Preface. Clearly there’s not enough minerals and metals to shift from fossil fuels to electric vehicles and utility scale battery storage, due to peak critical elements, peak platinum group elements, peak precious elements, peak rare earth elements, and peak everything else.
The whole mineral game is over once oil declines, except perhaps for some recycling, since all minerals and metals use oil to mine, crush, smelt, fabricate, and deliver the products made from them.
Even now, only the top 5% can afford electric vehicles. The third and last article explains why battery prices fell one-time only and are likely to rise again, putting EV out of reach for perhaps all but the 1% some day.
The first article points out how much cobalt, neodymium, lithium, and copper just the United Kingdom alone would need to meet electric car targets for 1050.
The second article, from science magazine, also points out what an immense amount of minerals are needed and some of the ecological destruction in obtaining them (the references contain the grim details of amounts and devastation caused).
Alice Friedemann www.energyskeptic.com author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer, Barriers to Making Algal Biofuels, and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Collapse Chronicles, Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report
Herrington, R., et al. 2019. Leading scientists set out resource challenge of meeting net zero emissions in the UK by 2050. Natural History Museum, London.
For just the United Kingdom alone to meet electric car targets for 2050 requires production of twice the global cobalt production, near all of the world’s neodymium, three quarters the world’s lithium production and at least half of the world’s copper production. Also, the UK grid would need to increase in size by 20% to charge electric cars. The UK comprises less than 1% of world population (0.87%) so clearly the entire world can’t migrate from gasoline to electric vehicles.
Sovacool, B. K., et al. 2020. Sustainable minerals and metals for a low-carbon future. Science 367: 30-33.
Metals and minerals, including cobalt, copper, lithium, cadmium, and rare earth elements (REEs) will be needed for technologies such as solar photovoltaics, batteries, electric vehicle (EV) motors, wind turbines, fuel cells, and nuclear reactors.
Between 2015 and 2050, the global EV stock needs to jump from 1.2 million light-duty passenger cars to 965 million passenger cars, battery storage capacity needs to climb from 0.5 gigawatt-hour (GWh) to 12,380 GWh, and the amount of installed solar photovoltaic capacity must rise from 223 GW to more than 7100 GW (3). The materials and metals demanded by a low-carbon economy will be immense (un 2019). One recent assessment concluded that expected demand for 14 metals—such as copper, cobalt, nickel, and lithium—central to the manufacturing of renewable energy, EV, fuel cell, and storage technologies will grow substantially in the next few decades (Dominish 2019). Another study projected increases in demand for materials between 2015 and 2060 of 87,000% for EV batteries, 1000% for wind power, and 3000% for solar cells and photovoltaics. Although they are only projections and subject to uncertainty, the World Bank put it concisely that “the clean energy transition will be significantly mineral intensive” (WB 2018).
Many of the minerals and metals needed for low-carbon technologies are considered “critical raw materials” or “technologically critical elements,” terms meant to capture the fact that they are not only of strategic or economic importance but also at higher risk of supply shortage or price volatility (EC 2017).
In addition, mining frequently results in severe environmental impacts and community dislocation. Moreover, metal production itself is energy intensive and difficult to decarbonize. Mining for copper, needed for electric wires and circuits and thin-film solar cells, and mining for lithium, used in batteries, has been criticized in Chile for depleting local groundwater resources across the Atacama Desert, destroying fragile ecosystems, and converting meadows and lagoons into salt flats. The extraction, crushing, refining, and processing of cadmium, a by-product of zinc mining, into compounds for rechargeable nickel cadmium batteries and thin-film photovoltaic modules that use cadmium telluride (CdTe) or cadmium sulfide semiconductors can pose risks such as groundwater or food contamination or worker exposure to hazardous chemicals, especially in the supply chains where elemental cadmium exposures are greatest. REEs, such as neodymium and the less common dysprosium, are needed for magnets in electric generators in wind turbines and motors in EVs, control rods for nuclear reactors, and the fluid catalysts for shale gas fracking. But REE extraction in China has resulted in chemical pollution from ammonium sulfate and ammonium chloride and tailings pollution that now threaten rural groundwater aquifers as well as rivers and streams. Several metals for green technologies are found as “companions” to other ores with differential value and unsustainable supply chains (Nassar 2015).
References (the interesting details that are skimmed over above)
- Dominish, E. et al. 2019. Responsible minerals sourcing for renewable energy. Institute for Sustainable Futures, University of Technology, Sydney.
- EC. 2017. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions on the 2017 list of critical raw materials for the EU. COM/2017/490, European Commission, Brussels.
