Will EV Batteries achieve economies of scale?

So says the Department of Energy. (PDF Warning) This graph shows it all:

After reading the report, it seems the trajectory of this forecast was demand driven.  I have no doubt that economies of scale and innovation manufacturing processes can help bring the cost down but I am skeptical of the cost of lithium inputs.  It is not that abundant as oil, as there is only two regions I can think of (China and Bolivia) that have substantial sums of it.  But this does bode well for Intercon’s idea for reusing batteries for alternative power sources, as this will push prices downward for aftermarket batteries.  See, I said that economies of scale was possible! (or at least the DoE confirms it…)

HT: Engadget

Waste products after-market: EV’s Lithium Ion Batteries

Intercon wrote an interesting article today highlighting a solution for the high cost of electric vehicles: by transitioning drained lithium ion batteries from used EVs to function as stores of energy for alternative power sources such as wind and solar.   As Intercon notes, the high cost of manufacturing lithium for EVs can be subsidized by the aftermarket sale to energy producers:

Estimates in vehicles prices have seen these costs naturally passed onto customers to make EVs just as expensive—if not more expensive—than comparable gas vehicles or hybrids. But an afterlife for batteries that paid dividends could put a dent in those high costs for producers and consumers alike. Apparently, when batteries degrade from levels necessary for driving they still hold large amounts of charging capacity (perhaps as high as 75%)—a commodity that could be captured by another industry. Realizing an after-market value of batteries could shift some of that excess cost away from customers into other willing buyers at wind or solar farms. According to GM, the situation is a triple-win because although deconstructing the batteries to safely harvest their components is possible, it is expected to be intensive in both labor and capital.

Intercon believes that the greatest benefit alternative energy producers stand to gain is to provide a store of energy for a more reliable source of energy.

At the same time, renewable power has its own drawback, namely its intermittent nature. Wind turbines and solar farms can provide power that is clean but often unreliable. The result is needing large amounts of dirtier power kept in the grid spinning reserve (plants that are running but not producing electrons for the grid) meaning that the net benefit of the greener installations is marginal. When paired with power storage, however, renewable energy advances quickly against into the marketplace. Power storage systems made up of recycled EV batteries could help the output of renewable systems remain more consistent allowing for more grid systems to be powered down. The UK Times reports that 25 recycled car batteries could store up to 1 MW of power and yet may be an incremental additional cost added to a wind turbine.

While novel in it’s pursuit, I see some issues with the idea for this as a magic bullet for alternative energy. If lithium ion batteries can retain their value past being used in an EV, wouldn’t the value be more useful in consumer electronics? Spreading the bulk of the car battery across more sell-able units  would bring economies of scale, decrease cost per unit and increase margins. Given the high value of lithium, any discount on used lithium would nonetheless still make it expensive, making it a boon for already struggling clean energy providers to compete with cheap, dirty power. It would only make economic sense to push an after-market of used lithium towards consumer electronics rather than utilize them in alternative power schemes.

This is a consequence of the power industry’s structure, not exactly a failed idea.  This would be a great way to utilize post-consumer material for efficient means (if it is possible) in order to help cushion the cost of utilizing lithium ion batteries as a store for power.  Of course alternative energy providers would want whatever is available now, but can’t due to cost.  A lot will depend on the shape of the power industry in the future, which is currently unknown at the moment, but positive given the newly awaited American Power Act.  This shouldn’t detract from the fact that lithium in EVs is  still recoverable for after-market uses, (either for renewable power or consumer electronics) which should help cushion consumers from high lithium prices, making the shift to EVs more attractive.  Not everyone will be able to get a Tesla, (Pictured above) but Nissan’s new Leaf is a start.

The End of Cheap Coal

One of the reasons why the push for Cap and Trade was a good idea was it would not only internalize the cost of carbon emissions, but it would also raise the price of energy created from coal.   With higher prices for kilowatt per hour from coal energy, cleaner energy sources would become competitive.  Currently, cleaner energy sources can barely compete with coal, with exceptions of course.  But if legislation wasn’t going to push up the price of burning coal, then in the long-term, rising international demand would.  That time is now.

In 2009, China has ceased to export coal and has now began to import it.  According to the financial times, in 1993 the same happened to oil.  China’s oil imports exceeded what was being imported and the consequence was a climb in the average oil price, all too well known thanks to oil spiking at $150 a barrel in 2008.  China had been using more oil than it could produce in order to fuel its large amount of economic growth, and oil wasn’t the only commodity.

