What Keeps a Climate Expert Up at Night

Milo McBride joined Carnegie in March.

You study the geopolitics of energy transition technologies. What do you see as the most pressing issue at the moment?

The most pressing issue is the extent to which the United States and India—the world’s second- and third-largest carbon emitters—can decouple from some of China’s massive clean tech production without stalling their energy transitions. But it’s not what keeps me up at night.

Globally, I’m more concerned with how the economy can decarbonize heavy industry such as steel or cement and the type of international cooperation required to facilitate this trajectory. Producing these materials comprises at least a quarter of global emissions—a number that’s only projected to increase over the coming years. While there are currently commercial pathways to decarbonize our power grid, transportation sector, and building operations, the technologies required to make zero-emissions cement, steel, chemicals, and alternative fuels are still at their infancy, with notable cost premiums.

Recently, some exciting, perhaps game-changing, technological advancements have emerged in Western countries that could allow for low-carbon materials and fuels, but it remains unclear how those processes will be implemented in developing countries where construction growth will be the most pronounced. For example, countries in Africa and Asia are likely at the forefront of the new concrete and steel demand and related emissions growth, but they are not in line to receive these new technologies. Will Western governments devise policies to equitably decarbonize the global majority and allow for green industrialization? Or will the rising trends of protectionism cause wealthy, Western governments to hoard this intellectual property?

What’s one trend or story in your area of study that has flown under the radar?

A battle is brewing in Santiago, Chile, over lithium—the essential metal used in electric vehicles (EVs) and grid batteries—and the world’s largest lithium brine operation. The story is niche but emblematic of the friction between two trends in critical minerals geopolitics: resource nationalism and Chinese dominance. Chile is the world’s second largest producer of lithium, and it mandated that Chile’s state-owned mining companies have a stake in strategic lithium projects. In a recent victory for the administration of President Gabriel Boric, Chile’s largest private lithium producer formed a joint venture with Chile’s largest state-owned mining company in exchange for the government’s blessing to increase production.

But an emerging legal conflict cuts to the core of competing interests. The entrance of the Chilean state-owned company will diminish the long-standing strategic influence of one of China’s most prestigious lithium producers, a historical financer and equity shareholder of the project. China is the epicenter of global lithium demand as the world’s largest producer of lithium-ion batteries, and Chinese firms are anxious about maintaining their presence across markets. The Chinese company has unsuccessfully appealed the Chilean government in attempt to retain its original stake in the company.

A parallel story is unfolding in Mexico, where the outgoing president’s pseudo-nationalization of lithium resources has rescinded a Chinese lithium company’s deal for deposits in Sonora. The Chinese firm has taken legal action against the Mexican government. It’s also playing out in West: both Australia’s and Canada’s finance ministers recently prevented Chinese firms from investing in their lithium and rare earth industries. With demand for energy transition technologies and related minerals expected surge several fold in coming decades, twentieth century sentiments of resource nationalism have certainly meandered back into the fore.

The EC recently passed legislation that seeks to advance climate goals while retaining an industrial edge. The United States has made similar moves, with recent tariffs on Chinese EVs and the various credits in the Inflation Reduction Act (IRA). Do these policies have a shot at moving countries closer to climate goals?

In short, yes, but U.S. and EU policies each have their own tradeoffs with regard to carbon emissions reductions and supply chain resilience. At their core, the United States’ IRA and the EU’s Green Deal Industrial Plan (GDIP) have different objectives and policy approaches emblematic of the limitations of their respective political economies.

The IRA leverages subsidies to bolster emission reduction goals with a core agenda of onshoring supply chains out of China. Forecasters think that the IRA will bring the United States just short of the climate goals it pledged to the world. Despite its success in unlocking over $240 billion of investment and potentially kickstarting 100,000 clean energy manufacturing jobs, some IRA onshoring incentives haven’t worked as quickly as planned, leaving gaps in the supply chain. Given that there is no room for new legislation, the administration has begun surgically applying tariffs as a means of incentivizing industry to fill these gaps. Present tariffs could risk slowing the pace of the U.S. transition—primarily for EVs—in the near term at the expense of promoting self-sufficiency in the long term. The greater concern is if these tariffs escalate and are not applied as tactfully. Doing so could disrupt both the transition and onshoring.

