(Reuters) - The United States and its allies must encourage mining projects in countries where Western corporations are reticent to do business to guarantee a reliable and sustainable global supply of the critical minerals needed to combat climate change, a senior White House official said on Monday.
In a stark warning, White House senior adviser for energy and investment, Amos Hochstein, said mineral resources in nations like the Democratic Republic of Congo and Zambia were essential to meeting enormous global demand for clean energy components and power infrastructure to support the growth of artificial intelligence. They also offered an alternative to the world's current dependence on China.
"We can all live in the capitals and cities around the world and say 'I don't want to do business there.' But what you are really saying is we're not going to have an energy transition," Hochstein said on a panel at the Milken Institute Global Conference in Los Angeles. "Because the energy transition is not going to happen if it can only be produced where I live, under my standards."
President Joe Biden's landmark climate change law, the Inflation Reduction Act, created big subsidies for producers of minerals like lithium and copper that are needed in equipment like batteries and solar panels.
The same is now needed for projects in countries that possess large amounts of those resources but may have poor labor and environmental standards and less stable political systems, Hochstein said.
"If you want to invest in, whether it's Chile, Peru, Ecuador, Mexico, Congo, Zambia, DRC, etc, Angola - these are different profile countries that have different kinds of risks associated with them. And Western finance has basically said we will not be able to absorb this risk," Hochstein said.
The United States and Group of Seven (G7) nations as well as Australia, South Korea and Saudi Arabia must collaborate to unlock capital that would back up companies that currently are unwilling to take on projects in countries they deem risky to their reputations or assets, Hochstein said.
The capital could flow through U.S. agencies like the U.S. International Development Finance Corporation, Export-Import Bank of the United States and global institutions like the World Bank and International Monetary Fund.
Those collaborations must offer countries incentives to improve their communities and quality of life, Hochstein said.
"The government has a real role here of incentivizing private capital by taking more risk in this initial work, in a responsible manner, but more risk to allow the private sector to come in, augment it and allow the investment so that we have a diversified, sustainable and equitable energy transition," Hochstein said.