China isn’t the only player.  India as well as the emerging markets have offered its heavy share of the demand, tipping trade balances toward imports and helping to drive up commodity prices for oil and building materials.   The same is expected for coal.

This is good news for America, which contains the largest coal reserves in the world.  This is also good news for the coal industry, as it will be able to profit from an uptick in prices.

This is not so good for the coal power industry, especially in America.  While the coal industry will benefit in developing nations who have already increased the capacity to burn coal for energy and produce steel from coke, the developed world already faces pressures for pursuing greener technologies instead of burning coal.  And the coal power industry should be scared: the only thing keeping them from not succumbing to the powers of green energy is price, which is now soon to change.  With coal prices higher translating into higher per kilowatt hour energy costs that begin to be on par with greener technologies, the coal power industry will have a tough fight.

Green technologies already have the leg up of being green and renewable.  Obama’s recent moves to push for nuclear energy, which would already be competitive given Obama’s plan, and the ARRA’s subsidizing of renewable resources like wind and solar significantly put the government against the coal power industry.

The government’s backing of renewable energy certainly distorts what the market wants when providing energy, but a needed distortion nonetheless.  The only hope for the coal industry is to level the playing field by either removing green energy subsidies (not likely) or becoming green it self.  The industry’s only hope is going for clean coal. And now, it doesn’t have the luxury of waiting anymore.

Before one says that clean coal isn’t viable, I disagree.  It is possible, given recent developments in innvoation.  I blogged recently about Thomas Friedman’s catch about clean coal:

If you combine CO2 with seawater, or any kind of briny water, you produce CaCO3, calcium carbonate. That is not only the stuff of corals. It is also the same white, pasty goop that appears on your shower head from hard (calcium-rich) water. At its demonstration plant near Santa Cruz, Calif., Calera has developed a process that takes CO2 emissions from a coal- or gas-fired power plant and sprays seawater into it and naturally converts most of the CO2 into calcium carbonate, which is then spray-dried into cement or shaped into little pellets that can be used as concrete aggregates for building walls or highways — instead of letting the CO2 emissions go into the atmosphere and produce climate change.

If this can scale, it would eliminate the need for expensive carbon-sequestration facilities planned to be built alongside coal-fired power plants — and it might actually make the heretofore specious notion of “clean coal” a possibility.

With coal prices expected to rise, you can bet this will scale. With clean coal on the horizon, subsidizing greener technologies won’t be needed anymore or vice versa, coal won’t be dirty anymore. Either way, whether a Cap and Trade bill , favorable legislation towards green technologies or the sheer power of the market was going to force it, switching towards less CO2 intensive energy was inevitable. Now, about those mountain tops…

Indecision on climate bill dampening economic recovery?

So says Obama. From Real Time Economics:

Senior Obama administration officials say the nation’s economic recovery could stall if Congress doesn’t pass a climate bill this year.

The officials warn that investors are so uncertain about the future cost of emitting greenhouse gases that they are sitting on capital rather than pouring it into “clean” technology, new power plants or energy-intensive manufacturing.

The administration has for months been moving away from advocating climate legislation primarily as an environmental issue and toward a jobs-creation argument. But the comments are a marked shift to a stronger rhetoric: fears of prolonging the recession. The White House says spurring “clean,” or low-greenhouse-gas-emitting energy, can help lay the foundation for the 21st-century U.S. economy.

“Right now there’s a lot of money on the sidelines,” said Energy Secretary Steven Chu. “Capital on hold means investments not being made, investments not being made means jobs not being created,” he said at an Export-Import Bank conference last week.

Companies that could capitalize on a carbon-constrained economy, such as General Electric Co., Alstom SA, Areva, Babcock & Wilcox, a unit of McDermott International, Siemens AG, Chesapeake Energy Corp. and First Solar Inc., say policy clarity will focus investment. So do emitting businesses that will need to adapt, such as American Electric Power Co. and BP PLC.

Ambiguity, however, breeds risk, which begets financiers’ reluctance.

It is an interesting argument. Financial decisions makers will always delay their decisions until some certainty can be had.  But, I don’t think indecision is hampering recovery. I think it is only limiting the potential for growth in clean energy. Nothing should change the outlook for conventional energy because climate change legislation’s aim is to not reduce the amount of conventional energy but reduce carbon. Financial decision makers regarding conventional energy should be much savvier when facing this uncertainty because the room for change is available post investment.  Unless congress is going to enact climate legislation that will completely cripple the conventional energy industry, (it won’t) carbon will be priced should be priced where alternative energy will become competitive.  There is no metric for pricing carbon at it’s value. (Pigovian tax)  Politics determines it.  Cap and trade is the best mechanism for private investment to determine the actual cost of carbon.

