Global tensions and clean energy costs
Price Shocks Ahead: How global tensions drive the cost of clean energy
14 May 2026
Even a hint of geopolitical instability can send critical mineral prices soaring, threatening the cost, speed, and security of the global clean energy transition.
In global critical mineral markets, perception sometimes matters more than reality, according to research from the multidisciplinary Monash Critical Minerals Initiative.
Long before sanctions hit or conflicts erupt, whispers of instability, diplomatic breakdowns, or regulatory changes can affect prices and supply planning across industries worldwide.
Professor Joaquin Vespignani.
Professor Joaquin Vespignani warns that ignoring these signals can lead to higher costs, slower renewable rollout, and disruptions across the energy transition.
“Geopolitical risk disrupts critical-mineral supply chains and raises investment uncertainty, which amplifies price volatility in minerals that are essential inputs to low-carbon technologies and therefore to energy security,” Prof Vespignani said.
Measuring geopolitical risk
Prof Vespignani and colleagues, Professor Russell Smyth and Dr Jamel Saadaoui, analysed monthly data from 1985 to 2024, tracking how mineral markets react to global tensions, trade disputes, and regulatory uncertainty.
They developed advanced statistical models to measure how price sensitivity shifts around major global events, from the Gulf War to the Russia-Ukraine conflict.
Crucially, the framework captures not just the impact of actual disruptions, but how markets react to expectations of future conflict or restrictions.
Professor Russell Smyth.
Their research shows that market fears often hit harder than the actual events, triggering price surges that last longer and bite deeper than the conflicts themselves.
Nickel and copper are more sensitive to geopolitical risk than aluminium or zinc, making them critical pressure points for the energy transition.
“We quantify how shocks to geopolitical risk affect mineral prices using constant and time-varying local projections, and we show the impacts differ across minerals and over time, helping identify when and where price sensitivity to geopolitical shocks is rising,” Prof Vespignani said.
“The results imply that reducing non-technical risk - especially policy and regulatory uncertainty - can dampen the price impacts of geopolitical shocks, alongside strategies like diversification and friend-shoring to reduce exposure to concentrated supply chains.”
Real-world impact
The framework is already delivering tangible benefits across governments, international agencies, and industry.
The findings have informed briefings to the International Energy Agency (IEA) and consultations with the Australian Treasury on managing price volatility and supply risk.
Researchers at Monash’s Pacific Action for Climate Transitions (PACT) are adapting the framework to support energy planning in small island states, where exposure to price shocks is particularly acute.
Next, the team plans to expand the scope of the research to additional minerals beyond the six analysed.
“A key next step is extending the analysis beyond the six minerals in the study, and working with policy and industry partners to apply these risk insights across a broader set of critical minerals relevant to net zero and security priorities,” Prof Vespignani said.