A recent report from Deutsche Bank has shown the scale of investment required to transition the world to a clean-energy economy and end reliance on fossil fuels.
The report concludes that, “the energy spending needed by 2030 to hit net zero by 2050 could be equivalent to triple the combined increase in U.S. and European central-bank balance sheets since Covid.” That is an overly convoluted way of saying – $27 trillion.
And with such large spending, the world will see greenflation (rising costs of materials for ‘green’ products). We are already seeing greenflation in some of the critical metals and commodities needed for the green transition – lithium in particular comes to mind. The report’s authors estimate that three millions tonnes of minerals and metals will be needed to deploy the energy-generation and energy-storage technologies required. So demand for these future-facing commodities – lithium, aluminium, copper, nickel and cobalt – should remain strong.
Offsetting this greenflation is the promise of new technologies. As trillions of dollars are invested, the world should get more efficient at generating and storing energy, meaning less inputs are required, bringing down costs. We are at the start of a decades-long transition and many of the investments made (or not made) in the next couple of years will have impacts for decades to come.
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