Europe’s mineral trade and global energy transition

In recent years, metallic minerals have become essential for manufacturing and making use of cleaner energy production technologies, including electric vehicles, wind turbines, solar photovoltaics, and battery-based power storage systems, to meet climate goals in the coming decades. Shifting from non-renewables to cleaner energy production processes, the countries that intend to implement the energy transition find themselves in an urgent race to import the necessary resources. More importantly, an energy transition based on the mineral trade is faced with geopolitical risks such as war, nuclear threats, and terror threats. This situation calls for an investigation of how geopolitical tensions are prominent in affecting trade from the perspective of global moves toward the energy transition in which metallic minerals are used as critical raw materials. Europe shares this global vision of an energy metamorphosis. In March 2023, the European Commission proposed two initiatives, the Critical Raw Materials Act and the Net-Zero Industry Act, which work in tandem to promote green technology and supply the crucial materials needed for its production. The study of European economies is critical because of their dual nature as traders importing and exporting these mineral resources, especially for renewable energy production. This research project will investigate how the mineral trade helps European countries achieve their goal of the energy transition when faced with a potential increase in geopolitical risks. This study is based on the international trade theory concerning metallic mineral goods used for renewable energy generation and aims to analyze diverse challenges, especially geopolitical issues affecting the mineral resource-driven energy transition process in Europe. To this end, we utilize novel econometric techniques, such as the cross-quantilogram, cross- sectional autoregressive distributed lag and quantiles via moments techniques under individual and panel time-series data analysis procedures. The originality of this study involves considering the energy transition goals of European countries combined with demands for metallic minerals affected by the worldwide geopolitical turmoil, especially the Russia-Ukraine war. The policy implications of this study can mitigate geopolitical risk events by expanding the mineral trade, helping European nations achieve their vision of a clean energy transition on a net-zero emissions trajectory. Moreover, the findings of this study provide insights into developing a concrete climate change mitigation framework for these European countries.

No additional funding sources recorded.