Hum Wei Mei, Straits Times 14 Oct 09;
CLEAN technology is about more than just reducing greenhouse gases. It is also likely to catapult a class of commodities into prominence, with implications for resource politics and the economic strategies of nations.
There are three reasons for the sector's growing significance: its role in keeping down the cost of climate change measures by improving energy efficiency; its ability to reward enterprising countries with new avenues of growth; and its potential to increase a country's energy security and independence.
Countries that come out ahead in the clean technology sector are therefore likely to be more competitive and secure than others. As a result, clean technology features prominently in the grand strategies of nations in the 21st century.
While clean technology is still in a nascent stage, international competition to develop the sector has intensified considerably.
This has, in turn, added a new dimension to global resource politics. While there is no formal consensus on which commodities will be vital, the European Union, America, Japan, China and South Korea have all established commissions to identify the resources key to their interests.
The scarce materials used in the lucrative and strategically significant clean technology sector include metals such as rare earth elements (REEs), platinum group metals, indium and niobium, which are critical to clean technologies ranging from turbines to lithium-ion batteries.
There are supply problems with a number of these metals because of the difficulty of increasing their production quickly or because they may be subject to export restrictions. Add high demand to these factors, and the stage is set for intense international rivalry for access to these materials.
The fierce competition for lithium stems from its applications in the important field of energy storage. According to Sociedad Quimica y Minera de Chile SA, the world's largest supplier of lithium, global demand - already growing at 6.7 per cent annually - is expected to accelerate rapidly. This is because of the growing demand for lithium-ion batteries for use in electric vehicles, leading some to wonder if lithium is the new oil.
Meanwhile, global reserves of lithium are concentrated in a few countries. Just four Latin American countries - Chile, Bolivia, Argentina and Brazil - account for more than 80 per cent of the world's reserves of lithium.
China too has an enviable share of the scarce materials needed to support the clean technology sector. In fact, China accounts for more than 95 per cent of the global production of REEs, which are needed to make the advanced permanent magnets used in hybrid and electric vehicles and wind turbines.
About 20kg of these elements are used in a hybrid car such as the Toyota Prius and almost 1,000kg is needed to make an efficient 1MW wind turbine.
Last month, it was reported that China's Ministry of Industry and Information Technology was considering imposing further restrictions on the production and export of REEs and other industrial raw materials.
This sparked fears that the clean technology industry would be held hostage to limited supplies of vital raw materials.
China has not only encouraged the growth of clean technology industries within its borders, by reducing exports of crucial raw materials, it has also given foreign clean technology companies incentives to set up operations in the country so as to secure access to supplies.
In December, more than 170 countries will attempt to bring about a new global climate agreement. But even as countries negotiate measures to mitigate climate change, they are also seeking to position their economies to profit from a different energy landscape.
Countries like Singapore, which boast neither rich endowments of strategic raw materials nor cutting-edge clean technologies, need to assess how they can best adapt to the new global resource politics.
Economic and industrial strategies are being realigned in an emerging carbon constrained world underwritten by clean technology.
The writer is an adjunct fellow at the Energy Studies Institute, National University of Singapore.
