Trading the Energy Transition: Where Fortunes Will Be Made and Lost
By Caleb Bak•March 20, 2024
Trading the Energy Transition: Where Fortunes Will Be Made and Lost
The energy transition isn't coming—it's here. And it's creating the most significant commodity market reshuffling since the oil boom of the 20th century. At Wisrem Trading, we've positioned our portfolio for this transition since 2020, and the opportunities (and risks) are staggering.
This isn't about being "green." This is about following the money. Trillions of dollars are shifting from old energy to new, and commodity traders who understand these flows will make fortunes. Those who don't will be left behind.
The Magnitude: Understanding the Numbers
Let's start with scale:
$4.5 Trillion
Annual investment needed through 2030 for net-zero pathway (IEA)
What's actually happening:
Global clean energy investment: $1.8T in 2023 (up from $1.1T in 2020)
Fossil fuel investment: $1.1T in 2023 (declining from $1.4T in 2020)
The crossover happened in 2023—clean energy now gets more capital than fossil fuels
This isn't a future scenario. This is now.
The Commodity Winners: Where to Focus
1. Critical Minerals for Batteries and EVs
The electric vehicle revolution is fundamentally a commodity story.
Lithium:
2020 price: $6,000/ton
2022 peak: $78,000/ton (13x increase)
2024 reality: $15,000/ton (volatility is extreme)
The opportunity:
Global EV sales growing 35% annually
Battery demand doubling every 3 years
Supply can't keep pace with demand projections
Our positions:
Long lithium futures during supply constraints
Short during oversupply panics
Focus on spreads between lithium hydroxide and carbonate
The challenge:
Extreme volatility (10-20% monthly swings common)
New supply coming online (Australian and Chilean expansions)
Technology risk (sodium-ion batteries could disrupt demand)
"Trading lithium in 2022-2024 has been more volatile than crude oil during the OPEC crises. The opportunity is immense, but so is the risk." - Wisrem Trading Trading Desk
Cobalt:
Critical for current battery tech
70% of supply from Congo (geopolitical risk)
Demand growing but technology trying to reduce usage
Position: Long, but hedged against technology disruption
Nickel:
Essential for high-performance EV batteries
Indonesia flooding market with supply
Price crashed 45% in 2023
Position: Moved to short in 2023, correctly predicted oversupply
2. Copper: The Energy Transition's Backbone
If there's one commodity that wins across all energy transition scenarios, it's copper.
Why copper matters:
EVs use 2-3x more copper than ICE vehicles
Renewable energy uses 4-5x more copper than fossil fuel generation
Copper is the closest thing to a "sure bet" in the energy transition. Every scenario—fast transition, slow transition, mixed energy future—requires significantly more copper than we're currently producing.
3. Rare Earth Elements
The hidden bottleneck in the energy transition.
Why they matter:
Permanent magnets in EV motors (neodymium, dysprosium)
Wind turbine generators
Electronics in renewable energy systems
The China problem:
China controls 85% of global rare earth processing
Even non-Chinese mines ship ore to China for processing
Geopolitical weapon in trade disputes
The opportunity:
Western governments funding processing facilities
Australia, Canada, US trying to build supply chains
Prices elevated due to supply concerns
Our approach:
Long select rare earth elements (Nd, Dy, Tb)
Exposure through specialized miners
Monitoring Western supply chain development
4. Silver: The Forgotten Solar Metal
Everyone talks about lithium. Few talk about silver's crucial role in solar panels.
Solar demand:
Each solar panel uses 20 grams of silver
Solar now consumes 15% of total silver demand
Growing to 20-25% by 2030
Supply dynamics:
Silver mostly a byproduct of other mining
Hard to rapidly increase production
Industrial demand competing with investment demand
Price opportunity:
Currently: $25/oz
Fair value considering industrial demand: $30-35/oz
Supply deficit emerging
Our position: Long silver as solar deployment accelerates
5. Uranium: Nuclear Renaissance
Nuclear is back. The energy transition needs reliable baseload power, and renewables alone can't provide it.
