Sustainable and Reliable: Securing Resources for the Clean Energy Future

Beginning in late 2021, tens of thousands of people in Serbia took to the streets, blocking roads and bridges. They were protesting the government’s support of a lithium mining proposal––dubbed the Jadar project––and the passage of several laws ostensibly designed to push for increased mining.¹ The protesters believed those laws to be undemocratic attempts to advance mining projects against the public will² and deemed the environmental and safety impacts of the Jadar project––from water and soil pollution to the threat of a breached tailings dam––too high a price. Despite the long-standing nature of the project, which global mining giant Rio Tinto had in the works since a 2004 agreement with the Serbian government, the protests were effective. In early 2022, the Serbian prime minister—who was facing reelection—dealt Rio Tinto a significant blow and revoked the mine’s permits. If the mine had opened, it would have made Serbia one of the largest global producers of lithium,³ a core component of batteries for electric vehicles (EVs) and grid storage.

The public’s outrage over the proposed mine had real consequences. The government’s decision to override public concerns to push through the initial proposal meant Rio Tinto lost the metaphorical social license to operate, or the local stakeholders’ acceptance of a project. Ultimately, the company lost the physical permit for the mine regardless of whether environmental impacts could have been effectively mitigated or whether the local communities could have benefited from the mine. The prime minister still sees lithium as one of the most important components of growing Serbia’s economy, but she sees no path to reviving this particular project.⁴

While it is only one example, the Jadar project is emblematic of the importance of securing the social license as the world moves quickly to source and develop the minerals that will underpin the global clean energy build-out. It is a significant challenge, but it is possible—and essential to success—to mine and process the battery minerals needed for the clean energy transition while also protecting communities and the environment.

The batteries for energy storage and vehicles are a key technology to power this transition, and producing them requires a secure supply of critical minerals. While battery chemistries are advancing and supply chains are changing, the five minerals critical to lithium-ion batteries—lithium, cobalt, nickel, graphite, and manganese—are not currently produced in any significant quantities in the United States. The People’s Republic of China, meanwhile, controls more than half of all supply steps needed to produce a lithium-ion battery and relies on a supply chain that is rife with human rights abuses⁵ and corporate corruption.⁶

How the United States aligns community and business interests has never been more important. Where the potential to develop domestic resources exists, the mining industry has influenced and operated under weak laws and regulations, leaving a legacy of toxic waste, displaced workers, and poisoned communities.⁷ The international record does not fare much better. Globally, the mining industry is subject to lax environmental regulations,⁸ poor labor standards in many countries,⁹ and inadequate global standards and compliance mechanisms, all of which have enabled health risks and human rights abuses due to overwork, underpayment, and exposure to toxic chemicals.¹⁰ This history has bred a deeply ingrained and warranted distrust of mining developers, even in communities that could see substantial economic and social benefits.

This is a critical decade for the United States to reshape and reclaim leadership in supply chains and the global clean energy economy. Congress has risen to the challenge through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act’s powerful new incentives for domestic investment in every step of the battery supply chain. These include the production and processing of critical minerals, the manufacture and assembly of batteries and their installation in electric vehicles and on the electric grid, and the eventual reclaiming and recycling of critical minerals from used batteries. These congressional actions will also have ramifications throughout the global supply chain, leaving three central challenges for policymakers to navigate as these investments unfold and the clean energy transition accelerates:

1. Shoring up the capacity to process and recycle critical minerals in the United States and with its democratic allies to diversify supply chains and reduce dependence on China
2. Securing the supply chains that produce critical minerals for processing domestically and in allied nations, with clear, strict standards for human rights, workers’ rights, and environmental protections
3. Making mining work for the benefit of communities at home and abroad, winning back the social license needed to move at the pace and scale necessary to realize the clean energy transition

The United States must act quickly, in concert with its allies and partners, and in a way that is equitable and just, so that the world can secure the minerals and resources needed to build a clean energy economy. This report offers a look at increasing demand and U.S. policy responses to the supply chain bottleneck. Next, it explores human rights vulnerabilities and the importance of international cooperation. Finally, it lays out recommendations for leading by example, winning the social license, and developing resources for battery technologies, offering specific domestic and international examples of communities where these principles are put into practice. This is the Center for American Progress’ first report addressing the challenges ahead. It draws on expertise from numerous sources in the organization and aims to plant a guidepost for future work on critical minerals and the clean energy transition.

