​Orderly exit, Pg6

Key Highlights:

• American-Israeli strikes on Iran have triggered a new global energy crisis, disrupting both oil and gas flows.
• Electric vehicles displaced approximately 0.9 million barrels per day (mb/d) of oil demand in 2023, and are projected to displace 1.3 mb/d in 2024.
• The energy transition may challenge the dollar's dominance in global energy trade, potentially shifting influence to countries like China.
• Critical minerals such as Lithium, Cobalt, and Copper are geographically concentrated, creating new dependencies.

Detailed Insights:

• Past energy shocks include the 1970s Yom Kippur War, the 1979 Iranian Revolution, the 1990-91 Iraqi invasion of Kuwait, and the 2022 Russian invasion of Ukraine.
• The current energy crisis is occurring during a significant transition in the global energy system, marked by increasing transport electrification.
• The "petrodollar" system, established after the 1970s oil shocks, ensured oil was priced in dollars, benefiting the U.S. financially.
• The emerging energy paradigm is characterized by geographically dispersed supply chains centered on critical minerals, potentially shifting power dynamics.
• Lithium reserves are concentrated in Chile (30%), Argentina (13%), and Australia (20%+), while the Democratic Republic of Congo dominates cobalt production.
• China holds a decisive advantage in processing and manufacturing within the new energy system, potentially leading to dependence on Chinese industrial capacity.
• For countries like India, the energy transition presents both an opportunity to reduce fossil fuel dependence and a risk of creating new technological and supply chain dependencies.
• Navigating the changing energy landscape requires a strategy rooted in non-alignment, focusing on securing resources and building domestic technological capabilities.

Key Concepts Involved:

• Petrodollar: A system where the U.S. dollar is used to price oil, with surplus revenues recycled into U.S. financial markets.
• Energy Transition: The shift from fossil fuels to renewable energy sources like solar, wind, and electric power.
• Critical Minerals: Minerals essential for clean energy technologies and other industries, with supply chains that can create dependencies.