No Soil & Water Before 100% Renewable Energy

7 09 2017

Hot on the heels of my last post from someone else who has given up campaigning for renewable energy, comes this amazing article that defines why it’s all a futile effort…. I am beginning to think it is all starting to catch on…..

After all, excessive energy use got us into this mess, more energy will not get us out. As Susan Krumdieck says, the problem is not a lack of renewable energy, it’s too much fossil fuel consumption…….


Many say we can have 100% renewable energy by 2050. This is factually incorrect.

We can have 100% renewable electricity production by 2050.

But electricity production is only 18% of total world energy demand.

82% of total world energy demand is NOT electricity production.

The other 82% of the world’s energy is used to extract minerals to make roads, cement, bricks, glass, steel and grow food so we can eat and sleep. Solar panels and wind turbines will not be making cement or steel anytime soon. Why? Do you really want to know? Here we go.

TWED = Total World Energy Demand

18% of TWED is electrical grid generation.

82% of TWED is not electrical grid generation.

In 20 years, solar & wind energy is up from 1% to 3% of TWED.

Solar & wind power are projected to provide 6% of TWED by 2030.

When you hear stories about solar & wind generating
50% of all humanity’s electrical power by 2050,
that’s really only 9% of TWED because
100% of electrical production is 18% of TWED.

But, it takes 10X as much solar & wind energy to close 1 fossil fuel power plant simply because they don’t produce energy all the time.

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That means it will take 10 X 18% of TWED to close all fossil power plants with intermittent power.

Research says it will take 4 X 82% of TWED for a 100% renewable energy transition. But then again, whoever trusts research?

10 X 18% + 4 X 82% = 100% Renewable TWED.

We require 10X the fossil electrical grid energy we use now just to solve 18% of the emissions problem with solar & wind power. This also means that even if we use 100% efficient Carbon Capture and Storage (CCS) for all the world’s electricity generation, we would still only prevent 18% of our emissions. 100% efficient CCS is very unlikely. Switching to electric vehicles would only double electrical demand while most of our roads are made out of distilled oil sludge.

These figures do not include massive electrical storage and grid infrastructure solar & wind require. Such infrastructure is hundreds of millions of tons of materials taking decades to construct, demanding even more energy and many trillions of dollars. With that kind of money in the offing, you can see why some wax over-enthused.

Solar & wind systems last 30 years meaning we will always have to replace them all over the world again 50% sooner than fossil power plants.

Solar and wind power are an energy trap.

It takes 1 ton of coal to make 6-12 solar panels.

Business As Usual = BAU

In 15 years 40% of humanity will be short of water with BAU.

In 15 years 20% of humanity will be severely short of water.

Right now, 1 billion people walk a mile every day for water.

In 60 years humanity will not have enough soil to grow food says Scientific American. They call it, “The End of Human Agriculture.” Humanity’s soil is eroding and degrading away at 24 million acres per year.  And, when they say 60 years they don’t mean everything is wonderful until the last day of the 59th year. We will feel the heat of those words in much less than 30 years. Soil loss rates will only increase with severe droughts, storms and low-land floods. Here’s what BAU really looks like.

50% of humanity’s soil will be gone in 30 years.

50% of humanity will lack water in 30 years.

50% of humanity will go hungry in 30 years.

100% TWED transition takes 50 years minimum. It is a vastly more difficult and complex goal than you are told.

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We are losing earth’s soil and fresh water faster than we can effect 100% renewable TWED.

In 25 years civilization will end says Lloyds of London and the British Foreign Office.

In my opinion, in 30 years we won’t have enough fossil fuel for a 100% renewable TWED transition.

This is the most important fact I’ve learned:

Renewable Energy is Unsustainable
without massive energy demand destruction

Humanity will destroy its soil and water faster than we can switch to renewable energy with BAU. We cannot sustain economic growth with renewable energy. Without massive political-economic change, civilization will collapse with 100% certainty. But, don’t worry, I like to fix things.

Animal Agriculture = AA

Humans + Livestock = 97% of the weight of all land vertebrate biomass

Humans + Livestock = 80% of the cause of all land-air extinctions

Humans + Livestock = 50% of the use of all land surface area

Humans + Livestock = 40% consumption of all land plant growth *
* Net Primary Production.

50% of the soy grown in South America is shipped over to China to feed their pigs. Rainforests and deep-rooted scrub are cleared to grow animals & feed so that their required fresh water is in reality a sky river exported in boats to China and Europe leaving little moisture in the air to reach São Paulo. Since rainforest roots are so thick they don’t require very much, or even good, soil;  this leaves rainforest soil so poor and thin that it degrades and erodes faster when exposed to the elements.

The Himalayan mountains are heating 2X faster than the planet and many fear that China will run out of water in 15 years by 2030.

50% of China’s rivers have vanished since 1980.

60% of China’s groundwater is too poisoned to touch.

50% of China’s cropland is too poisoned to safely grow food.

Animal Agriculture will destroy our soil and water long before we can effect 100% intermittent TWED transition with BAU.

BAU means 7 billion people will not stop eating meat and wasting food without major $$$ incentive. Meaning a steadily rising carbon tax on meat. Just saying that can get you killed in some places.

Without using James Hansen’s 100% private tax dividends to carbon tax meat consumption out of the market earth will die. 100% private tax dividends means 100% for you, 0% for government.

100% for you, 
    0% for gov.

The funny thing is that meat and fire saved our ancestors from extinction and now meat and fire will cause mass extinction of all the life we love on earth. Survival is not an optional menu item as is eating meat. We have to act now, not 5 years from now, or forever be not remembered as the least greatest generation because there’ll be no one left to remember us.

Michael Mann says we will lock-in a 2 degree temperature rise in 3 years for 2036 with BAU. Ocean fish will be gone in less than 25 years simply because of the BAU of meat consumption. The BAU of fishing kills everything in its path producing lots of waste kill. We are stealing all the Antarctic Ocean’s krill just to sell as a health supplement. You can learn a lot about fishing by watching “Cowspiracy” on Netflix.

We cannot let governments get control of carbon markets like how Sanders, Klein and McKibben want government to get 40% of your carbon tax dividend money. Naomi Klein and Bill McKibben are funded by the Rockefellers. Klein’s latest video about herself was funded by the oil-invested Ford Foundation. This is 100% in direct opposition to James Hansen’s tax dividend plan and immoral. Hansen said that governments should get 0% of that money, not 40%.  I strongly believe your carbon dividends should be in a new open-source world e-currency directly deposited to your phone to be phased in over 10 years. But, I’m kinda simple that way.

Google: Rockefellers fund Bill McKibben. Believe me, the Rockefellers don’t fund out of the kindness of their hearts. To learn why they would do such a thing, you can watch the educational video at the bottom of this page.

