Securing lithium supply for a cleaner energy consumption pathway: A systems thinking on supply disruptions

Abstract: To mitigate climate change and realize the transition towards a cleaner consumption pattern, the development of EVs needs to be ensured as it is one of the major solutions to the fossil fuel-related problems human beings face today. Lithium, as a critical material to EV cells, is seen as a strategic resource in many countries. Given the fact that the global lithium distribution is quite uneven, securing lithium supply for the development of EVs is essential for the world to phase out fossil fuels consumption in the transport sector. The supply risks of lithium can be observed in many aspects, ranging from lithium production to geopolitics. In this paper, the author combines qualitative and quantitative analysis in order to overarchingly reflect the global supply disruptions of lithium. In the qualitative section, the concept of systems theory is applied, supported by the connection circle, the stock-flow model, and the panarchy model; in the quantitative section, the author uses the combination of Herfindahl-Hirschman Index (HHI) and Worldwide Governance Indicators (WGI) to measure the extent of supply disruptions in a certain year. The quantitative section serves as a good supplement to the qualitative analysis. The qualitative results indicate that lithium mining and processing plays the key role in the whole lithium supply chain. It can be affected by the factors in the larger global context such as global political environment and the demand for lithium, as well as the social, ecological and technical components in the smaller scale that provides a physical environment for lithium production. The quantitative results show that the global supply disruptions of lithium are significant in 2019, mainly due to the high level of supply concentration. The author suggests that the governments of major lithium producer countries might organize panel discussions regularly to ensure the stable and non-centric supply of lithium to the global market. The rich production countries may also offer technical support to the less developed lithium holders to help the latter overcome the difficulties brought by the increasing cost of mining.