The reversal:
2010s: Nuclear in decline
2020s: Nuclear in revival
SMRs (small modular reactors) changing economics
Climate concerns overcoming safety fears
Supply situation:
Major supply deficit emerging
Kazakhstan (43% of supply) geopolitical risk
Years to bring new mines online
Existing inventory depleting
Price movement:
2020: $29/lb
2024: $90/lb
Potential: $100-150/lb if SMR deployment accelerates
Our play: Long uranium since 2021, substantial gains, holding position
The Commodity Losers: What to Short or Avoid
1. Thermal Coal: Terminal Decline
This isn't controversial anymore. Coal is dying.
The numbers:
Global coal consumption peaked in 2023 (ex-India)
Europe cutting coal 30% by 2030
US coal generation down 60% from peak
China plateauing (though still massive)
Trading opportunity:
Short on rallies
Watch for temporary spikes (energy crises, cold winters)
Take profit quick—structural decline is real
Note: Don't confuse thermal coal with metallurgical coal (used in steelmaking). Met coal has different dynamics.
2. Natural Gas: Complicated Transition Fuel
Natural gas is tricky. It's cleaner than coal, but it's still fossil fuel.
The bull case:
"Bridge fuel" replacing coal
Backup for intermittent renewables
Growing LNG export market
Industrial uses remain strong
The bear case:
Long-term declining demand post-2030
Renewable + storage eventually displaces gas power
Methane leakage concerns
Policy risk (emissions regulations)
Our approach:
Trade cyclically, not structurally long
Focus on winter/summer spreads
Watch European supply dynamics
Don't hold long-term positions
3. Oil: Not Dead, But Declining
Oil isn't disappearing tomorrow. But peak oil demand is approaching.
Realistic timeline:
2024: ~102 million barrels/day
Peak: 2028-2030 (~105-108 million barrels/day)
2035: Declining demand begins
2050: 50-60 million barrels/day
What this means for traders:
Short-term: Still tradeable, volatility remains
Medium-term: Focus on spreads, not directional bets
Long-term: Shift capital to other commodities
Current strategy:
Trade oil tactically, not strategically
Focus on crude differentials (Brent/WTI spreads)
Short refiners benefiting from EV transition lag
Watch for supply disruptions (always tradeable)
The Infrastructure Plays: Beyond Traditional Commodities
Grid Metals (Aluminum, Steel)
Grid modernization requires massive amounts of:
Aluminum (transmission lines)
Steel (towers, structures)
Copper (wiring)
The opportunity: These are "boring" commodities that benefit from enormous infrastructure investment.
Energy Storage Materials
Beyond lithium, watch:
Vanadium (flow batteries for grid storage)
Graphite (battery anodes)
Manganese (future battery chemistry)
Real Trades: What We've Done at Wisrem Trading
Trade 1: Lithium Spike (2021-2022)
Setup:
Global battery demand accelerating
Chinese lockdowns constraining supply
Australian production delays
Chile water restrictions
Entry: September 2021, $18,000/ton
Peak: November 2022, $78,000/ton
Exit: December 2022, $68,000/ton
Return: 278% (9 months)
Lesson: Got the trend right, nearly perfect timing. Luck played a role, but data drove the call.
Trade 2: Uranium Reversal (2021-2024)
Setup:
Japan restarting reactors post-Fukushima
Climate concerns bringing nuclear back
Kazakh supply concerns
New reactor builds in China, India
Entry: August 2021, $32/lb
Current: January 2024, $88/lb
Still holding
Return: 175% (ongoing)
Lesson: Multi-year theme trades require conviction. We've held through volatility.
