That’s Elon Musk’s estimate of the total price the world will pay to clean up the economy.
This sum of money will make it possible to get to a point where the world entirely switches from carbon-heavy fossil fuels to clean energy sources.
To put this in perspective… $10 trillion is about 40% of the United States’ gross domestic product (or GDP) or 10% of the global GDP.
It’s a hefty price tag even for the largest economies.
But the cost of continuing to rely on fossil fuels is actually higher, at $14 trillion.
In other words, moving to clean energy sources is cheaper than keeping the status quo in place.
Tesla’s Master Plan Part 3 envisions massive expansion of solar-panel factories and critical metals mines and refineries. It also includes power grid upgrades, the development of underground hydrogen storage caverns, and battery plants.
According to Musk’s research, the world will need 30,000 gigawatts of clean power capacity and 240,000 gigawatt-hours of battery storage. And the world is lagging behind these numbers…
BloombergNEF estimated that in 2021 the world only had 3,214 gigawatts of clean energy capacity. (That’s just 11% of the generation capacity needed.)
And stationary energy storage capacity will only reach 1,432 gigawatt-hours by the decade’s end. That’s just 0.6% of the storage capacity that would be sufficient in the future.
In other words, the clean energy transition is still in its infancy, with massive growth projected for years to come.
Musk’s Master Plan Part 3 projects $502 billion going directly into the mining sector and $662 billion going into critical metals refining.
That’s over a trillion dollars projected to flow into the critical minerals industry.
This funding will support the mining and refining of 3.3 billion metric tons of ore containing lithium, nickel, copper, and other critical minerals per year.
Moving the economy away from fossil fuels is not only good for the environment, but it’s also cheaper… Even if it requires high upfront capital expenditures.
And if investors follow this $10-trillion trend, they can secure stakes in the companies that will revolutionize the world.
The next few decades will change the energy and mining industries forever.
Lithium, nickel, copper, and other vital clean energy transition metals will be at the top of investors’ lists. And we should keep these on the radar.
Saudi Arabia Failed to Shift Away from Oil
Saudi Arabia, the second-largest oil producer in the world, knows that the days of its outsized role in the global market are numbered…
That’s why the country spent millions of dollars searching for another commodity that it could extract and sell to the global market.
Since 2017, Saudi Arabia has put over $37 million into uranium exploration. And it only led to the conclusion that the kingdom has almost no economic uranium resources.
The kingdom realizes that oil demand is going away. And without a backup plan, Saudi Arabia will face a major economic and political headwind.
It will not be alone. Countries like Qatar and Russia, which rely on the export of fossil fuels, are also facing the same dilemma. To stay relevant in the economy of the 21st century, they need to adapt… and undergo a painful adjustment period.
The age of fossil fuels is gone. And investors with long-term horizons should steer away from carbon-heavy commodities.
Thank you for your loyal readership,
The Financial Star team