Building out ethical and secure supply chains of critical minerals is a daunting goal. But putting an end to the inequities and harms of the fossil fuel-based system will benefit communities across the world and prevent the worst impacts of climate change. The United States has an opportunity to align community and worker benefits and environmental safeguards with national security and business interests as it charts a course for the world’s clean energy future.

Electric vehicles and grid storage require several specific minerals for battery technology: lithium, cobalt, manganese, graphite, and nickel, in particular. Demand for these minerals is set to skyrocket in the coming decades. The demand for lithium will increase by as much as 40 times, while demand for graphite, cobalt, and nickel will increase by as much as 25 times, by 2040 compared with 2020 levels—according to the International Energy Agency (IEA), which has modeled extensively to account for policy and technology uncertainty.¹¹ Much of this uncertainty is driven by questions around the policy landscape and technology advances that will allow efficiency, substitutions, and recycling. Recent breakthroughs have allowed for increased efficiency, and there is ample research underway to find alternatives. For instance, just last year, scientists found a way to make lithium-ion cathodes with a substitute for cobalt, which had previously been seen as a limiting factor in EV battery deployment.¹²

One of the biggest determinants of demand over time will be the circular economy. As demand for these resources increases, so too must the capacity to recycle and reuse resources to avoid or minimize costly and resource-intensive mining that can have environmental and public health impacts. Research has shown that recycling could reduce demand for battery minerals by 11 percent in 2040 and by 28 percent in 2050.¹³

But as that true circular economy is years off—and breakthroughs in efficiency and substitution are difficult to predict—where and how these minerals are mined and processed in the coming decades is a linchpin in the world’s path to meet its 2050 climate goals.

In general, countries that have the largest reserves mine and then ship raw minerals to other countries—often to China—for refining. In fact, China controls 58 to 100 percent of processing of the five battery minerals and produces roughly 70 to 90 percent of battery components worldwide.³⁴ The United States is currently 100 percent import-dependent for graphite and manganese, 76 percent import-dependent for cobalt, 56 percent import-dependent for nickel, and more than 25 percent import-dependent for lithium.³⁵ And close U.S. allies—including countries with free trade agreements, NATO allies, major non-NATO allies, and EU member countries—control less than 30 percent of mining and less than 25 percent of processing capacity for cobalt, manganese, graphite, and nickel.³⁶

Political tensions with China are real, but China is a U.S. trading partner and major geopolitical player. Regardless, it is important that no one country dominates supply chains, as this imbalance threatens to undermine the clean energy transition.

To combat this vulnerability, U.S. policy has taken major steps through legislation to shore up supply. The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), passed in 2022 and 2021, respectively, spur investment in domestic and allied processing capacity and recycling technology and have begun to conceptualize an emerging policy framework for globally secure, ethical, and transparent supply chains—what some are calling “onshoring” and “friendshoring”—of the critical minerals supply. Clean energy investments are the key to contesting China’s chokehold of the world’s critical mineral processing.

Inflation Reduction Act

The Inflation Reduction Act created a variety of new tax credits to incentivize the domestic production of critical minerals and batteries. Several credits are aimed at electric vehicles, such as the 30D New Clean Vehicle Credit, which will reward the purchase of vehicles that meet domestic sourcing requirements along with other tax credits for previously owned vehicles and commercial clean vehicles. The 30D tax credit could serve as a valuable instrument, when applied to international supply chains, to stimulate investment in mineral exploration and development.

The Inflation Reduction Act also invests heavily in domestic production and manufacturing through investment and production tax credits such as the 48C Qualifying Advanced Energy Project Credit and the 45X Advanced Manufacturing Production Credit. The 45X credit applies to both critical minerals production and processing but also several downstream products, including battery components.³⁷ This level of investment is significant and, while not a cure-all, will be central to the United States’ ability to bolster processing capacity and be competitive on a global scale.

Eligibility criteria under the Inflation Reduction Act for the 30D New Clean Vehicle Credit specifies that—in addition to being assembled in North America—the critical minerals used in the vehicle’s battery must be either extracted or processed within the United States or in a country with which the United States has a free trade agreement. To take advantage of the 45X production tax credit, qualifying components and critical minerals must be produced in the United States. Additionally, starting in 2024 and 2025, “foreign entities of concern”—any enterprise that poses a threat to U.S. national security³⁸—will be excluded from the supply chain for batteries and critical minerals, respectively, for the United States and allies who want the benefit of 30D.