What the issue here is, investors wishing to take advantage of more growth in clean energy are waiting on congress to make clean energy more competitive.  So, while indecision is not hampering recovery, it certainly is hampering growth.  And given this comment:

“People need to realize this is a global market for our capital,” GE’s Walsh said. “Our money is going to go where we see long-term certainty … and if Europe has a better framework, that’s where our money’s going to go,” he said.

I would have to say that a climate bill is not an issue of environmentalism anymore. Its about helping new industries compete with a global mindset that may have more forward thinking politicians than America does. So maybe I should retract my comment: Indecision with climate change legislation isn’t hampering our recovery; its hampering our competitiveness with the rest of the world in clean energy.

Clean coal finally a reality without the expense?

Instead of pumping C02 into the ground we can just mix it with seawater to create something that resembles coral, a substance that is harmless to the earth and and can be useful for creating building materials. From Thomas Friedman:

If you combine CO2 with seawater, or any kind of briny water, you produce CaCO3, calcium carbonate. That is not only the stuff of corals. It is also the same white, pasty goop that appears on your shower head from hard (calcium-rich) water. At its demonstration plant near Santa Cruz, Calif., Calera has developed a process that takes CO2 emissions from a coal- or gas-fired power plant and sprays seawater into it and naturally converts most of the CO2 into calcium carbonate, which is then spray-dried into cement or shaped into little pellets that can be used as concrete aggregates for building walls or highways — instead of letting the CO2 emissions go into the atmosphere and produce climate change.

If this can scale, it would eliminate the need for expensive carbon-sequestration facilities planned to be built alongside coal-fired power plants — and it might actually make the heretofore specious notion of “clean coal” a possibility.

Assuming it is scientifically possible and economically viable:

– Reduced demand for conglomerates used in concrete lessens environmental damage from rock quarries (assuming coal plants produce this coral cheaply) and reduces holes in mountains

– Increased demand for coal provides incentive for finding cheap coal by using cheaper extraction processes, leading to blowing up mountains for it and increases holes in mountains

Oh well, less carbon is still a pareto efficient outcome in my book.  Maybe in a quest for economies of scale, coal plants can start to diversify their carbon sequestration technologies from creating building materials to providing C02 in my soda.*  Mmmmm…coal’d soda…

HT: Environmental Economics

*I think the industry already does this but I could be wrong…

Finding Value in Waste

S4 Energy Solutions will be testing a valuable technology for commercial viability by:  (here)

…superheating landfill waste using an electricity-conducting gas called plasma, which rearranges the waste’s molecular structure into a synthetic gas. The end product can be converted into transportation fuels such as diesel or ethanol, industrial products like hydrogen and methanol, or used as a natural gas substitute to fuel electric plants.

The question is: How much quantity at what cost? I also wonder if this becomes economically viable, how it would change the value of waste in the long run?

History of natural gas and oil prices

Just recently read an article from the Economic Review by the Federal Reserve Bank of Kansas (here) about energy price states.  I thought that this particular graph from the report (here) highlighting energy prices and recessionary cycles over the course of 40 years gives some perspective on the run up of natural gas and oil prices.

Continuing this trend means guaranteed higher energy prices in the future. How high do energy prices have to go in order to provide incentive for alternative means to be viable?

Put climate change where your mouth is

Via MR, a really good NYT article written by John Tierny with a proposal that will put climate change skeptics and proponents beliefs to the test: tie the amount of carbon taxed/capped to the rise in temperature on earth.  Why is this great? If skeptics are right, we don’t pay anything.  If global warming proponents are right, we will have the safe guards installed to make sure that when temperatures do rise, we are able to internalize the actual cost of carbon, thereby limiting the amount we emit into the future.

Of course there will be needed discussion on just how the temperature should be measured, but the idea is foolproof nonetheless: the only judge of how much damage we are really doing to our earth will be from the earth itself.  No arguing over fudged forecasts or ulterior motives, this plan would take all of the political risk out of future changes to the climate and create a more forward looking plan; a plan that everyone will now have a stake in, including private investors – if they want to make sure that they hedge against higher costs in the future.

