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Energy Shift

How Energy Prices Performed in 2021

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energy prices in 2021

How Energy Prices Performed in 2021

A year after the start of the COVID-19 pandemic, the world started to reopen and generate insatiable energy demand. Supply shortages and the clean energy transition further fueled the rise of all energy commodities.

Even in a year where markets and commodities performed strongly, energy prices stood out. The energy component of the Goldman Sachs Commodity Index (GSCI) rose by 59% in 2021, returning more than double any other component in the index.

Let’s take a look at how energy commodities performed in 2021, as tracked by Trading Economics and TradingView.

How Much Did Energy Prices Climb in 2021?

After dipping into negative prices in April of 2020, WTI crude oil had a strong bounce back.

Many of crude oil’s derivative products also increased in price by double digits, resulting in higher gas prices at the pump. The U.S. average retail price for gasoline increased by 45.8% to close at $3.28/gal, while wholesale prices of RBOB gasoline also climbed by 57.8%.

Asset2021 Returns
TTF Gas290.6%
UK Gas215.9%
Ethanol101.7%
Coal93.1%
Lumber59.4%
RBOB Gasoline57.8%
WTI Crude Oil56.4%
Heating Oil53.1%
Brent Crude Oil50.7%
Natural Gas46.9%
Naphtha46.5%
Uranium U30840.3%
Propane33.6%
Methanol3.2%

Natural gas prices in Europe and the UK saw the biggest price increases in 2021, jumping more than 200%.

They were followed by ethanol, a biofuel that oil refiners are required to blend with their products. This requirement, along with the price rises in corn and sugar (ethanol’s primary raw materials around the world), made this hot commodity even more expensive.

Rising Natural Gas Prices Fuel Tension and Unrest

While the U.S. saw increases in its gasoline prices as well, these were mild compared to surges in Europe and elsewhere.

With close to 43% of Europe’s total gas imports coming from Russia, no additional supply was provided during the cold winter months. This was compounded as Germany’s approval of the Nord Stream 2 pipeline has remained in limbo.

So far, 2022 has been a continuation of these trends. For example, liquified petroleum gas (LPG) prices have nearly doubled due to unrest in Kazakhstan. The Kazakhstan government’s decision to lift price controls on LPG (the primary fuel for Kazakh cars) saw prices surge and led to days of protests and Russian intervention.

Coal Stays Strong Despite the Clean Energy Transition

Despite 2021’s emphasis on the clean energy transition, coal prices nearly doubled as the world was unable to shake off its dependence on the fossil fuel.

Even pledges from the COP26 climate change conference, such as China’s to reduce coal consumption after 2025, are not yet having an impact on prices. That’s because the country is still planning to add up to 150 gigawatts of new coal-fired capacity before then.

On the other hand, uranium couldn’t keep up with the price rises of fossil fuels. Although the energy metal had a breakout year as one of the recently renewed hopes for cleaner energy, the outlook for nuclear energy adoption and development is still mixed.

While China is expected to invest as much as $440B into new nuclear power plants over the next 10 years, Germany shut down half of its remaining plants in 2021.

After the surge of energy prices in 2021, nations will need to carefully manage their clean energy transitions to avoid further unsustainable price rises.

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Electrification

Visualizing the World’s Largest Copper Producers

Many new technologies critical to the energy transition rely on copper. Here are the world’s largest copper producers.

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Visualizing the World’s Largest Copper Producers

Man has relied on copper since prehistoric times. It is a major industrial metal with many applications due to its high ductility, malleability, and electrical conductivity.

Many new technologies critical to fighting climate change, like solar panels and wind turbines, rely on the red metal.

But where does the copper we use come from? Using the U.S. Geological Survey’s data, the above infographic lists the world’s largest copper producing countries in 2021.

The Countries Producing the World’s Copper

Many everyday products depend on minerals, including mobile phones, laptops, homes, and automobiles. Incredibly, every American requires 12 pounds of copper each year to maintain their standard of living.

North, South, and Central America dominate copper production, as these regions collectively host 15 of the 20 largest copper mines.

Chile is the top copper producer in the world, with 27% of global copper production. In addition, the country is home to the two largest mines in the world, Escondida and Collahuasi.

Chile is followed by another South American country, Peru, responsible for 10% of global production.

RankCountry2021E Copper Production (Million tonnes)Share
#1🇨🇱 Chile5.627%
#2🇵🇪 Peru2.210%
#3🇨🇳 China1.88%
#4🇨🇩 DRC 1.88%
#5🇺🇸 United States1.26%
#6🇦🇺 Australia0.94%
#7🇷🇺 Russia0.84%
#8🇿🇲 Zambia0.84%
#9🇮🇩 Indonesia0.84%
#10🇲🇽 Mexico0.73%
#11🇨🇦 Canada0.63%
#12🇰🇿 Kazakhstan0.52%
#13🇵🇱 Poland0.42%
🌍 Other countries2.813%
🌐 World total21.0100%

The Democratic Republic of Congo (DRC) and China share third place, with 8% of global production each. Along with being a top producer, China also consumes 54% of the world’s refined copper.

Copper’s Role in the Green Economy

Technologies critical to the energy transition, such as EVs, batteries, solar panels, and wind turbines require much more copper than conventional fossil fuel based counterparts.

For example, copper usage in EVs is up to four times more than in conventional cars. According to the Copper Alliance, renewable energy systems can require up to 12x more copper compared to traditional energy systems.

