The green treasure chest buried in Ukraine

Greetings from New York, where political chatter is swelling about former US president Donald Trump’s bid to become the Republican nominee for the 2024 race. But as pundits ponder the US far right, green activists need to watch the conservative vote in Europe too.

Spanish voters went to the polls this weekend in an election that left Alberto Núñez Feijóo, the leader of the rightwing, notably strengthened. He, like other conservatives in Europe, has run on a platform that seeks to slow the green transition. Meanwhile, in London there are growing calls inside the UK Conservative party for a rollback of net zero measures, following recent parliamentary by-elections.

It remains unclear whether UK prime minister Rishi Sunak will heed those demands to water down green policies. One complicating factor is that polls indicate fairly strong bipartisan support for green policies in the country, even amid a cost of living crisis. In a survey by the Office for National Statistics this month, for example, 62 per cent of British adults said they felt “very” or “somewhat” worried about climate change — compared with 92 per cent who are worried about the cost of living, 88 per cent about the NHS and 79 per cent about the economy.

This leaves concern about climate issues below the 74 per cent level seen last year — but still notably high. And 62 per cent of respondents this year reported changing their lifestyle in response to climate change.

But even if such polls make the Conservatives wary of being overtly anti-green, or reversing existing policies, there is a growing risk that Sunak’s team may become less aggressive in pushing for new green reforms. This matters, given how much needs to be done — and co-ordinated — to hit net zero targets. Retrofitting the housing stock, for instance, is a policy that will need government action. So it will be interesting to see what the opposition Labour party says about the green agenda when it meets for its party conference this autumn. Let us know what you think it should do.

And in the meantime, take note of the story below about how Russia’s invasion of Ukraine has unleashed a battle for a vast swath of rare earth minerals that are needed for green tech. And check out the FT report on how extreme heat is reshaping economies. — Gillian Tett

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Ukraine is sitting on a treasure chest to fuel the energy transition

Another week, another wave of depressing news from Ukraine.

As Kyiv launches its counteroffensive, striking against targets such as the Kerch bridge, Russia has bombed Ukraine’s port cities, warning that it would treat grain ships as military targets.

Friends of mine working with the Ukrainian forces in places such as Zaporizhzhya are now braced for long, ugly battles as Kyiv tries to seize back eastern regions such as Donbas. So are western allies, judging from the mood at the Aspen Security Forum last week, which featured a video address from Volodymyr Zelenskyy.

This obviously has big consequences for geopolitics. But what is less known is that these battles matter enormously for green technology too. Ukraine is sitting on vast reserves of hydrocarbons. But it is also sitting on one of Europe’s biggest deposits of critical minerals needed for electric vehicles and other clean energy applications.

The country has an estimated 500,000 tonnes of lithium, researchers for the National Academy of Sciences of Ukraine said last year. This total edges out Portugal as the biggest lithium resource in Europe. But for now, none of Ukraine’s lithium is mined, the researchers said.

More broadly, Foreign Policy magazine said last year, citing Ukrainian government documents and foreign analysts, that the country had “commercially relevant deposits of 117 of the 120 most-used industrial minerals across more than 8,700 surveyed deposits”. The total value of these deposits — including titanium, iron, neon, nickel and lithium — was estimated as being up to $11.5tn. There are also reserves of other minerals deemed critical by the IEA such as beryllium, niobium, tantalum, titanium and cobalt, along with non-critical elements such as uranium and feldspar — to name but a few.

Before Moscow’s invasion, Ukraine was drawing up plans to develop these resources by offering outside investors tax breaks and investment rights. Unfortunately, those plans did not get very far.

“It’s an incredibly important issue about the war that people don’t understand,” one senior US official told me recently. And what makes it doubly critical is that the western allies are frantically looking for ways to break their dependency on the Chinese supply chains for these minerals.

To return to lithium: China is the world’s third-largest lithium producer and has also been on an “acquisition blitz” for lithium projects worldwide. China still accounts for about 50 per cent of all batteries installed in electric vehicles globally — more than Europe and the US combined, according to Morgan Stanley.

While western car manufacturers and entrepreneurs such as Elon Musk are trying to develop alternative sources of lithium, this is unlikely to deliver rapid results anytime soon, not least because getting permits for the messy work of lithium mining and processing is hard in the US and Europe. Hence the tantalising prospect of trying to develop critical minerals in a place such as Ukraine, which will be desperate for new sources of growth if (or when) the war ends.

Sadly, the Russian authorities are also keenly aware of the geopolitical significance of those minerals, and many reserves are sitting in Russian-controlled land; indeed, western diplomats suspect that the location of these riches was one reason why the Putin regime annexed four territories in eastern Ukraine last year.

The Wagner mercenary group is particularly attuned to the commercial implications of those minerals, I am told. Titanium, in particular, is a key focus. But nobody should underestimate the determination of western leaders to break their dependency on China — and the capacity for mineral prospecting to deliver surprises. Just take note, for example, of what has just happened in Norway: a couple of weeks ago the Anglo-Norwegian group Norge Mining announced it had discovered vast reserves of phosphate rocks in Rogaland, which apparently amount to at least 70bn tonnes, nearly equal to the previously known global reserves of phosphates.

Since phosphate is a key mineral used in a major form of lithium-ion battery known as LFP, this discovery is “a very big deal”, said Gavin Harper, a geologist at Birmingham university. “Until this discovery, just five countries controlled 85 per cent of global reserves, with 70 per cent in Morocco alone,” he notes. “It is China that mines the most phosphate rock, producing 85mn tonnes in 2021, with Morocco the next at 38mn tonnes.”

Norge does not expect to sell phosphate from this reserve until 2028, because of the messy and time-consuming approval and investment process in Europe. In the US, the approval issue is arguably even worse (as we recently noted.) But as entrepreneurs scout western soil for other deposits, Ukraine is likely to seem ever more tantalising. Which, of course, is yet another reason to hope that the western alliance can help Kyiv to win the war soon. (Gillian Tett and Patrick Temple-West)

Smart read

Extreme heat is reshaping economic output — and it is not just tourism under threat from heatwaves. Industries ranging from construction, to manufacturing, agriculture, transport and insurance are all bracing themselves for changes to the way they do business, our colleagues write in this Big Read, which is very much worth your time. There’s evidence that extreme heat is “pulling down our growth”.