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Greetings from London, where we find ourselves in a week full of corporate results.

But before they come out — Shell and TotalEnergies are expected on Thursday, among others — Chevron announced late Sunday that its CEO, Mike Wirth, will stay on past the mandatory retirement age. You can read Myles McCormick’s story about it here.

This week in Source Energy, we look at the coming shortage of metals needed for the energy transition – and how much the gap between supply and demand could be eased through recycling.

We also look at the latest news from Beijing and whether a muted economic recovery there will cast a shadow over Chinese oil demand this year.

Thank you for reading. — Leslie Hook

Why might the energy transition depend on . . . recycling

There is a lot of thinking about how metal shortages could pose a risk to the energy transition. All those transmission lines, wind turbines, and batteries for electric cars will require a lot of copper, nickel, and lithium—much more than is produced today. Or so the common orthodoxy goes.

However, a message from the Energy Transition Commission sheds new light on this issue and presents some radical projections for how this gap between supply and demand for metals could be reduced – recycling and use the material more efficiently.

Take lithium: by 2030, demand for the metal is expected to grow sixfold over current production levels. At this point, lithium demand will be 30 percent higher than projected supply under the baseline scenario.

With extensive recycling and the use of less lithium in future batteries, that gap could narrow to just 10 percent — what the report calls a “maximum efficiency” scenario.

Lord Adair Turner, chairman of the commission, said demand for these metals would respond quickly to market signals. “These things move fast,” he said. “Even imperfect markets produce reactions.”

The impact of battery metal recycling would grow over time, he added, as opportunities to recycle batteries increase. “Recycling by 2030 can by definition play a relatively small role because there is only so much[electric vehicles]. . . by 2040 it can make a huge difference.”

The trend is even more pronounced for copper and nickel. By 2030, copper demand will exceed supply by 10 percent in the baseline scenario. However, this gap could be reversed if copper recycling and replacement is very high – potentially leading to a slight copper oversupply by 2030, according to the report’s projections.

For nickel, an aggressive shift toward battery chemistries that use less nickel, along with increased recycling, could also lead to a surplus in 2030, it found.

Even so, the report’s authors acknowledge that the energy transition will still require a huge number of new mines. As many as 40 copper, 55 nickel and 65 lithium mines could be needed by 2030, according to the report. Increased recycling and efficiency would reduce the number of additional mines needed.

But despite the boom in metal recycling, new mines will still be needed.

Data drill

A closely watched Politburo meeting on Monday evening gave his verdict on China’s economic recovery after the coronavirus pandemic: “cruel”.

Although that wasn’t a huge surprise after China’s second-quarter gross domestic product growth much lower than expectedThis statement is worrying for those who expected a more significant recovery.

The key question is how the stagnant economy will affect China’s demand for oil. So far this year inquiry outpaced economic growth and rose to an all-time high in April.

Much of this appears to be related to physical demand as people start driving and flying again after last year’s pandemic lockdowns. Sinopec, China’s largest seller of gasoline and jet fuel, reported that sales of petroleum products rose 28 percent in the second quarter of 2023 compared to the previous year.

“The recovery is very slow and yet the oil demand data is incredibly strong,” said Neil Beveridge, senior analyst at Bernstein in Hong Kong.

But will it continue in the second half of this year? There are many answers: China is expected to account for 70 percent of the total growth in global oil demand this year, according to the International Energy Agency.

The IEA expects global oil markets to tighten in the second half of 2023, and expects Chinese oil demand to continue at more than 16.3 million barrels per day – hovering near April records.

But with a grim outcome from Monday’s Politburo meeting, that projection may soon start looking too rosy.

Power Points

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The Energy Source is written and edited by the FT’s global energy team. Contact us at energy.source@ft.com and follow us on Twitter at @FTEenergy. Follow past issues of the newsletter here.