This week, world leaders are gathering in Sharm El Sheikh, Egypt for COP27, the 27th annual United Nations conference on climate change.

This year’s conference carries with it the weight of the climate challenge, an enormous threat facing humanity, but also comes at a time of growing volatility in global energy markets, rising energy prices, a food security crisis, and war. As a result, countries both rich and poor will be focused on immediate security and economic threats.

While Russia’s war in Ukraine has convinced policymakers of the necessity of divesting from volatile oil markets, the lack of readily available raw materials and supply chain issues continue to impede rapid transitions toward clean energy.

Specifically, the world needs to expand its supply of critical minerals—graphite, nickel, cobalt, and especially lithium, and the chemicals into which they are refined.

And while COP27 is meant to be part of the journey to organize national efforts into collective solutions, the reality is that geopolitical competition over access to critical minerals is accelerating, both among consumers and producers. The challenge of procuring adequate supplies of critical minerals is thus a key obstacle facing both global decarbonization and international security.

This competition is driven by expectations that demand for critical mineral components will increase as the world transitions away from fossil fuels. Electric vehicles (EVs), for example, are growing rapidly as a share of the overall automotive market, accounting for 17% of total auto sales in Europe in 2021 and 35% in China in 2022. Markets in the United States, such as California, have vowed to only permit EV sales by 2035, while nearly every major auto manufacturer plans to produce only EVs by the end of the next decade.

This new fleet of cars will require millions of tons of lithium, graphite, nickel, and other minerals that presently do not exist. Battery demand for EVs is currently driving 75% of lithium demand, and in 2021 enough lithium was mined to produce just 11.4 million new EVs—far fewer than will eventually be required. According to the latest forecasts, the market for lithium will double in size by 2030, while demand for other critical minerals will grow as well.

The story goes beyond electric cars. According to the latest critical minerals report from the International Energy Agency (IEA), growing quantities of relatively scarce minerals will be needed to feed the world’s demand for clean energy. By 2040, the clean energy sector will demand more than 60% of the world’s cobalt and nickel, 40% of its copper, and 80% of its lithium. In a high-growth scenario, mineral demand will increase by 400% by 2040. Achieving this level will be necessary for nations to meet climate goals.

In short: to reduce emissions, mitigate climate change, and accomplish a speedy energy transition, the world is going to need vast new quantities of critical minerals. And that means new challenges for building transparent and resilient supply chains, well governed markets, and changing patterns of geopolitical tensions and alliances.

China is arguably the most important country in the critical mineral supply chain. It refines 68 percent of the world’s nickel and 59 percent of its lithium, retains 78 percent of the world’s lithium battery capacity and 84 percent of global solar panel manufacturing capacity. It is also a major producer of other critical minerals, and holds considerable financial interests in overseas critical mineral production in the Democratic Republic of the Congo (DRC), Brazil, and elsewhere, through its Belt and Road Initiative (BRI).

China’s dominance of critical minerals has now emerged as an element of geopolitical tension—especially in relation to seemingly heightened tensions with the United States. As indicated by the latest National Security Strategy (NSS) and National Defense Strategy (NDS), the United States is formatting its foreign policy around Great Power Competition, with energy resources a key flashpoint. The Inflation Reduction Act (IRA) passed in August includes tax incentives for producing critical minerals at home or in countries linked to the United States through free trade agreements. The goal of these policies explicitly aims to increase U.S. critical mineral production or secure access of overseas resources, rather than depend on China.

The trend of competition over critical minerals goes beyond Sino-American competition. In October, the Canadian government ordered Chinese firms to divest from Canadian critical minerals, citing national security concerns. There are signs that producers are mobilizing to leverage the geopolitical importance of critical minerals to secure more favorable economic returns. Indonesia is considering a “little OPEC” for nickel, while South American lithium producers are increasingly concerned that Western firms will exploit the continent’s critical mineral resources irresponsibly.

Brazilian President-elect Luiz Ignacio Lula da Silva pledged in his acceptance speech to embrace non-alignment, doing business with China (Brazil’s largest trading partner) while maintaining good relations with the United States. “We will not accept a new Cold War,” he declared. Earlier this year Brazil began easing its mineral leasing laws in order to attract foreign investment for lithium and copper mines, though it is unclear whether Lula will continue such policies.

This type of competition and strains in international relations have also appeared in a technology fundamental to current decarbonizations globally—the production of solar panels. Here again China dominates the advanced manufacturing sector and has helped bring prices down, making photovoltaic (PV) panels competitive as a source of electricity. But there are cracks in the supply chains, including well-founded allegations of serious abuse of ethnic minorities.

The U.S. policy approach to the issue of Chinese solar panels has been ad hoc and ineffective (including various tariff approaches, import bans, and so forth). Nevertheless, it may still offer some important lessons for critical minerals policy, chiefly on the need for greater transparency surrounding supply chains and their markets. Another key lesson concerns the importance of focusing on the timing of transitions—moving too abruptly and without substitutes in place can cause serious negative consequences for economic development and climate aspirations. Given the lack of critical mineral production, refining, or manufacturing capacity inside the United States, an immediate break from China–in the form of trade restrictions, tariffs, or embargoes of Chinese materials–would be too disruptive and will delay crucial energy transitions.

It is clear that climate change policy has now become a sphere of Great Power competition. But that should not blind policymakers or private sector actors to the deep interdependence within the critical minerals supply chain. As leaders gather for COP27, cooperation should be the key focus, rather than confrontation or competition.

IMAGE: A road runs through an open pit mine (via Getty Images).