evolve due to unfavorable regulations and the environment surrounding extraction.
However, the rivalry between China and ASEAN battery manufacturers has brought into the picture questions concerning increasing extraction rates. Mining activities are prone to deforestation, pollution of water resources, and displacement, thus making them politically volatile processes, especially within the context of protected environments and Indigenous peoples. The rise of the clean energy sector, although economically profitable, raises environmental and human rights issues. Before the political crisis, Myanmar was an important exporter of rare earth materials, particularly heavy rare earth materials, used in wind power generation turbines and electric motor permanent magnets. Much of the Myanmar rare earth export activity was either inadequately regulated or conducted through artisanal mining operations within Chinese supply chains.
Rare earth mining is concentrated in conflict zones, often under the terms of covert agreements. With the expected growth of demand for minerals in clean energy technology innovation, without regional cooperation, the problems of illicit trade, environmental degradation, and human rights violations will only become more serious. With relatively fewer mineral reserves in comparison with its neighbors, Vietnam may commence exploitation of rare earth deposits located in the northern highlands. The United States and the European Union will likely encourage Japan and the European Union to invest in Vietnamese joint exploration and refinement initiatives to ensure future supplies of rare earths. With Vietnam having well-developed wind and solar energy sectors, access to critical mineral sources will allow the country to reduce import rates and increase energy security. Thus, clean energy transition will change ASEAN’s place in global value chains.
Traditionally, many of the bloc’s mineral exporters relied heavily on low-value raw material extraction with little downstream processing. Development of high-level processing and manufacturing capabilities is necessary for the development of clean energy technology.
ASEAN finds itself in a unique position where investments into metallurgy and mineral processing will lead to a development of the regional value chain, but failure to do so might result in peripheralization and volatility of prices. At the same time, demand for minerals used in clean energy technology brings ASEAN closer to environmental governance. The process of open pit mining, tailings disposal, and the energy-intensity of mineral processing is associated with great costs for the environment. If not properly regulated, the negative effects of clean energy mineral extraction may outweigh any positive contribution to environmental sustainability. Likewise, the carbon footprint of mineral processing and extraction, especially within the nations that rely on fossil fuel sources for their energy needs, may offset any reductions made with clean energy products. Consequently, regional cooperation and legislation on sustainability become increasingly popular.
The lack of harmonization within ASEAN in regard to mineral extraction security, environmental impact assessments, and mineral traceability reduces the possibility of the formation of regional coordination over a sustainable transition to clean energy. The development of initiatives such as AMCAP and ASEAN Guidelines for Responsible Investment in Food, Agriculture and Forestry is merely a first step in securing minerals for its clean energy transition. The application of the best practices in terms of EITI, IRMA, and OECD due diligence guidelines could significantly improve ASEAN’s competitiveness and attract responsible investments.
In addition to environmental awareness, clean energy mineral competition has led ASEAN to become a target for other international actors concerned with ensuring their mineral supplies. China is the world leader when it comes to the processing stage of many critical minerals and is an active developer of ASEAN minerals and related infrastructure as part of the Belt and Road Initiative. On the other hand, the US and EU actively promote ASEAN mineral diversification, supply of technical expertise, infrastructure development, and market liberalization as an assurance of mineral supply.
This geopolitical struggle poses the problem of maintaining regulatory independence in relation to foreign entities without compromising sustainability. The diffusion of clean energy technologies is likely to change energy systems and mineral demand geographies. ASEAN may undergo its own structural transformation, changing its position in global energy and environmental frameworks. Depending on its ability to reconcile renewable energy goals, mineral resources, and green initiatives, ASEAN will either be reduced to an economic dependence on the developed countries or take a leading regional role in the global energy sector. Green economy is necessarily material economy, and a supply of mineral resources will be critical for ASEAN. However, green initiatives should not sacrifice their environmental foundations.
Minerals for green energy technologies should be obtained without harming the environment.