Germany's interests - and those who can help realise them

Securing Essential Natural Resources and Protecting the Climate

Direct or indirect access to natural resources is a necessary condition for human life and economic activity. Essentially, this involves vital resources such as air, water and food, as well as an environment offering moderate temperatures or protection from hazardous weather.

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Direct or indirect access to natural resources is a necessary condition for human life and economic activity. Essentially, this involves vital resources such as air, water and food, as well as an environment offering moderate temperatures or protection from hazardous weather. The supply of vital resources generally requires access to other natural resources (for example, fuels for heating or ores for tool manufacture). Economically developed societies have an increased demand for resources and raw materials both in terms of quantity and number.[i]

In our world, which is still highly globalised despite the Covid pandemic. with its rapidly growing population and dynamic technological and economic development,nthere are no longer major differences in the demand that most countries have for natural resources and raw materials (e.g. through the worldwide use of electronic devices or other goods, such as cars), This demand, however, has also fundamentally changed in recent years. The mobility sector is one example: for roughly the last one hundred years, the option of motorised mobility anywhere in the world has depended on access to petroleum-based fuels. Growing electromobility is now creating new resource dependencies, for example in battery cell production, which will require metals such as lithium, cobalt and nickel for the foreseeable future.

The same applies to energy supply in the electricity, building and industrial sectors. Here, fossil fuels (oil, natural gas and coal) have dominated world markets since at least the middle of the 20th century. In these sectors, too, we have witnessed an accelerated change since the turn of the millennium , because raw materials such as iron ore, bauxite, rare earths, silver, indium or copper play a central role in the production of wind turbines or solar cells. With regard to power generation in a densely populated country like Germany, an additional aspect needs to be considered: the availability of land areas (as a resource) that are required for using renewable energies, and that have sufficiently favourable natural conditions (relevant mainly for wind power)is limited. Acceptance issues among certain sections of the population are already slowing down the expansion of renewable energies, and this trend is threatening to become worse in the coming years. For this reason alone, energy self-sufficiency in Germany, based on renewable energies, is an unrealistic prospect. Energy imports and reciprocal supply models, including partner countries inside and outside the EU, remain indispensable. This becomes even more relevant in view of the increasing importance of hydrogen, produced by renewable energies in large volumes, which is designed to play a key role in the defossilisation of primarily manufacturing and certain transport modes in the future.

With its striking industrial and export orientation, Germany is one of the world’s largest consumers of mineral resources, which are also of key importance for numerous future technologies. Based on weight, ores (especially non-ferrous metals), fossil fuels (oil, natural gas, coal) and other mineral resources each account for just over a quarter of Germany’s raw material imports, and biomass for about a fifth (90 percent of which comes from agriculture).[ii] Due to a lack of domestic deposits , Germany has to import almost all of these raw materials, for example from Peru (copper), Brazil (iron ore) or South Africa (platinum). There are risks associated with this import dependency, caused by:

  • price fluctuations on the world markets,
  • a rapidly increasing overall demand for (critical) raw materials,
  • supply disruptions due to various crises, such as Covid ;
  • concentrations of market power in a few countries and companies, sometimes along entire value chains (as in the case of China and Chinese companies, covering the entire process from extraction and processing of rare earths to the manufacture of the end product),
  • trade disputes, protectionism, and distortions in international competition caused by systematic state support programs for specific companies,
  • higher environmental, social and transparency standards in raw material extraction and trading as well as exercising proper due diligence along the supply chains.

In order to reduce these risks, raw material consumption should be decoupled from economic growth as much as possible. At the same time, this is how Germany intends to protect finite natural resources and reduce net greenhouse gas emissions to zero by 2045, in accordance with the national climate protection act. Because there is a close link between resource consumption and climate change. Not only does the increasing worldwide extraction and consumption of raw materials and resources have a massive impact on the environment and climate, but the reverse is true as well, as illustrated bywater shortages, soil erosion or crop failures, caused by more frequent and severe extreme weather phenomena.

Last but not least, climate change is a potential crisis intensifier that poses security risks, among other things, and that can also lead to migration movements. In this context, it is important to recognise that climate change does not just raise the question for German foreign policy of which partner countries offer the greatest potential for reducing emissions. From the perspective of many developing and emerging countries, the issue of adapting to climate change, which in some cases can no longer be avoided, has moved to the top of the agenda because of their vulnerability. It is therefore in Germany’s interest to support strategic partner countries in coping with the effects of climate change.

[i] The terms (natural) “resource“ and “raw material“ have different meanings: whereas forest, land or ores are considered resources, wood, grain or iron are raw materials derived from them. Air, water or climate, on the other hand, are resources that have no raw material counterpart. The term “resource“ is therefore broader and more general. Ore, for example, is the collective term for metal-bearing rocks from which various raw materials such as iron, aluminium or copper are extracted. A distinction must also be made between renewable (e.g. plant or animal-based) raw materials or resources (wind, sun) and non-renewable resources (e.g. natural gas, coal or ores). However, some renewable resources can lose their regenerative capacity due to overuse or certain damaging environmental influences and thus become finite.

