No, not in the long-term, due to lower price of substitutes for oil. As I have discussed on this blog, the fundamentals here are quite clear.
Substitutes are roughly in the same cost range as oil currently: PHEVs like the Volt1 become economic at about $3.35/gallon gasoline ($90 oil?). In the longer-term (the time it takes to ramp up PHEVs) this also puts a cap on prices.
In roughly 5 years economies of scale will reduce the cost of PHEVs to the range of $80 oil, and we'll see a race between oil depletion and EV growth.
http://energyfaq.blogspot.com/2009/07/volt-battery-costs-part-3.html
1Pure EVs are cheaper, but much less convenient.
Are battery prices really this predictable?
The price-performance improvement of batteries has been very consistent for quite some time, and it's accelerating. Those improvements are based in new tech (lower cost materials in newer chemistries), larger formats (which eliminate the overhead of packaging and controls per cell), improved manufacturing, and economies of scale.
I've been using such batteries on laptops for a long time - they're not very long-lived.
You're using out-dated battery chemistry, with inadequate temperature and charge-discharge management. Look into the newer li-ion chemistries being used by A123systems and LG (and many others).
If I'm so confident on price of substitutes for oil, why don't I get rich in the futures market?
I am quite confident about the price of substitutes - I called the oil price peak last year (as you can also see in earlier entries here) as did Richard Rainwater looking at much the same data.
I'm not so confident about the time before another price peak ends - the next peak is likely to be longer and lower. Things depend as much on the willingness of oil exporters to recycle petrodollars, and the willingness of oil importers like China and India to subsidize their price controls, as they do on the speed with which substitutes replace oil.
If exporters get as smart as China and Japan, they'll finance exports just as long as exports exist: that could support much higher prices for quite a while, if the US was stupid enough to continue borrowing to support it's addiction to oil. OTOH, if China, India and other importers with price controls wise up and eliminate price controls & subsidies (or, even better, replace them with taxes and import controls), the price could drop sharply.
EV/PHEV substitution will happen incrementally. Lifestyle substitution, especially carpooling, could happen quickly with the proper "victory-garden" promotion (although it's hard to see that kind of realism in US politics at the moment).
What if world oil production declines more than a few percent per year? Wouldn't balancing supply and demand be very difficult without a worldwide economic depression?
Not because of a lack of BTU's. See http://energyfaq.blogspot.com/2008/09/can-everything-be-electrified.html . OTOH, the trade imbalances it would create would indeed be very difficult to manage. I haven't seen a good model for what might happen - I would guess we'd see economic stagnation for a good 10 years. Eventually I would hope to see an aggressive response in the US, which could dramatically reduce oil consumption quickly.
Emergency measures could easily reduce consumption by 25% in 6 months by conservation (just make all highway lanes HOV, strictly enforced), and drilling (in ANWR and off the coasts) and large-scale CTL could both be done in 3 years under truly emergency conditions.
We have more than enough energy to build new electric vehicles. For that matter, we can carpool and telecommute during the transition. We really can. I'm often baffled by the lack of awareness of the potential of carpooling: the US could cut it's oil consumption by 25% in 3 months, if it chose to. It would be inconvenient, and require an emergency to do, but everyone would still get to work.
October 14, 2009
How important is the energy to manufacture vehicles?
Not as important as the fuel they use.
This is analyzed here ( http://www.scientificamerican.com/article.cfm?id=green-is-a-mirage ). It's an interesting article.
Here's the relevant quote for EVs:
"An LCA reveals that in terms of global warming effluents, for example, everything in the car's life cycle from manufacture to getting scrapped pales when compared to the emissions while it is driven."
So, it really is the fuel used for driving that matters.
This is analyzed here ( http://www.scientificamerican.com/article.cfm?id=green-is-a-mirage ). It's an interesting article.
Here's the relevant quote for EVs:
"An LCA reveals that in terms of global warming effluents, for example, everything in the car's life cycle from manufacture to getting scrapped pales when compared to the emissions while it is driven."
