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EV Dreams and Industrial Metal Nightmares

John Petersen

The hardest part of blogging about the energy storage and vehicle electrification sectors is coping with ideologues who are so enthralled with their myopic EV dreams that they can't see the industrial metal nightmares that make those dreams impossible at relevant scale in the real world. They whimper, whine and complain about the obscene prices charged by diabolical oil companies and gush over how safe, quiet, clean and secure life will be when plug-in cars with immense battery packs are common as wildflowers in an alpine meadow and getting cheaper every day.

The fly in their soothing balm for the ills of humanity is that electric vehicles and the batteries to power them require immense amounts of nonferrous industrial metals for electric motors, batteries and other essential components.

To begin with, the prices of industrial metals are more volatile than oil prices and they usually increase faster. The following graph offers a seven-year comparison of market prices for Brent Crude and a basket of industrial metals represented by the Dow Jones UBS Industrial Metals Index (^DJUBSIN).

5.5.12 Crude-Metals.png

Nothing in that graph leads me to believe oil prices and industrial metals prices will decouple in the foreseeable future and make dreams of significantly cheaper EVs possible. Technology can do marvelous things with electronic devices made from bits of silicon and plastic. It has little or no ability to improve the efficiency of electric drive components or reduce the cost of large quantities of industrial metals used to make those components. There's always room to nibble around the edges, but electric motors and batteries have been around for a long time and they're not going to get much better.

Simply stated, the dream of falling EV prices is impossible because the underlying technologies require massive inputs of industrial metals.

To make matters worse, global production of energy resources is two orders of magnitude greater than global production of industrial metals. The following table is derived from published industry data and summarizes annual global production of energy resources on both a gross and a per capita basis.


Production
Per Capita

(Metric tons)
(Kilograms)
Coal 7,229,000,000
1,032.71
Oil 4,866,000,000
695.14
Natural Gas 1,880,000,000
268.57
Uranium 42,700
0.01
   All energy resources 13,975,042,700
1,996.43

The next table is derived from statistics published by the USGS and summarizes global production of iron, steel and all major industrial metals on both a gross and a per capita basis.


Production
Per Capita

(Metric tons)
(Kilograms)
Iron & Steel 1,500,000,000
214.29




Aluminum 44,100,000
6.30
Chromium 24,000,000
3.43
Copper 16,100,000
2.30
Manganese 14,000,000
2.00
Zinc 12,400,000
1.77
Titanium 6,700,000
0.96
Magnesium 5,900,000
0.84
Lead 4,500,000
0.64
Nickel 1,800,000
0.26
Bromine 460,000
0.07
Tin 253,000
0.04
Molybdenum 250,000
0.04
Antimony 169,000
0.02
Rare Earths 130,000
0.02
Cobalt 98,000
0.01
Tungsten 72,000
0.01
Niobium 63,000
0.01
Vanadium 60,000
0.01
Arsenic 52,000
0.01
Lithium 34,000
0.00
Silver 23,800
0.00
Cadmium 21,500
0.00
Bismuth 8,500
0.00
Gold 2,700
0.00
Mercury 1,930
0.00
Graphite 925
0.00
Platinum Group 399
0.00
Beryllium 240
0.00
   All nonferrous metals 131,200,994
18.74

The ratios are simple if you forgive a little rounding. For every 100 pounds of energy resources, our planet can produce ten pounds of iron and steel and one pound of nonferrous industrial metals. If you'd rather tighten the focus to oil and the specific industrial metals highlighted in red that are essential for electric drive components, the ratio works out to eleven ounces of industrial metals for every hundred pounds of oil.

The numbers simply can't work. When demand for a particular metal reaches a tipping point where it exceeds supply, the outcome is always the same; a price spike that lasts until supply and demand are brought back into balance. We’re already going through the first modern example with rare earth metals. Their prices increased by more than 1000% over the last couple years and the market is responding by developing new mines that will hopefully bring supply and demand into balance at a higher metal price over the next few years. Until balance is restored, metals that were relatively cheap and available before the inflection point will be difficult to obtain and prohibitively expensive.

All of the metals produced last year were used to make the necessities and luxuries of life for the planet's seven billion inhabitants. There is no slop or surplus in the industrial metals supply chain and while production of some metals can be increased with massive investments in new mines and production infrastructure, the required level of new investment can only increase price pressures and make metals that are very expensive today even more expensive tomorrow. There is no way to insure that incremental metal production will be dedicated to a particular use and there are plenty of competitive uses.

Just last week a group of technology titans including Google executives Larry Page and Eric Schmidt announced the launch of Planetary Resources, a venture that hopes to mine asteroids for industrial metals. While I can't comment on the business merits of their new venture, the fact that these men are investing their own money in off-planet exploration for industrial metals that the earth can't produce in sufficient quantities speaks volumes.

