Make Green Transition Affordable: Addressing Rising Costs and Trade Tensions for Sustainable Technologies
An Op-Ed from Dieter Kuckelkorn, Frankfurt
Raw materials supply chain faces potential crisis
The aspiring green transformation of the world economy hinges on a critical aspect: maintaining a continuous flow of affordable raw materials essential for sustainable technologies - like electric mobility. Price surges could derail the financial viability of this transition, which is already wavering. Meanwhile, we don't want costs so low that new extraction projects lose momentum because of insufficient demand in the long term.
Avoiding Skyrocketing Prices
Escalating prices for essential raw materials, like polyacrylonitrile (PAN) necessary for carbon fiber, could boost production costs of sustainable technologies[3]. Higher prices may lead to reduced demand as consumers balk at the increased costs.
Securing a Reasonable Price Floor
Affordable raw materials are a prerequisite for a successful transition. However, if prices dip too low, it might not be enticing for new projects to start up. After all, there's significant long-term demand for these raw materials predicted.
Managing Price Volatility and Supply Chain Issues
Supply chain disruptions due to instability in the raw materials market can exacerbate the challenges of transitioning to sustainable manufacturing[4].
Navigating Trade Tensions and Tariffs
Trade tensions and tariffs intensify the difficulties created by rising raw material costs. For example, US tariffs act as import taxes that increase the cost of raw materials and components needed for sustainable technologies[2]. These added expenses make green technologies less competitive. Furthermore, market uncertainty caused by trade tensions can discourage investments in sustainable technologies and slow the transition.
Strategies for Overcoming Challenges
To surmount these hurdles, we must consider strategies like rethinking system-level incentives, reducing subsidies for fossil-based materials, and investing in scalable recycling and waste management infrastructure[4][5]. Additionally, global cooperation to reduce trade barriers and bolster sustainable technologies could strengthen the financial feasibility of the green transition.
- The green transition requires sustainable technologies, like electric mobility, to have a steady supply of affordable raw materials, preventing price surges that could hinder the transition's financial viability.
- Aiming for affordable raw materials is crucial for success, but prices that are too low may discourage new extraction projects due to insufficient long-term demand.
- Price volatility and supply chain issues, often triggered by market instability in the raw materials market, pose significant challenges for the transition to sustainable manufacturing.
- Intensified trade tensions and tariffs exacerbate the hardships of transitioning to sustainable technologies by inflating the cost of necessary raw materials and reducing their competitiveness against conventional technologies.
- Strategies to overcome these challenges include reevaluating system-level incentives, decreasing subsidies for fossil-based materials, and investing in scalable recycling and waste management infrastructure.
- Global cooperation to eliminate trade barriers and bolster sustainable technologies could fortify the financial feasibility of the green transition, making it more accessible and affordable in a climate-change era.
