London (CNN Business)For decades, crude oil has been at the center of global commodities markets. Demand has served as a crucial metric of economic health, and price spikes have had major ramifications for gas-guzzling consumers.
But as countries around the world try to combat the climate crisis, oil could take a backseat, while metals like copper and lithium gain prominence.
"The critical role copper will play in achieving the Paris climate goals cannot be overstated," Goldman Sachs analysts said in a recent research note titled "Copper is the new oil."
Setting the scene: Copper is an essential component of systems that allow wind, solar and geothermal energy to be tapped and transmitted for applications like heating homes, the analysts noted.
And the market already looks tight. Copper prices have rallied 80% over the past 12 months, and supply is constrained as demand skyrockets. It takes two to three years to extend an existing mine, and as many as eight years to establish a new project, according to Goldman Sachs.
That could set up the price of copper to jump from current prices of more than $9,000 per tonne to $15,000 per tonne by 2025, per the bank's estimates.
There's also a growing focus on lithium, a key component for batteries in electric cars. In a recent note, analysts at Macquarie Research predicted that demand for electric vehicles could trigger "material shortages" of the metal from 2025.
These constraints are putting lithium miners in the spotlight. On Monday, Australia's Orocobre and Galaxy announced a $3.1 billion merger that would create one of the biggest lithium companies in the world.
Why it matters: Global carbon dioxide emissions are set to surge dangerously this year as the global economy undergoes a huge recovery, according to a report published Tuesday by the International Energy Agency.
The Paris-based group estimates that carbon emissions from energy use are on track to spike by 1.5 billion tonnes in 2021, as heavy coal consumption in Asia, and in China in particular, outweighs rapid growth in renewable sources. That would be the second largest annual increase in energy-related emissions in history.
"This is a dire warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate," Executive Director Fatih Birol said in a statement.
Watch this space: The IEA is sounding the alarm before 40 world leaders come together later this week for a two-day virtual summit on the climate crisis convened by President Joe Biden. Birol called it a "critical moment to commit to clear and immediate action."