1. Introduction
The world is standing at the intersection of two powerful forces shaping the global economy: the energy transition and the possibility of a new commodity supercycle.
The energy transition refers to the global shift away from fossil fuels like coal, oil, and natural gas, toward renewable and cleaner energy sources such as solar, wind, hydrogen, and nuclear. This transformation is driven by climate change concerns, technological advancements, and policy shifts by governments worldwide.
A commodity supercycle is a prolonged period (often 10–20 years) where commodity prices—such as oil, copper, lithium, and agricultural goods—rise significantly due to strong structural demand outpacing supply. Past supercycles were fueled by industrial revolutions, wars, and urbanization waves.
Today, these two phenomena are interlinked. The push for clean energy demands massive amounts of new materials—copper for wires, lithium and cobalt for batteries, rare earths for wind turbines, and silver for solar panels. At the same time, fossil fuel demand doesn’t vanish overnight, creating a tug-of-war between old energy and new energy, each influencing commodity markets in profound ways.
2. Historical Context: Past Commodity Supercycles
To understand today’s situation, it’s important to look at history. Commodity supercycles have occurred several times over the past century:
Late 19th century (Industrial Revolution)
Rapid industrialization in Europe and the U.S. fueled huge demand for steel, coal, and oil.
Post-World War II (1950s–70s)
Reconstruction of Europe and Japan required enormous amounts of metals, oil, and agricultural products.
China-led Boom (2000s–2014)
China’s entry into the World Trade Organization (WTO) and its infrastructure-heavy growth led to a surge in oil, iron ore, copper, and coal demand.
Each of these supercycles reshaped global trade and investment. Today, the green energy revolution may drive the next one.
3. What is the Energy Transition?
The energy transition is about changing the way we produce, distribute, and consume energy.
Key Drivers:
Climate Change: Rising global temperatures, extreme weather, and net-zero commitments.
Technology: Falling costs of solar, wind, and batteries.
Policy: Carbon taxes, emission regulations, and renewable energy mandates.
Consumer Behavior: Electric vehicles (EVs), rooftop solar, and ESG (environmental, social, governance) investing.
Main Pillars of Energy Transition:
Renewables: Solar, wind, hydropower, geothermal.
Electrification: EVs, electric heating, smart grids.
Storage: Lithium-ion batteries, hydrogen, pumped hydro.
Decarbonization of industry: Green hydrogen for steel, carbon capture technologies.
This shift requires enormous physical resources, which links the energy transition directly to commodities.
4. Commodity Demands of the Energy Transition
Unlike the oil-driven 20th century, the 21st-century energy system relies on minerals and metals.
Copper
Vital for electrical wiring, EVs, and renewable grids.
A single EV uses 2.5x more copper than a gasoline car.
Demand could double by 2035.
Lithium
Core of rechargeable batteries for EVs and storage.
Demand may rise 7-fold by 2030.
Cobalt
Improves battery life and performance.
Supply concentrated in the Democratic Republic of Congo (DRC), raising geopolitical concerns.
Nickel
Needed for high-energy-density batteries.
Indonesia is emerging as the global hub.
Rare Earths (Neodymium, Dysprosium, etc.)
Essential for magnets in wind turbines and EV motors.
China controls ~80% of global supply.
Silver
Used in solar panels.
Rising solar installations = surging silver demand.
This demand creates the foundation for a green commodity supercycle.
5. Supply-Side Challenges
Demand growth is one side of the equation. Supply, however, faces major bottlenecks:
Long Lead Times: New mines take 10–15 years to develop.
Geopolitical Risks: Resource nationalism, export bans, and trade tensions.
Environmental & Social Concerns: Local opposition, ESG scrutiny, and water use in mining.
Underinvestment: Years of low prices discouraged new projects in oil and mining sectors.
The result? Structural shortages that push prices higher.
6. The Role of Fossil Fuels in Transition
While the world shifts to renewables, oil and gas remain critical in the short and medium term:
Oil: Needed for transportation, petrochemicals, aviation.
Natural Gas: Acts as a “bridge fuel” to renewables.
Coal: Still dominant in India, China, and parts of Africa.
Ironically, underinvestment in fossil fuels—due to climate pressures—could trigger short-term price spikes, fueling inflation and instability.
