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Energy Shift

Trading Places: Electricity from Renewables vs. Coal in G20 Nations

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What powers the World Coal vs Renewables

Electricity generated by new wind and solar helped to force a record fall in global coal power in 2020.

What Powers the World in 2020? Coal vs. Renewables

Electricity from Renewables vs. Coal in G20 Nations

As the COVID-19 pandemic has forced people to work and shop from home, cancel gatherings, and reduce the use of transportation, it has also paused the world’s rising demand for electricity.

The pandemic has opened a window of opportunity to reduce the share of power generated by fossil fuels. When demand for electricity drops, coal plants are usually switched off first since the process of burning fuels constantly runs up costs. In contrast, renewables such as wind and solar plants, once built, have significantly lower running costs.

This infographic based on Ember’s Global Electricity Review shows how wind and solar generation rose robustly in 2020 by 15% (+314 TWh), compared to 2019. That helped coal use to fall a record 4% (-346 TWh).

Accelerating the Use of Renewables

Wind and solar produced 9.4% of the world’s electricity last year, doubling from 4.6% in 2015.

Wind and solar as % share of electricity production for G20 countries

Country201020152020
Germany8.02%18.57%32.7%
United Kingdom2.73%14.26%28.52%
EU-275.52%12.65%19.57%
Australia2.28%6.92%17.09%
Italy3.7%13.45%16.54%
Turkey1.44%4.73%11.99%
United States2.32%5.61%11.58%
Brazil0.43%3.81%10.61%
Japan0.68%4.05%10.1%
France1.87%5.08%9.92%
Mexico0.49%2.95%9.78%
China1.17%3.92%9.54%
World1.81%4.65%9.42%
India2.4%3.45%8.88%
Argentina0.02%0.44%7.96%
Canada1.52%4.62%6.05%
South Africa0.02%2%5.53%
South Korea0.34%1.01%3.84%
Russia0%0.05%0.29%
Indonesia0%0%0.21%

As you can see in the table above, many G20 countries now get around a tenth of their electricity from wind and solar, including India (9%), China (9.5%), Japan (10%), Brazil (11%), the U.S. (12%), and Turkey (12%).

Europe led wind and solar generation around the world, with Germany producing 33% and the United Kingdom at 29%. Overall, electricity demand fell 3.5% in the European Union.

Is This the End of Coal?

Coal generation collapsed almost everywhere in 2020 compared to 2019, with large falls in the U.S. (-20%), EU (-20%), and India (-5%).

China was the only G20 nation to show a large increase in coal generation (+1.7%). Overall, the country saw a 4% increase in electricity demand in 2020, as it was the first to restart production after the first months of the COVID-19 crisis.

China is now responsible for 53% of the world’s coal-fired electricity, up from 44% in 2015.

Change in coal generation, for G20 countries

Country2019-2020
China+1.7%
India-5%
Turkey -6%
Russia -9%
World-4%
South Africa-5%
South Korea-13%
Australia-5%
Japan-1%
Brazil-12%
Canada-8%
Argentina0%
United States-20%
EU-27-20%
Germany -22%
Mexico-48%
France -3%
Italy -24%
United Kingdom -23%
Saudi Arabia 0%

The pandemic has put political leaders in a unique position: along with additional policies such as eliminating subsidies for fossil fuels and increasing investments in wind and solar power, it is now easier than ever before to accelerate the end of high-carbon electricity.

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Energy Shift

How Energy Prices Performed in 2021

Energy commodities surged in 2021 as demand picked up and supply remained constricted, but which fuels flew highest?

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Energy price performance 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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Energy Shift

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.

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Rare Earth Elements Reserves

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
Permanent Magnets38%
Catalysts23%
Glass Polishing Powder and Additives13%
Metallurgy and Alloys8%
Battery Alloys9%
Ceramics, Pigments and Glazes5%
Phosphors3%
Other4%
Source

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.

CountryMine Production 2020Reserves% of Total Reserves
China140,00044,000,00038.0%
Vietnam1,00022,000,00019.0%
Brazil1,00021,000,00018.1%
Russia2,70012,000,00010.4%
India3,0006,900,0006.0%
Australia17,0004,100,0003.5%
United States38,0001,500,0001.3%
Greenland-1,500,0001.3%
Tanzania-890,0000.8%
Canada-830,0000.7%
South Africa-790,0000.7%
Other Countries100310,0000.3%
Burma30,000N/AN/A
Madagascar8,000N/AN/A
Thailand2,000N/AN/A
Burundi500N/AN/A
World Total243,300115,820,000100%

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.

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