- Oct 18, 2021 2:31 am GMT
In the short term, the surge in oil, gas, coal and metals prices is shaking up expectations about the global economic outlook over the next few years. In the long term, the transition to lower-carbon energy implies profound changes in the distribution of resource wealth around the world.
to the IMF’s World Economic Outlook. The forecast for global GDP growth has been revised down marginally to 5.9% for this year and left unchanged at 4.9% for 2022.
- Growth in Saudi Arabia and Russia is significantly stronger. The boost that those countries are enjoying this year is a reminder of the vital role that oil plays in their economies.
- The transition will lead to strong growth in demand for some metals, for batteries: lithium, cobalt and nickel. Reserves are concentrated in a small number of countries: Australia, Chile, The Democratic Republic of Congo, and to a lesser extent a few others including Russia and Argentina.
- About 13 million jobs would be created in low-carbon energy industries
- Growth in the ASEAN-5 countries including Indonesia and Malaysia is now expected to be much slower
- In a world that is on course to meet Paris Climate goal, the prices of those metals “would reach historical peaks for an unprecedented, sustained period,” the IMF said this week, adding: “The prices of cobalt, lithium, and nickel would rise several hundred percent from 2020 levels.”
- The is clearly bad news for the energy transition.
- Shortages and soaring prices for raw materials for metals could pose severe challenges to the growth of electric vehicle sales.
- Jobs would also be lost, including about 500,000 in oil and gas and 2 million in the coal industry worldwide.
- The new jobs will often require different skills and be in different places from the old jobs that are being lost, and “support must be there for those who lose jobs in declining sectors
Moving to net zero emissions would transform the allocation of resource wealth around the world. Policymakers are starting to assess the potential economic impact. There may be some clear winners and losers, but the short-term market signals are indicating Energy Transition may not be the winner!
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