Green-energy revolution needs a cleaner supply chain

China did not merely join the green transition, it has become its leading force. China's success in the green transformation is no accident. While many governments treated climate policy primarily as an environmental issue, Beijing saw it as an opportunity to invest in industries of the future.

The results are difficult to ignore. China now dominates much of the clean-energy supply chain, from solar manufacturing to battery production. Western governments, meanwhile, are trying to rebuild their own industrial capacity.

The US has used the Inflation Reduction Act to incentivise domestic clean-energy investment. The EU has pursued a similar objective through its Net-Zero Industry Act, seeking to expand European manufacturing and reduce strategic dependencies.

These efforts indicate that the green transition is no longer just about reducing carbon emissions, it is increasingly being viewed by major powers as a race for technological leadership and more secure control of the supply chains that will power the twenty-first century. Thus far, China's lead in vital areas of the green economy is undisputed.

But now comes the trickier part. The world should be wary of replacing one form of dependency with another. Dependence on fossil fuels created decades of geopolitical tussles, in addition to their enormous environmental toll.

Building a clean-energy future that relies heavily on concentrated and contested supply chains could create a new set of risks. Consider cobalt, a critical ingredient in many batteries. The Democratic Republic of Congo produces roughly two-thirds of the world's mined cobalt, while China accounts for around three-quarters of global cobalt refining.

Yet the cobalt supply chain is plagued by violations related to labour rights and environmental standards. Indonesia's nickel industry offers a similar warning. Nickel is increasingly important to battery production, yet much of its processing remains heavily dependent on coal-fired power.

The green transition risks losing credibility if consumers celebrate cleaner technologies while pollution and environmental damage are shifted elsewhere. For much of the world, which is not competing with China for clean-technology dominance, the problem is not that China has become a clean-energy powerhouse.

The real issue is that the clean-energy revolution cannot be considered a success if its environmental and social costs are simply displaced farther up the supply chain.

A solar panel, electric vehicle or battery may produce fewer emissions in use, but that does not make the technology inherently clean if the minerals needed to produce it are extracted through exploitative practices.

A sustainable green transition must account for the full life cycle of clean technologies, from mining and refining to manufacturing and, ultimately, the disposal of the products which use renewable energy. This is what the next phase of the global energy transition must address.

Countries and companies that can build not only more diversified and resilient supply chains but also uphold higher standards of transparency, environmental responsibility and labour protection will help define the next phase of the green energy transition.