Achieving Net Zero: Policy Approaches to the Challenges of the Copper Supply Chain in the United States’ Energy Transition

Abstract

Today, investments in the copper mining industry are insufficient to produce the near-term affordable copper output levels that will be needed to supply the mineral inputs for technologies essential to meeting net zero emissions targets, like photovoltaic panels, wind turbines, and electric vehicles. This thesis investigates the role the United States government can and should play in domestic and international markets to ensure adequate copper supplies to meet expected demand in response to the energy transition. This is done by asking the research question: What are the existing policy and technical obstacles to sustainable domestic and international high-quality copper mining and refining supply chains for the clean energy transition, and how might the federal government best attempt to encourage industry investment in and/or directly develop a reliable copper supply chain to mitigate shortfalls on emissions targets and/or compromised sourcing standards that could result in environmental harm and/or social injustices?

I frame the answer to this question by splitting the United States’ copper supply chain into two–the domestic and international markets–and examining the biggest obstacles/concerns of industry and policy in both circumstances. These concerns are identified and evaluated through a mixture of a literature review on political development theory and existing climate change and copper exploration, mining, and refining policy, as well as interviews with 12 copper mining industry C-suite executives and industry analysts.

The overarching conclusion of this thesis is that not only is government copper market intervention justified in light of climate change being regarded by legislators as an existential threat, but also that the most effective actions the federal government can take to incentivize investments in copper reserve exploration, mining, and refining by the industry is to reduce the risk of such investment. I find that while some policy actions to encourage a reliable clean energy materials supply chain have been taken to date, copper’s lack of official classification as a “critical mineral” has largely exempted its supply chain from significant reform. Domestically, I find that while there is potential and political motivation for the expansion of the copper mining and refining sector, policy changes are needed to streamline the mine permitting process, encourage the development of “greener” mining technologies, increase federal agency funding to generate sector expertise, establish a national copper stockpile, and to formulate copper offtake agreements between the government and copper producers. This is all with the goal of increasing investor confidence and therefore encouraging investment in the domestic mining industry. Internationally, I conclude that policy actions like establishing a national copper stockpile and offtake agreements, promoting foreign direct investment in allied nations with significant copper reserves, establishing an organization for international collaboration in the copper sector, and removing copper trade disincentives like tariffs on imports from allied countries are needed to mitigate national security concerns in the international copper supply chain and to ensure a reliable and environmentally sustainable supply chain. This thesis concludes with two copper producing country case studies (Chile and China) that illustrate some of the possible federal approaches to and impacts of political risk and government intervention on the copper industry.