This tax credit structure could simultaneously combat vulnerabilities in U.S. critical minerals supply chains while encouraging good behavior from would-be trading partners. Any desire for free trade agreements should be leveraged to incentivize country partners to meet U.S. labor standards that safeguard the well-being of communities. Given that the IRA does not define a free trade agreement, the White House has discretion to negotiate bilaterally with partner nations who do not currently have a free trade agreement, though this has drawn bipartisan ire in Congress. The White House should use this opportunity, in consultation with Congress, to secure the most advantageous deals. Specifically, agreements must require free, prior, and informed consent and include strong, transparent, and enforceable labor and environmental standards.

Expanding 30D would not only bolster the sustainability of mineral supply chains but also, ideally, promote adherence to democratic values and ethical business practices. To maintain the integrity of these supply chains, enhancing oversight and implementing stringent chain of custody protocols is necessary. These measures—some of which are discussed in more detail later in this report—should aim to deter illicit activities and ensure responsible sourcing of minerals, thereby contributing to the resilience of the international clean vehicle and battery supply chain.

Infrastructure Investment and Jobs Act

The Infrastructure Investment and Jobs Act establishes several programs at the U.S. Department of Energy (DOE) to support the processing, manufacturing, and recycling of battery minerals and components. The Battery Manufacturing and Recycling Grant Program makes grants to support demonstration projects for battery or battery component manufacturing or recycling.³⁹ The Electric Drive Vehicle Battery Recycling and Second-Life Program supports research into electric vehicle battery recycling.⁴⁰ And the Advanced Energy Manufacturing and Recycling Program makes grants to reequip, expand, or establish manufacturing and recycling facilities that produce advanced energy resources.⁴¹ Combined, these IIJA programs make $9.95 billion in grants available to support critical mineral and battery manufacturing and recycling. In October 2022, DOE announced the first tranche of DOE funding for projects that will expand domestic manufacturing for EVs and battery storage.⁴²

The IIJA also included several provisions to support sourcing critical minerals domestically, such as the Earth Mapping Resources Initiative, and grants to support research on mining.⁴³

CHIPS and Science Act

The CHIPS and Science Act is part of a strategic effort by the United States to stay ahead of China and other nations in advanced technologies.⁴⁴ This act includes a “guardrails” provision to ensure that the funding provided does not go to any “foreign entity of concern.”⁴⁵ This same language was written into the IIJA and IRA as well. The U.S. Department of Commerce has since issued a proposed definition of “foreign entity of concern” as any entity organized under the laws of China or having its principal place of business in China—and any entity organized outside of China where at least 25 percent of its voting interests are owned by the Chinese government. The U.S. Department of Treasury must also decide how to interpret this term in its application of the IRA tax credits.

The interpretation of “foreign entity of concern” could significantly influence the availability of EV tax credits as delineated under the IRA, especially considering the disproportionate market share in critical minerals controlled by Chinese entities. This is an opportunity for the United States to establish a comprehensive auditing mechanism that operates in collaboration with the European Union and other major buyers. A collaborative approach would provide greater transparency and accountability and would mitigate the risk of overreliance on any single entity, making the global EV industry more resilient.

Despite these legislative initiatives, there is still much more to be done to secure a reliable and ethical source of battery minerals. The United States must continue to invest in domestic processing and recycling research, development, and deployment, with the goal of creating a truly circular economy.

Building an international supply chain is not just about ensuring U.S. competitiveness and supporting clean energy goals. Diversifying control over critical minerals can lead to strengthened management of these resources and improved protections for the communities involved. Conversely, China’s commanding position over global supply chains for critical minerals and its lack of emphasis on environmental conditions and human rights has undermined working conditions and environmental protections in mining and processing and harmed communities living and working near these production sites.⁴⁶ In short, China feeds its processing juggernaut by relying on forced labor in Xinjiang.⁴⁷ China has also been complicit in human rights abuses in the Democratic Republic of Congo⁴⁸ and dozens of other countries across the Asia-Pacific, Latin America, and Africa.⁴⁹

Absent new partners, many countries have no other option than to do business with China’s extractive firms, which create environments where vast numbers of workers are vulnerable to dangerous working conditions, child labor, violence, and corruption.⁵⁰ As the United States and allies gain control over their own processing needs and, in turn, increasingly contract directly with domestic and foreign suppliers of raw minerals, they have a responsibility—and newfound leverage—to require the highest labor standards, transparency in business operations, and other safeguards for human rights and environmental health in a way that China has refused to do up to this point. And there is a compelling business case for firms to do so.

