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.
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%.
|WTI Crude Oil||56.4%|
|Brent Crude Oil||50.7%|
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.
After the surge of energy prices in 2021, nations will need to carefully manage their clean energy transitions to avoid further unsustainable price rises.
What Electricity Sources Power the World?
Coal still leads the charge when it comes to electricity, representing 35% of global power generation.
What Powered the World in 2022?
In 2022, 29,165.2 terawatt hours (TWh) of electricity was generated around the world, an increase of 2.3% from the previous year.
In this visualization, we look at data from the latest Statistical Review of World Energy, and ask what powered the world in 2022.
Coal is Still King
Coal still leads the charge when it comes to electricity, representing 35.4% of global power generation in 2022, followed by natural gas at 22.7%, and hydroelectric at 14.9%.
Over three-quarters of the world’s total coal-generated electricity is consumed in just three countries. China is the top user of coal, making up 53.3% of global coal demand, followed by India at 13.6%, and the U.S. at 8.9%.
Burning coal—for electricity, as well as metallurgy and cement production—is the world’s single largest source of CO2 emissions. Nevertheless, its use in electricity generation has actually grown 91.2% since 1997, the year when the first global climate agreement was signed in Kyoto, Japan.
Renewables on the Rise
However, even as non-renewables enjoy their time in the sun, their days could be numbered.
In 2022, renewables, such as wind, solar, and geothermal, represented 14.4% of total electricity generation with an extraordinary annual growth rate of 14.7%, driven by big gains in solar and wind. Non-renewables, by contrast, only managed an anemic 0.4%.
The authors of the Statistical Review do not include hydroelectric in their renewable calculations, even though many others, including the International Energy Agency, consider it a “well-established renewable power technology.”
With hydroelectric moved into the renewable column, together they accounted for over 29.3% of all electricity generated in 2022, with an annual growth rate of 7.4%.
France’s Nuclear Horrible Year
Another big mover in this year’s report was nuclear energy.
In addition to disruptions at the Zaporizhzhia nuclear power plant in Ukraine, shutdowns in France’s nuclear fleet to address corrosion found in the safety injection systems of four reactors led to a 4% drop in global use, year-over-year.
The amount of electricity generated by nuclear energy in that country dropped 22% to 294.7 TWh in 2022. As a result, France went from being the world’s biggest exporter of electricity, to a net importer.
Powering the Future
Turning mechanical energy into electrical energy is a relatively straightforward process. Modern power plants are engineering marvels, to be sure, but they still work on the same principle as the very first generator invented by Michael Faraday in 1831.
But how you get the mechanical energy is where things get complicated: coal powered the first industrial revolution, but heated the planet in the process; wind is free and clean, but is unreliable; and nuclear fission reliably generates emission-free electricity, but also creates radioactive waste.
With temperature records being set around the world in the summer, resolving these tensions isn’t just academic and next year’s report could be a crucial test of the world’s commitment to a clean energy future.
How Mine Permitting Delays Impact the Transition to a Green Economy
Currently, the U.S. has a backlog of more than 280 mining projects awaiting permits.
Mine Permitting Delays and the Transition to a Green Economy
Minerals are essential components in many of our daily-use products, such as cell phones, laptops, and cars.
In fact, every American uses nearly 40,000 pounds of newly mined materials each year.
In the United States, however, the current permitting process makes it difficult for businesses to invest in the extraction and processing of minerals, such as copper.
This graphic by Northern Dynasty explores the untapped potential of mineral resources in America.
Copper, a Critical Material
In 2023 the U.S. Department of Energy officially added copper to its critical materials list, following the examples of the European Union, Japan, India, Canada, and China.
Copper is a highly efficient conductor of electricity and is considered vital for clean energy technologies such as solar, wind energy, and electric vehicles.
Green energy-related copper demand is expected to increase by nearly 600% by 2030. In this scenario, the copper market could see an annual deficit of up to about 1.5 million tonnes by 2035.
Despite having more than 53 million tons of copper reserves, the U.S. imports 45% of its copper from other countries.
This is the highest level of import reliance in over 30 years. One of the biggest reasons for this is the country’s mine permitting process.
A Rigorous Mine Permitting Process
Mines are large-scale projects that demand extensive research and policies. As a result, mining projects can take 16 years, or more, to start production.
Currently, the U.S. Bureau of Land Management—which regulates land use in the country—has a permitting backlog of more than 280 mining projects.
In addition, environmental activists have adopted a “not in my backyard” stance towards domestic mining. As a result, companies have often had to resort to litigation to make any progress in the permitting process.
“Activists have weaponized the government bodies that are essential to the safe and responsible development of domestic mines,” says Michael Westerlund, VP Investor Relations at Northern Dynasty Minerals.
The company owns the largest undeveloped copper deposit in the world, named Pebble, in Alaska. Pebble and other five major copper projects totaling over 11 billion tonnes in copper resources have been delayed because of the Federal permitting process.
The Largest Undeveloped Copper Deposit in the World
The Pebble Project has been through a roller coaster of regulatory activity for the past 15 years.
Recently, the U.S. Environmental Protection Agency banned the depositing of mining waste near the mining project in Alaska, citing potential harm to the local sockeye salmon industry.
However, the veto directly contradicts findings from the Federal government that concluded that mining and fishing could coexist in the region.
“Alaska does resource development better than any other place on the planet, and our opportunities to show the world a better way to extract our resources should not be unfairly preempted by the Federal Government”
–Alaska Governor Mike Dunleavy
Projects like Pebble can provide significant economic benefits and support the U.S. transition to a greener future. With the current regulatory uncertainty for U.S. developers, where the much-needed supply of copper will come from is unknown.
Click here to learn more about Pebble.
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