Sustainability Community

HI All,

I hope this is a suitable post to add, I thought this is interesting given sustainability and Net Zero targets go hand-in-hand.  I watch a lot of documentaries on a variety of subjects, but I follow this one particular channel on YouTube that centres around the subject of geopolitics.  This video discusses how the lofty aspirations of reaching net zero and the technological revolution required to meet this is likely to be insurmountable, given what drives this is raw materials required to manufacture the technology we are pinning our hopes on (i.e. renewable energy, batteries, hydrogen...etc).  The point the video is making that the technology required to make this dream a reality isn't there yet and that there isn't enough raw materials to meet this demand (as it currently stands), and if it was the consequences of extracting all of this would effectively destroy the ecosystems of many countries, as current mining practices do not prioritise the protection of environment above all else.  But also looks at the geopolitical angle of how China effectively controls the mines that produce most of these so called "green minerals" that are required in the technology, and as we ramp up production it will drive up demand and will likely cause resource conflicts between key global powers.

It would be interesting how given what he is suggesting, how can the AM industry effect change that will facilitate reaching this goal? because clearly there are some significant hurdles 

https://www.youtube.com/watch?v=iibsrDXdEos&t=337s

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James MacLeod-Nairn
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Hi James, thank you very much for posting and sharing! Very important theme to think about, yet another dilemma humans have to overcome.

Just to add on the tangency: I have met several mining companies in the last two years (sustainability and R&D departments mostly). They seem to have their own hurdles (on all continents) in terms of permitting, rising costs and other issues etc.  Came across these two articles on FT which claims that China is so far winning the global scramble for metals needed in the green transition. This other article maintains that securying metals supply for the US will be a tricky business.

Look forward to other members views on the issues that you have raised, thank you again!

aya

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Aya Pariy
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Thanks Aya,

just to note coincidentally, Tata have just confirmed they will go ahead with the second gigafactory in the UK to supply batteries for their vehicles (news article).  Tata have a significant vested interest in the UK market, for example they have a stake in the port talbot steel factory(not far from where I come from) .  The only problem is that the vast majority of gigafactories are in continental Europe as the UK's car market is too small and not economically viable, but also each gov is competing against the other is some regards to entice these projects to be built in their respective countries.  The point that I am trying to make is that yes, companies like Tata are enticed with sweeteners by the UK gov to set up shop here, so that it encourages investment, benefits the UK economy and supports jobs.  But clearly, the failure of Britishvolt, a gigafactory startup that collapsed after securing pledges of £100m in government support, has cast a shadow over the future of carmaking in Britain.  This is especially important as with the gov's ban on new petrol and diesel cars by 2035, what this show is that we are woefully behind the curve in terms of making the significant investment in the supply chain to manufacture electric vehicles.  In combination with the lack of raw materials and the access to them, companies like tata etc.. are not making enough investments that usually take 10-15+ years for the projects to go online in the UK, Clearly companies still put the economic viability of any decision above all else and with only the full support of governments very little will change in a meaningful amount of time, especially when we are talking about the so called green revolution of vehicles (again there is a debate that such things will just offset the environmental damage to other parts of the world, https://www.npr.org/sections/goatsandsoda/2023/02/01/1152893248/red-cobalt-congo-drc-mining-siddharth-kara).  Clearly there is still an ongoing battle in terms of shareholder activism/stewardship and the self interest of companies putting profit above all else and not taking into consideration the complex variables that their decisions have on communities and the environment.

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James MacLeod-Nairn
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Original Message:
Sent: 18-07-2023 16:34
From: Aya Pariy
Subject: The Reality of meeting 2050 Net Zero Target!

Hi James, thank you very much for posting and sharing! Very important theme to think about, yet another dilemma humans have to overcome.

Just to add on the tangency: I have met several mining companies in the last two years (sustainability and R&D departments mostly). They seem to have their own hurdles (on all continents) in terms of permitting, rising costs and other issues etc.  Came across these two articles on FT which claims that China is so far winning the global scramble for metals needed in the green transition. This other article maintains that securying metals supply for the US will be a tricky business.

Look forward to other members views on the issues that you have raised, thank you again!

aya

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Aya Pariy
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Good points from you both and I'm very much of the same mind to the original post: there is a lot of wishful thinking and perhaps a lack of rigour in detailing how the long run transition will occur.

It is clear that in some sense there is no totally clean energy given given the raw materials needed for batteries, solar panels etc as you point out 

A multi-faceted approach that includes nuclear, and less polluting fossil fuels such as natural gas, with, for example, producers getting to net zero on their scope 1 and 2 emissions through electrification and an end to practices such as flaring, seem a more realistic approach.