The Europeans are more focused on emissions than resilience, but the IRA has complicated this by triggering concerns of remaining industrially competitive. On the emissions front, the GDIP will also get the bloc close to its climate goals—albeit still falling slightly short. As for resilience, Brussels has passed several policies under the GDIP like the Critical Raw Materials Act and the Net Zero Industry Act that—as their names imply—focus on securing greater sufficiency in minerals and clean energy manufacturing. These policies seek to bolster domestic resilience through establishing mineral-related production targets, advancing permitting timelines for strategic projects, and authorizing some direct funding—but not at the scale of the essentially unlimited tax credits that the IRA has leveraged in the United States. The EU is unlikely to authorize greater funding measures to onshore industry because Brussels is still cautious of World Trade Organization rules (which are essential to the European framework) and because finance ministers are increasingly concerned about fiscal limits and new spending priorities, such as defense.

As the energy transition accelerates, how will these changes in technology impact global power dynamics. Are there clear winners and losers?

Broadly speaking, there will be significant shifts in international power dynamics moving from an energy system of molecules to one of minerals, machinery, and electrons.

Twentieth century energy geopolitics were dominated by oil and—more recently—liquified natural gas (LNG), with a myriad of key producers ranging from OPEC+ members to Western allies. But, at present, the factories and mineral supply chains needed to mass produce solar panels and EV batteries are increasingly dominated by one country: China. It’s a unique asymmetry that will likely result in Beijing solidifying domestic energy security goals, peaking emissions ahead of its schedule, and ensuring China’s stature as the world’s top clean tech powerhouse. This dynamic will be increasingly challenging for the United States, the world’s largest hydrocarbon producer and exporter.

Some wealthy fossil fuel producing–countries and their energy companies are reading the tea leaves and devising scenarios to avoid being overly exposed to high-carbon assets in an aggressive energy transition. Australia, a major exporter of coal and LNG, is well endowed in energy transition minerals and has put fourth national policy to expand its prominence in these markets. Like the United States, Australia has become increasingly focused on onshoring value-add industry like solar manufacturing, critical minerals processing, and some low-carbon heavy industry such as clean steel production. Saudi Arabia, a leading oil producer and OPEC member, has recently cut back on expanding oil production, citing the energy transition. But the Saudis have also initiated a wide-ranging strategy to invest in energy transition minerals, both domestically and abroad. Even more, Riyadh has also begun onshoring its own production of solar panels and some EV battery components.

Unfortunately, many poorer fossil fuel–producing countries face a high transitional risk, and the energy transition could pose long-term challenges to national fossil fuel income if diversification strategies are not pursued. This is a notable point of geopolitical friction that’s especially visible at the UN climate conferences, where some developing nations advocate for their right to continue fossil fuel production and receive climate adaptation funding. These countries have contributed negligibly to global carbon emissions and want an equal opportunity to utilize their resources for development. Many of them do not have simple pathways to diversification, and removing hydrocarbons from their economies would require more creative policy measures from the international development and finance community.

Some rising middle powers will have a unique opportunity to capitalize on the energy transition. Indonesia, for example, is already the world’s largest producer of nickel, a sought-after metal for EV batteries. Going forward, the incoming Indonesian president is likely to follow his predecessor’s legacy and continue interventionist policies to secure domestic production of other energy transition metals such as tin and cobalt. Similarly, Morocco is the world’s largest producer of phosphate, another battery metal, and has begun attracting significant investment from Chinese and Korean manufacturers to develop an EV supply chain for entrance into the European single market (and perhaps the United States as well, given Morocco’s free-trade agreement with Washington).

If you were president, what’s one policy related to your field that you would enact immediately?

Hit the accelerator on innovation policy. Both sides of the aisle believe that the rise of China as a technological superpower will threaten the long-term competitiveness of U.S. industry and Washington’s role in the world. Devising a sector-agnostic, innovation-first policy that includes clean energy could prove more salient than seeking to pass another climate or energy transition policy in the traditional sense.

On the climate front, bolstering innovation does not negate the need to deploy the technologies that are at market. But today, about 35 percent of net-zero technologies are still not yet commercialized, and many of those on the market—like EV batteries or solar panels—are reaching their theoretical limits of efficiency. Accelerating the innovation-to-market pipeline could come with significant efficiency, sustainability, and resiliency bonuses. For technologies such as EV batteries, new battery chemistries offer a longer drive range and require less risky minerals, which several U.S. firms are working to develop.

What are you most looking forward to researching at Carnegie?

At Carnegie, my primary area of excitement is the U.S. Foreign Policy for Clean Energy Taskforce that I co-lead with Noah Gordon. It’s an exceptional project that is working to develop a comprehensive analysis and strategy for the United States to bolster clean energy production in tandem with partners abroad. It includes a stellar group of nonpartisan policy leaders at the forefront of trade, minerals, innovation, development, and diplomacy. I’m personally excited to research international collaboration opportunities for advanced energy technologies and low-carbon industrial processes.