Against the backdrop of the accelerating global push towards net zero carbon emissions, the authors of a May 2021 KPMG study on “geographical and geopolitical constraints to the supply of resources critical to the energy transition” and the associated “call for a circular economy solution” titled the first chapter of their report “From OPEC to ‘OMEC’: the new global energy ecosystem.” In a then little-noticed footnote the authors explained that “OMEC” was a “freshly minted acronym for ‘Organisation of Mineral Exporting Countries’” – a grouping that “may not yet exist, but the point remains: geopolitical power could shift from oil-dominated countries to critical metal-dominated countries.”
“There is an underappreciated risk to the energy transition: the supply of clean energy depends on mined natural resources, which are steeped in geological, geopolitical, and governance challenges,” wrote the authors at the time.
Fast forward twelve months to our vastly changed geopolitical landscape, and the “freshly minted acronym” may go from footnote to required subject of global public policy considerations.
As Tsvetana Paraskova writes for OilPrice.com, “Russia’s invasion of Ukraine has exposed, once again, the vulnerability of the global energy markets and economy to the actions of petrostates with the power to weaponize their energy resources for political purposes.” She adds that as the European Union attempts to wean itself off Russian oil and gas and accelerate the shift to renewables, other harsh geopolitical realities come into focus:
“Countries that aren’t Saudi Arabia, Iraq, and Iran hold vast resources of the metals and minerals that will be critical to enabling a faster energy transition. But those resource holders also include Russia, China, and a host of African and South American nations still living ‘the resource curse’, where conflict, forced and child labor, and critically low environmental standards are undermining the ‘green’ credentials of the clean energy transition.”
With a confluence of factors — pandemic-induced supply chain shocks, increasing resource nationalism in various parts of the world, and Russia’s invasion of Ukraine — having completely altered the Post-Cold War geopolitical landscape and mineral resource security calculus, the new global energy ecosystem could indeed see a transformational shift “from OPEC to OMEC.”
We know how decades of petro-dependency warped geopolitics and challenged national security. The question as we move from “OPEC to OMEC” is whether the U.S. and its allies will trade petro-dependency for tech metal-dependency – or will U.S. policy makers and other stakeholders be able to chart a course that will provide much needed security for 21st century supply chains?
