Building Resilient Clean Energy Supply Chains: The Role Of Infrastructure And Investment

(MENAFN- 3BL) The global race to net-zero emissions has put supply chains under a sustainability microscope. Clean energy technologies like solar panels, wind turbines, electric vehicles (EV), and batteries are the building blocks of a decarbonized future, but producing and deploying these technologies at scale can bring with them significant supply chain headaches. A joint report by DP World and Canary Creative, Closing the Gap on Clean Energy Supply-Chain Sustainability , dives into the challenges and presents strategies to ensure supply chains are secure, resilient, and sustainable.

Given that supply chains power everything-from the electric vehicle you're dreaming of buying to the solar farms lighting up cities-this affects everyone. But without infrastructure upgrades, better investment strategies, and a focus on sustainability, the clean energy transition could stall. As the report highlights, building resilient supply chains is not just a lofty goal-it's a necessity for global climate goals and economic stability.

Why Supply Chains Need a Sustainability Makeover

Let's set the stage. The International Energy Agency (IEA) forecast that 2,400 gigawatts of renewable energy capacity will be deployed between 2022 and 2027-a 30% increase from earlier estimates. While this is promising news for the planet, the backstory isn't so sunny. Scaling up clean energy technologies requires an uninterrupted flow of critical components like lithium, cobalt, and polysilicon, many of which are sourced from regions with shaky infrastructure or environmental concerns.

Take lithium-ion batteries, a cornerstone of the EV revolution. China controls more of the global lithium-ion battery production than the rest of the world combined . This geographic concentration exposes supply chains to geopolitical risks and trade disputes. Plus, the environmental and social costs of mining these materials can run counter to the very principles of sustainability. The solution? Diversified supply chains and resilient infrastructure that can keep pace with booming demand.

Onshoring: A Band-Aid, Not a Cure

The Inflation Reduction Act (IRA) in the U.S. has poured billions into boosting domestic manufacturing of clean energy technologies. In fact, over $150 billion in capital investments in U.S. utility-scale clean energy projects have been announced since the law's passage. Policies like these aim to reduce reliance on imports and shorten supply chains.

But here's the catch: onshoring alone won't close the gap. According to one report , 85% of solar modules installed in the U.S. between 2018 and 2020 were imported, with most components still coming from China. Even as domestic factories pop up, they continue to rely on global supply chains for raw materials. Simply put, onshoring is only one piece of the sustainability puzzle.

Infrastructure: The Achilles' Heel of Clean Energy Expansion

Building clean energy supply chains isn't just about factories; it's about infrastructure-ports, railroads, and EV charging stations, to name a few. For example, the report notes that the U.S. Department of Energy estimates that 66% of American car dealerships don't have a single electric vehicle in stock, largely due to supply chain bottlenecks. And let's not forget the ports: they're the beating heart of global trade but are often powered by diesel equipment that spews greenhouse gases.

The IRA's Clean Ports Program allocates $3 billion to electrify port operations, potentially cutting emissions while improving supply chain efficiency. Still, upgrading infrastructure at scale is a monumental task requiring not just money but coordination between public and private sectors.

Flying Blind in the Sustainability Game Is Risky Business

If data is the new oil, clean energy supply chains are running on fumes. Most companies lack accurate data on Scope 3 emissions (those generated in their supply chains), which account for an average of five times the emissions from their direct operations. Worse, only 8% of companies surveyed by DP World and Canary Creative said they were comprehensively tracking and reporting these emissions.

This lack of visibility hampers efforts to decarbonize supply chains. What's needed? Better tools for tracking emissions, bolstered by policies like Europe's Corporate Sustainability Reporting Directive , which requires companies to disclose their environmental impacts. As the report points out, you can't fix what you can't measure.

Following the Supply Chain Breadcrumbs

Speaking of visibility, traceability is a game-changer for sustainability. The renewable energy sector has already embraced traceability protocols to ensure materials are sourced responsibly. For instance, the Solar Energy Industries Association has developed a protocol to track the origins of solar components, ensuring they aren't linked to forced labor.

Adopting traceability standards across industries would allow companies to verify not only where materials come from but also how sustainably they were produced. As the report highlights, this can help mitigate risks, from human rights violations to reputational damage.

The Cost of Going Green

Here's the million-dollar question: who foots the bill for sustainable supply chains? According to the survey, 61% of respondents said they were willing to pay a premium for suppliers that meet or exceed environmental, social, and governance (ESG) standards. But not everyone is on board. Nearly 30% of companies said cost-cutting remains their top priority, even at the expense of sustainability.

This tension underscores the need for incentives. Tax credits, public-private partnerships, and consumer education can all help bridge the gap between cost and sustainability. After all, a sustainable supply chain isn't just a moral imperative-it's a competitive advantage.

The Road Ahead

The clean energy transition is in full swing, but supply chains are its make-or-break factor. From upgrading infrastructure to embracing traceability, the challenges are daunting-but not insurmountable. Whether you're a policymaker, a business leader, or a consumer, the time to act is now.

For more insights and actionable strategies, download the full report, Closing the Gap on Clean Energy Supply-Chain Sustainability, here .

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