[ii] The latest reliably available data is from 2014.

In 2007, chaired by the Federal Ministry for Economic Affairs and Energy (BMWi), the Interministerial Committee (IMA) on Raw Materials was set up, thereby defining the securing of raw material supplies as a cross-cutting political issue.[i] The German government’s first official raw materials strategy was published by the BMWi in 2010. It covers non-energetic mineral resources, i.e. it does not include crude oil, natural gas and coal or plant-based, especially agricultural, raw materials. The strategy was developed against the backdrop of sharply rising prices since 2003 and increasing supply risks in the international raw material trade. This development was accompanied by an increasing dependence on imports of raw materials in Germany and Europe. The 2010 raw materials strategy was drawn up on the premise that businesses themselves are primarily responsible for securing their own supply of raw materials. The government’s responsibility is to support companies politically through appropriate trade agreements and through advisory services. To this end, the German Raw Materials Agency (DERA) was founded, which analyses foreign raw material risks and potential and, increasingly, also reviews the sustainability aspects of supply chains.

In response to the rise in raw material prices and increasing trade restrictions (such as restrictions on the export of rare earths by China), the German government concluded government agreements with Mongolia (2011), Kazakhstan (2012) and Peru (2014) – so-called raw material partnerships. In addition, a memorandum of understanding was signed with Australia in 2017 on closer institutionalised cooperation in the fields of raw materials and energy. Raw material cooperation projects, which are less binding than raw material partnerships, were initiated with Chile, Ghana and Canada. But it is above all credit guarantees that are issued by the federal government and that provide long-term financial cover for raw material purchase contracts signed by German companies which are frequently used financial instruments. At the same time, German companies have largely withdrawn from the extraction of raw materials themselves (despite support programmes, such as conditionally repayable loans).

The focus had shifted in the updated version of the raw materials strategy, which was adopted by the German government at the beginning of 2020: the primary concern is now the influence on raw material demand caused by disruptive technologies, trade disputes, concentrations of power in the market and sustainability requirements along the supply chains. The objective is to link the implementation of the raw materials strategy with the goals of the German industrial strategy and the sustainability strategy (with its national and international focus) and with climate goals. Partner countries are to be supported in setting up stronger supervisory authorities for mining – thereby also ensuring a more water and energy-efficient, environmentally friendly raw material extraction. A development policy programme to this effect has already been launched in the Andean region. Financial support for environmentally sound recultivation of mining sites in Mongolia is another example.

With regard to electromobility, the federal government (along with the EU Commission) has already publicly emphasised the need to address the dependency on battery cell imports from the Far East and the plan to promote battery cell production in Germany (and Europe). In spite of this, the dependency on importing raw materials will persist, especially for lithium, cobalt, nickel, graphite and manganese. Large amounts of copper and rare earth will still be required for electric drivetrains (as well as for numerous other electrical products). While it is relatively easy to source copper and nickel on the world market, procuring manganese and lithium, and especially cobalt, graphite and rare earths, entails greater risk. 70 percent of the world’s graphite and 85 percent of rare earths are mined in China; 61 percent of cobalt comes from the Democratic Republic of the Congo. So there are not only very few countries that can supply these raw materials, but these countries are also plagued by political uncertainties. What’s more, the Covid pandemic has once again highlighted the kinds of supply risks that emerge if there is too much dependence on imports from supposedly safe supplier countries in the event of severe and sudden crises.

In the energy sector, the so-called energy partnerships with important energy producing, energy transit and energy consumer countries are a key instrument in the BMWi’s energy foreign policy strategy. The primary goal of this cooperation is to promote the expansion of renewable energies and the use of efficient energy technologies. In addition to the desired effect of climate protection, the objective is to reduce global competition for increasingly scarce energy resources and to increase the security of supply for Germany. At the same time, the federal government hopes that export opportunities for German companies offering energy-efficient products and innovative energy systems can be improved. Examples are the German-Norwegian energy cooperation, the German-Russian modernisation partnership ( with a focus on energy efficiency), as well as the energy partnerships with Turkey, Nigeria, Morocco, Tunisia and Algeria. As far as the major energy-consuming countries are concerned, there are partnerships with India, China, South Africa, Mexico and Brazil, based on the assumption that these countries exert a strong influence on global consumption and thus also on fossil fuel prices. In the case of Japan, the focus is on joint research and pilot projects, as well as on various types of cooperation for accelerating the energy revolution. A particular priority is innovation and digitalisation[ii] in the field of renewable energies, power grid development and hydrogen. In June 2020, the BMWi published a dedicated national hydrogen strategy, including an international cooperation roadmap, in order to respond to the expected future significance of this energy source. By the same token, a memorandum of understanding was signed with Saudi Arabia, in March 2021, on a cooperation on generating, processing, using and transporting green hydrogen. The “Atlas of Green Hydrogen Generation Potentials in Africa“ that was published in May 2021 analyses the potential for the generation and export of green hydrogen in Western and Southern Africa.

