The writing is on the wall for the fossil fuels industry. For decades, climate scientists and environmental activists have been urging the world to move away from dirty and finite energy sources like coal, oil, and gas and to transition toward renewable energies that have a much lighter impact on the climate and the environment as a whole. While the world has been slow to respond to these escalating pleas for decarbonization, it looks like the global community has finally entered the clean energy transition in earnest.
Peak oil is just around the corner -- that is, if it isn’t already happening as we speak. To be sure, the world is not going to wean itself off of fossil fuels overnight, and hundreds of billions of barrels of oil will be consumed before the petro-economy fades to black. But oil’s days as the king of the global energy economy are numbered, and even Big Oil is finally starting to pivot toward a cleaner energy future.
Indeed, the parts of the energy industry seeing the most growth, innovation, and investment in the current era are centered around renewable energies, from the booming business of energy storage to electric vehicle batteries.
But while these cleaner energy technologies have much lower negative environmental externalities than traditional fossil fuels, renewable energy infrastructure is still dependent on a litany of finite natural resources. Some of the battery metals that figure as key components for manufacturing technologies like photovoltaic solar panels and lithium-ion batteries are likely going to be the geopolitical linchpins of the future, much as oil fields and coal seams have been in the industrial era.
In fact, we could soon see an all-out renewable energy resource war between key players like the United States and China if trade negotiations and diplomacy aren’t handled with care. China currently controls up to 90% of the global supply of battery metals and minerals, and they have already shown that they are not afraid to wield this supply-chain control to bully other nations and sway international relations.
The global transition from fossil fuels to clean energy could necessitate an inversion of as much as $173 trillion in energy supply and infrastructure investment over the next thirty years, which will “reverberate from lithium-rich salt flats in Chile to polysilicon plants in China’s Xinjiang region” according to reporting from Bloomberg. While renewable energies like solar and wind can be installed in virtually any region, in some ways democratizing the playing field for nations who have historically been reliant on energy imports, there will still be major winners and losers in the clean energy game. Indeed, the coming clean energy gold rush is poised to completely shift the geopolitical power map, giving newfound influence to nations naturally rich in these battery metals.
“The energy transition is driving the next commodity supercycle,” Jessica Fung, head strategist at Swiss green-mining fund Pala Investments Ltd., was quoted in the Bloomberg report entitled ‘There’s a Fortune to Be Made in the Obscure Metals Behind Clean Power‘. “It is a decades-long transition, but the time to invest and make money is this decade. The time is now.”
Demand for cobalt is expected to increase by 70% by 2030. Lithium and nickel consumption will increase at least five-fold. And the world is already running out of lithium-ion batteries. It’s not just lithium, silicon, and cobalt that are going gangbusters. In the past few months yellowcake uranium has seen a historic surge in trading and purchases as buyers bet big on nuclear energy’s role in the impending decarbonization of the global energy trade. Even Reddit’s infamous r/WallStreetBets is getting involved.
Any kind of low-carbon energy production is sure to expand rapidly in the coming decades, and the seismic shift in global supply chains for clean energy infrastructure can not be overstated. And it’s going to make a lot of people a whole lot of money.
By Haley Zaremba for Oilprice.com
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