Wealth Outlook 2024 - Slow then grow

87 Wealth Outlook 2024 | Unstoppable trends OPEC's unlikely role in the energy transition Considerations: • Over the past several years, whenever oil prices have fallen, OPEC has repeatedly intervened by curbing production and restoring price stability, typically around $80 a barrel. • One set of winners has been Western producers and pipeline suppliers who get the benefit of the higher price without the production cuts. • The strategy has been a gift to the green energy transition, creating a floor under the price at which alternative energy producers must compete with fossil-fuel-powered sources. • Another set includes copper miners and spot copper, the one indispensable element in the global thrust toward electrification. The transition from carbon-intensive to sustainable in green technology and economies of scale are energy sources is accelerating. The cost of new driving this historic shift. electricity generation from the major alternative energy sources like wind and photovoltaic solar has But there is another, unlikely driver that has come into fallen below that of building an equivalent new fossil- sharper focus: the vitally supportive role of OPEC, the fuel-fired plant ( FIGURE 1 ). Major, ongoing advances Organization of Petroleum Exporting Countries. FIGURE 1 Global cost of adding new green electricity capacity relative to building an equivalent new fossil-fuel-fired plant Solar cost relative to fossil fuels (Ratio) Ratio to natural gas Ratio to coal 300 200 100 0 Source: Bloomberg as of December 31, 2022