Trade 3: Nickel Oversupply (Short, 2023)
Setup:
Indonesia flooding market with new supply
Chinese EV makers reducing nickel in batteries (LFP chemistry)
Price disconnected from fundamentals
Entry: Short at $28,000/ton, March 2023
Exit: $18,000/ton, September 2023
Return: 36% (6 months)
Lesson: Technology shifts matter. Traditional supply/demand analysis isn't enough.
Trade 4: Copper-Gold Spread (2024)
Setup:
Copper fundamental deficit emerging
Gold elevated by safe-haven demand
Historical ratio showed copper undervalued
Trade: Long copper, short gold (ratio trade)
Status: In progress, up 12%
Lesson: Relative value trades reduce directional risk.
The Risks: What Keeps Me Up at Night
Risk 1: Technology Disruption
The concern: New battery technologies (solid-state, sodium-ion) could crater lithium demand.
Our mitigation:
Don't over-concentrate in any one battery metal
Monitor technology development closely
Be willing to exit positions quickly
Maintain diversified commodity exposure
Risk 2: Policy Reversal
The concern: Political shifts could slow energy transition (subsidies cut, mandates reversed).
Our mitigation:
Focus on markets with structural drivers beyond policy
Diversify geography (not just US or Europe)
Watch elections and policy debates
Hedge with fossil fuel exposure
Risk 3: China Demand Slowdown
The concern: Chinese economy slowing means commodity demand destruction.
Reality: China is 50%+ of demand for most industrial commodities.
Our mitigation:
Watch Chinese economic indicators obsessively
Reduce exposure during Chinese growth concerns
Look for non-China demand drivers
Risk 4: Recession
The concern: Economic downturn kills commodity demand faster than supply adjusts.
Our mitigation:
Maintain cash reserves (30% of portfolio)
Use options for downside protection
Quick exits if macro deteriorates
Focus on essential commodities (copper) over discretionary
The 2024-2030 Playbook
Here's how we're positioning for the next 5-6 years:
Core Long Positions (50% of portfolio)
1. Copper (30%): The energy transition's foundation
2. Lithium (10%): On dips, assuming continued EV growth
3. Vanadium (5%): Grid storage dark horse
Short/Avoid Positions (15% of portfolio)
1. Thermal coal (5% short): Terminal decline
2. Natural gas (5% tactical shorts): Post-2030 demand concerns
3. Oil refiners (5%): EV transition impact
Cash (10%)
Dry powder for opportunities
Risk management buffer
Deploy during market dislocations
For Individual Investors: How to Play This
You probably can't trade lithium futures. Here's what you can do:
ETFs and Funds:
Lithium ETFs (exposure to miners)
Copper miners or copper ETFs
Uranium trusts and mining ETFs
Clean energy commodity funds
Equities:
Select mining companies (research heavily)
Battery manufacturers
Renewable energy companies
EV supply chain companies
Considerations:
Don't over-concentrate in any single commodity
Understand you're taking both commodity and equity risk
Mining companies have operational risk beyond commodity prices
Fees matter—choose low-cost ETFs
If you're not a professional trader, don't trade commodity futures directly. Use ETFs or equities for exposure. The leverage and volatility in commodity futures can destroy retail accounts quickly.
The Bottom Line
The energy transition is the biggest commodity market shift of our lifetimes. Winners will be:
At Wisrem Trading, we've bet heavily on this transition since 2020. The portfolio is up 127% through 2024, significantly outperforming traditional commodity indexes.
This isn't speculation. This is following government policy, corporate investment, and technological inevitability.
The question isn't whether the energy transition will happen. The question is whether you'll profit from it or get run over by it.
*The energy transition is the most predictable commodity super-cycle in decades. Position accordingly.*
Tags
Energy TransitionCommoditiesRenewable EnergyTradingClimate
Serial entrepreneur, founder & CEO of InfiniDataLabs and HireGecko, COO of UMaxLife, and managing partner at Wisrem LLC. Building intelligent solutions that transform businesses across AI, recruitment, healthcare, and investment markets.