Energy Transition Is In Danger Due To The Increase In Metals Demand

Energy Transition Is In Danger Due To The Increase In Metals Demand

After decades of non-binding agreements and insufficient measures, the race to achieve a zero-emission economy has finally been launched. In the last year, laws have been passed or commitments announced with the aim of promoting the use of clean energy, something to which companies have responded with new projects to make it a reality.

However, all this, together with the role of the energy sector in the economic recovery, has boosted the demand for precious metals, essential for developing such renewable projects, in such a way that it jeopardizes the very future of the energy transition.

According to a report by the International Energy Agency , the need for metallic minerals will double with current policies until 2040 , it will quadruple if a greater commitment is made towards sustainability and it will multiply by six if the global goal of zero emissions is to be reached. . As these are expensive and scarce items, such an impulse has resulted in a significant increase in their prices and, consequently, in their prices.

Thus, in the last three years, gold and platinum have appreciated by around 30%, while copper has done so by 40% and silver rose by 50%. Of these four, only copper marks a notable advance so far this year, with a 20% rise. But other metals such as lithium (91% so far this year), steel (16%), palladium (14%), cobalt (57%) or aluminum (27%) are making the chain significantly more expensive productive.

This panorama is generating a great debate among experts and key players in the international economy. While some managers consider that the market is facing a super-cycle of raw materials , the forecasts of the European Central Bank and the US Federal Reserve consider that these are inflationary spikes in the medium term , and rule out significant increases in prices in the coming years.

What is certain for now is that the prices of metals such as copper, nickel or lithium have increased as new energy parks are being built and put into operation and batteries for electric cars are produced. In the case of platinum, traditionally linked to the automotive industry, it has gained prominence in the ecological transition due to its potential to lower the cost of energy production and storage through green hydrogen .

Platinum, a key element for a sustainable economy
The main commitment of the European Commission and the Government of Spain to achieve climate neutrality is obtained using water, electricity and a catalyst, a substance that facilitates the reaction. It is an intensive process that requires a lot of energy, which increases its cost and reduces its attractiveness.

This is where platinum enters the scene , a precious metal that facilitates the decomposition of water into hydrogen and, in addition, reduces the amount of energy used thanks to its chemical characteristics.

Given these expectations, platinum has experienced months of upward progression that culminated in reaching $ 1,313.7 per ounce in February, its highest level in more than six years, and then maintaining some stability.

From eToro they indicate that this metal has touched a “significant support in the zone of 1,033 dollars”. If this bottom holds, platinum could even rise to $ 1,300 per ounce, while if it falls below $ 1,033, falling below its 200-session moving average, “it would enter a bearish reversal, potentially projecting toward $ 950.”

The increase in demand for essential metals for the energy transition can have a significant impact on its viability, by directly impacting the cost of generating electricity through renewable energies. A situation that could end up resulting in companies in the sector putting their business margins before the objective of achieving a zero emissions economy.

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