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Energy Shift

The History of Energy Transitions

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The History of Energy Transitions

Over the last 200 years, how we’ve gotten our energy has changed drastically⁠.

These changes were driven by innovations like the steam engine, oil lamps, internal combustion engines, and the wide-scale use of electricity. The shift from a primarily agrarian global economy to an industrial one called for new sources to provide more efficient energy inputs.

The current energy transition is powered by the realization that avoiding the catastrophic effects of climate change requires a reduction in greenhouse gas emissions. This infographic provides historical context for the ongoing shift away from fossil fuels using data from Our World in Data and scientist Vaclav Smil.

Coal and the First Energy Transition

Before the Industrial Revolution, people burned wood and dried manure to heat homes and cook food, while relying on muscle power, wind, and water mills to grind grains. Transportation was aided by using carts driven by horses or other animals.

In the 16th and 17th centuries, the prices of firewood and charcoal skyrocketed due to shortages. These were driven by increased consumption from both households and industries as economies grew and became more sophisticated.

Consequently, industrializing economies like the UK needed a new, cheaper source of energy. They turned to coal, marking the beginning of the first major energy transition.

YearTraditional Biomass % of Energy MixCoal % of Energy Mix
180098.3%1.7%
182097.6%2.4%
184095.1%4.9%
186086.8%13.3%
188073.0%26.7%
190050.4%47.2%
192038.4%54.4%
194031.6%50.7%

As coal use and production increased, the cost of producing it fell due to economies of scale. Simultaneously, technological advances and adaptations brought about new ways to use coal.

The steam engine—one of the major technologies behind the Industrial Revolution—was heavily reliant on coal, and homeowners used coal to heat their homes and cook food. This is evident in the growth of coal’s share of the global energy mix, up from 1.7% in 1800 to 47.2% in 1900.

The Rise of Oil and Gas

In 1859, Edwin L. Drake built the first commercial oil well in Pennsylvania, but it was nearly a century later that oil became a major energy source.

Before the mass production of automobiles, oil was mainly used for lamps. Oil demand from internal combustion engine vehicles started climbing after the introduction of assembly lines, and it took off after World War II as vehicle purchases soared.

Similarly, the invention of the Bunsen burner opened up new opportunities to use natural gas in households. As pipelines came into place, gas became a major source of energy for home heating, cooking, water heaters, and other appliances.

YearCoal % of Energy MixOil % of Energy MixNatural Gas % of Energy Mix
195044.2%19.1%7.3%
196037.0%26.6%10.7%
197025.7%40.2%14.5%
198023.8%40.6%16.3%
199024.4%35.5%18.4%
200022.5%35.1%19.7%

Coal lost the home heating market to gas and electricity, and the transportation market to oil.

Despite this, it became the world’s most important source of electricity generation and still accounts for over one-third of global electricity production today.

The Transition to Renewable Energy

Renewable energy sources are at the center of the ongoing energy transition. As countries ramp up their efforts to curb emissions, solar and wind energy capacities are expanding globally.

Here’s how the share of renewables in the global energy mix changed over the last two decades:

YearTraditional BiomassRenewablesFossil FuelsNuclear Power
200010.2%6.6%77.3%5.9%
20058.7%6.5%79.4%5.4%
20107.7%7.7%79.9%4.7%
20156.9%9.2%79.9%4.0%
20206.7%11.2%78.0%4.0%

In the decade between 2000 and 2010, the share of renewables increased by just 1.1%. But the growth is speeding up—between 2010 and 2020, this figure stood at 3.5%.

Furthermore, the current energy transition is unprecedented in both scale and speed, with climate goals requiring net-zero emissions by 2050. That essentially means a complete fade-out of fossil fuels in less than 30 years and an inevitable rapid increase in renewable energy generation.

Renewable energy capacity additions were on track to set an annual record in 2021, following a record year in 2020. Additionally, global energy transition investment hit a record of $755 billion in 2021.

However, history shows that simply adding generation capacity is not enough to facilitate an energy transition. Coal required mines, canals, and railroads; oil required wells, pipelines, and refineries; electricity required generators and an intricate grid.

Similarly, a complete shift to low-carbon sources requires massive investments in natural resources, infrastructure, and grid storage, along with changes in our energy consumption habits.

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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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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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