The green transition is one of the most important investment themes of this decade. It would involve incredible amounts of spending, government subsidies, and (hopefully) progress.
Ministers met in Sapporo, Japan and agreed to accelerate the development of renewable energy and move toward a rapid phase-out of fossil fuels and plastics.
Some have pushed for phasing out coal in 2030, but that didn’t appear in the manifesto, nor did it hope to reduce natural gas use. This is not much of a surprise, given Europe’s energy crisis and practical considerations that conflict with ambitions.
“In the midst of an unprecedented energy crisis, it is important to come up with measures to address climate change and enhance energy security at the same time,” Japanese Industry Minister Yasutoshi Nishimura told a news conference.
One concrete push has been toward more offshore wind, including a pledge to provide 150 gigawatts of capacity by 2030.
I’m curious about the economics of offshore wind because last month, NextEra Energy He saidOffshore wind is a bad bet. They are the largest producer of renewable energy and have extensive experience in offshore wind.
The statement also set a goal to install 1 terawatt of solar power.
On fossil fuels, they agreed to “relentlessly phase out fossil fuels” by 2050 at the latest.
None of the targets are binding but they do highlight the direction governments are taking, including subsidies.
One of the best investment opportunities will be forward spending on critical materials and a looming supply gap. As the G7 countries push for a faster transition, the global regulatory structures around opening new mines are long and arduous. There are few places in the world where a new copper mine can be built in less than 7 years, and many have taken twice that.
The statement touched on this, emphasizing the vital importance of strengthening the supply of minerals and vital materials. The United States has already subsidized the new mines.
This is one of the more compelling charts on the global investment landscape right now, given the time lag.
Note the oversupply though this year and next.
Copper prices have held up this year despite concerns about a recession, but there are short-term signs of weakness as the premium in China’s refined market has fallen to CNY90/lb, from a peak of US$260 per month, according to CIBC.
Copper prices
For further reading about the next step for copper, see This breakdown of S& P Global From the World Commodities Summit on March 21.