LONDON, March 6, 2018 /PRNewswire/ --
A low carbon transition has begun, bringing huge structural changes in power and transport markets. These trends will have substantial implications not only for metals demand, but also development in mining-rich countries around the world. However, these important macroeconomic and fiscal impacts remain under explored. Robust analysis is urgently needed to help developing countries capture the opportunities – and manage the risks – associated with supplying raw materials to a low carbon economy.
Drawing on CRU's market-leading analysis in this area, we present a ground-breaking exploration into the impacts of low carbon transition on mining related output and revenues for a sample of developing countries.
The 2015 Paris Agreement signals an accelerating rate of both carbon-related regulation and technological innovation, fostering massive structural changes in both power and transport markets. Such effects are already taking place: annual electric vehicle (EV) sales, for example, have grown by an average of 101 percent annually between 2010 and 2016, while installed solar and wind power has grown by an average of 20 percent annually in the same period.
A low carbon transition is likely to have a material impact across copper and other metals markets, given the high metal intensity of many green technologies. To understand these effects, CRU have developed 3 robust, internally consistent scenarios – termed brown, light brown and deep green – as a basis for exploring different possible futures and their potential implications both metal markets and resource rich countries.
Economic development in mining rich countries, including across much of African and Latin America, will be impacted by these changes. This could lead to structural economic changes, affecting, for example, output, growth, balance of payments and fiscal positions. However, the nature of these changes will depend on the extent and pace of low carbon transition and countries' resource endowments, as well as other technical, economic and policy factors bearing on the ease and cost of production. These effects are currently only weakly understood.
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SOURCE CRU International Limited