According to a recent analysis from Rice University’s Baker Institute for Public Policy, the worldwide rush to convert the globe to electric cars would produce supply chain complications that might stymie the alternative energy transition in the United States.
According to Michelle Michot Foss, a fellow in energy and materials at the Baker Institute, although Russia has tremendous clout in influencing oil and gas pricing, it pales in contrast to China’s position in numerous crucial sectors important to the energy transition.
According to the article she co-authored with Jacob Koelsch, a research intern at the Baker Institute, “it is becoming more evident that China has positioned itself as a gatekeeper to the energy transition, with significant consequences for strategic planning in the United States.”
Nickel sulfate is a significant element in cathode precursors for lithium-ion batteries, which are used in battery-powered automobiles. The privately held Tsingshan Holding Group has made considerable investments in Indonesia, which contains the world’s greatest nickel deposits. Tsingshan is the world’s biggest nickel syndicate, with operations that include nickel ore mining, nickel refining, purification, ferronickel manufacturing, crude steel manufacture, logistics, port management, trading, and shipping.
Between 2010 and 2021, global nickel use increased by over 90%. This increase was mostly due to steel production in China. According to the analysis, batteries presently account for around 7% of nickel demand, but this may climb to one-third of nickel demand by 2040, posing a supply chain disruption for the United States.
According to Foss, China’s role as a battery gatekeeper, as well as its stationary storage capacity in power grids and its development as the “manufacturer to the world” on energy, non-fuel minerals, and other critical commodities, poses significant problems. Its economic “soft power” approach has infiltrated commodities warehouses, electric vehicle manufacturing, and everything in between, giving Chinese companies enormous influence over numerous vital supply chain nodes.
She believes that government incentives may help improve electric car sales in the United States, but that plans to encourage EV adoption would be hampered by a lack of infrastructure. The United States is confronted with a variety of issues, including unstable raw material supply chains, limited battery production capacity, and a lack of infrastructure to power electric vehicles or complement intermittent wind and solar power sources.
“Unanswered problems regarding how to even pay electrification or road building and maintenance given diminished income from gasoline taxes,” according to Foss.
“How China’s supremacy will affect emissions reduction objectives in areas like the US and Europe remains to be seen,” she said in an age of unprecedented geopolitical conflict.
