Concern about energy supply is not new; wars have been waged for centuries over how to keep the trains moving. But a combination of developments has driven new urgency to building security around — and alternatives to — energy access.
“As it stands, current raw materials production may not be sufficient to achieve an energy transition with our current technology”
This is why we see energy access, and its primacy to nearly every country's national interest, as a major driver of re-globalization. Every country needs energy, but they are diverse in their access to, public opinion toward, and innovation around various elements of the energy supply chain.
Innovation in resources: climbing the energy s-curve
It's a jarring thought, but there might not be enough raw materials on earth to achieve a green energy transition with our current technology. If the absolute level of supply is sufficient, many constraints remain: the concentration of critical mineral production in select countries, a 17-year average lead time from discovery to production of these commodities, and a current lack of recycling capacity to maximize longevity of supply.
The increasing impact of climate change and the supply challenges created by the conflict in Ukraine may be the shocks needed to speed up the s-curve. If so, more efficient energy production and storage in both traditional and green capacity, together with greater political buy in to energy access will be the new necessary innovations required to fuel the energy independence and green transition needed to respond to that shock.
Critical minerals: countries must grapple with their dependence on the raw materials that make an energy transition possible
China is so far ahead of other countries in building up raw materials supply and processing capacity that it has the potential to hinder goals of energy independence elsewhere. Fortunately, the contest over critical minerals may force a virtuous cycle. Shortages and prohibitively high pricing of select inputs may well induce innovation by necessity. Aside from the perennial quest to find cheaper, cleaner, more scalable energy sources, we see an intense need to innovate the lithium-ion battery, both to enhance storage and reduce the mineral intensity of the electric vehicle expansion.
Innovation in process: political grit and public-private partnership
If countries could make meaningful steps toward cost-effective and secure energy access, it would seem like a no-brainer. So why hasn't it happened? The first answer has to do with political will — both domestic and international. Because achieving energy security requires extensive spending, nuanced education of public opinion, and international cooperation, solid and committed leadership is crucial to achieve this goal.
Related but distinct from political will is how a true energy shift might be coordinated and executed across government and the private sector. Government investment is certainly a driver of the energy transition, but the private sector has a meaningful role to play in the execution of, and investment in, an energy transition.
For our full analysis of how access to technology, energy, and the global financial system will drive re-globalization and shape investment strategies, download the Megatrends report.