Freeman on Mills on IEA on battery powered cars
Blog: The Grumpy Economist
James Freeman's always excellent "best of the web" WSJ column today covers a Manhattan Institute report by Mark Mills itself referencing material deep in side an International Energy Agency report on battery powered electric cars. Like corn ethanol, this enthusiasm may also pass. The economic and environmental costs of batteries are slowly seeping out. One of my pet peeves in all of our command-and-control climate policy is that any comprehensive quantification of costs and benefits seems so rare, or at least so hidden. How many dollars for how many tons of carbon -- and especially the latter: how many tons of carbon, really, all in, including making the cars? (California only counts tailpipe emissions!) I have seen guesstimates that electric cars only breakeven in their carbon emissions at 50,000-70,000 miles. And, the point of the article, those estimates are likely undercounts especially if there is a huge expansion. Parts I found interesting and novel: For all of history, the costs of a metal in both dollar and environmental terms are dictated primarily by ore grades, i.e., the share of the rock dug up that contains the metal sought... Ore grade is what accounts for the differences in the cost per pound of gold, $15,000, and iron, $0.05. The former ore grades are typically below 0.001% and the latter over 50%.... Average nickel ore grade is under 2% and for copper below 1%, ... Such geological realities determine the amount of energy used by big machines to do the digging, moving, grinding, refining, etc.The global mining industry today already accounts for about 40% of all industrial energy use, and that's before an epic expansion that will be needed to meet green plans. Petroleum itself typically accounts for half of mining-sector energy use.Thus, estimating future EV energy emissions requires including the trajectory for ore grades. There is no evidence that any study is doing so. [My emphasis] Every metal exhibits a long-run and significant decline in ore grades. [The International Energy Agency] acknowledges this, even if it tendentiously understates the reality: "Future [minerals] production is likely to gravitate towards more energy-intensive pathways." The word "likely" dodges the fact that the data and the trends are clear. Copper is typical and is one metal for which there are no substitutes for building EVs or wind and solar hardware. As a National Renewable Energy Laboratory paper pointed out, "a decrease in copper ore grade between 0.2% and 0.4%, will require seven times more energy than present-day operations." And copper ore grades are forecast to continue the long-run decline...Mr. Mills cites an IEA report showing a trend of increasingly energy-intensive mining to collect a number of other minerals needed for EVs and adds:All the trends for declining ore grades are visible, even if they are ignored. [my emphasis]Now any economist of a certain era like me remembers the resource limits arguments of the 1970s, and the fact that raw materials prices keep going down over time. How does this square with the above? Simple: over time energy prices go down, and a bit the cost of machinery goes down, so we can mine lower and lower quality ore at the same or lower price. This is how we overcome the laws of thermodynamics. As the thing you want is more and more needle in a haystack of rubble, it takes more and more energy to pull it out. We could make copper from sea water with enough free energy. We could make copper from other elements in particle accelerators with enough free energy. Energy abundance drives declining resource prices. And, of course, current policy is driving us to more and more expensive energy. So perhaps the resource limited crowd might be right after all, though only because of our self-imposed energy policies. (I don't see how one can use nuclear or solar power to run a mine. Maybe, which would at least help the carbon issue if not all the other externalities of mining.)Some of the environmental question around carbon is nicely stated as, what kind of earth do we want to leave our great grandchildren? A hotter earth is not a pleasant choice. But an earth with all of its high grade minerals removed, and only a tenth of a degree cooler, is not a great choice either. I recall from somewhere a speculation about whether industrial civilization could revive after a social collapse. The answer is no. We can't even have a new Bronze Age. All the easily accessible deposits are gone. Second, an interesting forecast that our regulators will give up -- i.e. give up on the idea that replacing ICE vehicles with batteries and continuing as we do now will work: . . . Consumers are also to be persuaded, or forced, to drive less in general and travel more by bus, bicycle, rail, ride-share, or on foot, and to own fewer cars in the first place. As stated in the IEA net zero goal: the number of global households without a car needs to rise from 45% today to 70% by 2050, reversing a century-long trend of rising ownership. One researcher simply stated: "There is therefore a need for a wide range of policies that include measures to reduce vehicle ownership and usage." As usual, California regulators are ahead of the proverbial curve in admitting that the state's emissions goals will require citizens of that state—on top of being forced into EVs—to drive 25% fewer miles than they did 30 years ago . . . Reversing Americans' entire residential locations to something like a Manhattan where non-car transport can work is hard enough. Carbon emissions in the next century means China, India and Africa. Do they join the modern world? Reducing "global" car ownership means, no. You walk. Not in the article, my own pet peeve about electric car mandates, current policy, and the coming total ban on ICE vehicles: Economics teaches you the wonder of tremendous variety in our economy. Lots of people use cars and trucks for lots of different things. If electrification saves carbon at all -- a big if, and the central point of this report -- but is expensive or range limited, then it makes sense to do it first where it's least costly and most beneficial, and leave the most high value and hard to substitute uses of gas power alone. For example, the natural first use for electric cars is a second or shared small car with small battery for around town. Most families have two cars. Or, you could own a small limited range car for daily driving and rent a Chevy Tahoe for a long road trip. Privately owned cars sit idle most of the time, and are not a great first use for expensive and environmentally costly batteries anyway. A fire truck that operates one month of the year in the middle of nowhere off the grid should probably stay gas powered forever. The earth does not require 100% elimination of ICE, 90% will do! Yet our policy makers see only one vision: each family has one car, Chevy Chase's family truckster, and must take that car on a long road trip. So the car needs to be huge, have a huge battery, and have a network of charging stations. All at once. Moonshot, not bit by bit. The pressure on materials will not just come from cars either. The current policy plan is to move home heating, AC, stoves, and industry to electricity, and to move electric production to solar panels and windmills. But those only work during the day. The current plan -- dream -- is battery powered grid scale electric storage. To obviate the need for backup fossil plants -- i.e. doubling the fixed cost -- we then need something like a week's worth of battery backup for the whole current electrical output, all the cars, houses, and industry that are going to be forced to move to electricity, and new economic growth. A total ban on gas power, a forced move to huge cars with huge batteries, and no clear quantitative understanding that this actually saves any carbon at all, let alone the other environmental consequences of massively increasing resource extraction, will obviously end badly. Freeman says "they're coming for your cars." They may, but we are still a democracy. More likely, this will join corn ethanol, switchgrass, high speed trains, urban mass transit, and a hundred other enthusiasms in a pile of eternal subsidies while the chattering classes move on to the next great enthusiasm. I can bet what will happen in California. The ban will take effect, but there will be a mechanism to plead for exemptions. Once again large well connected people and companies will get exemptions, smaller businesses will shut down, and everything gets more expensive. The sad effect of all of this is that slow diffusion of sensible electric cars may be stalled, along with development of the technology--whatever it is--that will eventually win out 20 or 30 years from now.