Community benefits plans and the Thriving Communities Network

The Biden administration is taking substantive steps to ensure investments made by the Inflation Reduction Act, Infrastructure Investment and Jobs Act, and CHIPS and Science Act result in tangible and lasting benefits in the places where projects are sited, particularly in rural and underserved communities. The Department of Energy now requires companies applying for all of the agency’s grant and loan programs to submit a community benefits plan that details a framework for how the company will address policy priorities,⁵¹ including good union jobs; community benefits; advancing diversity, equity, and inclusion; and implementing the Justice40 Initiative, which directs the federal government to ensure 40 percent of investments flow to disadvantaged communities.⁵²

The Federal Interagency Thriving Communities Network,⁵³ which is designed to target resources to the communities most in need of investment, coordinates federal capacity building and technical assistance programs across 22 federal agencies and regional commissions—including the U.S. Department of Agriculture’s Rural Partners Network,⁵⁴ the U.S. Environmental Protection Agency’s Environmental Justice Thriving Communities Technical Assistance Centers, and the Economic Development Administration’s Economic Recovery Corps, among others. These programs provide a framework for how mining can be done differently in the United States.

Accelerating the pace and driving the scale of the clean energy transition requires an all-encompassing and forward-thinking strategy. The stakes are too high and the issues too global for the United States to tackle these challenges single-handedly. A collaborative approach with international partners is not only advantageous but also a prerequisite for achieving meaningful climate progress.

The United States is working through multilateral agreements, bilateral partnerships, and even voluntary compliance mechanisms that, while not binding, have significant reputational impacts and often see impressive engagement from companies. These examples demonstrate significant room to improve enforcement mechanisms so that these strong commitments to communities, workers, and the environment can be realized.

Multilateral agreements

The Partnership for Global Infrastructure and Investment (PGII), launched at the G7 summit in Hiroshima, is one of several multilateral commitments the U.S. government has made to tackle climate change and energy infrastructure in partner countries. As part of the Blue Dot Network, the PGII is driving significant investments in climate-resilient infrastructure and transformative energy technologies, including critical minerals. One example of a partnership under PGII is a new multi-metals processing facility to be set up in Tanzania under a framework agreement for delivery of battery-grade nickel to the global market.⁶³ The partnership would build and expand resilient and transparent supply chains for clean energy technology based on extensive local engagement, respect for the environment and conservation, and safe, high-integrity labor practices. Another key example is the facilitation of a $2 billion solar project in Angola, expected to help the country generate 70 percent of its power from carbon-free sources by 2025.⁶⁴ The initiative is underpinned by a commitment to equality, strong labor standards, environmental safeguards, and good governance and transparency measures.

Achieving energy security, however, is also reliant on maintaining transparency and good governance standards in resource extraction. The United States was a co-founder and driving force within the Extractive Industries Transparency Initiative (EITI)—a global organization promoting accountability in resource extraction—but withdrew in 2017,⁶⁵ citing its inability to meet this requirement due to legal provisions that restrict the mandatory reporting of such information by companies. However, EITI has succeeded in promoting open data and transparency, important factors in accountability.⁶⁶ Rejoining EITI would underscore U.S. commitment to transparent and ethical resource extraction and set a precedent for maintaining global standards of accountability.

In another collaborative effort, the United States has joined other wealthy nations and private financial institutions in developing a new financing mechanism to support clean energy transitions in fossil fuel-dependent emerging economies. Over the past two years, these Just Energy Transition Partnerships (JETPs) have been announced for South African, Indonesia, and Vietnam, with the goal of accelerating a transition away from coal.⁶⁷ Using the Indonesian JETP as an example, where about 250,000 people are employed by the coal industry,⁶⁸ the partnership aims to accelerate the country’s shift toward cleaner energy, potentially leading to a reduction of more than 300 megatons of greenhouse gas emissions by 2030 and 2 gigatons by 2060.⁶⁹ The Indonesia JETP declaration recognizes the importance of sustainable development and economic growth and prioritizes the protection of communities and workers affected by the transition.⁷⁰ While JETPs have faced criticism⁷¹ and there are questions about whether sufficient financing can be realized,⁷² they are an example of the type of partnerships that could potentially facilitate the energy transition in emerging economies worldwide. And although none of the JETPs explicitly include critical mineral provisions, the renewable energy goals of the partnerships and the continuing multilateral cooperation they support may create space for critical mineral strategies, programs, and agreements. As such, it is important that ethical and responsible critical mineral standards accompany any projects, workplans, and programs associated with JETPs.

