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Should You Invest in Disruptive Materials?

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The following content is sponsored by the Global X ETFs

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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Energy Shift

Ranked: The Most Carbon-Intensive Sectors in the World

Comparing average Scope 1 emission intensities by sector, according to an analysis done by S&P Global Inc.

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Ranked: The Most Carbon-Intensive Sectors in the World

Ever wonder which sectors contribute the most to CO2 emissions around the world?

In this graphic, we explore the answers to that question by comparing average Scope 1 emission intensities by sector, according to an analysis done by S&P Global Inc.

Defining Scope 1 Emissions

Before diving into the data, it may be useful to understand what Scope 1 emissions entail.

Scope 1 emissions are direct greenhouse gas emissions from sources that are owned or controlled by a company, such as their facilities and vehicles.

Source: U.S. Environmental Protection Agency

Scope 1 emissions can do a good job of highlighting a company’s environmental footprint because they represent the direct emissions related to manufacturing or creating a company’s products, whether they are tangible goods, digital software, or services.

Scope 2 and 3 emissions, on the other hand, encompass the indirect emissions associated with a company’s activities, including those from a company’s purchased electricity, leased assets, or investments.

Ranking the Carbon Giants

According to S&P Global’s analysis of 2019-2020 average emissions intensity by sector, utilities is the most carbon-intensive sector in the world, emitting a staggering 2,634 tonnes of CO2 per $1 million of revenue.

Materials and energy sectors follow behind, with 918 tonnes and 571 tonnes of CO2 emitted, respectively.

SectorSector ExplanationScope 1 CO2 emissions per $1M of revenue, 2019-2020
UtilitiesElectric, gas, and water utilities and independent producers2,634 tonnes
MaterialsChemicals, construction materials, packaging, metals, and mining918 tonnes
EnergyOil and gas exploration/production and energy equipment571 tonnes
IndustrialsCapital goods, commercial services, and transportation194 tonnes
Consumer staplesFood, household goods, and personal products90 tonnes
Consumer discretionaryAutomobiles, consumer durables, apparel, and retailing33 tonnes
Real estateReal estate and real estate management31 tonnes
Information technologySoftware, technology hardware, and semiconductors24 tonnes
FinancialsBanks, insurance, and diversified financials19 tonnes
Communication servicesTelecommunication, media, and entertainment9 tonnes
Health careHealth care equipment, pharmaceuticals, biotechnology, and life sciences7 tonnes

S&P Global also reveals some interesting insights when it comes to various industries within the materials sector, including:

  • Cement manufacturing exhibits an extremely high level of Scope 1 emissions, emitting more than double the emissions from the utilities sector (5,415 tonnes of CO2 per $1M of revenue)
  • Aluminum and steel production are also quite emission-intensive, emitting 1,421 and 1,390 tonnes respectively in 2019-2020
  • Relatively lower-emission materials such as gold, glass, metals and paper products bring down the average emissions of the materials sector

Given these trends, a closer look at emission-intensive industries and sectors is necessary for our urgent need to decarbonize the global economy.

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Energy Shift

Ranked: The World’s Biggest Oil Producers

Just three countries—the U.S., Saudi Arabia and Russia—make up the lion’s share of global oil supply. Here are the world’s biggest oil producers.

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Oil by Country

Ranked: The World’s Biggest Oil Producers

This visualization originally appeared on Visual Capitalist

In 2022 oil prices peaked at more than $100 per barrel, hitting an eight-year high, after a full year of turmoil in the energy markets in the wake of the Russian invasion of Ukraine.

Oil companies doubled their profits and the economies of the biggest oil producers in the world got a major boost.

But which countries are responsible for most of the world’s oil supply? Using data from the Statistical Review of World Energy by the Energy Institute, we’ve visualized and ranked the world’s biggest oil producers.

Ranked: Oil Production By Country, in 2022

The U.S. has been the world’s biggest oil producer since 2018 and continued its dominance in 2022 by producing close to 18 million barrels per day (B/D). This accounted for nearly one-fifth of the world’s oil supply.

Almost three-fourths of the country’s oil production is centered around five states: Texas, New Mexico, North Dakota, Alaska, and Colorado.

We rank the other major oil producers in the world below.