This creates a paradox: the transition away from fossil fuels may actually make them more expensive in the interim.
7. Economic Implications of an Energy-Driven Supercycle
If the green transition sparks a commodity supercycle, the ripple effects are vast:
Inflationary Pressures
Higher commodity prices = higher costs of goods.
Potential stagflation risks.
Winners & Losers
Winners: Resource-rich nations (Chile for lithium, Indonesia for nickel, Australia for iron ore, Africa for cobalt).
Losers: Import-dependent nations (India, Japan, Europe).
Investment Shifts
Mining, renewable infrastructure, EV supply chains attract capital.
Traditional oil & gas companies under pressure but may benefit from short-term price spikes.
Currency Impact
Commodity exporters’ currencies (AUD, CAD, CLP) strengthen.
Importers’ currencies weaken.
Global Trade Patterns
New alliances forming around critical minerals (U.S. + Australia, China + Africa).
8. Geopolitics of Energy Transition
Energy has always been geopolitical. In the past, oil shaped wars, alliances, and global dominance. In the future, critical minerals will play that role.
China: Dominates rare earths and battery manufacturing.
U.S. & Europe: Trying to secure supply chains via partnerships (Inflation Reduction Act, EU Critical Raw Materials Act).
Africa & Latin America: Emerging as key battlegrounds for resources.
Middle East: Investing in hydrogen and renewables to stay relevant in a post-oil world.
This geopolitical race adds volatility and competition, feeding into the supercycle narrative.
9. Financial Markets & Commodities
A commodity supercycle doesn’t just impact physical trade—it also reshapes financial markets:
Hedge Funds & ETFs: Increasing exposure to lithium, copper, and rare earths.
Retail Investors: Gaining access via green commodity ETFs.
Central Banks: Worry about inflation and commodity-driven shocks.
Corporates: Automakers (Tesla, BYD, Ford) racing to secure long-term mineral contracts.
Commodities are no longer just “raw materials”—they are becoming strategic assets.
10. Risks to the Supercycle Thesis
While the green supercycle is a strong narrative, there are risks:
Technological Breakthroughs
Battery alternatives (sodium-ion, solid-state) could reduce lithium/cobalt demand.
Policy Shifts
Political resistance to climate policies may slow transition.
Recycling & Circular Economy
Secondary supply from recycling could offset new demand.
Economic Slowdowns
Recessions or prolonged low growth may dampen demand.
Overestimation of Speed
Energy transitions historically take decades, not years.
11. Case Studies
a. Lithium Boom
Between 2020–2023, lithium prices rose more than 500%, driven by EV demand. Though prices later corrected, the volatility highlights supply-demand mismatches.
b. Copper as “New Oil”
Goldman Sachs and other analysts call copper the “new oil” because electrification is impossible without it. Current supply projections suggest a multi-million-ton deficit by 2030.
c. Oil Paradox
Despite climate goals, oil demand hit record highs in 2023–2024, showing the sluggish pace of transition. This means both fossil fuels and green metals can rally simultaneously.
12. Future Outlook: 2025–2040
Looking ahead, the interplay of energy transition and commodities will shape economies:
Short Term (2025–2030):
High volatility, shortages in copper, lithium, and nickel.
Oil remains essential but faces supply tightness.
Prices of key metals remain elevated.
Medium Term (2030–2040):
Renewables and EVs dominate new investment.
Recycling industry scales up.
New supply from Africa/Latin America stabilizes markets somewhat.
Long Term (2040+):
Fossil fuel demand declines sharply.
Clean energy minerals dominate trade flows.
Commodity power shifts from Middle East to Latin America & Africa.
13. Conclusion
The energy transition is not just about climate—it’s a structural re-engineering of the world economy. This transformation requires vast amounts of resources, creating conditions for a commodity supercycle unlike any in history.
But unlike past cycles driven by industrial revolutions or urbanization, this one is shaped by decarbonization, technology, and geopolitics. It’s a cycle that could bring prosperity to resource-rich nations, inflationary shocks to consumers, and massive shifts in global trade.
Whether it lasts 10 years or 20, the green commodity supercycle is likely to redefine wealth, power, and progress in the 21st century.