- Nassar, N. T., et al. 2015. By-product metals are technologically essential but have problematic supply. Science Advances. Companionality is the degree to which a metal is obtained largely or entirely as a by-product of one or more host metals from geologic ores. The dependence of companion metal availability on the production of the host metals introduces a new facet of supply risk to modern technology. We evaluated companionality for 62 different metals and metalloids, and show that 61% (38 of 62) have companionality greater than 50%. Eighteen of the 38—including such technologically essential elements as germanium, terbium, and dysprosium—are further characterized as having geopolitically concentrated production and extremely low rates of end-of-life recycling. It is this subset of companion metals—vital in current technologies such as electronics, solar energy, medical imaging, energy-efficient lighting, and other state-of-the-art products—that may be at the greatest risk of supply constraints in the coming decades.
- UN. 2019. Global resources outlook 2019: Natural resources for the future we want. United Nations Environment Programme, Nairobi www.resourcepanel.org/reports/global-resources-outlook.
- WB. 2018. Climate-smart mining: Minerals for climate action. World bank. www.worldbank.org/en/topic/extractiveindustries/brief/climate-smart-mining-minerals-for-climate-action
Goehring, L. R., Rozencwajg, A.A. 2019. The unintended consequences of high grading. Goehring & Rozencwajg.
We believe what follows will have a significant impact on the potential adoption of both electric vehicles and renewable power generation as we progress through the coming decade. Our research indicates that neither the EV nor renewable power can gain material adoption without further major reductions in battery costs. Yes, battery costs have dropped dramatically over the last decade, but we believe these costs reductions were one time in nature and will be near impossible to repeat. Further cost reductions will be entirely dependent on major advancements in battery technology–which, as of today just don’t exist.
Renewable energy’s major problem is intermittency: the sun doesn’t always shine and the wind doesn’t always blow. As a result, it’s impossible for renewables to provide reliable baseload power at scale without storage. While batteries could provide the necessary buffer to overcome the problem of intermittency, the costs of renewable plus storage remain prohibitive and uncompetitive.
Similarly, the battery pack has become the limiting factor to widespread EV adoption. Analysts estimate that the battery pack on an EV represents one-third of its total cost. Unless the EV reaches cost parity with the combustion engine it will not gain widespread adoption, unless the EV is subsidized or the ICE is outlawed. Materially reducing the cost of the battery is the only way for the EV to become competitive. Many analysts believe that EVs will reach cost parity once lithium-ion batteries can be produced at $100 per kwh. Costs would have to fall further to allow for grid-level storage. Battery proponents argue these thresholds are just around the corner. As recently as 2012, lithium-ion batteries cost more than $750 per kwh. Bloomberg New Energy Finance estimates these costs have now fallen by an impressive 80% to reach $156 per kwh by 2019. The bulls argue that even if cost improvements slowed by half, $100 per kwh will be achieved within three to five years. Bloomberg New Energy finance reports that per $/kwh, lithium ion battery costs dropped as follows $707 (2012), $663 (2013), $588 (2018), $381 (2015), $293 (2016), $219 (2017), $180 (2018), $156 (2019).
But where did these numbers come from? The data is hard to find. Many battery commentators spoke about economies of scale, but few were willing to give details. Battery companies also consider their manufacturing process to be their greatest competitive advantage and, as a result, few give information or breakdowns of their cost structure.
Through our research, we came across an excellent book detailing the inner workings of the battery industry. In Powerhouse, Steve LeVine (my review of this 2015 book is here) explores the challenges in developing lithium-ion batteries. He also describes the ground-breaking work conducted at the Argonne National Laboratory outside of Chicago. Levine explains how Argonne maintained meticulous cost models for all major lithium-ion battery formulations over time and regularly released these models into the public domain.
Argonne’s models are invaluable in understanding what caused the 80% fall in battery costs over the last seven years. After carefully analyzing the Argonne data, we now believe costs have come down mostly through a series of one-time improvements. Instead of continuing to fall materially (à la Moore’s Law), we believe that most of the drop in lithium-ion costs is now behind us. The first $600 move from $750 to $156 per kwh was relatively easy– the next $56 move from $156 to $100 will be extremely difficult. If we are correct, lithium-ion batteries will not be able to reach the threshold for mass adoption in either EVs or grid-level storage for the foreseeable future. We should point out that many battery experts privately acknowledge that the trajectory of the past decade is not repeatable.
Four main factors explain the fall in battery costs over the past decade: increased plant utilization, increased battery size, chemical prices and battery chemistry improvements. Beginning in 2008, the battery industry built a large amount of lithium-ion manufacturing capacity to meet the expected surge in demand. While the demand projections ultimately proved correct, the timing was initially far too optimistic and by 2010 the average battery plant only operated at 10% utilization. The low level of throughput resulted in substantial operational inefficiencies and artificially high unit costs. Argonne released a version of its model in late 2011 and we used this as a starting point for our analysis. The Argonne model assumes a 100,000 pack per year facility that operates at full capacity. The first thing we did was adjust the model to reflect a plant that only operated at 10% utilization. The result was a cost of $705 per kwh–within 5% of the battery cost reported by the battery industry for 2012.