So, it really is the fuel used for driving that matters.
September 29, 2009
How do we overcome resistance to change?
There's been a lot of discussion of how to overcome resistance to change, especially to the changes needed to deal with climate change. I think a lot of it's been pretty unrealistic.
We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables (and other new ways of doing things) - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.
This applies especially to coal consumption: there isn't any country in the world that will let the lights go out, if coal is available (This means that we don't face Peak Energy: we face Peak Oil and Climate Change).
With luck, we'll start building out wind and solar even faster. When it starts hurting revenues for investors in coal, we'll need to find a a way to buy them out to maintain the pace of the transition.
-------------
We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.
A classic story: Manhattan needed more cab drivers, but faced resistance from the current drivers, who would face more competition. The solution? Giving the licenses to the old drivers, so they could sell them and get the benefit of the new resource. It accomplished the result, and yet the existing drivers were happy.
We need creative ways to enlist the investors, and employees, in existing industries, so that they become enthusiastic partners. Otherwise, they'll fight change forever, in the exhausting trench warfare we see today.
----
The Cash For Clunkers program was a good example.
Criticism of CFC seems a bit "hindsight is 20/20" ish. While it's always good to identify where something could be improved, it seems we should acknowledge that
1) it did what it was intended to do - primarily to stimulate auto sales and the economy, amd secondarily to improve efficiency,
2) it was an improvement over the European programs from which the US got the idea (they had no efficiency provisions), and
3) CFC got intense criticism during the drafting process for the efficiency provisions, as many people thought they would limit the program too much.
Sure, it was expensive: that's the point of stimulus programs, to put money into the economy.
Efficiency regulations are cheap for the government, and great in theory, but the difficulty is that you're creating costs for those who are regulated, so that they'll fight the regulations tooth and nail. We have to acknowledge the costs in delay created by a parsimonious approach. We may need to compensate people for their costs in order to get things moving.
Shouldn't Cash for Clunkers have had much stronger efficiency requirements?
Sure.
The problem here is that the political context in which such legislation is crafted doesn't contain the PO/CC awareness needed to support more aggressive action. CAFE requirements should be much higher; we should have stiff carbon/fuel taxes; we should be doing many other things such as cap and trade in addition to regulatory efficiency improvements such as CAFE and carbon taxes (not to mention building efficiency).
Of course, we have most of the information we need to take action. Much of the reason for delay is resistance in the form of disinformation ("FUD") from those who would lose careers and investments. That's one good feature of "C4C": it overcomes such resistance by paying people to give up their inefficient capital investments (rather than just making them obsolete by regulation).
Finally, we learn by doing and trial & error. There was much speculation that the efficiency requirements were too stiff, and that as a result the program would fail for lack of participation. Instead, there was so much demand that they expanded the program substantially.
We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables (and other new ways of doing things) - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.
This applies especially to coal consumption: there isn't any country in the world that will let the lights go out, if coal is available (This means that we don't face Peak Energy: we face Peak Oil and Climate Change).
With luck, we'll start building out wind and solar even faster. When it starts hurting revenues for investors in coal, we'll need to find a a way to buy them out to maintain the pace of the transition.
-------------
We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.
A classic story: Manhattan needed more cab drivers, but faced resistance from the current drivers, who would face more competition. The solution? Giving the licenses to the old drivers, so they could sell them and get the benefit of the new resource. It accomplished the result, and yet the existing drivers were happy.
We need creative ways to enlist the investors, and employees, in existing industries, so that they become enthusiastic partners. Otherwise, they'll fight change forever, in the exhausting trench warfare we see today.
----
The Cash For Clunkers program was a good example.
Criticism of CFC seems a bit "hindsight is 20/20" ish. While it's always good to identify where something could be improved, it seems we should acknowledge that
1) it did what it was intended to do - primarily to stimulate auto sales and the economy, amd secondarily to improve efficiency,
2) it was an improvement over the European programs from which the US got the idea (they had no efficiency provisions), and
3) CFC got intense criticism during the drafting process for the efficiency provisions, as many people thought they would limit the program too much.