Technology2020 Installed Capacity (megawatts)Copper Content (2020, tonnes)2050p Installed Capacity (megawatts)Copper Content (2050p, tonnes)
Solar PV126,735 MW633,675372,000 MW1,860,000
Onshore Wind105,015 MW451,565202,000 MW868,600
Offshore Wind6,013 MW57,72545,000 MW432,000

With these technologies’ rapid and large-scale deployment, copper demand from the energy transition is expected to increase by nearly 600% by 2030.

As the transition to renewable energy and electrification speeds up, so will the pressure for more copper mines to come online.

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Energy Shift

Should You Invest in Disruptive Materials?

Disruptive materials are experiencing a demand supercycle. See how these materials are helping revolutionize next generation technologies. (Sponsored)

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The-10-vital-Ingredients-Behind-Explosive-and-Emerging-Technologies

Should You Invest in Disruptive Materials?

New technologies are having a transformative impact on the transportation and energy sectors. As these technologies develop, it is becoming clear that a small selection of materials, metals, and minerals—known collectively as disruptive materials—are critical components required to innovate.

This graphic from Global X ETFs takes a closer look at the disruptive materials that are key to fueling climate technologies. With a growing global effort to decarbonize, disruptive materials may enter a demand supercycle, characterized as a structural decades-long period of rising demand and rising prices.

Building Blocks Of the Future

There are 10 categories of disruptive materials in particular that are expected to see demand growth as part of their role within emerging technologies.

Disruptive MaterialApplicability
ZincProtects metal surfaces from rusting through a process called galvanization. This is essential to wind energy.
Palladium & PlatinumOften used in catalytic converters, thus playing a major role in hydrogen fuel cell technology.
NickelA corrosion-resistant metal used to make other metals more durable.
ManganeseAn important mineral needed for battery and steel production.
LithiumThe foundational component of lithium-ion batteries.
GrapheneThe thinnest known material which is also 100x stronger than steel. Used in sensors and transistors.
Rare Earth MaterialsA broader category including 15 lanthanide series elements, plus yttrium. These metals are found in all types of electronics.
CopperA reliable conductor of electricity. It can also kill bacteria, making it useful during pandemics.
CobaltAn important ingredient for rechargeable lithium batteries, found only in specific regions of the world.
Carbon Fiber & Carbon MaterialsStrong and lightweight materials with applications in aerospace and the automotive industry.

While these 10 categories do not make up the entire disruptive material universe, all are essential to securing a climate and technologically advanced future.

How The Green Revolution Is Transforming the Materials Market

The data on rising global temperatures and extreme weather events is jarring and has governments and organizations from all over the world ramping up efforts to combat its effects through new budgets and policies.

Take the soaring total number of U.S. climate disasters for instance. Most recently in 2021, the quantity of weather disasters stood at 20 whereas in 1980 it stood as a much smaller figure of three. In addition, total disaster costs have risen above $100 billion per year.

Globally, the top 10 most extreme weather events in 2021 racked up $170 billion in costs.

RankClimate EventCost ($B)
#1Hurricane Ida$65.0B
#2European floods$43.0B
#3Texas winter storm$23.0B
#4Henan floods$17.6B
#5British Columbia floods$7.5B
#6France’s “cold wave”$5.6B
#7Cyclone Yaas$3.0B
#8Australian floods$2.1B
#9Typhoon In-fa $2.0B
#10Cyclone Tauktae $1.5B

What’s more, some research estimates that these rising costs are far from coming to a halt. By 2050 the annual cost of weather disasters could surge past $1 trillion a year. In an effort to slow rising temperatures, governments are dramatically increasing their climate spending. For example, the U.S. is set to spend $80 billion annually over the next five years.

To see how climate spending impacts the materials market, consider the complexity behind a typical solar panel which requires almost 20 different materials including copper for wiring, boron and phosphorus for semiconductors, as well as zinc and magnesium for its frame.

Overall, these materials are essential to the expansion of a variety of emerging technologies like lithium batteries, solar panels, wind turbines, fuel cells, robotics, and 3D printers. And therefore, are translating to higher levels of demand for the disruptive materials that make combating climate change possible.

Estimated Disruptive Material Growth by 2040

A societal shift in how we address climate change is forecasted to lead to a demand supercycle for disruptive materials and acts as a massive tailwind.

But just how large is this expected level of demand to be? To answer this, we use two scenarios created by The International Energy Agency (IEA). The first is the Stated Policies Scenario, a more conservative model that assumes demand for material will double by 2040 relative to 2020 levels. Under this scenario, it’s assumed that society takes climate action in line with current and existing policies and commitments.

Then there is the Sustainable Development Scenario, which assumes more drastic action will take place to transform global energy use and meet international climate goals. Under this scenario, the demand for disruptive materials could rise as high as 300% relative to 2020 levels.

However, under both scenarios there’s still significant demand for each type of material.

Disruptive Material

Stated Policies Scenario Demand Relative to 2020

Sustainable Development Scenario Demand Relative to 2020

Lithium13X42X
Graphite8X25X
Cobalt6X21X
Nickel7X19X
Manganese3X8X
Rare earth elements3X7X
Copper2X3X

Overall, lithium is expected to see the most explosive surge in demand, as it could reach anywhere from 13 to 42 times the level of demand seen in 2020, based on the above scenarios.

Introducing the Global X Disruptive Materials ETF

The Global X Disruptive Materials ETF (Ticker: DMAT) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Disruptive Materials Index.

Investors can use this passively managed solution to gain exposure to the rising demand for disruptive materials and climate technologies.

The Global X Disruptive Materials ETF is a passively managed solution that can be used to gain exposure to the rising demand for disruptive materials. Click the link to learn more.

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