Not long ago, I had the opportunity to talk with several hundred participants in an Australian Smart Energy Council webinar. It was organized to exploit my unusual timezone alignment with Oz as I spend a few weeks in New Zealand as a digital nomad. Many more signed up, expecting to listen to the recording later. That recording is under the link in the opening sentence, by the way.
The organizer Steve Blume, former President of the Council, and I thought it would be useful to answer most of the dozens of questions in articles and share with the registrants as well. This is the fourth of a few articles with responses, which will be aggregated and shared by the Council as well for participants. The first article was on aviation and maritime shipping questions, the second covered biofuels and HVDC , the third dealt with hydrogen and the fourth with fossil fuels.
The framing of my prepared remarks was the Radical Electrification of Transportation. I’ve published a lot on the subject as I’ve dug through most modes over the past 15 years.
Intro slide to Michael Barnard presentation to Australian Smart Energy Council webinar
To summarize my presentation, all ground transportation will electrify. That’s cars, trucks, buses, utility vehicles, trains, and mining vehicles. All inland shipping and two-thirds of short sea shipping will electrify, with only the longest routes requiring biofuels. Shipping and rail will also drop in tonnage due to removal of bulk fossil fuels from loads. Aviation will be disrupted by electric regional air mobility, autonomous flight, and digital air traffic control, and only trans-oceanic flights will require biofuels in 50 years.
That means the billions of tons of fossil fuels per year requirement for extraction, processing, refinement, and distribution are going away and being replaced by tens of millions of tons of technology metals such as lithium and cobalt, as well as a few hundred million tons of biofuels for aviation and maritime shipping. That’s all very doable.
The prepared remarks skimmed over all of that in 30 minutes or so, leaving far too little time for questions, and so I’ve chosen to respond to most of them in writing.
Politics & Geopolitics
Have you factored major international disruptions into your model to 2100, e.g. pandemics, geo-political conflicts?
Not really, no. At the decade-by-decade level, that’s mostly noise. COVID had a much larger impact than almost anything else, but it was dwarfed by the rise of China’s manufacturing and demand since 1990. Everything else is well below the level of COVID’s impact.
My projection assumes a few things around major geopolitics. The first is that we won’t be stupidly getting into big hot wars between superpowers. China and the USA won’t be coming to blows, Russia will be constrained to its borders more than not, and North Korea will continue to be isolated and impoverished. Fixing the problems with rogue states is a multi-decadal effort by itself, but a rounding error globally.
Global trade will continue despite noises about decoupling. There will be some symbolic decoupling and recreation of regional North American and European mineral extraction, processing and manufacturing, but absurd amounts of all of that come down to China continuing to have significant purchasing power and Wright’s Law advantages which western countries are going to be really challenged to overcome.
Pandemics will come and go, but having had a modern COVID, every country is vastly more prepared for the next COVID, whatever that will be. Having helped build the world’s most sophisticated outbreak and communicable disease management solution in the aftermath of SARS, I simply point to SARS, H1N1, Ebola, and COVID as normal events, with COVID being the one that broke through to significant global impacts. Pandemics are business as usual with some being higher and lower impacts, and trying to predict which decade they might occur in is not a useful exercise.
I do see China’s massive infrastructure build-out coming to an end, which means a very big change in demand for a lot of substances. I see India’s and Africa’s rise being slower than China’s for a variety of reasons, so the demand curves aren’t nearly as strong. I see much greater downward pressures on moving good and people as we price carbon emissions holding on until we start really reaping the benefits of cheap, efficient renewables, transmission and storage making energy really cheap, and battery energy chemistries being in place to really exploit that.
My curves do lean into demographic shifts that are eliminating population growth. The UN’s projections are still peak population in 2100, but other very credible demographics organizations are projecting much more rapid peaks, in 2070 and 2050. Personally, I find the more optimistic projections to be more likely. The huge population growth from 1960 onward is going to be flat, and that’s going to have a huge impact on demand curves.
Increasing affluence will continue, but so will increasing alternatives to flying. Witness the soon-to-be 50,000 km of high-speed electrified passenger rail in China. And unless Africa and India fix governance, the deep inequity will continue to leave only a small percentage of rich people able to fly.
My demand curves for the last 25 years of the century are even more nebulous than the ones for the preceding decades. Food for thought and argument, not something to be considered remotely reliable.
Based on your modeling, what are the optimal solutions for energy importing economies such as South Korea and Japan to meet their decarbonization targets?
Same as everywhere else. As much onshore wind and solar as there is good resource for. Ditto offshore wind, which both countries have lots of room for in territorial waters. HVDC cables in all directions. Israel is getting connected to Europe with a 1,200 km undersea HVDC cable, so the 90 km from Japan to South Korea and the 350 km from South Korea to China are trivial distances. Pumped hydro where there is resource availability (and there’s lots) and batteries for a bunch of the rest. Energy interconnection a lot more than energy importing.
