Originally Posted by
Translation of the UOG
According to Nomura, the use of materia drains the planet's life energy, this being why the good guys don't use it anymore. There's not an explanation for why its use drains the planet's energy, but based on Sephiroth's explanation from the original game that materia links someone to the planet and allows them to use its powers, its most likely that the materia allows someone to tap into the Lifestream's energy and manifest it as a spell based on the specs of the materia they're using. This would, of course, drain the planet's energy, the same as turning it into electricity would.
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