Sure, it was expensive: that's the point of stimulus programs, to put money into the economy.
Efficiency regulations are cheap for the government, and great in theory, but the difficulty is that you're creating costs for those who are regulated, so that they'll fight the regulations tooth and nail. We have to acknowledge the costs in delay created by a parsimonious approach. We may need to compensate people for their costs in order to get things moving.
Shouldn't Cash for Clunkers have had much stronger efficiency requirements?
Sure.
The problem here is that the political context in which such legislation is crafted doesn't contain the PO/CC awareness needed to support more aggressive action. CAFE requirements should be much higher; we should have stiff carbon/fuel taxes; we should be doing many other things such as cap and trade in addition to regulatory efficiency improvements such as CAFE and carbon taxes (not to mention building efficiency).
Of course, we have most of the information we need to take action. Much of the reason for delay is resistance in the form of disinformation ("FUD") from those who would lose careers and investments. That's one good feature of "C4C": it overcomes such resistance by paying people to give up their inefficient capital investments (rather than just making them obsolete by regulation).
Finally, we learn by doing and trial & error. There was much speculation that the efficiency requirements were too stiff, and that as a result the program would fail for lack of participation. Instead, there was so much demand that they expanded the program substantially.
September 26, 2009
Does sustainability mean less complexity?
A popular theory about the challenges of dealing with resource limitations suggests that resource limits may force us to simplify (Tainter).
Probably not. Here's an example: bricks that use less energy, recycle pollutants, and cost less..but rely on more precise (read complex) manufacturing.
"Bricks have been made pretty much the same way for 3,000 years, until Calstar's scientists came up with their new technique, said Chief Executive Michael Kane.
Ordinary bricks are fired for 24 hours at 2,000 degrees F (1,093 C) as part of a process that can last a week, while Calstar bricks are baked at temperatures below 212 F (100 C) and take only 10 hours from start to finish, Kane said.
The recipe incorporates large amounts of fly ash -- a fluffy, powdery residue of burned coal at electric plants, that can otherwise wind up as a troublesome pollutant.
"Ours is a precise product" that relies on getting the chemistry right, said Amitabha Kumar, Calstar's director of research and development."
http://www.reuters.com/article/wtUSInvestingNews/idUSTRE58K47220090921
Probably not. Here's an example: bricks that use less energy, recycle pollutants, and cost less..but rely on more precise (read complex) manufacturing.
"Bricks have been made pretty much the same way for 3,000 years, until Calstar's scientists came up with their new technique, said Chief Executive Michael Kane.
Ordinary bricks are fired for 24 hours at 2,000 degrees F (1,093 C) as part of a process that can last a week, while Calstar bricks are baked at temperatures below 212 F (100 C) and take only 10 hours from start to finish, Kane said.
The recipe incorporates large amounts of fly ash -- a fluffy, powdery residue of burned coal at electric plants, that can otherwise wind up as a troublesome pollutant.
"Ours is a precise product" that relies on getting the chemistry right, said Amitabha Kumar, Calstar's director of research and development."
http://www.reuters.com/article/wtUSInvestingNews/idUSTRE58K47220090921
September 16, 2009
Is Climate Change real?
Sure looks like it. Here's a report that was signed off on by old-fashioned management consulting firm McKinsey:
"The study looked at eight areas, both rich and poor, around the world seen as high risk from more droughts, hurricanes, floods and rising sea levels that climate change may cause.
In the worst-case scenario, global warming could trigger severe flooding in Guyana, costing the South American country over 19 percent of its annual GDP by 2030, the report said.
The hurricane-prone U.S. state of Florida could see weather-related costs knock 10 percent off its GDP each year.
The group that produced the report is made up of the United Nations, insurer Swiss Re, management consultancy McKinsey, the European Commission, the Rockefeller Foundation, Standard Chartered Bank and environmental network ClimateWorks."
source
"The study looked at eight areas, both rich and poor, around the world seen as high risk from more droughts, hurricanes, floods and rising sea levels that climate change may cause.