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Rockefellers behind ‘scruffy little outfit’

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James Hansen repeated at COP21 that his 100% private carbon tax dividends would unite Democrats and Republicans because government would be 100% excluded. Socialists like Sanders, Klein and McKibben want government to control 40% of that money. They are divisive and Republicans will never accept their revolutionary rhetoric. We don’t have time for this endless fighting. Forget the Socialist vs. Capitalistmentality. We barely even have time to unite, and nothing unites like money. Environmentalism in the 21st century is about a revolving door of money and power for elite socialists and capitalists. Let’s give everyone a chance to put some skin in the game.

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What humans & livestock have done so far:

We are eating up our home.

99% of Rhinos gone since 1914.

97% of Tigers gone since 1914.

90% of Lions gone since 1993.

90% of Sea Turtles gone since 1980.

90% of Monarch Butterflies gone since 1995.

90% of Big Ocean Fish gone since 1950.

80% of Antarctic Krill gone since 1975.

80% of Western Gorillas gone since 1955.

60% of Forest Elephants gone since 1970.

50% of Great Barrier Reef gone since 1985.

40% of Giraffes gone since 2000.

30% of Marine Birds gone since 1995.

70% of Marine Birds gone since 1950.

28% of Land Animals gone since 1970.

28% of All Marine Animals gone since 1970.

97% – Humans & Livestock are 97% of land-air vertebrate biomass.

10,000 years ago we were 0.01% of land-air vertebrate biomass.

Humans and livestock caused 80% of land-air vertebrate species extinctions and occupy half the land on earth. Do you think the new 2-child policy in China favours growth over sustainability? The Zika virus could be a covert 1% population control measure for all I know. Could the 1% be immune? I don’t know, but I know this…

1 million humans, net, added to earth every 4½ days.


Lithium’s limits to growth

7 08 2017

The ecological challenges of Tesla’s Gigafactory and the Model 3

From the eclectic brain of Amos B. Batto

A long but well researched article on the limitations of the materials needed for a transition to EVs…..


Many electric car advocates are heralding the advent of Tesla’s enormous battery factory, known as the “Gigafactory,” and its new Model 3 electric sedan as great advances for the environment.  What they are overlooking are the large quantities of energy and resources that are consumed in lithium-ion battery manufacturing and how these quantities might increase in the future as the production of electric vehicles (EVs) and battery storage ramps up.

Most of the credible life cycle assessment (LCA) studies for different lithium-ion chemistries find large large greenhouse gas emissions per kWh of battery. Here are the CO2-eq emissions per kWh with the battery chemistry listed in parentheses:
Hao et al. (2017): 110 kg (LFP), 104 kg (NMC), 97 kg (LMO)
Ellingsen et al. (2014): 170 kg (NMC)
Dunn et al. (2012): 40 kg (LMO)
Majeau-Bettez et al. (2011): 200 kg (NMC), 240 kg (LFP)
Ou et al (2010): 290 kg (NMC)
Zackrisson et al (2010): 440 kg (LFP)

Dunn et al. and Hao et al. are based on the GREET model developed by Argonne National Laboratory, which sums up the steps in the process and is based on the estimated energy consumption for each step. In contrast, Ellingsen et al. and Zackrisson et al. are based on the total energy consumption used by a working battery factory, which better captures all the energy in the processing steps, but the data is old and the battery factory was not very energy efficient, nor was it operating at full capacity. Battery manufacturing is getting more energy efficient over time and the energy density of the batteries is increasing by roughly 7% a year, so less materials are needed per kWh of battery. It is also worth noting that no LCA studies have been conducted on the NCA chemistry used by Tesla. NCA has very high emissions per kg due to the large amount of nickel in the cathode, but is very energy dense, so less total material is needed per kWh, so it is probably similar in emissions to NMC.

The big debate in the LCA studies of battery manufacturing is how much energy is consumed per kWh of battery in the battery factory. In terms of MJ per kWh of battery, Ellingsen et al. estimate 586 MJ, Zachrisson et al. estimate 451 MJ and Majeu-Bettez et al. estimate 371-473 MJ. However, the energy for the drying rooms and factory equipment is generally fixed, regardless of the throughput. Ellingsen et al (2014) found that the energy expended to manufacture a kWh of battery could vary as much as 4 times, depending on whether the factory is operating at full capacity or partial capacity. Since the Gigafactory will probably be operating a full capacity and energy efficiency is improving, let’s assume between 100 MJ and 150 MJ per kWh of battery in the Gigafactory (which converts to 28 – 42 kWh per kWh of battery). It is unlikely to be significantly less, because it is more energy efficient to burn natural gas for the drying rooms than use electric heaters, but the Gigafactory will have to use electric heaters to meet Musk’s goal of 100% renewable energy.

If producing 105 GWh of batteries per year at 100 – 150 MJ per kWh, plus another 45 GWh of packs with batteries from other factories at 25 MJ per kWh, the Gigafactory will consume between 3,229 and 4,688 GWh per year, which is between 8.3% and 12.0% of the total electrical generation in Nevada in 2016. I calculate that 285 MW of solar panels can be placed on the roof of the Gigafactory and they will only generate 600 GWh per year, assuming a yearly average of 7.16 kWh/m2/day of solar radiation, 85% (1.3 million m2) of the roof will be covered, 20% efficiency in the panels and a 10% system loss.

Solar panels in dusty locations such as Nevada loose roughly 25% of their output if they are not regularly cleaned. Although robots have been developed to clean panels with brushes, water will most likely be used to clean the Gigafactory’s panels. A study by Sandia National Laboratory found that photovoltaic energy plants in Nevada consume 0.0520 acre-feet of water per MW of nameplate capacity per year. The solar panels at the Gigafactory will probably have 25% less area per MW than the solar panels in the Sandia study, so we can guesstimate that the solar panels on the Gigafactory roof will consume 11.1 acre-feet or 13,700 cubic meters of water per year.

Solar panels can also be placed on the ground around the factory, and but consider the fact that the Gigafactory will only receive 4.23 kWh/m2/day in December, compared to 9.81 kWh/m2/day in July. With less than half the energy from the panels during the winter, the Gigafactory will need other sources of energy during the times when it is cloudy and the sun’s rays are more indirect. Even during the summer, the Gigafactory will probably have to use temporary battery storage to smooth out the solar output or get additional energy with electric utilities which use gas peaking, battery storage or buy energy from the regional grid to give the Gigafactory a stable supply of electricity.

The original mockup of the Gigafactory showed wind turbines on the hillsides around the plant, but wind energy will not work onsite, because the area has such low wind speed. A weather station in the Truckee River valley along I-80, near the Gigafactory, measures an average wind speed of 3.3 m/s at a height of 6 meters, although the wind speed is probably higher at the site of the Gigafactory. Between 4 to 5 m/s is the minimum wind speed to start generating any energy, and between 5 and 6 m/s is generally considered the minimum for wind turbines to be economically viable. It might be possible to erect viable wind turbines onsite with 150 m towers to capture better wind, but the high costs make it likely that Tesla will forgo that option.