Using this as a baseline, we adjusted the plant utilization to 100%–the base case used in the Argonne model. Immediately the costs collapsed by 50% from $705 per kwh to $360. These results have profound consequences: nearly 60% of the total cost savings of the past decade came from simply ramping up underutilized facilities. The cost savings is the result of the fixed or semi-fixed costs (such as capital equipment, land and labor) being amortized over a greater quantity of batteries. Battery manufacturing plants today are operating near full utilization. Going forward, additional demand will be met by building new plants and not by increasing utilization. As a result, the largest driver of cost reduction over the last decade is unrepeatable.
The second source of cost reduction is the size of the battery itself. In 2012 the average lithium-ion battery had much less capacity than today. For example, the benchmark battery from the 2011 Argonne model only had capacity of 11 kwh compared with 65 kwh in the most recent edition. In any battery pack there are significant costs that are incurred only once per battery. These costs include module terminals, gas release valves, bus bars, and pack jackets as well various integration costs. By increasing the capacity of the battery five-fold, these one-time costs are spread over more kilowatt hours. In a typical 2012 vintage battery, these costs made up as much as 20% of the total battery cost. As the capacity increased materially, we estimate these costs came down from $80 to $20 per kwh–a reduction of 75%.
we believe these cost reductions will not be repeated going forward. There is clearly a tradeoff between capacity, unit cost, and total cost. For example, a 2019-vintage battery has a capacity of 65 kwh equating to an EV range of 220 miles. Such a battery is estimated to cost $156 per kwh or $10,170 per battery. If you increased the capacity six-fold (similar to the increase between 2012 and today), the resulting battery would have a range of nearly 1,000 miles and a total cost of $50,000. While its cost per kwh would indeed have come down from $156 to $120, we doubt any consumer would be willing to incur these extra costs for such a ridiculously long range. Clearly there is a right-sizing of the battery that dictates capacity and we believe current EVs are close to optimal.
The third driver of cost reduction over the last several years has been chemical prices. A battery’s “chemistry” typically refers to the active material used in the battery’s cathode. For example, Tesla utilizes a so-called LCA battery where the cathode consists of a compound made of lithium, cobalt, nickel, and aluminum. This compound is purchased from a specialty chemical company which charges a price based upon the cost of the underlying materials and the cost of manufacturing. Over the last several years, the compound price has fallen by nearly 50% as manufacturing costs have declined materially. Our models suggest these cost savings have a limit as the raw material cost becomes a larger and larger percent of the total. For example, we estimate raw material costs made up 40% of chemical price in 2011. By 2018 this had flipped and the raw materials made up 60% of the total chemical price. Moreover, as battery demand picks up we believe metal demand risks exceeding supply in cobalt and nickel. This will put upward pressure on the specialty chemical price. Battery insiders admit metal prices could be a problem going forward. In January 2019, Tesla announced a cobalt offtake agreement with Glencore in an effort to secure long-term supply. These cost pressures are unlikely to be offset by lower manufacturing costs, given they now make up less and less of the total. Over all, we estimate chemical prices have lowered battery costs by $40 per kwh between 2011 and 2019.The remaining cost savings have come from improvements to the underlying battery itself and the manufacturing process. After accounting for cost inputs mentioned above, we believe these additional improvements have resulted in $100 in savings or less than 20% of the total.
Our analysis suggests a full 80% of the cost savings of the last several years have come from one-time sources that cannot be repeated. Battery bulls extrapolate the 20% annual cost savings that took prices from $705 to $157 over the last several years. Instead, we believe it is more appropriate to first back out the one-time cost savings in order to isolate the sustainable cost savings going forward. Instead of falling $550, we believe battery prices fell by less than $100 per kwh over the last seven years, after adjusting for plant utilization, pack size, and chemical cost reduction. One-time reductions of scale ($343), larger battery ($60), chemical prices ($40), and other prices ($106) based on models from the Argonne National Laboratory.
Late last year the Wall Street Journal reported a spat between Tesla and Panasonic regarding their Gigafactory joint venture. The issue revolved around price with Panasonic claiming it could not operate profitably at current levels. The Gigafactory is the largest battery manufacturing facility in the world, operates at near full utilization, and produces very high capacity batteries. This strongly suggests its costs should be among the lowest in the world – and yet they still are not low enough. If our analysis is correct, it will become harder and harder for battery manufacturers to continue to lower costs. Perhaps the Panasonic headlines are just the start.