[i] In addition to the BMWi, the following federal ministries were represented in the IMA: the ministries of finance, agriculture, environment, education, development, transport and of the interior.

[ii] https://komor.de/digitisation-and-digitalisation-you-need-to-know-the-difference/ [05/11/2020].

In view of the various strategy papers (sustainability, industry, raw materials and hydrogen strategy, climate protection plan) that the German government has recently developed or updated, it can at least be said that the need for a more strategic approach in its policy-making has been recognised and has been translated into appropriate goals and guidelines. When considering the level of practical implementation, however, it remains to be seen to what extent real coordination will be achieved between the ministries concerned and the various strategy papers. Different approaches, responsibilities and interests must be reconciled, at least broadly. What is not yet clearly visible, however, is an attempt to bring together the potential for climate policy cooperation and geostrategic and security policy considerations. Why should Germany, for example, not offer those countries more climate policy support that would make good, close partners in other areas as well, starting with raw materials?

There are some indications that this approach is being tried in individual cases. Germany, promotes the expansion of renewable energies in Morocco, for example, thereby supporting a country in a very fragile region, but in the immediate European neighbourhood. This focus makes sense, for security policy as well. Because of its enormous renewables potential and its geographical proximity, Morocco is now also considered a possible partner for what is regarded as the necessary, long-term import of hydrogen and hydrogen-based products that are carbon-neutral, having been produced with renewable energies, for different use cases. Positive dependencies could thus be created for both sides without producing excessive, one-sided risks.

Such risks are more likely to emerge from importing fossil fuels. Germany has to import almost all of its oil and 90 percent of its natural gas. While the dependency on individual supplier countries is less relevant in the case of crude oil, because it is supplied globally and flexibly by tanker from a large number of countries, the situation is different for natural gas imports, which usually depend on pipelines. These imports come mainly from Russia, the Netherlands and Norway.[i] Nevertheless, German gas supply is highly diversified compared to other European countries. Additional significant diversification and balancing of supplier countries is not really possible due to limited capacities on the part of supplier countries and limited infrastructure (natural gas pipelines). Nor has this been a political priority for Germany to date, as shown by the German government’s favourable position on the Nord Stream 2 gas pipeline that runs from Russia on a direct route through the Baltic Sea to Germany – regardless of protests from Brussels and several Eastern European countries and (at least temporary) US sanctions. Criticism of the project focuses on the high level of dependence on Russia as a political rival of the EU. This potential conflict (even within Europe) is likely to persist for years to come and Germany should keep a watchful eye on this.

Jasper Eitze is Policy Advisor for Energy and Resources in the Analysis and Consulting Division.

[i] Since supply quantities are no longer published based on country of origin for data protection reasons, the German government can no longer show dependency by individual supplier countries.

Last update: August 24th, 2021

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RUSSIA

as a partner for securing essential natural resources and protecting the climate

Economic growth and employment in Germany largely depend on key, energy-intensive industries, such as chemical or metal production. Despite the increasing importance of renewable energies, petroleum and natural gas – the first and second most important energy sources in Germany – play an important role for these industries.

IRAQ

as a partner for securing essential natural resources and protecting the climate

Iraq has the world’s fifth largest oil and twelfth largest natural gas reserves. The country is a founding member of the Organisation of Petroleum Exporting Countries (OPEC) and, in recent years, has become its second largest producer. The Iraqi government plans to further expand the oil and gas sector in the coming years, thereby increasing production capacities even more.

SOUTH AFRICA

as a partner for securing essential natural resources and protecting the climate

According to Federal Minister Müller, Africa is to become the “green continent of renewable energies”. South Africa, the continent’s most developed economy, is pursuing ambitious goals in this area, similar to those being debated in Germany, for example, drastically reducing CO2 emissions, reducing the massive dependence on coal and introducing a carbon tax.

PERU

as a partner for securing essential natural resources and protecting the climate

Peru is an exception in Latin America in terms of its enormous wealth of resources and biodiversity. The country has three large landscape zones: the coast, most of which is covered by desert, the Andes and the jungle region. According to the World Resource Institute, Peru is one of only eight megadiverse countries in the world, possessing 84 of the 104 existing life zones. 76 percent of the country is occupied by rainforest, which means that the country has the largest share of the Amazon rainforest after Brazil.

JAPAN

as a partner for securing essential natural resources and protecting the climate

For Germany, Japan is one of the most important economic and value partners in Asia. In addition to the desire to jointly maintain and further develop the multilateral order, there is also the desire for closer cooperation in future technologies. Japan and Germany face very similar challenges, particularly with regard to the future of industrial production and the demographic development of their societies.