Gazprom, Russia’s largest natural gas company, has once again curtailed its gas supply to Europe. The ‘gas war’ between Russia and the West, which has only continued to spiral, has had serious ramifications on Britain’s energy prices. With gas making up 41.9% of Britain’s electricity supply in June, the reduction in supply has caused energy bills to soar.
The drastic increase in energy bills and fuel prices has led to a deteriorating cost-of-living crisis, with the average electricity bill per household forecasted to be £3,363 this January, and the cost of fuel rising 17p per litre. As Conservative leadership candidates continue to debate what we must do next, many have called for the UK to shift away from Russian gas towards domestic supplies and become more self-sufficient.
One proposed way to reduce the UK’s reliance on Russia would be to shift towards greener energy. Not only would this be instrumental in reaching net zero targets, but would also achieve greater self-sufficiency, breaking our current reliance on Russian gas.
By ending our dependence, we will be able to see the benefits of cheaper, renewable energy. According to the Natural Resources Defence Council, electric vehicles (EV) spend on average 60% less on fuel as they avoid spiralling fuel prices. Households can also benefit from this shift to renewable energy, with the International Renewable Energy Agency reporting a 13% drop in fuel prices in 2020 thanks to the increased production of wind farms.
In order to achieve this change, there will be a huge demand for lithium-ion batteries (LIBs). These batteries are needed for the storage of energy which can be used later during on-peak times as well as providing the energy source for EVs; it is also estimated that the UK will need more than 30 million new EVs by 2050 which will also require LIBs.
With 60 kg of lithium needed per EV battery, sourcing LIBs will be crucial. However, 77% of the world market share of LIB manufacturing is attributed to China. Therefore, we are in serious danger of shifting our reliance on Russia to China.
Although China does account for the vast majority of the LIB market share currently, its lithium reserves pale in comparison to those of Australia and the Lithium Triangle (a region of the Andes dominated by salars abundant in lithium-rich brine). Australia has nearly 4 times the annual lithium mine production of China (while only having 3 times the reserves), and the Lithium Triangle is thought to host 54% of the world’s reserves – China has about 7%.
The reason for this disparity between raw material reserves and market share in production is the Chinese government has spent up to $100bn in subsidising the production of domestic LIBs. This subsidy gave manufacturers 15,840 CNY per new EV which fulfilled the distance and price criteria. Subsequently, profit margins were improved, helping build lithium processing plants, which are vital for turning lithium ore into purer lithium carbonate and thus provided China with a dominating market share of LIBs processing plants.
While relying on other countries to build these processing plants and outsource lithium from countries with large reserves is one option, a shift towards domestic lithium production in the UK must happen if we want to become truly self-sufficient – luckily Britain can do both mining and processing of LIBs.
A recent study by the British Geology Survey concluded that there could be minable lithium in the St Austell Granite, Cornwall. This ore-grade lithium-mica granite could yield 3.3 million tonnes of lithium. Cornish Lithium, a mineral exploration company founded in 2016, forecasts production of around 10,000 tonnes per year. By domestically mining LIBs, we will not only be able to ensure long-term supply of LIBs, but also can cut out carbon emissions drastically. Firstly, the distance of transporting LIBs will be cut, but we also can ensure the extraction will not come through brine, ensuring we use more environmentally friendly methods.
Given enough extractable lithium ore, investment into processing plants would be reasonable, reducing production costs as shipping would not be needed whilst helping to catapult the UK to become a technological champion in the race towards net zero – most crucially, would cut the UK’s reliance on China.
Simply put, manufacturing LIBs in the UK or elsewhere to combat the rising monopoly China has over this market will require huge investment. While this will not be the most economically viable option on a short-term basis, the need for it to become LIB independent from China is not only a wise political option, but also an environmental one.
Edward Forman is currently undertaking work experience at Bright Blue. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: possessedphotography]