Moving molecules for energy isn’t necessary in the future when using renewable electricity directly is so much more efficient and it’s cheap and easy to generate renewable electricity. The transition will be fraught, but what transition isn’t?
Technically and economically, electrifying most things makes sense to many. There are communities that may not agree with this approach, particularly if they do not see individual or community benefit, which then has an influence in politics. How do we overcome or deal with the opposition to massive electrification?
Two things are going to kick resistance to the curb. The first is European leadership. It remains the second or third biggest economy in the world depending on where you draw the boundaries, does massive trade with every other economy in the world, and it’s going to start pricing carbon at its borders in 2026 with the carbon border adjustment mechanism. That’s based on its cap and trade emissions trading scheme, something very similar to California’s and China’s. Chinese business executives are well aware of this, as I was unsurprised to find when presenting to a group of them in Dalian near Beijing recently on Europe’s decarbonization plans.
The European carbon price has been butting up against €100 for a couple of years, is seeing more and more commodities and industries swept into it, is seeing fewer and fewer grants of entitlements like those to aviation and will continue to increase in price. Jurisdictions without carbon prices will be increasingly uncompetitive in European markets. Given that China has a carbon price and it’s going to see the same trajectory as Europe’s, which economy in the world is going to look at that and say that they aren’t going to decarbonize?
The second reason is China. It’s the only scaled manufacturer of a very large percentage of the technologies required to decarbonize, from electric cars to wind turbines to solar panels to batteries. And because it’s massively scaled, those technologies are increasingly cheap to buy, and because those technologies are so efficient and cheap to operate, they are strongly preferred coming and going by buyers globally. I know Goldwind has a strong presence in Australia’s wind energy as an acquaintance works for them, as an example.
China is also approaching a tipping point where its economy is going to decarbonize rapidly. It’s electrifying its economy vastly more rapidly than any other country in the world and it’s building more low carbon generation, transmission and storage than any country in the world. Yes, it’s building coal plants to balance the grid, but they are running at 55% capacity factors and that percentage will decline rapidly in the coming years as they get shut down because they are unneeded.
Among other things, China just launched a 1,000 km route Yangtze electrified small container ship with swappable containerized batteries, and is about to launch another. They are going to electrify all of their massive inland water freight just as they have electrified most intercity freight and passenger miles with high-speed rail and most buses and trucks with battery electric vehicles. Industry is coming next, and it will be blindingly swift as well.
Decarbonizing electricity system: What is the most likely long duration storage where pumped hydro is not an option, e.g. West Australia?
Well, West Australia has a lot more pumped hydro resource off protected land and near transmission than you think, I suspect. The link is to the ANU pumped hydro atlas. There’s quite a bit, but it’s not in the interior.
But I rate redox flow batteries as the long duration storage solution that will be biggest after pumped hydro.
On value-added minerals processing & recycling, what is your advice on Australia’s potential engagement with China to learn on what they have been doing on this? Any examples of collaboration in LATAM, AFRICA, ASEAN Australia should be aware of?
My guidance will be somewhat trite and superficial in this as there is a deep history between the two countries that I’m only somewhat aware of. Among other things, I was surprised to find that the previous federal administration actually canceled Victoria state Belt & Road Initiative agreements.
That said, there are some obvious things to do. Lean into the reality that China is Australia’s biggest bi-lateral trading partner. Lean into the reality that Australia is part of APAC, not the west, regardless of history. Work with ASEAN partners to identify the right contacts. Leverage existing mineral extraction relationships with China to seek out potential knowledge sharing opportunities. Establish joint Chinese-Australian research programs between Chinese and Australian firms. Invite Belt & Road Initiative efforts to establish minerals value add including iron manufacturing with green hydrogen created with Chinese electrolyzers.
As I said, trite and obvious. Also really hard to do gracefully in the weird political climate at the moment.
Regarding other geographical examples, I don’t have good ones to share, I’m afraid. It’s an interesting question though, so I’ll pay attention and hopefully find some.
What is your view of the battery cost curve going forward? It seems that cost reductions have slowed in recent years, or has this been a short-term effect because demand is increasing faster than new supply can ramp up?
That’s a market demand vs supply bump. What’s going to happen is what has happened for the past twenty years, which is that battery energy capacity will go up for the same price and weight point. Further, the higher market price for Li-ion means that other chemistries which are suitable for other market segments, like grid storage, have a real opportunity to move.
Batteries come with a lot of different components, and most new chemistries like LFP and silicon chemistries that use cell-based batteries can leverage the economies of manufacturing scale of that lithium-ion has created. Pouch-based batteries can gain the advantages that the laptop and smartphone industries created. That’s a point Vincent Pluvinage, CEO and co-founder of silicon nanowire innovator OneD Battery Sciences made to me recently when we spoke.
New chemistries with well differentiated characteristics can get to market at a much cheaper price point much more quickly than was previously possible.
And so, another set of Australian questions about decarbonization, electrification of transportation, hydrogen, and the future of Australia’s role in the world asked and answered.
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