What the Energy Transition Means for Copper
The world is on course to move to green and renewable energies. The question is, ‘how fast will it happen’. This will depend on two key factors. One, how much will policy push towards carbon net-zero targets. Two, how quickly will the price of green tech fall?
Although different organisations have different levels of projections the main view is that oil and gas consumption will fall and renewable and natural gas use will increase.
The speed at which this happens is up for debate. One interesting article on this was from Bloomberg who looked at the work from the Institute for New Economic thinking. This work critiqued OPEC’s long term energy report as underestimating the possible speed of an energy transition. One of the noteworthy quotes from the article was: ‘Solar, wind, and batteries on the other hand, have dropped in cost at a rate of roughly 10% per year for several decades. Today’s energy technology simply needs to continue at that rate to change tomorrow’s energy system’.
Ok, so the piece goes on to say that fossil fuels could be replaced in two decades.
What does this mean?
Certain metals are liable to be in demand according to the International Energy Authority.
One of the main ones is copper.
Deeper pullbacks in copper look good value on a medium-term to long term basis on rising copper demand due to green tech.