I also think we should try to avoid over-determining which technologies we will use as no-one can really know what the next decades of innovation will bring, and insisting, for example, that green hydrogen must be pushed seems a mistake to me.

Just my 2c and I'm very much here to learn from the community if anyone reads what I've written and finds inaccuracies.

Thanks,

Stuart.

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Stuart Fox
Portfolio Manager
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Original Message:
Sent: 18-07-2023 16:34
From: Aya Pariy
Subject: The Reality of meeting 2050 Net Zero Target!

Hi James, thank you very much for posting and sharing! Very important theme to think about, yet another dilemma humans have to overcome.

Just to add on the tangency: I have met several mining companies in the last two years (sustainability and R&D departments mostly). They seem to have their own hurdles (on all continents) in terms of permitting, rising costs and other issues etc.  Came across these two articles on FT which claims that China is so far winning the global scramble for metals needed in the green transition. This other article maintains that securying metals supply for the US will be a tricky business.

Look forward to other members views on the issues that you have raised, thank you again!

aya

------------------------------
Aya Pariy
------------------------------

A knotty issue James and I agree with Stuart's point on a multi-faceted approach to energy commodities and materials.

With electrification of nearly everything energy demand is going up (7x by 2030, IEA) and needs to to transition away from a fossil fuel economy. Commodities and materials for electrification are crucial. Given energy is a social good that lifts countries out of poverty and fuels global GDP growth, it's the cost of that energy we need to better understand across all capitals: natural capital (environment & resources), social capital (forced labour) and financial capital.

Innovation is the key and the gaps left behind are trade-offs. The role of AMs I think is 2-fold, firstly, allocation of capital to innovators and second investee engagement with issuers to reduce the gaps and therefore lessen the necessity of trade-offs. On allocation of capital we can nab the well-used maxim reduce, re-use and recycle:

Reduce – investment in efficiency boosting innovation that reduces the quantity of material input per kW of output. OxfordPV perovskite solar panels does this by adding another layer of irradiation increasing solar power output by 75% and reducing the relative number of panels as well as the input materials per kW.

Reuse – repurpose EV batteries that aren't up to grade for cars into domestic batteries to store the power generated from your perovskite solar. Someone somewhere is doing this…

Recycle – extract material from old kit that has no viable use. A Tesla co-founder's Redwood Materials does just this on everything from key fobs to laptops and more. A recent funding round valued Redwood at $5bn.

On stewardship I'd offer building an engagement strategy around transition efforts: Energy firms increasing capex to renewable energy generation and storage and away from fossil fuels (sadly, the opposite of what BP did Q1 this year) and for mining companies to shift from or lessen coal extraction and move into lithium etc (in a sustainable manner!).

I'm a hatchling on this forum and already amazed by everything CFA UK is doing in this area; lots to do and no reticence to get stuck in.

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Oliver King
Sustainable Investing Data Solutions
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Indeed - agree with the above re: materials and resources are crucial to support the energy transition and investment in new technologies (e.g. demand for copper, lithuim, cobalt etc). 

Good article in the FT the other day from Adair Turner,  Myths are clouding the reality of our sustainable energy future_FT article and related report from Energy Transition Commission. Notes that there's enough long-term supply for key minerals from known resources easily exceeds total future requirements to support new technology and transition from fossil fuel to decarbonise electricity production to renewable sources (and need to increase and diversify supply of these materials and resources).

See link to main report Material and Resource Requirements for the Energy Transition and Exec summary/infographics below:

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James Doyle
Director, Green Finance, Investment Management
------------------------------

Original Message:
Sent: 20-07-2023 17:01
From: Oliver King
Subject: The Reality of meeting 2050 Net Zero Target!

A knotty issue James and I agree with Stuart's point on a multi-faceted approach to energy commodities and materials.

With electrification of nearly everything energy demand is going up (7x by 2030, IEA) and needs to to transition away from a fossil fuel economy. Commodities and materials for electrification are crucial. Given energy is a social good that lifts countries out of poverty and fuels global GDP growth, it's the cost of that energy we need to better understand across all capitals: natural capital (environment & resources), social capital (forced labour) and financial capital.

Innovation is the key and the gaps left behind are trade-offs. The role of AMs I think is 2-fold, firstly, allocation of capital to innovators and second investee engagement with issuers to reduce the gaps and therefore lessen the necessity of trade-offs. On allocation of capital we can nab the well-used maxim reduce, re-use and recycle:

Reduce – investment in efficiency boosting innovation that reduces the quantity of material input per kW of output. OxfordPV perovskite solar panels does this by adding another layer of irradiation increasing solar power output by 75% and reducing the relative number of panels as well as the input materials per kW.