The region has good geothermal energy at depths of 4000 to 6000 feet and this energy is not variable like solar and wind. However, there is a great deal of risk in geothermal exploration which costs $10 million to drill a test well. It is more likely that Tesla will try to buy geothermal energy from nearby producers, but geothermal energy in the region is already in heavy demand, due to the clean energy mandates from California, so it won’t be cheap.

Despite Musk’s rhetoric about producing 100% of the Gigafactory’s energy onsite from renewable sources, Tesla knows that it is highly unrealistic, which is why it negotiated to get $8 million in electricity rebates from the state of Nevada over an 8 year period. It is possible that the Gigafactory will buy hydroelectric energy from Washington or Oregon, but California already competes for that electricity. If Tesla wants a diversified supply of renewable energy to balance out the variability of its solar panels, it will probably have to provide guaranteed returns for third parties to build new geothermal plants or wind farms in the region.

I would guesstimate that between 2/3 of the electricity consumed by the Gigafactory will come from the standard Nevada grid, whereas 1/3 will be generated onsite or be bought from clean sources. In 2016, utility-scale electricity generation in Nevada was 72.8% natural gas, 5.5% coal, 4.5% hydroelectric, 0.9% wind, 5.7% PV solar, 0.6% concentrated solar, 9.8% geothermal, 0.14% biomass and 0.03% petroleum coke. If we use the grams of CO2-eq per kWh estimated by IPCC AR5 WGIII and Bruckner et al (2014), then natural gas emits 595 g, coal emits 1027 g, petroleum emits 880 g, hydroelectric emits 24 g, terrestrial wind emits 11 g, utility PV solar emits 48 g, residential PV solar emits 41 g, concentrated solar emits 27 g, geothermal emits 38 g and biomass emits 230 g. Based on those emission rates, grid electricity in Nevada emits 499 g CO2-eq per kWh. If 2/3 comes from the grid and 1/3 comes from rooftop PV solar or a similar clean source, then the electricity used in the Gigafactory will emit 346 g CO2 per kWh. If consuming between 3,229 and 4,688 GWh per year, the Gigafactory will emit between 1.12 and 1.62 megatonnes of CO2-eq per year, which represents between 3.1% and 4.5% of the greenhouse gas emissions that the state of Nevada produced in 2014 according to the World Resources Institute.

Aside from the GHG emissions from the Gigafactory, it is necessary to consider the greenhouse gas emissions from mining, refining and processing the materials used in the Gigafactory. The materials used in batteries consume a tremendous amount of energy and resources to produce. The various estimates of the energy to produce the materials in batteries and their greenhouse gas emissions shows the high impact that battery manufacturing has on the planet.


To get some idea of how much materials will be used in the NCA cells produced by the Gigafactory, I attempted to do a rough calculation of the weight of materials in 1 kWh of cells. Taking the weight breakdown of an NMC battery cell in Olofsson and Romare (2013), I used the same weight percentages for the cathode, electrolyte, anode and packaging, but scaled the energy density up from 233 kW per kg in the NCA cells in 2014 to 263 kW per kg, which is a 13% increase, since Telsa claims a 10% to 15% increase in energy density in the Gigafactory’s cells. Then, I estimated the weight of the components in the cathode, using 76% nickel, 14% cobalt, and 10% aluminum and some stochiometry to calculate the lithium and oxygen compared to the rest of the cathode materials. The 2170 cells produced by the Gigafactory will probably have different weight ratios between their components, and they will have more packaging materials than the pouch cells studied by Olofsson and Romare, but this provides a basic idea how much material will be consumed in the Tesla cells.


The estimates of the energy, the emissions of carbon dioxide equivalent, sulfur dioxide equivalent, phosphorous equivalent and human toxicity to produce the metals are taken from Nuss and Eckelman (2014), which are process-sum estimates based on the EcoInvent database. These are estimates to produce generic metals, not the highly purified metals used in batteries, and the process-sum methodology generally underestimates the emissions, so the estimates should be taken with a grain of salt but they do give some idea about the relative impact of the different components in battery cells since they use the same methodology in their calculations.

At this point we still don’t know how large the battery will be in the forthcoming Model 3, but it has been estimated to have a capacity of 55 kWh based on a range of 215 miles for the base model and a 20% reduction in the size of the car compared to the Model S. At that battery size, the cells in the Model 3 will contain 6.3 kg of lithium, 26.4 kg of nickel, 4.9 kg of cobalt, 27.9 kg of aluminum, 56.6 kg of copper and 21.0 kg of graphite.

Even more concerning is the total impact of the Gigafactory when it ramps up to its planned capacity of 150 GWh per year. Originally, the Gigafactory was scheduled to produce 35 GWh of lithium ion batteries by 2020, plus package an additional 15 GWh of cells produced in other factories. After Tesla received 325,000 preorders for the Model 3 within a week of being announced on March 31, 2016, the company ambitiously announced that it would triple its planned battery production and be able to produce 500,000 cars a year by 2018–two years earlier than initially planned. Now Elon Musk is talking about building 2 to 4 additional Gigafactories and one is rumored to have signed a deal to build one of them in Shanghai.

If the components for 1 kWh of Gigafactory batteries is correct and the Nevada plant manages to produce as much as Musk predicts, then the Gigafactory and the cells it packages from other battery factories will consume 17,119 tonnes of lithium, 71,860 tonnes of nickel, 13,292 tonnes of cobalt, 154,468 tonnes of copper and 75,961 tonnes of aluminum. All of these metals except aluminum have limited global reserves, and North America doesn’t have enough production capacity to hope to supply all the demand of the Gigafactory, except in the case of aluminum and possibly copper.


When the Gigafactory was originally announced, Telsa made statements about sourcing the battery materials from North America which would both reduce its costs and lower the environmental impact of its batteries. These claims should be treated with skepticism. The Gigafactory will reduce the transportation emissions in battery manufacturing, since it will be shipping directly from the refineries and processors, but the transportation emissions will still be very high because North America simply doesn’t produce enough of the metals needed by the Gigafactory. If the Gigafactory manufacturers 150 GWh of batteries per year, then it will consume almost 200 times more lithium than North America produced in 2013. In addition, it will also consume 166% of the cobalt, 133% of the natural graphite, 25.7% of the nickel, and 5.6% of the copper produced by North American mines in 2016. Presumably synthetic graphite will be used instead of natural graphite because it has a higher purity level of carbon and more uniform spheroid flakes which allow for the easier flow of electrons in the cathode, but most synthetic graphite comes from Asia. Only in the case of aluminum does it seem likely that the metal will come entirely from North America, since Gigafactory will consume 1.9% of North American mine production and the US has excess aluminum refining capacity and no shortage of bauxite. Even when considering that roughly 45 GWh of the battery cells will come from external battery factories which are presumably located in Asia, the Gigafactory will overwhelm the lithium and cobalt markets in North America, and strain the local supplies of nickel and copper.


