Co-written by Editor-in-Chief, Finanz und Wirtschaft
A year ago, commodity prices were set to go sky high. We even wrote that a new “super cycle” of price increases was in the offing. And with oil at least, those predictions have been confirmed.
At the beginning of 2021, the price of a barrel was approaching USD 60. The most pessimistic, at least on the consumer side, saw it reaching the USD 100 mark later this year. At the time of writing, it is already almost there.
This surge has pleased many players in the industry. And for those oil majors who made historic profits in 2021, the party isn’t over yet. Increased demand, reduced supply and geopolitical tensions around the Ukraine and the Middle East are factors that support continued high prices for oil and gas.
But this rising cost of fossil fuels supports something else, too – the energy transition. At COP 26 in Glasgow last November, a number of companies committed to achieving net zero emissions, with some promising to reach that goal as early as in 2030.
Is this realistic? The answer depends largely on the trading sector. Sincere as they may be, these green commitments can only be kept if the world has the raw materials it needs to decarbonize the economy, as explained in a fascinating report published in January by McKinsey. In particular, metals such as cobalt, nickel or tellurium play a crucial role in the production of wind turbines, solar panels or batteries for electric vehicles. But these resources are in danger of running out, at least temporarily, due to the very high demand, and their own scarcity.
Therefore, “as the raw-materials supplier to the economy, the mining sector will need to grow at an unprecedented pace in order to enable the required technological shifts”, McKinsey consultants suggest. It will also take time to set up supply chains and financing models to achieve the energy transition.
The challenge seems huge, but it is not impossible that things go faster than expected. Why? Because some technologies are making remarkably quick progress. Take aviation for example: some airlines are planning zero-emission short-haul flights as early as 2025. They plan to convert their aircraft to electric power using the technology of Universal Hydrogen, an American start-up led by a former Airbus executive. So there is every reason to be hopeful for the future.