The world is standing at the intersection of two powerful forces shaping the global economy: the energy transition and the possibility of a new commodity supercycle.
The energy transition refers to the global shift away from fossil fuels like coal, oil, and natural gas, toward renewable and cleaner energy sources such as solar, wind, hydrogen, and nuclear. This transformation is driven by climate change concerns, technological advancements, and policy shifts by governments worldwide.
A commodity supercycle is a prolonged period (often 10–20 years) where commodity prices—such as oil, copper, lithium, and agricultural goods—rise significantly due to strong structural demand outpacing supply. Past supercycles were fueled by industrial revolutions, wars, and urbanization waves.
Today, these two phenomena are interlinked. The push for clean energy demands massive amounts of new materials—copper for wires, lithium and cobalt for batteries, rare earths for wind turbines, and silver for solar panels. At the same time, fossil fuel demand doesn’t vanish overnight, creating a tug-of-war between old energy and new energy, each influencing commodity markets in profound ways.
2. Historical Context: Past Commodity Supercycles
To understand today’s situation, it’s important to look at history. Commodity supercycles have occurred several times over the past century:
Late 19th century (Industrial Revolution)
Rapid industrialization in Europe and the U.S. fueled huge demand for steel, coal, and oil.
Post-World War II (1950s–70s)
Reconstruction of Europe and Japan required enormous amounts of metals, oil, and agricultural products.
China-led Boom (2000s–2014)
China’s entry into the World Trade Organization (WTO) and its infrastructure-heavy growth led to a surge in oil, iron ore, copper, and coal demand.
Each of these supercycles reshaped global trade and investment. Today, the green energy revolution may drive the next one.
3. What is the Energy Transition?
The energy transition is about changing the way we produce, distribute, and consume energy.
Key Drivers:
Climate Change: Rising global temperatures, extreme weather, and net-zero commitments.
Technology: Falling costs of solar, wind, and batteries.
Policy: Carbon taxes, emission regulations, and renewable energy mandates.
Consumer Behavior: Electric vehicles (EVs), rooftop solar, and ESG (environmental, social, governance) investing.
Main Pillars of Energy Transition:
Renewables: Solar, wind, hydropower, geothermal.
Electrification: EVs, electric heating, smart grids.
Storage: Lithium-ion batteries, hydrogen, pumped hydro.
Decarbonization of industry: Green hydrogen for steel, carbon capture technologies.
This shift requires enormous physical resources, which links the energy transition directly to commodities.
4. Commodity Demands of the Energy Transition
Unlike the oil-driven 20th century, the 21st-century energy system relies on minerals and metals.
Copper
Vital for electrical wiring, EVs, and renewable grids.
A single EV uses 2.5x more copper than a gasoline car.
Demand could double by 2035.
Lithium
Core of rechargeable batteries for EVs and storage.
Demand may rise 7-fold by 2030.
Cobalt
Improves battery life and performance.
Supply concentrated in the Democratic Republic of Congo (DRC), raising geopolitical concerns.
Nickel
Needed for high-energy-density batteries.
Indonesia is emerging as the global hub.
Rare Earths (Neodymium, Dysprosium, etc.)
Essential for magnets in wind turbines and EV motors.
China controls ~80% of global supply.
Silver
Used in solar panels.
Rising solar installations = surging silver demand.
This demand creates the foundation for a green commodity supercycle.
5. Supply-Side Challenges
Demand growth is one side of the equation. Supply, however, faces major bottlenecks:
Long Lead Times: New mines take 10–15 years to develop.
Geopolitical Risks: Resource nationalism, export bans, and trade tensions.
Environmental & Social Concerns: Local opposition, ESG scrutiny, and water use in mining.
Underinvestment: Years of low prices discouraged new projects in oil and mining sectors.
The result? Structural shortages that push prices higher.
6. The Role of Fossil Fuels in Transition
While the world shifts to renewables, oil and gas remain critical in the short and medium term:
Oil: Needed for transportation, petrochemicals, aviation.
Natural Gas: Acts as a “bridge fuel” to renewables.
Coal: Still dominant in India, China, and parts of Africa.
Ironically, underinvestment in fossil fuels—due to climate pressures—could trigger short-term price spikes, fueling inflation and instability.
