Sustainability Atlas
Future of Finance & Investing·13 min read··...

Trend analysis: Macro, commodities & the energy transition — where the value pools are (and who captures them)

Signals to watch, value pools, and how the landscape may shift over the next 12–24 months. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.

Global energy transition investment reached a record $2.3 trillion in 2025, an 8% increase from 2024's $2.1 trillion milestone (BloombergNEF, 2026). Yet this headline figure obscures a more complex reality: the investment growth rate has decelerated from 27% in 2021 to just 8% in 2025, and current capital flows represent only 37% of the $5.6 trillion needed annually to reach net-zero by 2050. Meanwhile, critical minerals—copper, lithium, cobalt, and rare earths—have emerged as the constraining factor in the transition, with demand projected to grow 2x-7x over 2024-2040. Understanding where the value pools concentrate, who captures them, and which KPIs actually predict success has become essential for investors navigating this $130+ trillion reallocation of global capital.

Why It Matters

The energy transition represents the largest capital reallocation in human history, fundamentally reshaping commodity markets that have operated on relatively stable demand patterns for decades. In 2024 alone, electrified transport attracted $757 billion in investment, renewable energy commanded $807 billion, and power grid modernization drew $390 billion (IRENA, 2024; BloombergNEF, 2025). These figures signal a structural shift in where economic value accrues—away from hydrocarbon extraction and toward electrification infrastructure and the minerals that enable it.

The geographic concentration of this transition creates both opportunities and risks. China now captures over $850 billion annually in energy transition investment, exceeding the combined investment of the United States, European Union, and United Kingdom. Furthermore, China controls 45% of global copper refining capacity, projected to reach 50% by 2040, and dominates the processing of lithium, cobalt, and rare earth elements. For investors, this concentration represents both a supply chain vulnerability and a strategic imperative to diversify.

The supply-demand imbalance in critical minerals has reached structural proportions. The International Energy Agency projects a 30% copper shortfall by 2035, driven by declining ore grades (down 40% since 1991), a 16.5-year average timeline from discovery to production, and the discovery of only 14 new copper deposits in the past decade compared to 225 in the previous 23 years (IEA, 2025). This supply constraint means that even well-capitalized transition projects face material bottlenecks, making minerals exposure a portfolio necessity rather than an option.

Key Concepts

Value Pool Mapping

Value pools in the energy transition concentrate at three points: upstream extraction and processing, midstream technology manufacturing, and downstream deployment and integration. Each stage presents distinct risk-return profiles:

Upstream (Minerals Extraction): Characterized by high capital intensity ($500-800 billion needed in mining by 2040), long development timelines, and geological risk. Returns correlate strongly with commodity price cycles but offer inflation protection and scarcity premiums. Copper exploration budgets reached $3.2 billion in 2024, the highest since 2013.

Midstream (Battery and Equipment Manufacturing): Battery factory investment reached $74 billion in 2024, nearly doubling year-over-year, with 57% of clean energy supply chain investment directed to this segment. China dominates manufacturing, but the Inflation Reduction Act has catalyzed $338 billion in US clean energy manufacturing announcements.

Downstream (Deployment): The largest absolute value pool, encompassing EV sales, renewable installations, and grid upgrades. Battery storage grew 36% in 2024, from $600 million in 2014 to $54 billion—an exponential trajectory indicating market maturation.

Critical Mineral Intensity

Energy transition technologies require substantially more minerals than their fossil fuel counterparts. An electric vehicle contains 53-83 kg of copper (2.9x a conventional vehicle), while solar and wind installations require 2.5-7x more copper per megawatt than fossil fuel generation. By 2030, EVs alone will require 2.8 million tonnes of copper annually. AI data centers add incremental demand of 250-550 kilotonnes annually by 2030, representing 1-2% of global copper consumption.

Sector-Specific KPIs

KPIBenchmark RangeWhat "Good" Looks Like
Copper intensity (kg/MW)2,500-5,000<3,000 for solar; <4,000 for wind
Mine discovery-to-production16-18 years<12 years with streamlined permitting
Ore grade decline rate1-2% annuallyStable grades with tech-enabled extraction
Recycling contribution15-17%>25% by 2035 for circular economy targets
China refining dependency45-50%<35% for supply chain resilience
CAPEX per tonne copper$15,000-25,000<$18,000 with brownfield expansion
ESG compliance scoreVariableTop-quartile MSCI rating for institutional capital

What's Working and What Isn't

What's Working

Mature technology deployment at scale: Battery storage investment grew from $600 million in 2014 to $54 billion in 2024—a 90x increase over a decade. Solar attracted $500 billion in 2024 alone, demonstrating that proven technologies can absorb massive capital flows efficiently. This maturation creates predictable return profiles that institutional investors require.

Integrated major strategies: Mining majors like Rio Tinto and BHP have successfully reoriented their portfolios toward transition minerals. Rio Tinto's $10 billion annual CAPEX includes the Simandou iron ore project ($6.2 billion), the Rincon lithium project targeting 50kt/year by 2027, and strategic copper expansions. Their partnership with Founders Factory has reviewed 1,500+ startups, investing in 18 companies across biodiversity monitoring, AI-driven exploration, and extraction innovation.

