The Lithium Trap: Why the Green Energy Boom Is Repeating the Resource Curse

By Maya Li May 29, 2025

The race for decarbonization has created a paradox. As nations rush to abandon fossil fuels, they are becoming dependent on another finite resource—lithium. The International Energy Agency (IEA 2024) reports that demand for lithium, a core component in electric vehicle (EV) batteries, will increase sevenfold by 2030. Yet this new commodity rush is recreating the same patterns of inequality, exploitation, and volatility that once defined the oil age. The “green transition” is not only an environmental project—it is an economic battleground.

The Anatomy of a New Commodity Boom

Lithium extraction is concentrated in a handful of regions: Australia, Chile, China, and Argentina account for over 90 percent of global supply. This concentration mirrors the oil geography of the 20th century—where resource-rich nations remain dependent on foreign capital and technology.

In Chile’s Atacama Desert, lithium mining consumes 65 percent of the region’s freshwater, according to UNESCO (2024), displacing Indigenous communities and threatening fragile ecosystems. Meanwhile, Chinese firms such as Ganfeng Lithium and CATL control more than 60 percent of global refining capacity. As the World Bank (2024) warns, “control of processing, not extraction, defines the next energy hegemony.”

The green revolution, then, risks becoming a recolonization—this time through battery chemistry rather than oil concessions.

The Illusion of Sustainable Extraction

Proponents argue that lithium mining is cleaner than fossil fuel drilling. Yet lifecycle analyses suggest otherwise. The Journal of Cleaner Production (2024) estimates that producing one ton of lithium carbonate emits 15 tons of CO₂ equivalents—comparable to cement production.

Moreover, mining projects in the “Lithium Triangle” of Chile, Argentina, and Bolivia have sparked widespread protests. Bolivia’s Uyuni salt flats, once a symbol of national pride, now suffer groundwater depletion and soil contamination. Despite holding the world’s largest reserves, Bolivia earns less than US$400 million annually from lithium exports—less than 1 percent of its GDP.

The pattern is familiar: resource wealth without prosperity.

The Green Colonialism Debate

Western policymakers often frame lithium extraction as “partnership” with the Global South. In practice, technology transfer remains minimal. The OECD Development Cooperation Review (2024) finds that less than 12 percent of joint-venture profits** from lithium projects stay in local economies.

Chile’s government has responded by nationalizing new lithium concessions under state-owned Codelco, mirroring OPEC’s emergence in the 1960s. Yet multinational automakers—from Tesla to BYD—continue to negotiate long-term offtake agreements that bypass domestic value creation.

This asymmetry is not accidental—it reflects the structural power of technology ownership. Those who own battery patents and recycling infrastructure capture the value; those who dig the raw materials bear the cost.

China’s Lithium Leverage

China’s dominance in lithium refining is not merely industrial—it is geopolitical. The US Geological Survey (USGS 2025) notes that 78 percent of processed lithium chemicals originate from China. This concentration gives Beijing leverage over global EV supply chains akin to OPEC’s oil control in the 1970s.

In 2024, when Chinese export restrictions on gallium and graphite caused EV battery prices to spike 14 percent, Western policymakers recognized their vulnerability. The European Commission’s Critical Raw Materials Act (2025) aims to reduce dependence on any single supplier to under 65 percent, but diversification takes decades.

China, meanwhile, has invested heavily in African reserves, particularly in Zimbabwe and Namibia, securing future supply lines long before competitors. The green age may thus be defined not by energy independence, but by new dependencies.

The Recycling Mirage

Recycling is often touted as the escape route. Yet current lithium recovery rates remain under 20 percent, according to the International Renewable Energy Agency (IRENA 2024). Battery chemistry diversity—lithium-ion, lithium-iron-phosphate, solid-state—makes standardized recovery costly.

Moreover, recycling does not solve geopolitical concentration; the technology and capital for large-scale recovery are themselves monopolized by the same nations dominating refining. Without open-source recycling technology and circular-economy financing, the lithium loop will remain closed to the developing world.

Escaping the Resource Curse 2.0

The lesson from the oil era is clear: sovereignty without structure yields stagnation. To avoid repeating the curse, lithium-producing nations must prioritize three reforms:

1. Local value capture – Require refining and battery-component production domestically before export, as Indonesia did with nickel.

2. Environmental accountability – Tie mining licenses to transparent water and emission audits verified by multilateral agencies.

3. Revenue stabilization – Establish lithium sovereign wealth funds to smooth price volatility and reinvest in education and green R&D.

The African Development Bank (AfDB 2024) estimates that such reforms could increase national retention of lithium value by up to 40 percent.

The Future of Green Geopolitics

The energy transition is not simply about cleaner fuel—it is about who controls the new infrastructure of power. The world may trade oil rigs for solar farms, but without systemic reform, it will not trade dependency for dignity.

Lithium is not the new oil; it is the old oil reborn in green packaging. The future will be sustainable only if it is also just.

Works Cited

“Global EV Mineral Outlook 2024.” International Energy Agency (IEA), 2024.

 “World Development Indicators: Critical Minerals.” World Bank Group, 2024.

 “Water Use in Lithium Extraction.” UNESCO Environmental Assessment Report, 2024.

 “Critical Raw Materials Act 2025.” European Commission, 2025.

 “Global Lithium Supply and Demand.” US Geological Survey (USGS), 2025.

 “Resource Governance and Local Benefit.” Organisation for Economic Co-operation and Development (OECD), 2024.

 “Renewable Energy Minerals Report.” International Renewable Energy Agency (IRENA), 2024.

 “Clean Production Lifecycle Emissions Study.” Journal of Cleaner Production, 2024.

 “Lithium Industrialization and Local Value Chains.” African Development Bank (AfDB), 2024.

 “Battery Supply Chain Concentration Risks.” Boston Consulting Group, 2024.