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The imperative to reduce fossil fuel emissions has been exacerbated by the effects of financial crisis, the Covid-19 pandemic and geopolitical events, such as Russia's war with Ukraine. These have put a growing constraint on resources in terms of not only energy supply, but also on the financial resources available to address disrupted supply chains and the associated affordability challenges to society.
These disruptions have placed energy security at the very top of the European agenda. The green transition is not free of its own energy security challenges; a number of renewable technologies rely on rare earths, lithium and cobalt, for example, that are available in limited supply or from a small number of exporting countries creating vulnerability in the supply chain at a time of geopolitical uncertainty.
In the coming decades, energy security will depend less on uninterrupted access to fossil fuels and will be increasingly determined by the access to renewable technologies, materials and components. The EU energy system brings together different technology value chains, and its energy security relies on the individual security of each technology value chain, and interdependencies across the system and value chains.
RAND Europe, with partners CE Delft and E3-Modelling, carried out a study for DG Research & Innovation (European Commission) to assess the energy security challenges of clean energy value chains now and looking to 2050, and to identify research and innovation (R&I) actions to address them.
The study developed a bespoke methodology that brought together foresight- and futures-based methods, in particular scenario development, with PESTLE analysis, in-depth techno-economic analysis of the energy security components of clean energy technology value chains, and strategic management tools including SWOT and least regrets analysis to develop a R&I action plan for the next decade. Complementing methods used included expert interviews, R&I landscape analysis and an expert validation workshop.
The novel methodology enabled the study team to:
Through the scenarios, we were able to test the robustness of clean energy value chains across a wide range of potential futures.
We found that each clean energy value chain operates differently and faces its own unique challenges. Dependent on the technology, limited access to critical raw materials (CRMs) can be best tackled in varying ways: in some cases, recycling is the most appropriate option, in others, fundamental research on alternatives to CRMs may be the best, or indeed simplifying the technologies to reduce the need for CRMs entirely. Separately, cybersecurity threats and physical vulnerabilities also pose emerging risks to the energy security of clean energy technologies, given the increase in and ever-changing nature of cyber threats and climate change impacts; this is not only the case for smart infrastructure, but also relevant to established wind, ocean and hydropower technologies, most notably.
We also found common risks and challenges emerging across many of these value chains, such as the need for specific skills and access to CRMs, some of which are not currently readily available within Europe. For example, policy to onshore the sourcing of CRMs will have to have backing of the public, including positive public opinion on mining. We have presented these – and more – R&I challenges systematically, and proposed a number of interventions the EU can take to address and mitigate these threats.
Using a detailed analysis of clean energy value chains, the R&I landscape and futures scenarios, we have developed a comprehensive R&I action plan for the EU which sets out 30 actions that can be taken to mitigate risks and capitalise on strengths and opportunities to help ensure EU energy security to 2050 as we transition to clean energy technologies. The highest priority actions are:
While we considered the value chains in their entirety and in reference to a number of system-level scenarios, a number of challenges will be best-served to identify where energy security criticalities of one technology can be mitigated through the system and which criticalities introduce potential cascading or compounding risks into the energy system.
The study prioritised R&I actions that the EU could take, however, in some cases, R&I was not considered the most effective solution to a challenge in the value chain. Notable is the access to, and development of, relevant skills. While skills are an eventual output of R&I, this is not the main focus of these actions. Alternative measures are needed to invest in skills development beyond the purview of R&I. As such, when considering challenges to clean energy value chains, the appropriateness of the measure should be considered; this is a key pillar of the study, which has allowed us to develop an effective R&I action plan to help ensure energy security during the clean energy transition and beyond.
