OPEC's decision to cut oil production again, which triggered another surge in energy prices, will only spur investment in green technologies and alternative energy and accelerate the global energy transition. Analysts interviewed by Bloomberg come to this conclusion.
Experts note that last year's experience of reduced supply in traditional energy markets (oil and gas) has led many countries, accustomed to relying heavily on traditional fossil fuels, to increase their investments in alternative energy generation methods. The publication notes that the issue is no longer ecology, but energy security, as the authorities of many countries are tired of being dependent on other states that can manipulate the market by controlling supply.
“The higher the cost of conventional fuels, the greater the incentive to continue the transition. This, by the way, is another reason why OPEC does not seek to keep prices at $100 per barrel, ”said Ole Sloth Hansen, head of commodity strategy at Saxo Bank.
This example is especially indicative in the context of the ongoing energy confrontation with Russia, which has sharply reduced its gas supplies to the EU in 2023. This prompted local authorities to pay attention to alternative methods of power generation and increase investment in green and nuclear energy. Moreover, analysts fix an inverse relationship between the price of oil and rare earth metals necessary for the production of elements of "green" energy. For example, while oil prices are rising, the cost of lithium, which is necessary for the production of powerful batteries, on the contrary, is falling, which is pushing the development of the production of electric cars.
The agency notes that against the backdrop of OPEC's decision, oil prices rose by around 10%. At the same time, lithium prices fell by 3%, and since the beginning of the year – by 57%. Including for this reason, many manufacturers of electric cars have gone to lower prices for their products. Other commodities needed for green technologies are seeing similar dynamics, with polysilicon used in solar panels depreciating more than 30% from last year's peak, and steel used in windmills down 40% in Europe and 20% in the US. .
At the same time, experts admit that it is impossible to immediately change to a new type of energy generation. This means that oil and gas dependent countries will again face inflationary pressures caused by rising energy prices, and central banks of countries will have to pursue tighter and more cautious monetary policies in order not to slow down economic growth. And for the "green" technologies themselves, this carries additional risks, since most projects relied on cheap loans, which is impossible in the current conditions. However, there is another solution: investment in the sector has grown significantly in recent years, from $500 billion in 2019 to more than $1 trillion in 2022.