Shipping from overseas contributes to greenhouse gases, but shipping over water is very energy efficient. The Gigafactory is located at a nexus of railroad lines, so it can efficiently ship the battery materials coming from Asia through the port of Oakland. The bigger problem is that most ships on international waters use dirty bunker fuels that contain 2.7% sulfur on average, so they release large quantities of sulfur dioxide into the atmosphere that cause acid rain and respiratory diseases.

A larger concern than the emissions from shipping is the fact that the production of most of these battery materials is an energy intensive process that consumes between 100 and 200 mejajoules per kg. The aluminum, copper, nickel and cobalt produced by North America is likely to come from places powered by hydroelectric dams in Canada and natural gas in the US, so they are comparatively cleaner.  Most of the metal refining and graphite production in Asia and Australia, however, is done by burning coal. Most of the places that produce battery materials either lack strong pollution controls, as is the case in Russia, the Democratic Republic of Congo (DRC), Zambia, Philippines or New Caledonia, or they use dirty sources of energy, as is the case in China, India, Australia, the DRC, Zambia, Brazil and Madagascar.


Most of the world’s lithium traditionally came from pumping lithium rich subsurface water out of the salt flats of Tibet, northeast Chile, northwest Argentina and Nevada, but the places with concentrated lithium brines are rapidly being exhausted. The US Geological Survey estimates that China’s annual production of lithium which mostly comes from salt flats in Tibet has fallen from 4500 tonnes in 2012 to just 2000 tonnes in 2016. Silver Peak, Nevada, which is the only place in North America where lithium is currently extracted, may be experiencing similar production problems due to the exhaustion of its lithium, but its annual production numbers are confidential.

Since 1966 when brine extraction began in Silver Peak, the concentration of lithium in the water has fallen from 360 to 230 ppm (parts per million), and it is probably around 200 ppm today. At that concentration of lithium, 14,300 liters of water need to be extracted to produce 1 kg of battery-grade lithium metal. This subsurface water is critical in a state that only receives an average of 9 inches of rain per year. Parts of Nevada are already suffering from water rationing, so a massive expansion of lithium extraction is an added stress, but the biggest risk is that brine operations may contaminate the ground water. 30% of Nevada’s water is pumped from underground aquifers, so protecting this resource is vitally important. Lithium-rich water is passed through a series of 4 or 5 evaporation pools over a series of 12 to 18 months, where it is converted to lithium chloride, which is toxic to plants and aquatic life and can contaminate the ground water. Adams-Kszos and Stewart (2003) measured the effect of lithium chloride contamination in aquatic species 150 miles away from brine operations in Nevada.

As the lithium concentrations fall in the water, more energy is expended in pumping water and evaporating it to concentrate the lithium for processing. Argonne National Laboratory estimates that it takes 3 times as much energy to extract a tonne of lithium in Silver Peak, Nevada as in the Atacama Salt Flats of Chile, where the lithium is 7 times more concentrated.  Most of the lithium in Chile and Argentina is produced with electricity from diesel generators, but in China and Australia it comes from burning coal, which is even worse.

For every kg of battery-grade lithium, 4.4 kg of slaked lime is consumed to remove magnesium and calcium from the brine in Silver Peak. The process of producing this lime from limestone releases 0.713 kg of COfor every kg of lime. In addition, 5 kg of soda ash (Na2CO3) is added for each kilo of battery-grade lithium to precipitate it as lithium carbonate. Production of soda ash is also an energy intensive process which produces greenhouse gases.

Although lithium is an abundant element and can be found in ocean water and salty lakes, there are only 4 places on the planet where it is concentrated enough without contaminants to be economically extracted from the water and the few places with concentrated lithium water are rapidly being exploited. In 2008, Meridian International estimated that 2 decades of mining had extracted 20% of the lithium from the epicenter of the Atacama Salt Flats where lithium concentrations are above 3000 ppm. According to Meridian’s calculations, the world only had 4 million tonnes of high-concentration lithium brine reserves remaining in 2008.

As the best concentrations of lithium brine are being exhausted, extraction is increasingly moving to mining pegmatites, such as spodumene. North Carolina, Russia and Canada shut down their pegmatite operations because they couldn’t compete with the cheap cost of lithium from the salt flats of Chile and Argentine, but Australia and Zimbabwe have dramatically increased their production of lithium from pegmatites in recent years. Between 2004 and 2016, the percentage of global lithium from pegmatites increased from 39% to 44%.


In 2016, Australia produced 40.9% of the global lithium supply by processing spodumene, which is an extremely energy-intensive process. It takes 125 MJ of energy to extract a kilo of lithium from Chile’s salt flats, whereas 850 MJ is consumed to extract the same amount of lithium from spodumene in Australia. The spodumene is crushed, so it can be passed through a flotation beneficiation process to produce a concentrate. That concentrate is then heated to 1100ºC to change the crystal structure of the mineral. Then, the spodumene is ground and mixed with sulfuric acid and heated to 250ºC to form lithium sulfate. Water is added to dissolve the lithium sulfate and it is filtered before adding soda ash which causes it to precipitate as lithium carbonate. As lithium extraction increasingly moves to pegmatites and salt flats with lower lithium concentrations, the energy consumption will dramatically increase to produce lithium in the future.

Likewise, the energy to extract nickel and cobalt will also increase in future. The nickel and cobalt from Canada and the copper from the United States, generally comes from sulfide ores, which require much less energy to refine, but these sulfide reserves are limited. The majority of nickel and cobalt, and a sizable proportion of the copper used by the Gigafactory will likely come from places which present ethical challenges. Nickel from sulfide ores generally consumes less than 100 MJ of energy per kg, whereas nickel produced from laterite ores consumes between 252 and 572 MJ per kg. All the sulfide sources emit less than 10 kg of CO2 per kg of nickel, whereas the greenhouse gas emissions from laterite sources range from 25 to 46 kg  CO2 per kg of nickel. It is generally better to acquire metals from sulfide ores, since they emit fewer greenhouse gases and they generally come from deeper in the ground, whereas laterite ores generally are produced by open pit and strip mining which causes greater disruption of the local ecology. Between 2004 and 2016, the percentage of global primary production of nickel from laterite ores increase from 40% to 60% and that percentage will continue to grow in the future, since 72% of global nickel “resources” are laterites according to the US Geological Survey.