This creates a paradox: the transition away from fossil fuels may actually make them more expensive in the interim.
7. Economic Implications of an Energy-Driven Supercycle
If the green transition sparks a commodity supercycle, the ripple effects are vast:
Inflationary Pressures
Higher commodity prices = higher costs of goods.
Potential stagflation risks.
Winners & Losers
Winners: Resource-rich nations (Chile for lithium, Indonesia for nickel, Australia for iron ore, Africa for cobalt).
Losers: Import-dependent nations (India, Japan, Europe).
Investment Shifts
Mining, renewable infrastructure, EV supply chains attract capital.
Traditional oil & gas companies under pressure but may benefit from short-term price spikes.
Currency Impact
Commodity exporters’ currencies (AUD, CAD, CLP) strengthen.
Importers’ currencies weaken.
Global Trade Patterns
New alliances forming around critical minerals (U.S. + Australia, China + Africa).
8. Geopolitics of Energy Transition
Energy has always been geopolitical. In the past, oil shaped wars, alliances, and global dominance. In the future, critical minerals will play that role.
China: Dominates rare earths and battery manufacturing.
U.S. & Europe: Trying to secure supply chains via partnerships (Inflation Reduction Act, EU Critical Raw Materials Act).
Africa & Latin America: Emerging as key battlegrounds for resources.
Middle East: Investing in hydrogen and renewables to stay relevant in a post-oil world.
This geopolitical race adds volatility and competition, feeding into the supercycle narrative.
9. Financial Markets & Commodities
A commodity supercycle doesn’t just impact physical trade—it also reshapes financial markets:
Hedge Funds & ETFs: Increasing exposure to lithium, copper, and rare earths.
Retail Investors: Gaining access via green commodity ETFs.
Central Banks: Worry about inflation and commodity-driven shocks.
Corporates: Automakers (Tesla, BYD, Ford) racing to secure long-term mineral contracts.
Commodities are no longer just “raw materials”—they are becoming strategic assets.
10. Risks to the Supercycle Thesis
While the green supercycle is a strong narrative, there are risks:
Technological Breakthroughs
Battery alternatives (sodium-ion, solid-state) could reduce lithium/cobalt demand.
Policy Shifts
Political resistance to climate policies may slow transition.
Recycling & Circular Economy
Secondary supply from recycling could offset new demand.
Economic Slowdowns
Recessions or prolonged low growth may dampen demand.
Overestimation of Speed
Energy transitions historically take decades, not years.
11. Case Studies
a. Lithium Boom
Between 2020–2023, lithium prices rose more than 500%, driven by EV demand. Though prices later corrected, the volatility highlights supply-demand mismatches.
b. Copper as “New Oil”
Goldman Sachs and other analysts call copper the “new oil” because electrification is impossible without it. Current supply projections suggest a multi-million-ton deficit by 2030.
c. Oil Paradox
Despite climate goals, oil demand hit record highs in 2023–2024, showing the sluggish pace of transition. This means both fossil fuels and green metals can rally simultaneously.
12. Future Outlook: 2025–2040
Looking ahead, the interplay of energy transition and commodities will shape economies:
Short Term (2025–2030):
High volatility, shortages in copper, lithium, and nickel.
Oil remains essential but faces supply tightness.
Prices of key metals remain elevated.
Medium Term (2030–2040):
Renewables and EVs dominate new investment.
Recycling industry scales up.
New supply from Africa/Latin America stabilizes markets somewhat.
Long Term (2040+):
Fossil fuel demand declines sharply.
Clean energy minerals dominate trade flows.
Commodity power shifts from Middle East to Latin America & Africa.
13. Conclusion
The energy transition is not just about climate—it’s a structural re-engineering of the world economy. This transformation requires vast amounts of resources, creating conditions for a commodity supercycle unlike any in history.
But unlike past cycles driven by industrial revolutions or urbanization, this one is shaped by decarbonization, technology, and geopolitics. It’s a cycle that could bring prosperity to resource-rich nations, inflationary shocks to consumers, and massive shifts in global trade.
Whether it lasts 10 years or 20, the green commodity supercycle is likely to redefine wealth, power, and progress in the 21st century.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.