The bizarre theory of electric drive as packaged by EVangelicals and their eager commercial accomplices at Tesla Motors (TSLA), Nissan Motors (NSANF.PK), General Motors (GM) and others is that humanity can increase its consumption of scarce industrial metals including copper, manganese, nickel, rare earths, cobalt and lithium for the sole purpose of giving EV owners the dubious luxury of replacing energy from oil with energy from coal, uranium and natural gas. The idea that all natural resources are worth conserving never even enters the picture.

EVs cannot change global production of energy resources or the emissions from using those resources. Since the planet only has one atmosphere, the idea that moving emissions from Point A to Point B is somehow "virtuous and green" has all the intellectual integrity of a no peeing zone in a swimming pool.

The world currently produces enough industrial metals to make a few electric vehicles for eco-royalty who don't care whether their choices make economic sense. It cannot produce enough industrial metals to make affordable electric vehicles, or for that matter make enough electric vehicles to put even a tiny dent in global oil consumption.

No matter how the ideologues and their commercial accomplices twist, distort and spin the facts, electric vehicles cannot make a society or the world a safer, quieter, cleaner or more secure place to live. They're selling snake oil promises based on the gullibility of politicians and the general public and the absurd proposition that humanity can waste materials that are a hundred times scarcer than the energy resources ideologues want to replace.

On a micro-scale, electric vehicles and plug-in hybrids are feel-good eco-bling for the emotionally committed and the mathematically challenged. On a macro-scale they use more energy, emit more CO2 and are more expensive than established HEV technology. They're unconscionable waste and pollution masquerading as conservation.

I'm a lawyer, a battery guy and a policy geek. I know that six billion people on our planet want to earn a small piece of the lifestyle one billion of us have and take for granted. I also know that as a result of the information technology revolution, about half of the six billion have access to electronic data and understand for the first time in history that there is more to life than mere subsistence. Even if we assume that they'll only become consumers at 5% to 10% of purchasing power parity, the increased pressure on water, food, energy and every commodity you can imagine will be immense beyond reckoning. The big challenge will be creating enough room at the table so that we can avoid the unthinkable consequences of inaction.

I like hybrid vehicle technology because it minimizes waste of both gasoline and other natural resources. I'd like it even more if it were tied to a compressed natural gas fuel system that would eliminate dependence on imported oil, but that's a different discussion. I'm also a big fan of micro- and mild-hybrid vehicles that use less robust electric motors and simpler batteries to reduce waste for the masses that can't afford to upgrade to an HEV. I'm deeply offended by P.T. Barnum class hucksters that use the false promise of electric vehicles to create bloated market capitalizations and lead investors down a primrose path that's certain to end in massive losses for the gullible.

Disclosure: None.



was posted on AltEnergyStocks.com.


       

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Comments

John,
Once again, I think you're a little to simplistic in your analysis (although I agree with your conclusion that hybrids are more resource effective than EVs- although smaller cars and alternative transport are more effective than either.)

Back to the analysis.

1. On your point of the correlation between oil and industrial metal prices, this is not particularly relevant when you are taking about EVs (or hybrids, or any other oil-saving technology which uses industrial metals.) The reason is because the metals use it up front, while the oil savings come later. A more useful comparison would be to compare the cost of the metals today to the average cost of oil over the following 5-10 years. For those of us who think both prices are likely to continue up, this makes using metals to save oil look like a better investment than in your analysis.

2, you state that the world produces 1 lb of non-ferrous metals and 10 lb of iron and steel for every 100 lb of oil. This does not constrain the use of iron and steel significantly because these are widely recycled (As are many non-ferrous metals, while oil is not.) But even more importantly, you do not look into how much oil can be saved with that one lb of non-ferrous metals.

A hybrid will probably save about 1000 gallons of gas over its lifetime, weighing approximately 6000 lbs. So if it uses 60 lbs of nonferrous metals, we have a net gain in world resources. An EV might save 2000 gallons (feel free to use your own numbers, so we would have a net gain if it used 120 lbs or less of non-ferrous metals.

And all this ignores recyling. Agreed, we currently don't have the technology to effectively recycle many nonferrous metals, but there are many we can recycle, and who knows what will make sense in terms of recycling at the end of an EV's life, when the prices for nonferrous metals are much higher?

In other words, you still need to do your homework.

I highlighted global and per-capita production of the critical nonferrous metals that are required for EVs for a reason. The planet does not produce enough of them to make enough machines to make a dent in oil consumption. Even if it did, getting the rest of humanity to give up the other necessities that are made from the same metals is not bloody likely.

