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.
Rare Earth Elements: Where in the World Are They?
Rare earth elements are the critical ingredients for a greener economy, making their reserves increasingly valuable to global supply chains.
Rare Earths Elements: Where in the World Are They?
Rare earth elements are a group of metals that are critical ingredients for a greener economy, and the location of the reserves for mining are increasingly important and valuable.
This infographic features data from the United States Geological Society (USGS) which reveals the countries with the largest known reserves of rare earth elements (REEs).
What are Rare Earth Metals?
REEs, also called rare earth metals or rare earth oxides, or lanthanides, are a set of 17 silvery-white soft heavy metals.
The 17 rare earth elements are: lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb), lutetium (Lu), scandium (Sc), and yttrium (Y).
Scandium and yttrium are not part of the lanthanide family, but end users include them because they occur in the same mineral deposits as the lanthanides and have similar chemical properties.
The term “rare earth” is a misnomer as rare earth metals are actually abundant in the Earth’s crust. However, they are rarely found in large, concentrated deposits on their own, but rather among other elements instead.
Rare Earth Elements, How Do They Work?
Most rare earth elements find their uses as catalysts and magnets in traditional and low-carbon technologies. Other important uses of rare earth elements are in the production of special metal alloys, glass, and high-performance electronics.
Alloys of neodymium (Nd) and samarium (Sm) can be used to create strong magnets that withstand high temperatures, making them ideal for a wide variety of mission critical electronics and defense applications.
|End-use||% of 2019 Rare Earth Demand|
|Glass Polishing Powder and Additives||13%|
|Metallurgy and Alloys||8%|
|Ceramics, Pigments and Glazes||5%|
The strongest known magnet is an alloy of neodymium with iron and boron. Adding other REEs such as dysprosium and praseodymium can change the performance and properties of magnets.
Hybrid and electric vehicle engines, generators in wind turbines, hard disks, portable electronics and cell phones require these magnets and elements. This role in technology makes their mining and refinement a point of concern for many nations.
For example, one megawatt of wind energy capacity requires 171 kg of rare earths, a single U.S. F-35 fighter jet requires about 427 kg of rare earths, and a Virginia-class nuclear submarine uses nearly 4.2 tonnes.
Global Reserves of Rare Earth Minerals
China tops the list for mine production and reserves of rare earth elements, with 44 million tons in reserves and 140,000 tons of annual mine production.
While Vietnam and Brazil have the second and third most reserves of rare earth metals with 22 million tons in reserves and 21 million tons, respectively, their mine production is among the lowest of all the countries at only 1,000 tons per year each.
|Country||Mine Production 2020||Reserves||% of Total Reserves|
While the United States has 1.5 million tons in reserves, it is largely dependent on imports from China for refined rare earths.
Ensuring a Global Supply
In the rare earth industry, China’s dominance has been no accident. Years of research and industrial policy helped the nation develop a superior position in the market, and now the country has the ability to control production and the global availability of these valuable metals.
This tight control of the supply of these important metals has the world searching for their own supplies. With the start of mining operations in other countries, China’s share of global production has fallen from 92% in 2010 to 58%< in 2020. However, China has a strong foothold in the supply chain and produced 85% of the world’s refined rare earths in 2020.
China awards production quotas to only six state-run companies:
- China Minmetals Rare Earth Co
- Chinalco Rare Earth & Metals Co
- Guangdong Rising Nonferrous
- China Northern Rare Earth Group
- China Southern Rare Earth Group
- Xiamen Tungsten
As the demand for REEs increases, the world will need tap these reserves. This graphic could provide clues as to the next source of rare earth elements.
Mapped: Solar Power by Country in 2021
In 2020, solar power saw its largest-ever annual capacity expansion at 127 gigawatts. Here’s a snapshot of solar power capacity by country.
Mapped: Solar Power by Country in 2021
The world is adopting renewable energy at an unprecedented pace, and solar power is leading the way.
Despite a 4.5% fall in global energy demand in 2020, renewable energy technologies showed promising progress. While the growth in renewables was strong across the board, solar power led from the front with 127 gigawatts installed in 2020, its largest-ever annual capacity expansion.
The above infographic uses data from the International Renewable Energy Agency (IRENA) to map solar power capacity by country in 2021. This includes both solar photovoltaic (PV) and concentrated solar power capacity.
The Solar Power Leaderboard
From the Americas to Oceania, countries in virtually every continent (except Antarctica) added more solar to their mix last year. Here’s a snapshot of solar power capacity by country at the beginning of 2021:
|Country||Installed capacity, megawatts||Watts* per capita||% of world total|
|South Korea 🇰🇷||14,575||217||2.0%|
|United Kingdom 🇬🇧||13,563||200||1.9%|
|South Africa 🇿🇦||5,990||44||0.8%|
|United Arab Emirates 🇦🇪||2,539||185||0.4%|
|Czech Republic 🇨🇿||2,073||194||0.3%|
|El Salvador 🇸🇻||429||66||0.1%|
|Saudi Arabia 🇸🇦||409||12||0.1%|
|Dominican Republic 🇩🇴||370||34||0.1%|
|New Zealand 🇳🇿||142||29||0.02%|
|World total 🌎||713,970||83||100.0%|
*1 megawatt = 1,000,000 watts.
China is the undisputed leader in solar installations, with over 35% of global capacity. What’s more, the country is showing no signs of slowing down. It has the world’s largest wind and solar project in the pipeline, which could add another 400,000MW to its clean energy capacity.
Following China from afar is the U.S., which recently surpassed 100,000MW of solar power capacity after installing another 50,000MW in the first three months of 2021. Annual solar growth in the U.S. has averaged an impressive 42% over the last decade. Policies like the solar investment tax credit, which offers a 26% tax credit on residential and commercial solar systems, have helped propel the industry forward.
Although Australia hosts a fraction of China’s solar capacity, it tops the per capita rankings due to its relatively low population of 26 million people. The Australian continent receives the highest amount of solar radiation of any continent, and over 30% of Australian households now have rooftop solar PV systems.
China: The Solar Champion
In 2020, President Xi Jinping stated that China aims to be carbon neutral by 2060, and the country is taking steps to get there.
China is a leader in the solar industry, and it seems to have cracked the code for the entire solar supply chain. In 2019, Chinese firms produced 66% of the world’s polysilicon, the initial building block of silicon-based photovoltaic (PV) panels. Furthermore, more than three-quarters of solar cells came from China, along with 72% of the world’s PV panels.
With that said, it’s no surprise that 5 of the world’s 10 largest solar parks are in China, and it will likely continue to build more as it transitions to carbon neutrality.
What’s Driving the Rush for Solar Power?
The energy transition is a major factor in the rise of renewables, but solar’s growth is partly due to how cheap it has become over time. Solar energy costs have fallen exponentially over the last decade, and it’s now the cheapest source of new energy generation.
Since 2010, the cost of solar power has seen a 85% decrease, down from $0.28 to $0.04 per kWh. According to MIT researchers, economies of scale have been the single-largest factor in continuing the cost decline for the last decade. In other words, as the world installed and made more solar panels, production became cheaper and more efficient.
This year, solar costs are rising due to supply chain issues, but the rise is likely to be temporary as bottlenecks resolve.
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