The problem with politics now would be how to implement it. Cap and trade or carbon tax?  The article suggests:

[…] it would be even better, Dr. McKitrick says, to use the temperature readings as the basis for a carbon tax instead of a cap-and-trade system. Like many economists and environmentalists, he argues that the carbon tax would be more effective at reducing emissions because it is simpler, more transparent, easier to enforce and less vulnerable to accounting tricks and political favoritism.

It is certainly true that a carbon tax would make things easier, but does it provide the efficiency that cap and trade would provide? One of the benefits of cap and trade is to allocate carbon credits to those who need to pollute the most, providing incentive for others to focus on creating more efficient and cleaner ways of lessening their carbon footprint. Just because a carbon tax may be easier, it still doesn’t yield the benefit of the gains from trade that could happen if carbon is able to be capped. In this case, only true polluters would bear the brunt of the costs, which could in turn, offset end costs to consumers. (Which is the driving point for cap and trade)

Waste products aftermarket: part I

Thanks to stimulus funds, companies have been trying to get R&D money up front to make renewable energy an economic reality.  One of the most popular is bio-diesel, a versatile fuel that can be made from almost anything organic.  Usually the input for production of bio-diesel would be some kind of crop, but the one that has caught my eye is producing bio-diesel from chicken fat.

[Bolingbrook, Ill.-based Elevance Renewable Sciences]… plans to use plant oils and poultry fat as building blocks to replace petroleum-based chemicals used to make myriad products, including jet fuel, lubricants, adhesives and even cosmetics and candles.

Although chicken fat is an organic compound, and doesn’t yield as much environmental damage as other noxious chemicals, industrial waste treatment for chicken production usually yields about 1,640 pounds of chicken fat per day, nearly a ton. Whether converting it to Diesel is viable, there are already many how-to’s and products online in which you can convert your grease fat into diesel yourself.

What makes chicken fat bio-diesel such a great idea is not only does it lessen the impact of environmental damage from overloading the environment’s sink function, (amount of pollution the environment can handle before irreparable damage) but it also adds value to something that was not only worthless, but harmful.

If Elevance Renewable Sciences is successful in being able to make bio-diesel from chicken fat an economic reality, it could open doors to what auto-markets are already familiar with: an after-market.  Could an aftermarket for industrial waste products be a new profitable area that could effectively reduce the amount of environmental pollution made, add value to something otherwise harmful but also reap profits for entrepreneurs who have effectively used technology to create a cost-effective business model?  Given how much industrial waste there is, imagine how much all of that waste could be worth.  The next time you decide to throw away your chicken fat you could be throwing away slimy, dirty, smelly gold!

Evaluativing transportation’s carbon footprint in the U.S.

The North American Transportation Statistics Database released its new transportation data for 2007 covering the three countries in North America.  After a quick glance, it was interesting to see how much of a percentage total CO2 emissions from all particular transportation modes would be in the U.S.  Below is a chart showing the total amount of CO2 emissions for each transportation mode over the total amount of CO2 emissions for all transportation.*     (Click the chart to maximize it)  82% of all CO2 emissions from transportation is from road travel, making it the mode of transportation that contributes the greatest amount of CO2, with all other sectors combined contributing only 18%.  Air is the second greatest contributor with 10% of CO2 emissions for all transportation modes.

What seems to be an obvious point…everyone knows that the greatest contributor to CO2 for transportation has to be from road travel, correct?  So, for the sheer volume of travel being done on the road, the amount of CO2 will always be a significant amount.

If you were to divide the total amount of CO2 by the total amount of energy consumed by mode of transportation for 2007, you would end up with an interesting result.  Air travel would come out to be roughly 94 thousands of metric tons per petajoule (10 to the 15th joules) of energy.  Likewise, road travel comes out to be around 66, rail comes out to be 69 and water transport comes in at around 35.  When comparing air travel to road travel, you find that given the energy put in, less CO2 is exerted for road travel than rail or air travel.  Water transport seems to exert the least amount of CO2 for every petajoule used.

In a way, this is a crude measure of pollution efficiency.  Unfortunately, we can’t compare apples to apples by using CO2 per mile since the metrics given won’t translate into clean numbers.  So, for now, we can only make assumptions about these numbers.  If they could evenly be subdivided by the number of miles traveled, then we would be able to have an accurate picture of efficiency.  What assumptions can be made from these differences?  I feel that this is beyond my understanding.

*The chart says “% Total Greenhouse Gas Emissions by Transportation Sector for 2007.”  However, in my post, I kept on indicating C02 only.  In the tables from the primary source, that would also include NO2 and  CH4, however, I only used CO2 as the NO2 and CH4 numbers were negligible and I wished to only focus on CO2.