Dozens of nations have demonstrated a commitment to ethically sourcing raw materials through active participation in multilateral initiatives such as the U.S. government-led Minerals Security Partnership (MSP) and the Environmental Resource Governance Initiative (ERGI). These platforms provide forums for sharing and implementing best practices in resource extraction and advancing a collective commitment to sustainable and responsible sourcing.⁷³ However, merely participating in multilateral forums and professing good intentions is not sufficient. These efforts must be reinforced by robust policies, stringent enforcement mechanisms, and a shared commitment to meeting high environmental, labor, and social standards.

Bilateral agreements

The United States has also focused attention on striking bilateral deals with allies and partners abroad. The United States made strides in December 2022 by signing a memorandum of understanding (MOU) with Zambia and the Congo, key countries in the electric vehicle battery industry, to develop an integrated value chain for EV batteries.⁷⁴ Despite being nonbinding, such MOUs are an important step in countering China’s dominance of the EV market, particularly in Africa.

In March 2023, the United States and the European Union laid the foundations of a transatlantic partnership as they began negotiations on a potentially significant EV deal. This proposed agreement would enable EU-produced minerals to qualify for IRA tax credits, providing a potential incentive for closer transatlantic cooperation on supply chains. Aligning this deal with the European Union’s plans to phase out petrol and diesel cars by 2035 has the potential to catalyze advancements in electric vehicle manufacturing.⁷⁵

That same month, the United States and Japan signed a deal with the goal of diversifying supply chains and strengthening the economic and trade relationship between the two nations. Although this deal signifies progress by fostering much-needed bilateral cooperation on critical minerals, it notably lacks supply chain due diligence and enforcement mechanisms.⁷⁶ The absence of any such mechanisms underscores an area where future agreements must be strengthened.

Voluntary compliance

There are also voluntary compliance mechanisms, most notably the Organization for Economic Cooperation and Development (OECD) Guidelines for Responsible Business Conduct, which include human rights, environmental, labor, and transparency standards.⁷⁷ Civil society has used the adjoining National Contact Point mediation process to call out bad conduct by OECD country-headquartered multinational corporations in developing economies. While these guidelines do not provide any legal authorities, they can have significant reputation impacts that can be key in securing the social license to operate. Therefore, many companies respect and engage in the process.

Another example is the Towards Sustainable Mining (TSM) initiative, which is a globally recognized sustainability program that supports mining companies in managing key environmental and social responsibilities. TSM was the first mining sustainability standard in the world to require site-level assessments and is mandatory for all companies that are members of implementing associations. While not a government entity, TSM works through the consortium of mining companies who represent Indigenous groups, communities where industry is active, nongovernmental organizations (NGOs), and financial institutions. TSM’s performance protocols focus on three core areas: 1) communities and people, 2) environmental stewardship, and 3) energy efficiency.⁷⁸ Since first adopted by Canada in 2004, a growing number of mining associations have adopted the program, including Finland, Norway, Argentina, Australia, Botswana, the Philippines, Brazil, Norway, and Spain.⁷⁹

Similarly, the Initiative for Responsible Mining Assurance (IRMA) offers third-party assessment of mining operations, measuring against a set of standards that include business integrity, planning for positive legacies, social responsibility, and environmental responsibility.⁸⁰ Mining companies can complete self-audits or opt-in to a full independent assessment of specific mine sites.

These types of voluntary guidelines, programs, and assessments alone cannot guarantee good corporate behavior or human rights and environmental protections. But they can increase transparency, giving local communities more information and political power. And a company’s choice to engage—or not—can affect their image, a key component of the social license to operate.

Strengthening future agreements

These commitments and deals are strong in theory; however, all of them lack strong enforcement clauses. And voluntary compliance, by definition, has no enforcement teeth and cannot substitute for enforceable laws and agreements. Future agreements must include stringent rule of law and auditing mechanisms to ensure the responsible sourcing of critical minerals and must focus on human rights, labor, environmental, and climate perspectives.

