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Musings From The EV Black Knight

John Petersen

In June an anonymous blogger at Clean Technica dubbed me the “EV Black Knight,” the mortal enemy of electric cars.  While I was flattered by the tribute, I was deeply offended by the suggestion that I might be foolish enough to impale a lithium-ion battery pack with the burnished broadsword of economics.

Seriously, anybody who’s spent any time studying battery safety knows that shockingly bad things can happen when you puncture a lithium-ion battery pack with a conductor and even a full metal jacket wouldn’t be enough to protect a knight errant from the kind of explosive thermal runaway that did about $5 million of damage to a GM battery testing laboratory that was designed to safely manage catastrophic battery failures.

Truth is I’d rather have an e-bike than a horse, I find pens mightier than swords and I think green eyeshades enhance vision while face visors lead to the kind of tunnel vision I find so appalling in ideologues and Tesla (TSLA) stockholders who apparently think we can waste massive quantities of metal for the dubious luxury of powering a car with coal instead of gasoline.

I think the basic problem is that we’re painfully aware of energy costs but blissfully ignorant of the cost of making the machines that either produce or consume energy.

In the case of the family car, we know it burns 400 gallons of gas a year and hate the fact that each gallon costs $3 to $4. Heck, over a 15-year useful life we’ll spend $18,000 to $24,000 on fuel alone. Spending as much for fuel as you spend to buy the car seems outrageous until you consider that the cost of fuel includes the cost of:
  • Manufacturing the machines that drill for and produce crude oil;
  • Manufacturing the machines that that transport crude oil for refining;
  • Manufacturing the machines that convert crude oil into fuel; and
  • Manufacturing the machines that transport fuel to market.
I’ve never seen a detailed analysis, but I’d give long odds that if you start with the purchase price of the family car and add a proportional share of the cost of the upstream machinery, equipment and processing facilities that keep it running, you’ll find that machinery represents at least three-quarters of total ownership costs.

While I can’t pin down a precise number, most reports that discuss the economics of wind power claim an all-in power production cost of $.05 per kWh. In the typical analysis 25% of total power production cost is attributable to operations. The remaining 75% is attributable to capital cost recovery – the cost of manufacturing the turbines that turn free energy into useful energy.

With the exception of simple devices that burn fuel directly for heating and cooking, the cost of every useful form of energy pales in comparison to the cost of the machines that use the energy and the cost of the upstream machinery, equipment and processing facilities that deliver energy to our machines in a useful form.

If you spend enough time thinking about the supply chain, the issues become obvious.

We don’t have an energy cost and supply problem.

We have a machinery cost and supply problem.

Energy from wind, sun and water may be free, but machines to make that energy useful are anything but free. The same is true for coal, oil, natural gas and uranium. The in-place energy resources cost nothing, but the machines that extract, transport, refine and use those resources are expensive indeed.

Last year we produced 1,996 kg of energy resources for every man, woman and child on the planet. We also produced 214 kg of iron and steel per capita and 19 kg of nonferrous metals.

While energy resources are single use commodities, ferrous and nonferrous metals are essential for the manufacturing of:
  • EP – machines that produce energy and convert it to useful form;
  • EU – machines that use energy to perform useful work; and
  • NM – non-mechanical essentials of modern life including buildings, power distribution grids and an infinite variety of durable and disposable consumer and industrial goods.
The essential conundrum of modern life is that EP + EU + NM can never exceed total metal production. If we increase metal consumption in one category we have to reduce it somewhere else unless one believes in natural resource fairies.

According to a recent McKinsey study, “Resource Revolution: Meeting the world’s energy, materials, food, and water needs,”  the planet supports 1.8 billion middle class consumers. Over the next 20 years that number will increase to 4.8 billion, a gain of almost 270%. Every one of them will demand energy produced by machines, energy using machines and the non-mechanical essentials of modern life. The problem, of course, is there simply won’t be enough raw materials to go around.

Something’s got to give!

Simply stated, the great challenge of our species will be overcoming persistent global shortages of water, food, energy, building materials and every commodity you can imagine.

The McKinsey report argues that available resource productivity improvements could:
  • Offset 100% of the expected increase in land demand;
  • Address more than 80 percent of expected growth in energy demand;
  • Offset 60 percent of anticipated growth in water demand; and
  • Address 25 percent of expected growth in steel demand.
Unfortunately the report is completely silent on more troublesome resources like nonferrous metals that are absolutely essential for:
  • EP;
  • EU; and
  • NM.
Whether we like it or not, supply chain shortfalls will have to be overcome by wasting nothing, recycling everything and making the most efficient possible use of every natural resource.

That doesn’t leave much room for idealists that want to use non-recyclable 1,000-pound battery packs so they can choose coal instead of gasoline to power their car.

In the battery industry the strain on metal supply chains will be immense. The problems won’t be overwhelming for metals like lithium and lead that are abundant in nature but require major new investments in mines and infrastructure, but they’ll be crippling for metals like copper, nickel, cobalt, vanadium and rare earths, which are already in short supply and likely to encounter even more daunting supply chain disruptions over the next two decades.

I’m not a Black Knight wantonly attacking peaceful, frugal and righteous peasants. I’m humble scrivener with enough mining and oil and gas experience to know when the specious assumptions of aspiring eco-princelings can’t work.

I’d certainly never waste hundreds of pounds of steel to protect myself from starry-eyed fools in motley who didn’t endure the cruel tutelage of Sister Mary Angelica in their formative years.

7.13.12 Darasz.jpg

This article was first published in the Summer 2012 issue of Batteries International Magazine and I'd like to thank editor Mike Halls and cartoonist Jan Darasz for their contributions.

Disclosure: I have no direct or indirect interest in Tesla and I have nothing to gain or lose from its stock price movements. While I am a former director and current stockholder of Axion Power International (AXPW.OB), a nano-cap company that has developed a robust and affordable lead-carbon battery for use in micro-hybrid, railroad and stationary applications, I can't see how the success or failure of a fairy tale product like the Tesla Model S could impact the value of my investment in a company that's focused on relevant mainstream markets.



was posted on AltEnergyStocks.com.


       

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