Policy-driven manufacturing reshoring: The US Inflation Reduction Act catalyzed domestic supply chain investment, with exploration budgets in the US doubling to $456 million and Canada tripling to $336 million over the past decade. This policy certainty enables long-duration project financing.

Grid investment acceleration: Power grid investment reached $390 billion in 2024 (up 15% year-over-year), addressing a critical bottleneck. Transmission and distribution systems will require 7.1 million tonnes of copper annually by 2040—double 2020 levels—creating sustained demand visibility.

What Isn't Working

Hydrogen and CCS deployment collapse: Green hydrogen investment plummeted from $3.9 billion in 2023 to just $0.8 billion in 2024, while carbon capture and storage declined from $13.6 billion to $6.1 billion. Despite policy support, these technologies face cost curves that remain uncompetitive without substantial carbon pricing or mandates.

Emerging market capital gaps: 90% of energy transition investment concentrates in advanced economies plus China, leaving emerging markets—where population and energy demand growth occur—structurally underfunded. US investment stagnated at $338 billion (0% growth), while the EU declined, indicating transition fatigue in developed markets.

Recycling rate stagnation: Copper recycling contributes less than 17% of demand, declining from 18% in 2015 despite circular economy rhetoric. Without dramatic improvements in collection infrastructure and processing technology, primary mining must bear the entire demand burden.

Permitting and interconnection bottlenecks: Average mine development timelines of 16.5-17 years from discovery to production mean today's exploration successes won't reach production until the early 2040s. Grid interconnection queues extend years in major markets, stranding renewable capacity from ratepayers.

Key Players

Established Leaders

Rio Tinto (Market Cap: ~$100B): The world's second-largest mining company has positioned itself as an energy transition enabler through strategic copper and lithium acquisitions. Their $150 million Rio Tinto Centre for Future Materials, in partnership with Imperial College London and UC Berkeley, develops next-generation extraction technologies. The company targets 50% reduction in Scope 1+2 emissions by 2030 and net-zero by 2050, with over $1.5 billion invested in renewables since 2022.

BHP Group (Market Cap: ~$130B): The world's largest mining company has designated copper as its strategic priority, with $10 billion in annual CAPEX directed toward copper expansion, nickel projects, and battery materials. Their collaboration with Rio Tinto on battery-electric haul trucks and the NeoSmelt electric smelting furnace pilot signals commitment to operational decarbonization.

Freeport-McMoRan (Market Cap: ~$55B): The world's largest publicly traded copper producer, operating the Grasberg mine (Indonesia) and significant US and South American assets. Their exposure to North American production offers geopolitical diversification for investors concerned about China refining concentration.

Albemarle Corporation (Market Cap: ~$12B): The world's largest lithium producer has navigated the 2023-2024 lithium price collapse by focusing on low-cost assets and long-term offtake agreements with automotive OEMs. Their Salar de Atacama (Chile) operations remain the industry's lowest-cost source.

Emerging Startups

KoBold Metals (Venture-backed, $2B+ raised): Backed by Breakthrough Energy Ventures and major strategic investors, KoBold applies machine learning to mineral exploration, reducing discovery costs and timelines. Their Mingomba copper discovery in Zambia validates the AI-driven exploration thesis.

Lilac Solutions (Series C, $200M+ raised): Develops direct lithium extraction technology that reduces water consumption by 90% and production timelines from months to hours. Their technology addresses ESG concerns that have blocked conventional brine operations.

Redwood Materials (Unicorn, $2B+ raised): Founded by Tesla's former CTO, Redwood has become North America's leading battery recycler, recovering critical minerals from end-of-life batteries and manufacturing scrap. Their closed-loop model addresses both supply constraints and ESG requirements.

Terra AI (Seed-stage): Backed by Rio Tinto through the Founders Factory accelerator, Terra AI uses artificial intelligence to reduce drilling costs in mineral exploration, potentially compressing the 16-year discovery-to-production timeline.

Key Investors & Funders

Breakthrough Energy Ventures: Bill Gates-founded climate fund with $2 billion+ in committed capital, backing breakthrough technologies in extraction, processing, and recycling. Portfolio companies include KoBold Metals and Boston Metal.

US Department of Energy Loan Programs Office: Has deployed $40 billion+ in loan guarantees for energy transition projects, including critical mineral processing facilities. Their concessionary capital de-risks projects that commercial lenders cannot support alone.

Singapore's GIC and Temasek: Sovereign wealth funds increasingly directing capital toward transition mineral assets as diversification from hydrocarbon exposure. Their long-duration capital matches the extended development timelines of mining projects.

BlackRock: The world's largest asset manager has launched dedicated natural resources and energy transition funds, deploying institutional capital at scale into both public equities and infrastructure projects.