RankCountry2022 Production
(Thousand B/D)
YoY ChangeShare of
World Supply
1🇺🇸 U.S.17,770+6.5%18.9%
2🇸🇦 Saudi Arabia12,136+10.8%12.9%
3🇷🇺 Russia11,202+1.8%11.9%
4🇨🇦 Canada5,576+3.0%5.9%
5🇮🇶 Iraq4,520+10.2%4.8%
6🇨🇳 China4,111+2.9%4.4%
7🇦🇪 UAE4,020+10.4%4.3%
8🇮🇷 Iran3,822+4.6%4.1%
9🇧🇷 Brazil3,107+3.9%3.3%
10🇰🇼 Kuwait3,028+12.0%3.2%
11🇲🇽 Mexico1,944+0.9%2.1%
12🇳🇴 Norway1,901-6.3%2.0%
13🇰🇿 Kazakhstan1,769-2.0%1.9%
14🇶🇦 Qatar1,768+1.8%1.9%
15🇩🇿 Algeria1,474+8.9%1.6%
16🇳🇬 Nigeria1,450-11.2%1.5%
17🇦🇴 Angola1,190+1.1%1.3%
18🇱🇾 Libya1,088-14.3%1.2%
19🇴🇲 Oman1,064+9.6%1.1%
20🇬🇧 UK778-11.0%0.8%
21🇨🇴 Colombia754+2.4%0.8%
22🇮🇳 India737-3.8%0.8%
23🇻🇪 Venezuela731+8.1%0.8%
24🇦🇷 Argentina706+12.4%0.8%
25🇦🇿 Azerbaijan685-5.6%0.7%
26🇮🇩 Indonesia644-6.9%0.7%
27🇪🇬 Egypt613+0.8%0.7%
28🇲🇾 Malaysia567-1.7%0.6%
29🇪🇨 Ecuador481+1.7%0.5%
30🇦🇺 Australia420-5.2%0.4%
31🇹🇭 Thailand331-17.5%0.4%
32🇨🇩 Congo269-1.7%0.3%
33🇹🇲 Turkmenistan244+1.0%0.3%
34🇻🇳 Vietnam194-1.2%0.2%
35🇬🇦 Gabon191+5.4%0.2%
36🇸🇸 South Sudan141-7.6%0.2%
37🇵🇪 Peru128+0.5%0.1%
38🇹🇩 Chad124+6.2%0.1%
39🇬🇶 Equatorial
Guinea
119-9.2%0.1%
40🇸🇾 Syria93-2.7%0.1%
41🇮🇹 Italy92-7.9%0.1%
42🇧🇳 Brunei92-13.8%0.1%
43🇾🇪 Yemen81-2.4%0.1%
44🇹🇹 Trinidad
& Tobago
74-3.6%0.1%
45🇷🇴 Romania65-6.2%0.1%
46🇩🇰 Denmark65-1.6%0.1%
47🇺🇿 Uzbekistan63-0.9%0.1%
48🇸🇩 Sudan62-3.3%0.1%
49🇹🇳 Tunisia40-12.9%0.0%
50Other CIS43+4.4%0.0%
51Other Middle East210+1.2%0.2%
52Other Africa283-3.4%0.3%
53Other Europe230-20.5%0.2%
54Other Asia Pacific177-10.6%0.2%
55Other S. &
Cent. America
381+68.5%0.4%
Total World93,848+4.2%100.0%

Behind America’s considerable lead in oil production, Saudi Arabia (ranked 2nd) produced 12 million B/D, accounting for about 13% of global supply.

Russia came in third with 11 million B/D in 2022. Together, these top three oil producing behemoths, along with Canada (4th) and Iraq (5th), make up more than half of the entire world’s oil supply.

Meanwhile, the top 10 oil producers, including those ranked 6th to 10th—China, UAE, Iran, Brazil, and Kuwait—are responsible for more than 70% of the world’s oil production.

Notably, all top 10 oil giants increased their production between 2021–2022, and as a result, global output rose 4.2% year-on-year.

Major Oil Producing Regions in 2022

The Middle East accounts for one-third of global oil production and North America makes up almost another one-third of production. The Commonwealth of Independent States—an organization of post-Soviet Union countries—is another major regional producer of oil, with a 15% share of world production.

Region2022 Production
(Thousand B/D)
YoY ChangeShare of
World Supply
Middle East30,743+9.2%32.8%
North America25,290+5.3%27.0%
CIS14,006+0.9%14.9%
Africa7,043-3.5%7.5%
Asia Pacific7,273-1.4%7.8%
South & Central
America
6,3617.2%6.8%
Europe3,131-8.6%3.3%

What’s starkly apparent in the data however is Europe’s declining share of oil production, now at 3% of the world’s supply. In the last 20 years the EU’s oil output has dropped by more than 50% due to a variety of factors, including stricter environmental regulations and a shift to natural gas.

Another lens to look at regional production is through OPEC members, which control about 35% of the world’s oil output and about 70% of the world’s oil reserves.

A pictogram of the regional per day production by the biggest oil producers in 2022.

When taking into account the group of 10 oil exporting countries OPEC has relationships with, known as OPEC+, the share of oil production increases to more than half of the world’s supply.

Oil’s Big Balancing Act

Since it’s the very lifeblood of the modern economy, the countries that control significant amounts of oil production also reap immense political and economic benefits. Entire regions have been catapulted into prosperity and wars have been fought over the control of the resource.

At the same time, the ongoing effort to pivot to renewable energy is pushing many major oil exporters to diversify their economies. A notable example is Saudi Arabia, whose sovereign wealth fund has invested in companies like Uber and WeWork.

However, the world still needs oil, as it supplies nearly one-third of global energy demand.

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