Full Title: Supply Chain Traceability: Looking Beyond Greenhouse Gases
Author(s): Hylla Barbosa, Valentina Guido, Stephen Lezak, Paolo Natali
Publisher(s): Rocky Mountain Institute
Publication Date: November 15, 2022
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Metals and minerals like steel, aluminum, cobalt, and lithium form the backbone of the energy transition. Steel and aluminum production alone account for roughly the same annual CO2 emissions as all global passenger road and air transit, including buses, cars, motorcycles, and commercial flights. Decarbonization to meet climate targets will significantly increase the need for critical minerals. For example, demand for battery materials, including aluminum, cobalt, and lithium, is projected to grow sevenfold by 2030 relative to 2020. At the same time, the social and environmental impacts of producing these materials threaten to undermine the credibility of the climate movement.
This report illustrates the path forward for responsible climate-differentiated commodities. We focus in part on how damages should be tracked in complex chains of custody. Our analysis centers on the concept of fungibility to distinguish how certain damages should be tracked along mineral supply chains. Fungible damages, like GHG emissions, can be offset or compensated in their entirety by actions taken elsewhere, usually irrespective of geography. One ton of pure CO2 emissions in Zambia may be offset by one ton of CO2 sequestration in Aruba. A nonfungible damage is a damage whose impacts cannot be offset in different supply chains because their location and consequences are specific to the geography where these damages occur (e.g., child labor, water pollution, or biodiversity loss).