Thursday, January 27, 2022

"The Hard Math of Minerals" - Why the "Energy Transition" Won't Happen

Fantastic new essay ("The Hard Math of Minerals") by Mark P. Mills that captures why we own pipelines and hydrocarbons.

It has long been known that building solar and wind systems requires roughly a tenfold increase in the total tonnage of common materials—concrete, steel, glass, etc.—to deliver the same quantity of energy compared to building a natural gas or other hydrocarbon-fueled power plant. Beyond that, supplying the same quantity of energy as conventional sources with solar and wind equipment, along with other aspects of the energy transition such as using electric vehicles (EVs), entails an enormous increase in the use of specialty minerals and metals like copper, nickel, chromium, zinc, cobalt: in many instances, it’s far more than a tenfold increase. As one World Bank study noted, the “technologies assumed to populate the clean energy shift … are in fact significantly MORE material intensive in their composition than current traditional fossil-fuel-based energy supply systems.”

Today, the material intensity of solar and wind systems and EVs is still of minimal consequence because those technologies account for only a few percentage points of the global energy system. But the material demands will become hard to ignore if the world’s economies all simultaneously pursue similarly ambitious policies to displace the fossil fuels that currently supply over 80% of all energy. [...]

Replacing the energy output from a single 100 megawatt (MW) natural gas-fired turbine (producing enough electricity for 75,000 homes) requires at least 20 wind turbines, each about 500 feet tall and collectively requiring some 30,000 tons of iron ore and 50,000 tons of concrete, as well as 900 tons of nonrecyclable plastics for the turbine blades. The gas turbine, by contrast, requires only about 300 tons of iron ore and some 2,000 tons of concrete. The 20 wind turbines also require 1,000 tons of specialty metals and minerals such as copper, chromium, zinc, etc., versus about 100 tons embodied in the gas turbine. Moreover, the gas turbine is about the size of a residential house, while those 20 wind turbines require 10 square miles of land. And although a solar installation would require one-third as much land as wind, the aggregate tonnage of cement, steel, and glass used is about 150% greater than wind. [...]

In a recent report from the Geological Survey of Finland, researchers considered the minerals implications for achieving a so-called full transition; that is, using solar and wind to electrify all ground transport as well as to produce hydrogen for both aviation and chemical processes. They found the resulting demand for nearly every necessary mineral, including common ones such as copper, nickel, graphite, and lithium, would exceed not just existing and planned global production capabilities, but also known global reserves of those minerals.

A recent analysis by the Wood Mackenzie consultancy found that if EVs are to account for two-thirds of all new car purchases by 2030, dozens of new mines must be opened just to meet automotive demands—each mine the size of the world’s biggest in each category today. But 2030 is only eight years away and, as the IEA has reported, opening a new mine takes 16 years on average. [...]

Consider batteries, which underpin hopes to displace fossil fuels both in transportation and in enabling solar- and wind-dominated grids. Numerous estimates (exact data are proprietary) suggest that commodity materials comprise 60 to 70% of the cost to produce a battery. Thus, modest increases in commodity prices can wipe out gains in the smaller share of costs associated with assembly, electronics, and labor, leading to overall higher costs. The IEA’s analysis in early 2021 of “energy transition minerals” noted as much, concluding that future mineral price escalations could “eat up the anticipated” reductions in manufacturing costs expected from the “learning effects” in further scaling up battery production. [...]

Commodity inflation has begun to escalate the cost to build wind and solar systems as well, slowing or reversing long-run cost declines. As with batteries, progress in manufacturing efficacy has reduced solar module production costs so much that commodity inputs now make up about 70% of the overall price of modules. These inputs include not only copper, silver, and aluminum but also, in no small irony, coal. The energy-intensive fabrication of polysilicon, a key raw material in solar modules, takes place mainly in China (with its two-thirds share of all polysilicon supply) on its low-cost, coal-dominated grid. The combination of mineral commodity inflation and the jump in coal prices pushed solar module prices up nearly 50% over 2020. [...]