The battery passport introduced in Europe—required through regulations adopted by the Council of the European Union—serves as an example of an existing auditing mechanism that aims to accomplish this goal. The battery passport stipulates that manufacturers of all industrial batteries and EV batteries with a capacity greater than 2 kilowatt-hours provide a uniquely identifiable electronic record containing critical information about the battery, including the raw material origin, place of manufacture, human rights record, and carbon footprint, among other information. The implementing regulations also call for supply chain due diligence, which provides transparency and an opportunity to prevent child labor and human rights abuses while upholding environmental standards.⁸¹

Even as the U.S. government strives to meet demand, it must set the strictest standards for the extraction processes employed by overseas partners and work with partners as necessary to assure they adhere to those standards. To achieve this, it is crucial that the U.S. government establish robust chain of custody protocols for supply-chain-bound EV material. Conducting regular audits of the supply chains is an important first step to verify their adherence to ethical standards and prevent any potential lapses in reporting. And tools exist, such as the Responsible Mining Index, to ensure audits are factual and practical to conduct.⁸² Enhancing these measures would support a more sustainable and ethically driven approach to critical mineral sourcing and utilization, one that draws on the benefits of friendshoring responsibly.

Additionally, the Inflation Reduction Act has provided leverage for improving labor conditions. As the United States invests in increasing processing capacity, spurred by the generous new 45X tax credit, U.S. businesses will increasingly import raw materials directly from international sources to be processed and used in U.S.-made batteries. Reviewing direct import agreements, instead of lengthy and obscure supply chains that run through China—with its history of resisting U.S. policy against forced labor—will make the Trade Facilitation and Trade Enforcement Act of 2015 easier to enforce.⁸³ It will also give the United States leverage to improve working conditions in the countries where the raw materials are mined. As U.S. support for better labor practices, environmental protections, and reinvestment in local economies leads to improved mining conditions, other countries committed to human rights will have a better choice.

The route to energy security and decarbonization lies in international cooperation, strategic investment in clean EV technology, and firm adherence to transparency and accountability. Setting global resource governance standards tied to clean energy investments would diversify the commodities market and mitigate potential supply chain risks.

In building the new clean energy economy, the United States cannot perpetuate the inequities of the old, dirty energy economy and instead must protect and empower vulnerable communities. Mining on federal public land in the United States is still governed by the General Mining Act of 1872, signed by President Ulysses S. Grant to promote mining and settlement of the West. While the mining industry has evolved from the time of prospectors panning for gold into industrial-scale operations, this law has remained on the books, unchanged. The administration recently released a report featuring a robust set of recommendations for how to modernize this antiquated law and highlighting many of the current system’s shortcomings.⁸⁴ Under the hardrock mining law, companies can mine without paying a royalty to compensate taxpayers for extracting publicly owned resources, which is paid by all other extractive industries, including oil, gas, and coal operations. Bonding requirements are insufficient to cover the cost of reclamation, and no standards for reclamation exist. Additionally, despite planning laws that call for multiple use, the public lands agencies cannot determine where mining claims can be filed, effectively prioritizing mining ahead of all other uses of federally managed lands—including cultural and historical landmarks, clean water, recreation, and conservation.⁸⁵

This 150-year history that prioritized corporations over people and left a legacy of pollution and unremediated toxic mine sites means that industry has lost the social license to operate in much of the United States. The most important stakeholders in any mining operation are the people who live in the community, have history in the surrounding lands, and depend on the nearby rivers, streams, and aquifers for drinking water and healthy communities. Restoring the power to its rightful owners—the communities near mining operations—is one of many reasons that the antiquated General Mining Act, and the underlying regulations, must be reformed. While some companies have worked to win back the trust and the social license needed to move at the pace and scale required by the clean energy transition, others have done the bare minimum. A strong set of national standards would provide more certainty and a foundation of trust for affected communities.

Reform of this law must include a requirement for engaging local communities and guaranteeing benefits. A new mine comes with a construction boom, including the need for new roads, housing, upgraded water and sewer infrastructure, and increased enrollment at schools.⁸⁶ Often, these new costs are borne by communities who may have a limited tax base or face limits from state governments in covering costs, particularly if the mining company receives substantial tax incentives to get started.⁸⁷ The result can be higher taxes, new public debt, and specialized infrastructure and governmental budgets designed around the needs of the mining industry.⁸⁸ The local economy can become narrowly specialized and dependent on mining, unable to invest in the future or leverage any windfalls from mining into a more diversified and resilient economy.

