David Foster

“Green” Energy: Materials-Intensive–And It Matters

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There is now considerable momentum behind wind and solar power generation.  In addition to the governments pushing these technologies, there are many companies intending to profit by manufacturing and implementing these systems–also companies intending to get “sustainability” points for using them–and a nontrivial part of the financing industry licking their chops at the prospect of raising the necessary capital.

While wind and solar systems do not directly consume fuels, they do consume capital, that capital representing the labor and materials (and also the energy, in various forms) necessary to manufacture and install them.  Some of these materials are relatively scarce at present, and are sourced from problematic locations under questionable conditions.

Here is an interesting and quite detailed study on “green” materials and sourcing options, from the International Energy Agency.   Worth careful reading for anyone interested in energy issues, technologies, and politics.   Note that in addition to China’s development of its internal resources of the relevant materials, that country is developing strong trade and financing relationships…which may evolve to neo-colonial or even full-colonial relationships…with other countries possessing such resources.

And here are a pair of articles arguing that the only way for the US to acquire the requisite materials for a “green” energy transition will require close collaboration with China…that if the two greatest greenhouse-gas emitters on this planet can’t work together, we’re all going to be living in a more or less literal hell.  The authors of these pieces don’t seem to be very concerned about the risks of US dependence on China for our energy supply; they seem more concerned about the risks of a cold war (anti-China) mentality.   (It is also interesting that the word ‘nuclear’ doesn’t appear in either article.)

Comes now a Reuters article, which asserts that: The Biden administration is considering a plan to import the bulk of the materials needed to build electric vehicles and the batteries that power them instead of mining them domestically — a nod to environmental groups that make up a key part of the Democratic constituency, according to a report.    The article goes on to quote an administration source as saying, referring to mining, that “it’s not that hard to dig a hole”…a comment which interestingly echoes Michael Bloomberg’s assertions about farming–“I could teach anybody, even people in this room, no offense intended, to be a farmer…You dig a hole, you put a seed in, you put dirt on top, add water, up comes the corn.”   (Bloomberg also made similarly dismissive remarks about manufacturing jobs)

On the other hand, a post at the Seeking Alpha investment blog asserts that Contrary to Rumors, the Biden Administration is Not Abandoning Lithium–that on the contrary, they want to expand both domestic and international supply of this material.   (The author of this piece also notes critically that the Reuters article did not reference a single named source.)

But even if the Biden administration does throw some money at domestic mining and processing, environmental objections and litigation are likely to slow things down considerably…a Trump-style president might be willing and able to blow past such constraints, but Biden/Harris, given their dependence on their party’s extreme Left, will likely find it easier to placate environmentalists by combining a US emphasis on vehicle electrification and “green” energy with a de facto sourcing policy of acquiring most of the relevant materials from outside the United States–including China–which allowing most US mining and bulk processing initiatives to bog down in red tape.

Here’s a follow-up article from Reuters.

As the IEA article notes, “green” energy represents a shift from a fuel-intensive to a materials-intensive energy system.   Few of the prominent/influential advocates of such a shift seem to have given much thought to where those required materials might actually come from.

Wind and solar are more capital-intensive than are fossil-fuel power sources, and mining requires considerable capital as well.   It seems likely to me that the worldwide push for “green” energy and electric vehicles will drive enough capital demands–whether via government or private financing–to have a material upward impact on interest rates.

Inflation…or Deflation? The Debate

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Financial writer John Mauldin has two pieces: the first one, with the argument that we should expect inflation, and the second one, arguing that the case for deflation is stronger.

Read, consider, and comment if you feel so inclined.

Four Views of Government

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1–If the king did not, without tiring, inflict punishment on those worthy to be punished, the stronger would roast the weaker, like fish on a spit.

–the laws of Manu, 1500 BC

2–Government is not reason, it is not eloquence,—it is force! Like fire, it is a dangerous servant, and a fearful master; never for a moment should it be left to irresponsible action.

–Often attributed to George Washington, although there doesn’t seem to be any evidence that he actually ever said it.

3–The speaker at a meeting,  Grant, asks: “What is the prime knowledge acquired by our race? That without the rest is useless? What flame must we guard like vestal virgins?”

Members of the group give various answers: fire, writing, the decimal system, the wheel.

“No,” says Grant, “none of those. They are all important, but they are not the keystone. The greatest invention of mankind is government. It is also the hardest of all. More individualistic than cats, nevertheless we have learned to cooperate more efficiently than ants or bees or termites. Wilder, bloodier, and more deadly than sharks, we have learned to live together as peacefully as lambs. But these things are not easy..”

–from Robert Heinlein’s novel Tunnel in the Sky, in which a group of high school kids are stranded on a planet galaxies away, and have come to accept the idea that they are probably never going to be rescued. After a period of choosing their leader by acclamation, they have now decided to hold a formal election for that purpose.

4–Government is simply the name we give to the things we choose to do together.

–Congressman Barney Frank, also Massachusetts governor Deval Patrick, and (in somewhat different form) Barack Obama.

My Assertion: The first three quotes all have elements of truth and provide useful perspectives on the problem of government; the fourth one has no such redeeming value.

