National Security

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.