Foreign direct investment can enhance the development of clean energy in countries with critical materials

Abstract

Foreign direct investment is a critical material extraction and revenue generation tool, but its role in reducing clean energy vulnerability is often overlooked. Here, we use the clean energy vulnerability index and explore how foreign direct investment mitigates energy shortages in countries abundant in critical materials such as bauxite, cobalt, nickel, manganese, and platinum. We found that from 2016 to 2021, foreign direct investment controlled large portions of critical materials in vulnerable countries, with 56% of bauxite, 59% of cobalt and nickel, 52% of manganese, and 57% of platinum. Redirecting 40% of foreign direct investment-controlled production towards the deployment of clean energy could reduce energy vulnerability in the Democratic Republic of Congo, Indonesia, South Africa, and Guinea. The foreign investment redirection could enhance global energy transition equity, offering a strategic pathway for aligning with sustainable energy goals.