(I’ve been thinking about a post along these lines for a while, finally motivated to do it by a discussion at Sarah Hoyt’s blog.)

Your thoughts?

 

 

Thinking, Making, Profiting

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256 years ago this month, James Watt made the conceptual breakthrough that enabled a much more efficient steam engine…an engine that would play a major role in driving the Industrial Revolution.  He had been thinking about possibilities for improving the coal-hungry Newcomen engine, then the best available, which lost huge amounts of heat every cycle through the successive heating and cooling of the cylinder walls:

It was in the Green of Glasgow.  I had gone to take a walk on a fine Sabbath afternoon…I was thinking upon the engine at the time…when the idea came into my mind, that as steam was an elastic body it would rush into a vacuum, and if a communication was made between the cylinder and an exhausted vessel, it would rush into it, and might be there condensed without cooling the cylinder.

But in addition to the many details involved in reducing this idea to practice, there was another problem inhibiting the creation of reasonably-efficient steam engines.  The boring of the cylinders…even when the best tools and the highest skills of the day were applied…was so imprecise that considerable quantities of steam escaped around the piston, greatly lowering the overall efficiency of the engine.

Enter Matthew Boulton, who became Watt’s partner, and John Wilkinson, a Boulton associate and foundry operator who was obsessed with all things cast iron.   Boulton and Wilkinson wanted a steam engine to provide the blast for Wilkinson’s foundry, and they wanted an engine with especially-large cylinders…which made the problem of tight cylinder/piston fit even harder to solve.

Wilkinson saw that the technology he had already developed for the very precise boring of cannon could, with some modifications, be adapted to the boring of steam engine cylinders.   Amid “searing heat and grinding din,” he achieved a cylinder, four feet in diameter, which “does not err the thickness of an old shilling at any part.”  With the combination of Watt’s separate condenser and Wilkinson’s improved boring process, the steam engine was ready for the starring role that it was to hold for the next century and beyond.

Key point: It wasn’t only the design of the improved steam engine that mattered, but also the process for making it.

What if Britain had been offshoring its foundry operations, with their “searing heat and grinding din” to another country?  Spain, let’s say.  Given the importance of the interaction between the design talent and the manufacturing talent, would the improved steam engine have been developed in the 1770s timeframe at all?  And whenever it had been developed, to which individuals and countries would the financial benefits of steam power have accrued?

The present-day parallel is the relationship between microchip designers and microchip manufacturing facilities…foundries, as they are actually called.

More about John Wilkinson, here.

“Root Causes”

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The Biden administration wants to find and solve the ‘root causes’ driving the flood of refugees to the US from the south, and has assigned that task to VP Kamela Harris  More generally, liberals and ‘progressives’ like to talk about ‘root causes’ for all kinds of things: crime, for example: instead of arresting criminals, just solve the Root Causes of crime!

Someone needs to explain to these people the concept of ask why five times, and how that concept is properly implemented.  Example:

PROBLEM: There is oil on factory floor.  Why?

Looks like it’s coming from that machine over there.

ACTION: Clean up the oil. But then ask…
WHY is there oil leaking from that machine.

The machine has a bad gasket.

ACTION: Replace the gasket. But then ask..
WHY was the gasket bad?

Check out the condition of the gaskets on some other machines.
Looks like we’ve been buying inferior gaskets.

ACTION: Change the specifications so we don’t get any more of these. But also ask..
WHY did we decide to buy the gaskets that we did?

Uhh…they were cheap? Turns out the purchasing policy for supplies like this says “always buy the low bid.”

ACTION: Change the policy to give more weight to quality as well as price. But also ask…
WHY did the head of Purchasing ever approve a policy like this in the first place?

Maybe because his *incentive program* includes a big component for year-over-year reductions in supplies cost, with no measurement for downtime impact of bad items?

ACTION: Change the incentive program.
WHY did a one-sided incentive program like this get created and approved?

And so on. (There is nothing magic about the number Five)

But importantly, you don’t wait until you run all the way up and down the chain of causation before you clean up the oil on the floor before someone slips on it and hurts himself. You don’t go through analysis of why inferior gaskets are being purchased before replacing the gaskets before the machine loses oil again and shuts down or destroys itself.

Democrat politicians often act like they don’t understand these points, even informally and intuitively. Many of them really don’t, I think…but also, many of them just don’t care; accumulation of political power for themselves and their faction is all that matters.  Among their voters/supporters, though, there may be some who can be brought to understand the fallacies of root-causes-only thinking.

And, very importantly, if you pursue the chain of causation upward to enough levels, you are likely to find causes which are either beyond your ability to influence, or for which such influence has a very long time constant.  In the manufacturing example, for instance, you may be a factory manager in a large company with very little influence on the incentive policies that drive Purchasing to acquire inferior gaskets.  That still doesn’t mean you don’t need to clean up the oil and replace the failed gaskets, anyway.  In the Biden/Harris policy case, serious thought would show that the ability of American leaders to influence the policies, economic systems, and cultures of our southern neighbors is strictly limited, and what influence we can exert is likely to have a very long time constant. That doesn’t mean we don’t need to do anything about the border crisis.