Russia’s invasion of Ukraine could delay the global shift away from fossil fuels, analysts said Thursday, a perhaps counterintuitive impact of what will likely be Europe’s biggest ground war since World War II. world.
The price of crude oil jumped to $105 on Thursday for the first time in years, reflecting Russia’s vast oil and gas exports that are also the source of its modern economic power.
Earlier this week, Harvard economist Jason Furman, a former adviser to President Barack Obama, fired Russia The New York Times as “essentially a big gas station”, saying the country was “incredibly unimportant in the global economy, except for oil and gas”. Bill McKibben, founder of environmental group 350.org, said in a tweet Tuesday that “Russia can only afford to fight because of its oil and gas…so it might be wise to stop using oil and gas now.”
But analysts say that even if the world magically moved away from fossil fuels, Russia would still be an important player in the global energy supply chain. That’s because, as E&E News mining reporter Jael Holzman noted for the first time, Russia is a major source of key metals on which batteries and clean electricity depend, such as nickel and aluminum, as well as a leading exporter of nuclear reactor technology.
“Initially, it could slow down the energy transition,” said Julian Kettle, analyst and senior vice president at British energy consultancy Wood Mackenzie.
“We can’t extract the metal from the ground fast enough” to produce the renewable energy needed to keep warming below 2 degrees Celsius, or 3.6 degrees Fahrenheit, he added.
Russia produces around 7% of the nickel mined in the world. However, it generates 20% of the world’s supply of Class 1 nickel, the grade of the metal most commonly used in lithium-ion batteries to increase the amount of energy they hold and the duration of their charge.
When nickel prices rose by around 21% last year, Elon Musk, the billionaire CEO of electric car and battery giant Tesla, called nickel provides “our biggest concern for scaling up” battery production. While sales of electric vehicles soared more than 80% last year, a “tiny” number of those cars were powered by nickel-free batteries.
On Thursday, the price of nickel soared to more than $25,000 a ton, its highest level since 2011.
“Any sanctions leading to an export ban would likely have a further impact on the price of nickel, which is already at its highest level in a decade,” Caspar Rawles said.analyst at Benchmark Mineral Intelligence, a London-based research firm specializing in lithium-ion batteries.
Even after the West sanctioned major Russian industries following the 2014 invasion of Crimea, metal producers have largely avoided such sanctions. There was one notable exception: aluminum maker Rusal, which the United States sanctioned in 2018 in an effort to punish its billionaire founder, Oleg Deripaska, in connection with Crimea and various other fights with Russia.
The sanctions, which were lifted in 2019 when Deripaska relinquished control of the company, sent the price of aluminum skyrocketing by 35% within days, according to Reuters.
Today, Russia supplies around 6% of the world’s aluminium, the price of which hit a record high of $3,450 a tonne on the London Metal Exchange on Thursday.
Much more than the main source of basic kitchen foil, aluminum is so essential to the construction of solar panels that a january study in the peer-reviewed journal Nature Sustainability found that solar energy, at its current rate of growth, could consume half of the world’s metal supply by 2050. It is also used to make power lines at high voltages needed to transport solar and wind energy. energy from where it is available to where it is needed.
One problem with aluminum is that it normally requires large amounts of fossil fuels to melt. But even there, Russia has an advantage as companies like the Anglo-Russian group En+, which has ties to Rusal, are building low-carbon smelters in Siberia that use hydroelectricity made increasingly abundant by melting ice.
And the sanctions, especially for metals, are not necessarily effective because Russia could redirect its sales to China, which imports metals to finance its energy transition and could transform the raw materials and resell them to buyers in the same countries. of the West who seek to limit Russia’s access to markets as punishment for the invasion of Ukraine.
Even nuclear power – the carbon-free source of electricity favored by renewable energy skeptics – is a key asset for Russia. The national nuclear company Rosatom become the world’s largest reactor supplier in 2017, securing deals to build new power plants in countries including Bangladesh, China and Egypt.
Russia also produces about 2% of the world’s cobalt, the metal used in various battery chemistries, according to Benchmark Mineral Intelligence, and Russian mercenaries have played a significant role in the development of mining supply chains in sub-Saharan Africa, where most of the world’s supply originates.
China still enjoys a virtual monopoly on the production of rare earth minerals, a group of 17 metals with unique magnetic properties that make them crucial for making batteries and other electronic devices. But Russia has the fourth largest known reserves of these minerals. In August 2020, the country announcement plans to invest $1.5 billion to boost production of rare earth minerals, aiming to become the No. 2 supplier after China by the end of this decade.
The Biden administration seeks to counter the dominance of its geopolitical rivals in the clean energy supply chain. China’s control over lithium and rare earth flows in particular has become a sticking point that pro-fossil energy opponents of decarbonization policy have used to argue that reducing oil use, gas and coal pose risks to the national security of the United States.
Tuesday, the White House announcement plans to invest $35 million in the United States’ only rare earth producer, California-based miner MP Materials, as part of a plan to increase domestic production of the metals needed for decarbonization.
“China controls most of the global market for these minerals,” President Joe Biden said in a speech on Tuesday. “We cannot build a made-in-America future if we ourselves are dependent on China for the materials that power the products of today and tomorrow.”
The same could be said of Russia, although to a lesser extent.