Examples

  1. Rio Tinto's Rincon Lithium Project (Argentina): Rio Tinto acquired this lithium brine asset for $825 million in 2022 and has committed to scaling production to 50,000 tonnes annually by 2027. The project employs direct lithium extraction technology that reduces environmental impact compared to evaporation ponds, addressing ESG concerns that constrained competitor projects. Rincon demonstrates how majors can acquire proven assets and apply balance sheet strength to accelerate development timelines that would challenge junior miners.

  2. Redwood Materials' Nevada Battery Campus: Former Tesla CTO JB Straubel founded Redwood to address the circular economy gap in battery materials. Their Nevada facility processes 20 GWh of battery material annually, recovering 95%+ of lithium, cobalt, nickel, and copper. Partnerships with Ford, Toyota, and Panasonic provide feedstock visibility, while their proprietary hydrometallurgical process produces battery-grade materials at costs competitive with virgin mining. Redwood exemplifies how startup innovation can create value pools at the intersection of waste management and commodity production.

  3. BHP's Escondida Desalination Project (Chile): The world's largest copper mine faced water scarcity constraints that threatened production. BHP invested $3.4 billion in a desalination plant and 180-km pipeline, securing water supply while eliminating aquifer depletion concerns that had drawn regulatory scrutiny. This infrastructure investment demonstrates how operational innovation can unlock stranded resources, creating value for shareholders while satisfying ESG requirements.

Action Checklist

  • Assess portfolio exposure to transition minerals: Evaluate current holdings for copper, lithium, cobalt, and rare earth exposure across the value chain—extraction, processing, and end-use manufacturing.

  • Stress-test China concentration risk: Model portfolio impact of supply chain disruptions given China's 45%+ refining market share and dominant position in battery material processing.

  • Evaluate recycling and circular economy plays: Identify investments in battery recycling, urban mining, and secondary material recovery that address supply constraints without primary extraction risks.

  • Monitor permitting reform progress: Track legislative developments in major mining jurisdictions (US, Canada, Australia, Chile) that could compress the 16-year discovery-to-production timeline.

  • Build relationships with transition-focused allocators: Engage with sovereign wealth funds, development finance institutions, and infrastructure funds that provide patient capital matching mining project timelines.

  • Integrate ESG metrics into mineral investment thesis: Ensure holdings meet or exceed institutional requirements for water usage, emissions intensity, and community relations to avoid stranded asset risk.

FAQ

Q: How should investors think about the timing of energy transition mineral investments given commodity price volatility? A: The structural supply deficit—particularly the IEA's projected 30% copper shortfall by 2035—suggests that prices will trend higher over the medium term despite short-term volatility. Investors should consider dollar-cost averaging into positions rather than timing entry points, focus on low-cost producers that remain profitable across price cycles, and use commodity price declines as opportunities to accumulate quality assets. The 16-year development timeline for new supply means today's prices don't reflect tomorrow's scarcity.

Q: What distinguishes winning investments in the energy transition minerals space from underperformers? A: Winning investments typically share several characteristics: assets in jurisdictions with clear permitting pathways and rule of law; production costs in the lowest quartile of the industry cost curve; strong ESG performance that satisfies institutional investor requirements; offtake agreements with creditworthy counterparties providing revenue visibility; and management teams with track records of project delivery. Underperformers often suffer from permitting delays, cost overruns from geological complexity, or ESG controversies that limit their investor base.

Q: How does the energy transition affect traditional commodity trading strategies? A: The energy transition introduces new demand drivers that don't correlate with historical patterns. Copper demand, historically tied to construction and industrial activity, now responds to EV sales, renewable energy installations, and grid investment—factors with different cyclical profiles. Traders must incorporate EV sales data, renewable capacity additions, and policy developments (carbon prices, IRA implementation) into their models. Additionally, the physical delivery infrastructure is evolving as processing shifts from established hubs to new regions seeking supply chain diversification.

Q: What role does recycling play in the long-term supply outlook for transition minerals? A: Recycling currently contributes less than 17% of copper supply and minimal volumes for lithium and cobalt, as the installed base of EVs and battery storage is too young to generate significant end-of-life material. However, by 2040, recycling could contribute 25-30% of copper and 15-20% of lithium supply as early EV cohorts reach retirement. Investors should view recycling as a long-duration bet that gains materiality in the 2030s rather than an immediate supply solution. Companies positioning for this future—like Redwood Materials—are building processing infrastructure and customer relationships today.

Q: How do geopolitical tensions affect the investment thesis for energy transition minerals? A: Geopolitical tensions, particularly US-China competition, have become central to the investment thesis. The Inflation Reduction Act explicitly conditions subsidies on domestic content and free-trade agreement sourcing, directing capital toward Western-aligned jurisdictions. China's dominance in mineral processing (45% of copper refining, 60%+ of lithium processing) creates vulnerability, but also opportunity for investors backing diversification projects in the US, Canada, Australia, and Latin America. The geopolitical dimension adds a strategic premium to Western-jurisdiction assets beyond their intrinsic commodity value.

Sources

Topics

macrocommoditiesbenchmark KPIsratesadditionalityriskMRV

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