Many analysts claim that materials demand can be greatly alleviated with recycling. The ideal is described as a circular economy achieving nearly complete reuse of materials from discarded hardware. Although a worthy aspiration, myriad practical and economic factors impede getting close to that goal in general, not just with solar, wind, and batteries. And, as one United Nations study observed: “Less than one-third of some 60 metals studied have an end-of-life recycling rate above 50% and 34 elements are below 1% recycling, yet many of them are crucial to clean technologies.” Even if far greater levels of recycling were mandated, the vast quantity of solar and wind equipment required for the energy transition will for decades overwhelm any marginal additions to materials supply that could come from recycling the far smaller quantity from worn-out hardware.

Some proponents of the transition pin their hopes on innovation to reduce materials intensity through improvements to the underlying operating efficiency of the systems: higher photovoltaic conversion efficacy and battery chemistries with higher energy density, for example. But in these realms, gains of 10% or so are hard won. To have a meaningful impact on materials demands would require, rather than 10% efficiency gains, leaps of tenfold over existing solar, wind, and battery technologies—gains that aren’t even theoretically feasible. [...]

Based on today’s physics and technology, the only path to an energy system with a material intensity lower than hydrocarbons would be one focused on nuclear fission. In the pantheon of energy-producing machines, none is more remarkable than the nuclear reactor. Nuclear fission offers a potential hundredfold reduction in material intensity over combustion, and a thousandfold reduction over solar and wind.

Canadian oil majors, royalty owners, and hydrocarbon pipelines are all priced as though disruption - actual replacement by wind and solar and electric vehicles - is going to happen in the next five years or so. But simple back of envelope economic calculations based on physics and energy density tell us that replacing fossil fuels (again, 80% of current world energy consumption) with those energy sources, the so-called "energy transition," is impossible. That means that the world is seriously under-investing in hydrocarbon production and traditional energy infrastructure, and over-investing in electric vehicles (TSLA) and in wind and solar boondoggles that will collapse the way the previous iteration (e.g. Suntech Power, Evergreen Solar, A123 Systems) did a decade ago.


CP said...

The problem so far is that batteries just are not up to the job. As he points out, "the specific energy of gasoline—measured in kWh per kg, for instance—is about 400 times higher than that of a lead-acid battery, and about 200 times better than the Lithium-ion battery in the Chevrolet Volt."

CP said...

We've already seen an "energy transition" bubble boom and bust ten years ago - nothing has changed!

When I first approached the subject of energy in our society, I expected to develop a picture in my mind of our grandiose future, full of alternative energy sources like solar, wind, nuclear, biofuels, geothermal, tidal, etc. What I got instead was something like this matrix: full of inadequacies, difficulties, and show-stoppers. Our success at managing the transition away from fossil fuels while maintaining our current standard of living is far from guaranteed.

CP said...

"America’s Power Grid Is Increasingly Unreliable"
WSJ, 2/18/2022

Within the footprint of the Midcontinent Independent System Operator, or MISO, which oversees a large regional grid spanning from Louisiana to Manitoba, Canada, coal- and gas-fired power plants supplying more than 13 gigawatts of power are expected to close by 2024 as a result of economic pressures, as well as efforts by some utilities to shift more quickly to renewables to address climate change. Meanwhile, only 8 gigawatts of replacement supplies are under development in the area. Unless more is done to close the gap, MISO could see a capacity shortfall, NERC said. MISO said it is aware of this potential discrepancy but declined to comment on the reasons for it. Curt Morgan, CEO of Vistra Corp., which operates the naton's largest fleet of competitive power plants selling wholesale electricity, said he is worried about reliability risks in New York, New England and other markets as state and federal policy makers pursue ambitious goals to quickly phase out fossil fuel-fired power plants. His concern is that the plants will retire before replacements such as wind, solar and battery storage come online, he said, given the cost and challenge of quickly building enough batteries to have meaningful supply reserves. "Everything is tied to having electricity, and yet we're not focusing on the reliability of the grid. That's absurd, and that's frightening," he said. "There's such an emotional drive to get where we want to get on climate change, which I understand, but we can't throw out the idea of having a reliable grid."