Cobalt is a byproduct of copper or nickel mining. The majority of the sulfide ores containing copper/cobalt are located in places like Norilsk, Russia, Zambia and the Katanga Province of the Democratic Republic of Congo, where there are no pollution controls to capture the large amounts of sulfur dioxide and heavy metals released by smelting. The refineries in Norilsk, Russia, which produce 11% of the world’s nickel and 5% of its cobalt, are so polluting, that nothing grows within a 20 kilometer radius of the refineries and it is reported that Norilsk has the highest rates of lung cancer in the world.

The Democratic Republic of Congo currently produces 54% of the world’s cobalt and 5% of its copper. Buying cobalt from the DRC helps fuel a civil war in the Katanga Province where the use of children soldiers and systematic rape are commonplace. Zambia, which is located right over the border from Katanga Province, produces 4% of the world’s cobalt and copper and it also has very lax pollution controls for metal refining.

Most of the cobalt and nickel produced by the DRC and Zambia is shipped to China for refining by burning coal. China has cracked down on sulfur dioxide and heavy metal emissions in recent years, and now the DRC is attempting to do more of the refining within its own borders. The problem is that the DRC produces most of its energy from hydroelectric dams in tropical rainforests, which is the dirtiest energy on the planet. According to the IPCC (AR5 WGIII 2014), hydroelectric dams typically emit a medium of 24 g of  CO2-eq per kWh, but tropical dams accumulate large amounts of vegetation which collect at the bottom of the dam where bacteria feeding on the decaying matter release methane (CH4) in the absence of oxygen. There have been no measurements of the methane released by dams in the DRC, but studies of 3 Amazonian hydroelectric dams found that they emit an average of 2556 g CO2-eq per kWh. Presumably the CO2 from these dams would have been emitted regardless of whether the vegetation falls on the forest floor or in a dam, but rainforest dams are unique environments without oxygen that produces methane. If we only count the methane emissions, then Amazonian hydroelectric dams emit an average of 2044 g CO2-eq per kWh. Any refining of copper/cobalt in the DRC and Zambia or nickel/cobalt in Brazil will likely use this type of energy which emits twice as much greenhouse gases as coal.

To avoid the ethical problems with obtaining nickel and cobalt from Russia and cobalt and copper from the DRC and Zambia, the Gigafactory will have to consume metals from laterite ores in places like Cuba, New Caledonia, Philippines, Indonesia and Madagascar, which dramatically increases the greenhouse gas emissions of these metals. The nickel/cobalt ore from Moa, Cuba is shipped to Sherritts’ refineries in Canada, so presumably it will be produced with pollution controls in Cuba and Canada and relatively clean sources of energy. In contrast, the nickel/cobalt mining in the Philippines and New Caledonia has generated protracted protests by the local population who are effected by the contamination of their water, soil and air. When Vale’s $6 billion high pressure acid leaching plant in Goro, New Caledonia leaked 100,000 liters of acid-tainted effluent leaked into a local river in May 2014, protesters frustrated by the unaccountability of the mining giant burned a third of its trucks and one of its buildings, causing between $20 and $30 million in damages. The mining companies extracting nickel and cobalt in the Philippines have shown so little regard for the health of the local people, that the public outcry induced the Duterte administration to recently announce that it will prohibit all open pit mining of nickel. If this pronouncement is enforced, the operations of 28 of the 41 companies mining nickel/cobalt in the country will be shut down and the global supply of nickel will be reduced between 8% and 10%.

Most refining of laterite ores in the world is done with dirty energy, which is problematic because these ores require so much more energy than sulfide ores. Much of the copper/cobalt from the DRC and Zambia and the nickel/cobalt from the Philippines is shipped to China where it is refined with coal. The largest nickel/cobalt laterite mine and refinery in the world is the Ambatovy Project in Madagascar. Although the majority of the electricity on the island comes from hydroelectric dams, the supply is so limited that Ambatovy constructed three 30 MW coal-powered generators, plus 30 MW diesel powered generators.

It is highly likely that many of the LCA studies of lithium-ion batteries have underestimated the energy and greenhouse gas emissions to produce their metals, because they assume that the lithium comes from brine operations and the copper, nickel and cobalt come from sulfide ores with high metal concentrations. As lithium extraction increasingly shifts to spodumene mining and nickel and cobalt mining shifts to laterite ores, the greenhouse gas emissions to produce these metals will dramatically increase.

As the global production of lithium-ion batteries ramps up, the most concentrated ores for these metals will become exhausted, so that mining will move to less-concentrated sources, which require more energy and resources in the extraction and processing.  In 1910, copper ore in the US contained 1.9% copper. By 1950, this percentage had fallen to 0.9% copper, and by 1980 it was at 0.5% copper. As the concentration of copper in the ore has fallen, the environmental impact of extraction has risen. In a study of the smelting and refining of copper and nickel, Norgate and Rankin (2000) found that the energy consumption, greenhouse gas emissions and sulfur dioxide emissions per kg of metal rose gradually when changing from ore with 3% or 2% metal to 1% metal, but below 1% the environmental impacts increased dramatically. MJ/kg, CO2/kg and SO2/kg doubled when moving from ore with 1% metal to ore with 0.5% metal, and they doubled again when moving to 0.25% metal. Producing a kilo of copper today in the US has double the environmental impact of a kg of copper half a century ago and it will probably have 4 times the impact in the future.

The enormous demand for metals by battery manufacturers will force the mining companies to switch to less and less concentrated ores and consume more energy in their extraction. If the Nevada Gigafactory produces 150 GWh of batteries per year, then it will dramatically reduce the current global reserves listed by the US Geological survey. The Nevada Gigafatory will cut the current global lithium reserves from 400 to 270 years, assuming that current global consumption in other sectors does not change (which is highly unlikely). If the Gigafactory consumes metals whose recycled content is the US average recycling rate, then the current global copper reserves will be reduced from 37.1 to 36.9 years, the nickel reserves from 34.7 to 33.9 years, and the cobalt reserves from 56.9 to 52.5 years.

Recycling at the Gigafactory will not dramatically reduce its demand for metals. If we assume that 80% of the metal consumed by the Gigafactory will come from recycled content starting in 15 years when batteries start to be returned for recycling, then current global reserves will be extended 0.04 years for copper, 0.09 years for nickel, 0.9 years for cobalt. Only in the case of lithium will recycling make a dramatic difference, extending the current reserves 82 years for lithium.

The prospects for global shortages of these metals will become even more dire if the 95.0 million vehicles that the world produced in 2016 were all long-range electrics as Elon Musk advocates for “sustainable transport.” If the average vehicle (including all trucks and buses) has a 50 kWh battery, then the world would need to produce 4750 GWh of batteries per year just for electric vehicles. With energy storage for the electrical grid, that total will probably double, so 64 Gigafactories will be needed. Even that might not enough. In Leonardo de Caprio’s documentary Before the Flood, Elon Musk states, “We actually did the calculations to figure out what it would take to transition the whole world to sustainable energy… and you’d need 100 Gigafactories.”

