Japan Leads Global RISE Initiative to Diversify Renewable Energy Supply Chains

Japan, the World Bank, and other global partners have recently initiated a significant project aimed at diversifying renewable energy supply chains, highlighting the growing global concern over dependence on China for critical materials used in electric vehicles (EVs), solar panels, and more. This initiative, known as the partnership for Resilient and Inclusive Supply-chain Enhancement (RISE), is designed to provide financial and technological support to emerging countries in the supply chain, particularly those in the Global South, including Asia, Africa, and Latin America. RISE will enable these countries, currently primary producers of raw materials, to enhance their capabilities in processing these materials and assembling final products, thus ensuring a stable global supply and mitigating economic security risks.

The collaboration, featuring partners like the U.K., South Korea, Canada, and Italy, has committed over $40 million in initial contributions, with Japan alone pledging $25 million. RISE focuses on reducing dependency on specific countries like China for key materials, a concern amplified by China’s dominant role in the EV and solar panel sectors. For instance, while China accounts for 10% of the world’s lithium output, it controls 55% of its processing and a 75% share in battery production, and over 90% of substrates used in solar panels are manufactured in China. This dependency poses a security risk for industrialized economies, especially with increasing investments in decarbonization.

The initiative, endorsed by G7 finance ministers and central bankers, aligns with the May summit’s communique emphasizing derisking rather than decoupling supply chains. It seeks to maintain economic ties with China while reducing critical material dependencies, offering a balanced approach that respects the geopolitical sensitivities of countries in the Global South. Partnering with the World Bank leverages its expertise in development assistance, allowing advanced economies to collaboratively build alternative, more resilient supply chains, crucial for both economic stability and the transition to renewable energy. This strategy not only enhances procurement efficiency but also contributes to global sustainability efforts, aligning with the goals of procurement consulting companies like GetAhead, that focus on supply chain resilience and diversification.