Reuse – repurpose EV batteries that aren't up to grade for cars into domestic batteries to store the power generated from your perovskite solar. Someone somewhere is doing this…

Recycle – extract material from old kit that has no viable use. A Tesla co-founder's Redwood Materials does just this on everything from key fobs to laptops and more. A recent funding round valued Redwood at $5bn.

On stewardship I'd offer building an engagement strategy around transition efforts: Energy firms increasing capex to renewable energy generation and storage and away from fossil fuels (sadly, the opposite of what BP did Q1 this year) and for mining companies to shift from or lessen coal extraction and move into lithium etc (in a sustainable manner!).

I'm a hatchling on this forum and already amazed by everything CFA UK is doing in this area; lots to do and no reticence to get stuck in.

------------------------------
Oliver King
Sustainable Investing Data Solutions
------------------------------

Really useful thread, thank you all.

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William Goodhart
Chief Executive
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Original Message:
Sent: 21-07-2023 08:57
From: James Doyle
Subject: The Reality of meeting 2050 Net Zero Target!

Indeed - agree with the above re: materials and resources are crucial to support the energy transition and investment in new technologies (e.g. demand for copper, lithuim, cobalt etc). 

Good article in the FT the other day from Adair Turner,  Myths are clouding the reality of our sustainable energy future_FT article and related report from Energy Transition Commission. Notes that there's enough long-term supply for key minerals from known resources easily exceeds total future requirements to support new technology and transition from fossil fuel to decarbonise electricity production to renewable sources (and need to increase and diversify supply of these materials and resources).

See link to main report Material and Resource Requirements for the Energy Transition and Exec summary/infographics below:

In its latest report Material and Resource Requirements for the Energy Transition the ETC dives into the natural resources and materials needed to meet the needs of the transition. Large investments and strong policy support are needed to ensure that the supply of some key minerals grows quickly and sustainably over the next decade to meet rapidly growing demand.

There is no fundamental shortage of any of the raw materials to support a global transition to a net-zero economy: geological resources exceed the total projected cumulative demand from 2022-50 for all key materials, whether arising from the energy transition or other sectors.

However, even with strong action on innovation and recycling, scaling supply rapidly enough to meet demand growth between now and 2030 will be challenging for some metals, and mining will need to expand significantly.

Without strong action to improve materials efficiency, increase recycling or increase mined supply, there could be significant supply gaps for six key energy transition materials: lithium, nickel, graphite, cobalt, neodymium and copper.

The analysis identifies four key actions policymakers, miners and manufacturers must take to reduce that risk and expand supply quickly and sustainably:

• Building new mines and expanding existing supply of materials quickly
• Building more diverse and secure supply
• Driving sustainable and responsible material production
• Boosting innovation and recycling to reduce pressure on primary supply
  
  
  

  

  

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James Doyle
Director, Green Finance, Investment Management
------------------------------


Original Message:
Sent: 20-07-2023 17:01
From: Oliver King
Subject: The Reality of meeting 2050 Net Zero Target!

A knotty issue James and I agree with Stuart's point on a multi-faceted approach to energy commodities and materials.

With electrification of nearly everything energy demand is going up (7x by 2030, IEA) and needs to to transition away from a fossil fuel economy. Commodities and materials for electrification are crucial. Given energy is a social good that lifts countries out of poverty and fuels global GDP growth, it's the cost of that energy we need to better understand across all capitals: natural capital (environment & resources), social capital (forced labour) and financial capital.

Innovation is the key and the gaps left behind are trade-offs. The role of AMs I think is 2-fold, firstly, allocation of capital to innovators and second investee engagement with issuers to reduce the gaps and therefore lessen the necessity of trade-offs. On allocation of capital we can nab the well-used maxim reduce, re-use and recycle:

Reduce – investment in efficiency boosting innovation that reduces the quantity of material input per kW of output. OxfordPV perovskite solar panels does this by adding another layer of irradiation increasing solar power output by 75% and reducing the relative number of panels as well as the input materials per kW.

Reuse – repurpose EV batteries that aren't up to grade for cars into domestic batteries to store the power generated from your perovskite solar. Someone somewhere is doing this…

Recycle – extract material from old kit that has no viable use. A Tesla co-founder's Redwood Materials does just this on everything from key fobs to laptops and more. A recent funding round valued Redwood at $5bn.

On stewardship I'd offer building an engagement strategy around transition efforts: Energy firms increasing capex to renewable energy generation and storage and away from fossil fuels (sadly, the opposite of what BP did Q1 this year) and for mining companies to shift from or lessen coal extraction and move into lithium etc (in a sustainable manner!).

I'm a hatchling on this forum and already amazed by everything CFA UK is doing in this area; lots to do and no reticence to get stuck in.

------------------------------
Oliver King
Sustainable Investing Data Solutions