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  • Can silver prices sustain slowing momentum in the green energy transition?

    Wed June 19 2024


    Industrial demand increases from the global green energy transition propelled silver prices to a 12-year high last month as demand has outstripped supply. However, this trend appears to be at risk after the World Economic Forum noted that momentum in the green energy transition is slowing.


    In a report published Tuesday, the WEF said that while the global energy transition is still progressing, growing geopolitical uncertainty has caused it to lose momentum.


    The report used the Energy Transition Index (ETI) to benchmark 120 countries on the performance of their current energy systems. In the current hierarchy, European countries dominated the top 10 rankings for 2024, with Sweden and Denmark coming in first and second, respectively. At the same time, the report also noted that global average ETI scores reached a record high this year, but growth has slowed.


    “The 2024 report shows that the three-year improvement in global ETI scores between 2021-2024 is almost four times less than the upswing over the 2018-2021 period,” the report said. “Furthermore, the report indicates that 83% of countries achieved lower scores than last year on at least one of the primary performance dimensions of the energy transition – sustainability, equity, and security.”


    “This year’s Energy Transition Index delivers a clear message: urgent action is needed,” said Espen Mehlum, Head of Energy Transition Intelligence and Regional Acceleration, World Economic Forum. “Global decision-makers must make bold moves to regain momentum in the transition towards an equitable, secure, and sustainable energy future. This is critical for people, entire economies, and the fight against climate change.”


    While there is still more work to be done, the report noted that the gap in overall ETI scores between advanced and developing economies has narrowed and the “center of gravity” of the transition is shifting to developing countries.


    However, the report also suggested that advanced nations need to provide financial support for emerging markets to create an equitable global energy transition.


    Silver has played a critical role in the green energy transition as it is essential to the production of photovoltaic solar panels. According to some reports, the average solar cell uses roughly 111 milligrams of silver. Due to thrifting, the amount of silver used has declined sharply; however, analysts have said that this trend has run its course and the amount of silver needed is unlikely to decline further.


    Looking at the broader market, solar power represents a massive component of the green energy transition. Investment in this sector now accounts for approximately 40 percent of global investment in energy transition manufacturing, reaching $80 billion in 2023. Demand for silver is expected to continue to increase, with the Silver Institute estimating demand could rise by as much as 170% by 2030.