There are hard-learned best practices, including from state policy and voluntary agreements designed to address local impacts, monitor environmental performance, and share benefits that can be applied at the federal level and help inform international agreements. Engaging with local communities and finding ways to remake the mining economy to build resilience and local assets must be part of any 21st-century mining policy. This is particularly true with Tribes and Indigenous communities, who are most vulnerable to abuses from the mining of battery components. For example, more than three-fourths of lithium reserves and more than two-thirds of cobalt reserves in the United States are located within 35 miles of Tribal lands.⁸⁹

Some key principles of a modernized mining policy should include Tribal and Indigenous consent, meaningful engagement with all mining communities, strengthened environmental safeguards and financial assurances, and the use of impact plans, community benefits agreements, and permanent funds to protect taxpayers and benefit the local workforce and communities.⁹⁰

The mining industry in the United States is no different than other industries in that some facilities provide good, safe, union jobs and others fall short. For the United States to set an example for the rest of the world, companies that open new mines should abide by strong health and safety standards, allow workers who operate and maintain the mine to have free and fair access to a union, and utilize a project labor agreement for those who build the mine and its associated infrastructure.

A comprehensive policy framework will be important to ensure the United States can source critical minerals securely, ethically, and inclusively. Policymakers must address three central challenges to make sure the United States can act quickly, in concert with its allies, and in a way that is equitable and just:

1. Shoring up the capacity to process and recycle critical minerals in the United States and with its democratic allies to diversify supply chains and reduce dependence on China
2. Securing the supply chains that produce critical minerals for processing domestically and in allied nations, with clear, strict standards for human rights, workers’ rights, and environmental protections
3. Making mining work for the benefit of communities at home and abroad, winning back the social license needed to move at the pace and scale necessary to realize the clean energy transition

The following recommendations, while not an exhaustive list or sufficient on their own, highlight some of the early actions U.S. policymakers must pursue to address these challenges:

• Provide clear and strong policy signals about the goals of the global energy transition. Companies need certainty to make investment decisions and will be more conservative and bottleneck supply if U.S. policy direction is unclear.⁹¹
• Provide a framework to engage communities, guaranteeing local economic benefits and environmental safeguards. This should include community impact plans, community benefits agreements, and new royalty-saving and investment policy.⁹² Reforming the General Mining Act of 1872 and the underlying regulations should provide an opportunity to formalize many of these best practices.
• Set clear and enforceable standards for human rights to deter illicit activities and ensure responsible sourcing of minerals by respecting workers’ rights and environmental protections, domestically and abroad.
• Invest in developing ethically sited domestic mining that will become an example to the world for transparency, community engagement and Tribal consultation, labor standards, and environmental safeguards.
• Invest in developing U.S. processing and refining capacity to give the United States leverage to improve mining conditions internationally through direct sourcing of raw materials.
• Build partnerships and collaborations with allied nations and international organizations that increase investments in processing and build out refining capacity. This will help create supply chains that are less vulnerable to geopolitical risk or overdominance.
• Address financing concerns by urging lending institutions to take on the necessary risk and make faster decisions in ways that build the resilience of communities. The U.S. International Development Finance Corporation (DFC) must shoulder the risks that the private sector will not and be aggressive with loans to build out ethical supply chains. Additionally, international lending institutions such as the World Bank and the ICF were designed to take risks to support resilient communities. They must act on that mission.
• Maintain integrity of supply chains by enhancing oversight and implementing stringent chain of custody protocols.
• Invest in research, development, and innovation, including a circular economy that minimizes ongoing extraction.

Local communities and stakeholders have the potential to wield immense power over corporate behavior in the sourcing and processing of battery minerals. While history provides very few examples of respectful engagement with communities and Tribes, there are many examples where a community banded together to oppose poor corporate behavior and ultimately revoke the social license for a mine. The example of the Jadar project in Serbia is one of many, and communities are recognizing this power.

Corporations are taking note as well. Increasingly, mining interests are seeking local input and engaging with the community early; these companies understand that what is good for the community is good for business. Through engaging with local leaders and negotiating community benefits agreements, they are securing the social license to operate and guaranteeing through the most effective means possible that they are only investing in the projects that are viable because they have earned local support.

While the Center for American Progress does not endorse specific mining operations, much can be gained from reviewing illustrative cases that present scenarios where there is a positive dynamic between mining companies and community-based decision-makers. Through interviews and discussions with mining operators and community leaders at several projects—both domestic and international—CAP identified mining projects that illustrate best practices and deserve closer review by decision-makers, mining interests, and host communities that support building a responsible supply of critical minerals. No single mine excels in each key principle. Rather, the example mines demonstrate how best practices work in the real world.

