Energy fuels economic growth and improves the quality of life. However, for the world afflicted by inexorable environmental degradation following rampant use of fossil fuels for decades, energy transition has become a buzzword these days.

Come to think of it, energy transition is actually more of an inevitable necessity rather than conscious choice for the humankind. As environmental considerations come to the fore, countries and corporates are constantly looking to reduce the carbon emissions and are turning to green energy or renewable power.

While being inevitable, the energy transition to zero-carbon future is driving significant amount of investment opportunity. Base metals will inevitably be a beneficiary of the ongoing energy transition efforts including thrust on renewable like solar power and wind power.

Energy transition and country-level decarbonization targets will create new market for non-ferrous metals in the coming years. As metals are used in power systems - for instance, solar power - it will provide significant demand boost to industrial metals such as galvanized steel, aluminium, copper and zinc.

Industry experts point to the fact that a typical solar panel installation will need aluminium for front frame; and a combination of aluminium and galvanized steel for structural parts. With galvanized steel, consumption of zinc too by implication will get a boost.

Copper is used in high and low voltage transmission cables and thermal solar collectors. Given that copper is three times more expensive than aluminium, a lot of research is going on to at least partially replace expensive and heavy-weight copper with lighter and more economical aluminium where weight is not an issue.

Another major metals-intensive breakthrough is electric vehicles (EVs) which will contribute to reduction in carbon emission. The EV market is already expanding rapidly, albeit from a low base, and its share in the total automobile market is set to increase exponentially this decade.

That will boost demand for industrial metals such as copper and aluminium in addition to rare metals like lithium. EVs will need charging infrastructure where too metals will be consumed in significant quantities.

It is well recognised that currently the Indian electricity sector is on the cusp of a solar powered revolution. The explosive growth of solar power will match coal’s share in the power generation mix within two decades, according to International Energy Agency.

From this perspective, India turning from a net exporter of refined copper till 2017-18 to a net importer in the last three years is a matter of concern. The closure of copper plant in Tuticorin, Tamil Nadu, has meant a loss of over 400,000 tons annually.

It is critical that policymakers think through issues that are likely to stymie the country’s energy transition efforts and take steps to ensure adequate availability of inputs or raw material (metals) through domestic sources.

(The writer is a policy commentator and commodities market specialist. Views are personal)

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