Green energy revolution demands cleaner supply chains

DAR ES SALAAM: THE green-energy revolution is reshaping the global economy, with rapid growth in solar power, wind energy, electric vehicles, batteries, green hydrogen and energyefficient technologies.

However, this transition demands significant quantities of minerals, metals, manufacturing capacity, transport and infrastructure.

From an economic standpoint, this reveals a key paradox: A truly green economy cannot exist if the supply chain for green technologies remains environmentally damaging, socially harmful or highly carbon-intensive.

Manufacturing solar panels, batteries, electric vehicles and wind turbines relies heavily on minerals such as copper, lithium, nickel, cobalt, graphite and rare earth elements. Extracting and processing these materials can result in significant greenhouse gas emissions, water consumption, land degradation, waste and damage to biodiversity.

When minerals are extracted inefficiently, transported over long distances using fossil fuels and processed in facilities with high carbon emissions, the environmental advantages of the final cleanenergy products are reduced.

Therefore, establishing a sustainable green-energy supply chain requires a holistic life-cycle approach. It begins with responsible mineral extraction and continues through processing, manufacturing, transportation, installation, operation, recycling and, ultimately, disposal.

This involves increasing the use of renewable energy in mining and processing, improving resource efficiency, minimising waste, strengthening environmental standards and creating circular-economy systems that recover valuable materials from used batteries, solar equipment and other technologies.

For Tanzania and other African countries, this shift presents both opportunities and developmental challenges. Africa possesses vast reserves of crucial minerals needed for the energy transition. However, exporting raw minerals limits the economic benefits that can accrue to local economies, as discussed during the SADC Industrial Week in Durban a few months ago.

A more effective supplychain strategy should promote beneficiation, mineral processing, component manufacturing and, ultimately, technology production within Africa. This approach can create jobs, strengthen industrial capabilities, increase exports and develop domestic technological skills, while maintaining environmental and social safeguards.

Within these supply chains, Development Financial Institutions (DFIs) should evolve into strategic financiers and architects of the green-energy economy rather than simply providing traditional project loans.

First, DFIs should provide long-term financing for green infrastructure, including renewable-energy generation, transmission networks, energy-efficient industrial facilities, clean transport and energy-storage systems. Many of these investments involve high initial costs and long payback periods, making commercial banks reluctant to finance them.

Second, DFIs should finance the entire value chain rather than isolated projects. Financing should extend from responsible mineral extraction to processing, manufacturing, logistics, renewable-energy supply and recycling. This ecosystem approach can reduce supply-chain bottlenecks and encourage complementary investments.

Third, DFIs should leverage blended finance, guarantees, concessional funding and risk-sharing instruments to attract private investment. These mechanisms can help reduce perceived risks associated with innovative green technologies and emerging industrial sectors.

Fourth, DFIs should prioritise Environmental, Social and Governance (ESG) standards in their lending decisions. Projects funded through development finance should demonstrate credible plans to reduce carbon emissions, manage resources responsibly, protect communities and deliver measurable environmental outcomes.

Ultimately, DFIs should support innovation and promote local enterprises, especially Small and Mediumsized Enterprises (SMEs) that provide components, services and technologies for the green economy.

Their main role should be to foster clean, competitive and locally rooted green industrial ecosystems, ensuring that the transition to green energy results not only in reduced emissions but also in industrial growth, job creation, technological advancement and sustainable economic transformation.

By examining these factors, it becomes clear that China’s achievements in the green transition have been deliberate. While Western leaders have long discussed turning climate-change initiatives into economic opportunities, China has actively developed a robust industrial sector around this objective.

Today, China dominates much of the world’s clean-energy supply chain, producing about 86 per cent of global solar panels and leading in the manufacture of batteries, electric vehicles and many related materials.

China has also contributed significantly to reducing the cost of solar power to previously unthinkable levels, making clean energy more affordable and accessible globally. China has not merely participated in the green transition; it has emerged as a dominant force in the clean-energy economy.

China’s strategic approach to the green transition sets it apart. While many governments view climate policy primarily as an environmental concern, Beijing has increasingly treated it as an opportunity to develop new industries. As a result, China has established a leading position in clean-energy supply chains, particularly solar-panel manufacturing and battery production.

Western governments are also focusing on revitalising their industrial sectors. The United States, for example, has passed the Inflation Reduction Act to boost domestic clean-energy projects, while the European Union is developing the Net-Zero Industry Act to strengthen European manufacturing and reduce strategic dependence on external suppliers.

These efforts indicate that the green transition is no longer solely about reducing carbon emissions. Major powers increasingly view it as a contest for technological leadership and greater control over the supply chains that will power the 21st century.

China’s dominance in key green-economy sectors is significant. However, the challenge ahead is more complex. The global community must be cautious about replacing dependence on fossil fuels which have contributed to decades of geopolitical tensions and significant environmental damage with dependence on concentrated and often contested cleanenergy supply chains.

Such a shift could introduce new risks that require careful management.

Cobalt, a vital component in many batteries, is predominantly mined in the Democratic Republic of Congo and enters the world market through various routes, including Dar es Salaam Port. Tanzania’s port is an important regional trade gateway for minerals from landlocked countries.

Meanwhile, China accounts for approximately three-quarters of global cobalt refining. Despite its economic importance, the cobalt supply chain faces significant concerns, including reported labour-rights and environmental challenges.

Indonesia’s nickel industry highlights a similar concern. As nickel becomes increasingly important for battery production, much of its processing remains heavily dependent on coal-fired power.

The green transition could lose public trust if consumers embrace cleaner technologies while pollution and environmental damage are simply transferred to other parts of the world.

For many countries that are not competing with China in clean technology, the concern is not China’s rise as a clean-energy leader. The greater challenge is ensuring that the clean-energy movement does not simply shift its environmental and social costs along the supply chain.

Although solar panels, electric vehicles and batteries produce fewer emissions during use, their overall environmental performance depends partly on how the minerals and materials used to manufacture them are sourced and processed.

A sustainable green transition must therefore account for the full life cycle of clean technologies from mining and refining to manufacturing, transportation and, ultimately, the recycling or disposal of products that support renewable energy.

This is the focus of the next stage of the global energy transition. Countries and companies that develop diversified and resilient supply chains while maintaining high standards of transparency, environmental responsibility and labour protection will be better positioned to shape the next phase of the green-energy shift