Lithium-ion batteries will get more energy dense in the future, but they are unlikely to reach the high energy density of the NCA cells produced in the Gigafactory, if using the LMO or LFP chemistries. For that kind of energy density, they will probably need either an NCA or an altered NMC chemistry which is 70%-80% nickel, so the proportion of lithium, nickel, cobalt and copper in most future EV batteries is likely to be similar to the Gigafactory’s NCA cells. If 4750 GWh of these batteries are produced every year at an energy density of 263 Wh/kg, then the current global reserves will be used up in 24.5 years for lithium, 31.2 years for copper, 20.2 years for nickel, and 15.4 years for cobalt. Even if those batteries are produced with 80% recycled metals, starting in 15 years time, the current global lithium reserves would be extended 6.6 years, or 7.4 years if all sectors switch to using 80% recycled lithium. Using 80% recycled metal in the batteries would extend current copper, nickel and cobalt reserves by 0.7, 0.5 and 0.1 years, respectively. An 80% recycling rate in all sectors would make a difference for copper, extending its reserves by 11.5 years, but only 2.8 years for nickel and 0.2 years for cobalt. In other words, recycling will not significantly reduce the enormous stresses that lithium-ion batteries will place on global metal supplies, because they represent so much new demand for metals.

As the demand for these metals increases, the prices will increase and new sources of these metals will be found, but they will either be in places like the DRC with ethical challenges or in places with lower quality ores which require more energy and resources to extract and refine. We can expect more energy-intensive mining of spodumene and  more strip mining of laterite ores which cause more ecological disruption. The ocean floor has enormous quantities of manganese, nickel, copper and cobalt, but the energy and resources to scrap the bottom of the ocean will dramatically increase the economic and ecological costs. If battery manufacturing dramatically raises the prices of lithium, nickel, cobalt, copper (and manganese for NMC cells), then it will be doubly difficult to transition to a sustainable civilization in other areas. For example, nickel and cobalt are essential to making carbide blades, tool dies and high-temperature turbine blades and copper is a vital for wiring, electronics and electrical motors. It is hard to imagine how the whole world will transition to a low-carbon economy if these metals are made prohibitively expensive by manufacturing over a billion lithium-ion batteries for EVs.

Future batteries will probably be able to halve their weight by switching to a solid electrolyte and using an anode made of lithium metal, lithiated silicon or carbon nanotubes (graphene), but that will only eliminate the copper, while doing little to reduce the demand for the other metals. Switching the anode to spongy silicon or graphene will allow batteries to hold more charge per kilogram, but those materials also dramatically increase the cost and the energy and resources that are consumed in battery manufacturing.

In the near future, lithium-ion batteries are likely to continue to follow their historical trend of using 7% less materials each year to hold the same amount of charge. That rate of improvement, however, is unlikely to last. An NCA cathode currently holds a maximum of 200 mAh of energy per gram, but its theoretical maximum is 279 mAh/g. It has already achieved 72% of what is theoretically possible, so there is little scope to keep improving. NMC at 170 mAh/g is currently farther from its theoretical limit of 280 mAh/g, but the rate of improvement is likely to slow as these battery chemistries bump against their theoretical limits.

Clearly the planet doesn’t have the resources to build 95 million long-range electric vehicles each year that run on lithium-ion batteries. Possibly a new type of battery will be invented that only uses common materials, such as aluminum, zinc, sodium and sulfur, but all the batteries that have been conceived with these sorts of material still have significant drawbacks. Maybe a new type of battery will be invented that is suitable for vehicles or the membranes in fuel cells will become cheap enough to make hydrogen a viable competitor, but at this point, lithium-ion batteries appear likely to dominate electric vehicles for the foreseeable future. The only way EVs based on lithium-ion can become a sustainable solution for transport is if the world learns to live with far fewer vehicles.

Currently 3% more vehicles are being built each year, and there is huge demand for vehicles in the developing world. While demand for cars has plateaued in the developed world, vehicle manufacturing since 1999 has grown 17.4% and 10.5% per year in China and India, respectively. If the developing world follows the unsustainable model of vehicle ownership found in the developed world, then the transition to electrified transport will cause severe metal shortages. Based on current trends, Navigant Research predicts that 129.9 million vehicles will be built in the year 2035, when there will be 2 billion vehicles on the road.


On the other hand, James Arbib and Tony Seba believe that autonomous vehicles and Transport as a Service (TaaS) such as Uber and Lyft will dramatically reduce demand for vehicles, lowering the number of passenger vehicles on American roads from 247 to 44 million by 2030. If 95% of passenger miles are autonomous TaaS by 2030 and the lifespan of electric vehicles grows to 500,000 miles as Arbib and Seba predict, then far fewer vehicles will be needed. Manufacturing fewer electric vehicles reduces the pressure to extract metals from laterite ores, pegmatites, the ocean floor, and lower-grade ores in general with higher ecological costs.

Ellingsen et al (2016) estimate that the energy consumed by battery factories per kWh of batteries has halved since 2012, however, that has to be balanced by the growing use lithium from spodumene and nickel and cobalt from laterite ores, and ores with lower metal concentrations that require more energy and produce more pollution. Given the increased energy efficiency in battery manufacturing plants and the growing efficiencies of scale, I would guesstimate that lithium-ion battery emissions are currently at roughly 150 kg  CO2-eq per kWh of battery and that the Gigafactory will lower those emissions by a third to roughly 100 kg  CO2-eq / kWh. If the Model 3, uses a 55 kWh battery, then its battery emissions would be roughly 5500 kg  CO2-eq.

Manufacturing a medium-sized EV without the battery emits 6.5 tonnes of  CO2-eq according to Ellingsen et al (2016). Electric cars don’t have the huge engine block of an ICE car, but they have large amounts of copper in the motor’s rotor and the windings and the Model 3 will have far more electronics than a standard EV. The Model S has 23 kg of electronics and I would guesstimate that the Model 3 will have roughly 15 lbs of electronics if it contains nVidia’s Drive PX or a custom processor based on the K-1 graphics processor. If the GHG emissions are roughly 150 kg  CO2-eq per kg of electronics, we can guesstimate that 2.2 tonnes of  CO2-eq will be emitted to manufacture the electronics in the Model 3. Given the large amount of copper, electronics and sensors in the Model 3, add an additional tonne, plus 5.5 tonnes for its 50 kWh battery, so a total of 13 tonnes of  CO2-eq will be emitted to manufacture the entire car.

Manufacturing a medium-sized ICE car emits between 5 and 6 tonnes, so there is roughly a 7.5 tonne difference in GHG emissions between manufacturing the Model 3 and a comparable ICE car. A new ICE car the size of the Model 3 will get roughly 30 mpg. In the US, a gallon of gasoline emits 19.64 lbs of CO2, but it emits 24.3 lbs of  CO2e when the methane and nitrous oxide are included, plus the emissions from extraction, refining and transportation, according to the Argonne National Laboratory. Therefore, we will need to burn 680 gallons of gasoline or drive 20,413 miles at 30 mpg to equal those 7.5 extra tonnes in manufacturing the Model 3.