In the worst-case scenario, global warming could trigger severe flooding in Guyana, costing the South American country over 19 percent of its annual GDP by 2030, the report said.
The hurricane-prone U.S. state of Florida could see weather-related costs knock 10 percent off its GDP each year.
The group that produced the report is made up of the United Nations, insurer Swiss Re, management consultancy McKinsey, the European Commission, the Rockefeller Foundation, Standard Chartered Bank and environmental network ClimateWorks."
source
September 11, 2009
How expensive is the wind power needed to eliminate Chinese coal??
Previously, I asked How expensive is the wind power needed to eliminate coal in the US??
Well, China's emissions are just as high.
What would it cost in China?
It turns out: not much, in the grand scheme of things. Only about 7.5 cents per KWH http://www.technologyreview.com/energy/23460/
This is only $90B per year for 10 years, which really isn't much, expecially given that other power sources wouldn't be much cheaper.
Well, China's emissions are just as high.
What would it cost in China?
It turns out: not much, in the grand scheme of things. Only about 7.5 cents per KWH http://www.technologyreview.com/energy/23460/
“Sept. 11 (Bloomberg) -- Barren, windy stretches of the Tibetan plateau and grasslands in northeastern China hold untapped value in a country searching for more energy and cleaner air.
China, the biggest polluter from burning fossil fuels, has enough wind-energy potential to generate seven times its current power consumption, said Michael McElroy, a researcher at Harvard University. To develop that capacity and meet rising demand would cost about $900 billion, he wrote in a study published yesterday in Science.”
Volt battery costs, part 5
Are li-ion battery costs really dropping?
Yes. here are some retail costs: http://www.evcomponents.com/SearchResults.asp?Cat=34
We see that current Lithium cells are about $350/kWh for individual purchases. We can expect that an OEM can get them for around 50% of that (no more than $200/kWh), which places GM's wholesale cost for the Volt pack in the neighborhood of $3,200.
The range in the Volt is electronically limited in order to avoid any warranty issues with pack replacement (due to California Air Resources Board requirements). Essentially, GM's only letting the pack discharge to about half, so when capacity drops with age/cycling, as it does with all batteries, they can get more mileage out of it compared to going with a smaller pack and having the range drop below 40 miles within twenty+ thousand miles.
Going by specs for the retail batteries above, 5000 cycles before they hit 70% capacity would be at least .7(40 miles)5000 = ~140,000 miles until the pack capacity degrades to 70%, and probably ~200,000 miles before it degrades to 50% and drivers can't go a full 40 miles on all electric power w/ something like the Volt.
GM had to, in effect, de-rate their battery pack because the California Air Resources Board requirements for PHEVs are very stringent. Pure EVs don't have these requirements, so manufacturers can get away with using the whole pack.
Yes. here are some retail costs: http://www.evcomponents.com/SearchResults.asp?Cat=34
We see that current Lithium cells are about $350/kWh for individual purchases. We can expect that an OEM can get them for around 50% of that (no more than $200/kWh), which places GM's wholesale cost for the Volt pack in the neighborhood of $3,200.
The range in the Volt is electronically limited in order to avoid any warranty issues with pack replacement (due to California Air Resources Board requirements). Essentially, GM's only letting the pack discharge to about half, so when capacity drops with age/cycling, as it does with all batteries, they can get more mileage out of it compared to going with a smaller pack and having the range drop below 40 miles within twenty+ thousand miles.
Going by specs for the retail batteries above, 5000 cycles before they hit 70% capacity would be at least .7(40 miles)5000 = ~140,000 miles until the pack capacity degrades to 70%, and probably ~200,000 miles before it degrades to 50% and drivers can't go a full 40 miles on all electric power w/ something like the Volt.
GM had to, in effect, de-rate their battery pack because the California Air Resources Board requirements for PHEVs are very stringent. Pure EVs don't have these requirements, so manufacturers can get away with using the whole pack.
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