EU’s green dilemma with Indonesian nickel

In order to achieve global net-zero emissions goals by 2050, the annual supply of nickel and copper will have to drastically increase. A recent report from the World Bank’s International Finance Corporation revealed that a 208% increase in nickel supply and a 156% increase in copper supply are necessary relative to 2020 production levels. The report also emphasized the need for increased extraction of at least 15 other minerals and metals to meet climate targets.

However, concerns have been raised about the sustainability and ethical implications of this large-scale extraction. UN Secretary-General Antonio Guterres emphasized the importance of ensuring that the pursuit of net-zero emissions does not harm vulnerable communities or exploit natural resources.

EU companies have started taking steps to comply with sustainability regulations, such as the Corporate Sustainability Due Diligence Directive. This directive requires companies to demonstrate their commitment to protecting the environment and human rights throughout their supply chains.

The challenges of sustainably sourcing critical minerals were highlighted when German company BASF and French company Eramet withdrew from a nickel-and-cobalt refinery project in Indonesia due to concerns about its environmental impact on a local Indigenous tribe’s habitat.

EU’s Role in the Green Transition

While the EU aims to transition to a green economy, challenges remain in sourcing critical minerals ethically. There is a delicate balance between meeting the demand for these resources and protecting the environment and local communities.

Outgoing Indonesian President Joko Widodo has been working to position Indonesia as a hub for electric vehicle battery production by increasing mining capacity, particularly for nickel. However, concerns have been raised about the environmental impact of nickel mining in Indonesia, especially when it comes to deforestation and pollution.

As the demand for critical minerals continues to rise, finding sustainable solutions becomes increasingly important. EU companies and policymakers are faced with the challenge of meeting these demands while upholding environmental and ethical standards.

It is essential for all stakeholders to work together to ensure a responsible approach to sourcing critical minerals for the green transition.

Edited by: Wesley Rahn