At this point, the decision whether the Model 3 makes ecological sense depends on where the electricity is coming from. Let’s assume that the Model 3 will consume 0.30 kWh of electricity per mile, which is what the EPA estimates the Nissan Leaf to consume. The Model S will be a smaller and more aerodynamic car than the Leaf, but it will also weigh significantly more due to its larger battery. If we also include the US national average of 4.7% transmission losses in the grid, then the Model 3 will consume 0.315 kWh per mile. After driving the Model 3 100,000 miles, the total greenhouse gas emissions (including the production emissions) will range between 14.1 and 45.3 tonnes, depending on its energy source to charge the battery.


In comparison, driving a 30 mpg ICE car (with 5.5 tonnes in production emissions) will emit 42.2 tonnes of  CO2-eq after 100,000 miles. If we guesstimate that manufacturing a Toyota Prius will emit 7 tonnes, then driving it 100,000 miles at 52 mpg will emit 28.2 tonnes. Only in places like Kentucky which get almost all their electricity from coal is an ICE car the better environmental choice. The Model 3, however, will have worse emissions than most of its competitors in the green car market, if it is running on average US electricity, which emits 528 grams of CO2-eq per kWh. It will emit slightly more than a plugin hybrid like the Chevy Volt and an efficient hybrid like the Toyota Prius and substantially more than a short-range electric, like the Nissan Leaf.

Most previous comparisons between electric cars and ICE cars were based on short-range electrics with smaller batteries, such as the Nissan Leaf, which is why environmental advocates are so enthusiastic about EVs. However, comparing the Model S and Model 3 to the Nissan Leaf, Chevy Volt and Toyota Prius hybrid shows that the environmental benefits of long-range EVs are questionable when compared to short-range EVs, plugin hybrids and hybrids. Only when running the Model 3 on cleaner sources of electricity does it emit less greenhouse gases than hybrids and plugin hybrids, but in the majority of the United States it will emit slightly more. Many of the early adopters of EVs also owned solar panels, so buying a Model 3 will reduce their carbon footprint, but the proportion of EV owners with solar panels on their roofs is falling. According to CleanTechnica’s PlugInsights annual survey, 25% of EV buyers before 2012 had solar panels on their roofs, compared to just 12% in 2014-2015. Most people who own solar panels do not have a home battery system so they can not use their clean energy all day, and most EV charging will happen at night using dirtier grid electricity.

Another factor to consider is the effect of methane leakage in the extraction and transport of natural gas. There is a raging scientific debate about what percentage of natural gas leaks into the atmosphere without being burned. A number of studies have concluded that the leakage of methane causes electricity from natural gas to have GHG emissions similar to coal, but there is still no consensus on the matter.  If the leakage rate is as high as some researchers believe, then EVs will emit more greenhouse gases than hybrids and efficient ICE cars in places like California which burn large amounts of natural gas.

On the other hand, many people believe that EVs will last 300,000 miles or even 500,000 miles since they have so few moving parts, so their high emissions in manufacturing will be justified. However, the EV battery will probably have to be replaced, and the manufacturing emissions for a long range EV battery can be as high as building a whole new ICE car. Another factor that could inhibit the long life of Telsa’s cars is the fact that the company builds cars described as “computers on wheels,” which are extremely difficult for third parties to fix and upgrade over time. Telsa only sells its parts to authorized repair shops and much of the functionality of car is locked up with proprietary code and secret security measures, as many do-it-yourselfers have discovered to their chagrin. When Tesla cars are damaged and sold as salvage, Tesla remotely disables its cars, so that they will no longer work even if repaired. The $600 inspection fee to reactivate the car plus the towing fees discourage Teslas from being fixed by third parties. These policies make it less likely that old Teslas will be fixed and their lifespans extended to counterbalance the high environmental costs of producing the cars.

Although the Model 3 has high greenhouse gas emissions in its production and driving it is also problematic in parts of the world that currently use dirty energy, those emissions could be significantly reduced in the future if they are accompanied by a shift to renewable energy, more recycling and the electrification of mining equipment, refining and transport. The car’s ecological benefits will increase if the emissions can be decreased in producing battery materials and the greater energy density of batteries is used to decrease the total materials in batteries rather than keep extending the range of EVs. Producing millions of Model 3s will strain the supply of vital metals and shift extraction to reserves which have higher ecological costs. However, the Model 3 could become a more sustainable option if millions of them are deployed in autonomous Transport as a Service fleets, which Arbib and Seba predict will be widespread by 2030, since TaaS will cost a tenth of the price of owning a private vehicle. If the Model 3 and future autonomous EVs become a means to drop the global demand for private vehicles and that helps reduce the demand for lithium, nickel, cobalt and copper down to sustainable levels, then the high environmental costs of manufacturing the Model 3 would be justified.

Nonetheless, the Model 3 and the NCA 2170 batteries currently being produced by Tesla offer few of those possible future ecological benefits. Most of the metal and graphite in the battery is being produced with energy from fossil fuels. In the short term at least, Telsa batteries will keep growing in capacity to offer more range, rather than reducing the total consumption of metals per battery. The extra sensors, processing power and electronics in the current Model 3 will increase its ecological costs without providing the Level 4 or 5 autonomy that would make it possible to convince people to give up their private vehicles. In the here and now, the Model 3 is generally not the best ecological choice, but it might become a better choice in the future.

The Model 3 promises to transform the market not only for EVs, but cars in general. If the unprecedented 500,000 pre-orders for the Model 3 are any indication of future demand, then long-range electrics with some degree of autonomous driving like the Model 3 will capture most of the EV market. Telsa’s stunning success will induce the rest of auto-makers to also start making long-range EVs with large batteries, advanced sensors, powerful image processors, advanced AI, cellular networking, driving data collection and large multimedia touchscreens. These features will dramatically increase the environmental costs of car manufacturing. Whether these features will be balanced by other factors which reduce their environmental costs remains to be seen.

Much of this analysis is guess work, so it should be taken with a grain of salt, but it points out the problems with automatically assuming that EVs are always better for the environment. If we consider sulfate emissions, EVs are significantly worse for the environment. Also, when we consider the depletion of critical metal reserves, EVs are significantly worse than ICE vehicles.

