Energy transition and geopolitics: are critical minerals the new oil?

How likely is it that the clean energy transition, advancing rapidly in much of the world, could replace dependence on oil and other hydrocarbon by dependencies on critical minerals? Analysts and pundits are debating this question – and are often coming up with answers that set alarm bells ringing. This paper accepts as likely that dependencies on critical minerals will rise as the “energy transition” causes a big rise in the need for wiring, batteries, magnets and other key elements of cleaner energy systems. In tandem and with time, dependence on oil is likely to wane. But will this shift in dependencies be bad news for geopolitics, energy security or the environment?

This question has been hard to answer, partly because debates are advancing without much of a framework for analysis. Dire forecasts typically start with the expected surge in demand for critical
minerals, with predictions often based on little more than the assumption of exponential growth.
But a proper look at dependencies requires looking at how the whole system for supply and demand might respond, and how innovations in technologies, markets and governing institutions might alter those responses. The early days of the oil crisis in the 1970s saw similar errors in forecasting – with an obsession with supply, the assumption of exponential growth in demand and a failure to account for how the whole system might respond. These errors in forecasting can lead to grave mistakes in policy and investment.

This white paper is an effort to offer a preliminary framework for thinking about supply, demand and
trade-offs as the dependence on critical materials increases. It looks at supply and demand in turn, and argues that while most of the concerns about critical materials have focused on the level and concentration of supply, the most important factors driving potential scarcity in critical materials
are actually found in the realm of demand. It then identifies an array of “no regrets” policy measures
that can help make the inevitable shift towards more dependence on critical minerals less dangerous for the global economy, environment and political order.

source:
https://www.linkedin.com/posts/omaralajaji_energy-transition-and-geopolitics-ugcPost-7389971172077080576-9e5a?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAtGGkQBsxwMBmX3lEJO8btihnfBCaHqTz4