Image credits: Zbynek Burival
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News Article

Rising Oil Prices Affects the World’s Transition to Green Energy

By Paloma Duran | Tue, 08/09/2022 - 16:36

The global transition to greener technologies has been slowed down by rising prices for oil and raw materials that serve as key inputs for clean energy infrastructure and new technologies. Experts say that countries like Mexico, key producers of oil and minerals, will benefit greatly from the shifting market environment.

The study "Mineral Import Demand and Clean Energy Transitions in Major Mineral Importing Countries" focused on the clean energy transition of the world's nine major mineral importers: Australia, Brazil, Canada, Chile, Mexico, Russia, South Africa, Ukraine and the US. The study emphasized that although these countries are moving toward greener energy, they still rely on oil to deploy renewable energy infrastructure and capacity. In addition, oil remains the main fuel used by cars that transport and maintain this energy-intensive technology needed to produce clean energy, since it is the cheapest option.

“Making solar panels, for example, requires oil, and battery production requires the transportation of materials and equipment for mineral extraction. Therefore, in the process of providing renewable electricity, non-renewable resources are also needed, and they have a cost,” Kazi Sohag, Senior Researcher at Russia’s Ural Federal University said.

 

Sohag stressed that countries like Russia that produce both oil and key minerals will benefit the most. “The Russian Federation is one of the main exporters of oil but also of copper, which is needed for solar energy. In addition, it produces lithium, chromium, cobalt and nickel used for electric vehicle batteries.”

 

Mexico, like Russia, is benefiting from high oil prices. Recently, PEMEX registered historic profits in 2Q22. It owes these results to soaring oil prices and strong export levels, which stood at 267Mb/d, a figure “not seen since November 1998,” according to the NOC. PEMEX recorded a net attributable profit of US$65.3 billion, which is equivalent to multiplying its 2Q21 result over nine times, according to the company's quarterly report.

Regarding the import of key minerals, Mexico is among the top 10 world producers of 17 crucial minerals. The country ranks first in silver production, second in fluorite, third in sodium sulfate, clestite and wollastonite, fifth in lead, bismuth and molybdenum, sixth in magnesium sulfate, zinc, cadmium, diatomite and barite, eight in gold, salt and plaster and ninth in copper. Most of these minerals, especially silver and copper, are considered the drivers of the world's clean energy transition.

Sohag stressed that the problem caused by the increase in oil prices could be solved in the future by reallocating oil revenue, which could increase the import of metals and therefore accelerate the clean energy transition.

The data used in this article was sourced from:  
Science Direct, MBN, Mining.com,
Photo by:   Zbynek Burival
Paloma Duran Paloma Duran Journalist and Industry Analyst