Best practices for community mining engagement:

1. Early engagement and transparency are essential. This builds trust and helps identify issues early when they are easier and more cost-effective to address.
2. Communities require capacity and technical assistance to meaningfully engage. Tribal and local governments in rural communities often have limited staff, expertise, and resources to understand mining proposals, articulate local concerns and desired benefits, or negotiate with more powerful and well-resourced mining companies. Capacity support must continue through the life of the mine and mine closure.
3. Mining interests need an active local partner. Mining companies can and should enter into agreements to stand up locally led environmental monitoring and “good neighbor” agreements, or impact plans. Where capacity is a limiting factor, the mining company should provide funding for local staff and for independent technical, policy, and legal expertise as needed. A well-resourced Tribal government or NGO that is accountable to the local community and that can hold the mining company accountable to their agreements helps secure and maintain a social license to operate.
4. Successful community benefits agreements come from the community and are tied to the project, not just the current mine owner in case it changes hands. Community benefits agreements build local assets—including a skilled unionized workforce, infrastructure and amenities, and locally controlled funds—that help the local and regional economy leverage mining activity into a more diversified and resilient economy. This includes collaborative union-management workforce training programs; a project labor agreement for construction; collective bargaining rights for workers; and local hiring agreements. Community benefits agreements also involve profit sharing via local ownership, locally controlled permanent funds, purchase agreements with local businesses, and investments in community assets—such as child care, parks and trails, and public infrastructure—that help leverage mining into a more diversified and resilient local economy.
5. Pursue the right mines in the right places. There must be room to say no to the wrong mine in the wrong place. Mine characteristics and location matter. Some mines have minimal risk because of geology and proximity to communities. Others have geologic characteristics, such as acid-forming rocks, that have a much higher risk of pollution, groundwater contamination, and more. Additionally, some places are so culturally important that they are too special to mine.
6. Tribes must be treated as the sovereign government entities that they are. They are authorities and decision-makers, not merely stakeholders. Indigenous people have been living on and stewarding these lands for millennia. As such, federal land management agencies must engage in government-to-government consultation while considering treaty obligations and rights as well as sacred and cultural resources. Mining operations that affect treaty and reserved rights and sacred sites that cannot be fully remediated must be off the table. Additionally, mine permitting and approvals under the National Environmental Policy Act (NEPA) should incorporate Indigenous knowledge.
7. Hiring local workers supports the local economy and improves community relations. Some mines commit to a percentage of local hires, which means more of the economic benefits are invested and spent locally.

The following are mining projects that illustrate one or several of the above key principles:

The United States has an enormous opportunity ahead, and policymakers must choose a path that will determine the success of the clean energy transition. Now is not the time to bypass commitments to communities in the name of speedy development. Leaving communities behind or undermining their avenues to engage or say no threatens the social license on which the clean energy economy will depend. The challenges ahead—from shoring up processing and recycling capacity to securing supply chains to making mining work for the benefit of communities across the globe—are daunting. But only a clear-eyed commitment to equity and justice, supported by policy certainty and cooperation with U.S. allies, will set America on a path that can meet the moment.

If we fail, our future will be bound to the inequitable fossil-fuel based economy that has allowed polluters to profit, putting the health and livelihoods of billions of people at stake. But if we succeed, the future will give communities avenues to participate in the clean energy economy. It will raise working and human rights standards in countless communities. And it will move us toward a world where we avert the most catastrophic effects of climate change.

The people of Serbia, while they still face enormous challenges, have unlocked and demonstrated an important truth: When acting in concert, the people, not the corporations, hold the power. It is time for communities across the globe to reclaim this power and to demand that the clean energy economy be brighter, more equitable, and more just—and work for communities everywhere.

The authors would like to thank Robert Johnston, Chang Shen, Joel Moffett, Sadhana Mandala, Trevor Higgins, Mara Rudman, Mike Williams, Alan Yu, Anne Christianson, Leo Banks, Doug Molof, Heba Malik, Shannon Baker-Branstetter, Emily Gee, Lauren Vicary, Bill Rapp, Steve Bonitatibus, Beatrice Aronson, Audrey Juarez, and Shanée Simhoni for their review and contributions to this report.