Commodities in Transition: From Oil to Renewable Energy

Introduction

For over a century, oil, gas, and coal were the backbone of the global economy — powering industrial growth, fueling transportation, and shaping geopolitical dynamics. Today, however, that dominance is gradually evolving. Despite the progress of the 21st century, hydrocarbons remain central to global energy, but new forces are reshaping the landscape: renewable technologies and critical minerals for clean energy are emerging as transformative players.

Oil’s Enduring Role Amid the Shift

Oil and gas continue to play a pivotal role, supplying more than half of the world's energy needs IEAExxonMobil. The International Energy Agency (IEA) highlights the industry's current contribution, noting that oil and gas producers fund nearly USD 3.5 trillion in annual revenues IEA.

Still, to align with the 1.5 °C target, emissions from oil and gas operations — currently representing almost 15% of global energy-related greenhouse gas emissions — must drop by over 60% by 2030, and approach net-zero by the early 2040s IEA. This underscores the challenge for the sector: to maintain its energy role while decarbonizing operations.

The Surge of Critical Minerals

Transition efforts now hinge on a surge in demand for minerals essential to renewable technologies:

• Lithium demand surged nearly 30% in 2024 alone, far surpassing its previous 10% annual growth rate IEA.

• By 2040, lithium demand could increase over 40-fold in climate-aligned scenarios, with Nickel, Cobalt, and Graphite growing 20–25 times, and copper demand doubling or more IEA+1.

• Copper demand — vital for grids and EVs — is projected to rise 30% by 2040, from 27 million to 34 million tonnes, with a potential 30% supply shortfall by 2035 argusmedia.comThe Guardian.

• The concentration of refining remains high: the top three producers hold 86% of the market share for key energy minerals as of 2024, up from 82% in 2020 AP NewsIEA.

These trends highlight both the rapid expansion of green mineral demand and the risks of supply bottlenecks.

Investment and Market Dynamics

The shift Toward renewable commodities has triggered notable market responses:

• Investment in clean technologies is increasing, although only 1% of global clean energy investment currently comes from oil and gas companies IEA — revealing limited corporate engagement in the energy transition.

• Surging demand has led to price volatility: battery metals like lithium saw an 80% price drop since their 2021–22 highs IEA.

• The market value of key transition minerals in scenarios aligned with net-zero could reach USD 770 billion by 2040, with lithium emerging as the second-largest segment after copper IEA.

• Despite this, underinvestment and operational challenges — like depleting ore quality and rising costs — threaten copper supply, pushing up prices and encouraging consolidation through mergers and acquisitions rather than expanded production ReutersThe Guardian.

A Dual Energy Future

Hydrocarbons won’t vanish overnight. In many scenarios, oil and gas remain essential through 2040 and beyond, especially in sectors like aviation, shipping, and heavy industry International Energy ForumExxonMobil. Thus, the coming decades will likely feature a dual energy system, blending hydrocarbons and renewables.

Clean energy will grow in importance, but oil and gas will remain indispensable. Managing this coexistence will require strategic planning, regulatory adaptation, and investment across sectors.

Conclusion and Forward Outlook

The global commodity landscape is undergoing one of its most significant transformations. Oil, while still central, is facing mounting pressures to decarbonize and adapt. At the same time, clean energy minerals like lithium, cobalt, and copper are rapidly gaining importance — with demand rising exponentially and supply chains under increasing strain.

Successful navigation of this transition demands:

• Investment in diversified mining and refining capabilities

• Expansion of recycling and reuse to ease resource pressure

• International cooperation to ensure stable supply chains and reduce dependency on a few countries

The future belongs to those who can strategically embrace both currents — adapting to the green imperative while recognizing the enduring need for hydrocarbons. In doing so, they will help shape a resilient, sustainable economy for the decades ahead.