Iron and steel don't bother me a bit because they are relatively plentiful and recycling is common. Recycling rates for most industrial metals, however, are dreadful.

Playing analytical games about what might be possible if 100% of the world's available industrial metals were available for EV production leads to foolish conclusions. There is no surplus. Using mass quantities of industrial metals in EVs means they won't be available for other products that people consider essential.

There's no need to do any homework to prove that there aren't enough metals and even if there were using them to replace oil with coal and natural gas is a zero sum game.

I'm not saying that we can replace oil with batteries. The question I'm trying to get at is: "Does investing non-ferrous metals in a hybrid or EV increase the overall resources available to humanity, or not?"

If EVs (hybrids) increase the total available resources, then they are good investments.

You always argue that EVs are bad investments from a societal point of view. In order to make that case, you can't just say "we produce 100x pounds per pound of nonferrous metals" you also have to say that "it takes more than 1 lb of nonferrous metals to save 100 pounds of oil."

Until you have the data needed to make that latter statement, you have not done your homework, and your article is simply irrelevant to the question "Are EV's good investments of our resources?"

The question is not whether Xkg of industrial metals replace Ykg of oil. That, unfortunately, is the simplistic analysis.

The question is whether Xkg of industrial metals reduce oil consumption sufficiently to pay all of the opportunity costs associated with not using the Xkg of industrial metals in an alternative competitive application.

Humanity has to choose between Use A and Use B for every available resource, and it has to choose carefully because every kg of cobalt that goes into a lithium-ion battery is a kg of cobalt that can't go into an aircraft turbine.

I'll agree that your version of the question is what we're really trying to get at. Mine is a simpler version of the same that's easier to answer.

But to answer either your question of mine, you still need to know how much industrial metal goes into an EV or HEV as a first place. Until you have that information, your article does nothing to answer either question.

I've expanded the second paragraph after the metal production table to discuss what happens when metal supply and demand get out of balance.

Unfortunately that's the best I can do because none of these automakers publishes a bill of materials for a vehicle and I'm not about to get into the game of making crude estimates without third-party documentation.

If the task you perceive as "homework" was possible I'd have already done it.

I've expanded the second paragraph after the metal production table to discuss what happens when metal supply and demand get out of balance.

Unfortunately that's the best I can do because none of these automakers publishes a bill of materials for a vehicle and I'm not about to get into the game of making crude estimates without third-party documentation.

If the task you perceive as "homework" was possible I'd have already done it.

@John and Tom:

"Does investing non-ferrous metals in a hybrid or EV increase the overall resources available to humanity, or not?" This question can only be answered in the negative. However, there is a much larger issue here and the tree that both of your dogs are barking at does not have a raccoon trapped in it's branches.

The overriding issue is, IMHO, how are we going to move beyond depleting coal and oil and move to a system that can power the world in a manner to which we have become accustomed without killing ourselves in the process.

Batteries have always been a big problem making, as John avers, Ev's totally impractical. However, in the area of personal transportation I believe that there is a practical solution that involves using electricity to propel vehicles. To wit, direct engine to generator to electric motor bypassing rare earth batteries all together. My choice of engine (as is VW's) would be diesel. They have a cross over on tap that is reputed to be able to attain mileages of over 150/gal.

Of course, that in itself won't increase the overall resources available to humanity. But, if joined to a fuel that can be grown with the Sun's love we have an answer to the question. I'm referring to oil that is produced by algae (which, by the way, was the source of the oil that we now refer to as fossil). It can be grown into perpetuity, is carbon neutral and seems to me to be the best option available to mankind. Hopefully it would, in time, allow more of the 7billion to enjoy a life that at least approaches the one that we 1billion now live.

Thanks for the article John. You bring up a great point in the ongoing energy discussion.

Edward Kerr

John,
Since the amount of metals in EV/HEVs is unavailable, I'll agree you've "done your homework" to the extent possible.

I also would agree with what I see as your overarching theme in these industrial metal articles: That There Ain't No Free Lunch.

In other words, whenever we try to displace oil consumption with technology (EVs are only one example) the demand on resources is felt elsewhere in the economic system. In this case, you point to the increased stress in the supply of nonferrous metals.

If we do nothing, we will be confronted by an increasing and increasingly volatile oil price. The move towards vehicle electrification may moderate the impact of oil price spikes (especially for those who own EVs), but it in turn leads to increasing and increasingly volatile prices of industrial metals.

The only "solution," is to reduce the resource intensity of our economy, the transportation part of which can best be accomplished with more intelligent city planning, and a shift to smaller vehicles and alternative transport.

Relying on either vehicle electrification or oil is foolish. I guess my largest objection to your articles on the foolishness of EVs is that you fail to acknowledge the foolishness of the status quo.

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