The conclusion should be that switching to long-range EVs with large batteries and advanced electronics bears significant environmental challenges. The high manufacturing emissions of these types of EVs make their ecological benefits questionable for private vehicles which are only used on average 4% of the time. However, they are a very good option for vehicles which are used a higher percentage of the time such as taxis, buses and heavy trucks, because they will be driven many miles to counterbalance their high manufacturing emissions. Companies such as BYD and Proterra provide a model of the kinds of electric vehicles that Tesla should be designing to promote “sustainable transport.” Tesla has a few ideas on the drawing board that are promising from an ecological perspective, such as its long-haul semi, the renting out of Teslas to an autonomous TaaS fleet, and a new vehicle that sounds like a crossover between a sedan and a minibus for public transport. The current Model 3, however, is still a vehicle which promotes private vehicle ownership and bears the high ecological costs of long-range lithium batteries and contributes to the growing shortage of critical metals.

Clearly, EVs alone are not enough to reduce greenhouse gas emissions or attain sustainable transport in general. The first step is to work on switching the electric grid to cleaner renewable energy and installing more residential solar, so that driving an EV emits less CO2. However, another important step is redesigning cities and changing policies so that people aren’t induced to drive so many private vehicles. Instead of millions of private vehicles on the road, we should be aiming for walkable cities and millions of bikes and electric buses, which are far better not only for human health, but also for the environment.

A further step where future Model 3s may help is in providing autonomous TaaS that helps convince people to give up their private vehicles. However, autonomous EVs need to be matched by public policies that disincentivize the kind of needless driving that will likely occur in the future. The total number of miles will likely increase in the future due to autonomous electric cars driving around looking for passengers to pick up and people who spend more time in the car because they can surf the web, watch movies, and enjoy the scenery without doing the steering. Plus, the cost of the electricity to charge the battery is so cheap compared to burning gasoline that people will be induced to drive more, not less.

Reading The News On America Should Scare Everyone, Every Day… But It Doesn’t

22 07 2017

Whilst this is Amero-centric, make no mistake, it also applies to Australia in bucket loads…….

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Reading the news on America should scare everyone, and every day, but it doesn’t. We’re immune, largely. Take this morning. The US Republican party can’t get its healthcare plan through the Senate. And they apparently don’t want to be seen working with the Democrats on a plan either. Or is that the other way around? You’d think if these people realize they were elected to represent the interests of their voters, they could get together and hammer out a single payer plan that is cheaper than anything they’ve managed so far. But they’re all in the pockets of so many sponsors and lobbyists they can’t really move anymore, or risk growing a conscience. Or a pair.

What we’re witnessing is the demise of the American political system, in real time. We just don’t know it. Actually, we’re witnessing the downfall of the entire western system. And it turns out the media are an integral part of that system. The reason we’re seeing it happen now is that although the narratives and memes emanating from both politics and the press point to economic recovery and a future full of hope and technological solutions to all our problems, people are not buying the memes anymore. And the people are right.

Tyler Durden ran a Credit Suisse graph overnight that should give everyone a heart attack, or something in that order. It shows that nobody’s buying stocks anymore, other than the companies who issue them. They use ultra-cheap leveraged loans to make it look like they’re doing fine. Instead of using the money/credit to invest in, well, anything, really. You can be a successful US/European company these days just by purchasing your own shares. How long for, you ask?

There Has Been Just One Buyer Of Stocks Since The Financial Crisis

 As CS’ strategist Andrew Garthwaite writes, “one of the major features of the US equity market since the low in 2009 is that the US corporate sector has bought 18% of market cap, while institutions have sold 7% of market cap.” What this means is that since the financial crisis, there has been only one buyer of stock: the companies themselves, who have engaged in the greatest debt-funded buyback spree in history.


 Why this rush by companies to buyback their own stock, and in the process artificially boost their Earning per Share? There is one very simple reason: as Reuters explained some time ago, “Stock buybacks enrich the bosses even when business sags.” And since bond investor are rushing over themselves to fund these buyback plans with “yielding” paper at a time when central banks have eliminated risk, who is to fault them.

More concerning than the unprecedented coordinated buybacks, however, is not only the relentless selling by institutions, but the persistent unwillingness by “households” to put any new money into the market which suggests that the financial crisis has left an entire generation of investors scarred with “crash” PTSD, and no matter what the market does, they will simply not put any further capital at risk.

So that’s your stock markets. Let’s call it bubble no.1. Another effect of ultra low rates has been the surge in housing bubbles across the western world and into China. But not everything looks as rosy as the voices claim who wish to insist there is no bubble in [inject favorite location] because of [inject rich Chinese]. You’d better get lots of those Chinese swimming in monopoly money over to your location, because your own younger people will not be buying. Says none other than the New York Fed.

Student Debt Is a Major Reason Millennials Aren’t Buying Homes

 College tuition hikes and the resulting increase in student debt burdens in recent years have caused a significant drop in homeownership among young Americans, according to new research by the Federal Reserve Bank of New York. The study is the first to quantify the impact of the recent and significant rise in college-related borrowing—student debt has doubled since 2009 to more than $1.4 trillion—on the decline in homeownership among Americans ages 28 to 30. The news has negative implications for local economies where debt loads have swelled and workers’ paychecks aren’t big enough to counter the impact. Homebuying typically leads to additional spending—on furniture, and gardening equipment, and repairs—so the drop is likely affecting the economy in other ways.

As much as 35% of the decline in young American homeownership from 2007 to 2015 is due to higher student debt loads, the researchers estimate. The study looked at all 28- to 30-year-olds, regardless of whether they pursued higher education, suggesting that the fall in homeownership among college-goers is likely even greater (close to half of young Americans never attend college). Had tuition stayed at 2001 levels, the New York Fed paper suggests, about 360,000 additional young Americans would’ve owned a home in 2015, bringing the total to roughly 2.9 million 28- to 30-year-old homeowners. The estimate doesn’t include younger or older millennials, who presumably have also been affected by rising tuition and greater student debt levels.

Young Americans -and Brits, Dutch etc.- get out of school with much higher debt levels than previous generations, but land in jobs that pay them much less. Ergo, at current price levels they can’t afford anything other than perhaps a tiny house. Which is fine in and of itself, but who’s going to buy the existent McMansions? Nobody but the Chinese. How many of them would you like to move in? And that’s not all. Another fine report from Lance Roberts, with more excellent graphs, puts the finger where it hurts, and then twists it around in the wound a bit more:

People Buy Payments –Not Houses- & Why Rates Can’t Rise

 Over the last 30-years, a big driver of home prices has been the unabated decline of interest rates. When declining interest rates were combined with lax lending standards – home prices soared off the chart. No money down, ultra low interest rates and easy qualification gave individuals the ability to buy much more home for their money. The problem, however, is shown below. There is a LIMIT to how much the monthly payment can consume of a families disposable personal income.


 In 1968 the average American family maintained a mortgage payment, as a percent of real disposable personal income (DPI), of about 7%. Back then, in order to buy a home, you were required to have skin in the game with a 20% down payment. Today, assuming that an individual puts down 20% for a house, their mortgage payment would consume more than 23% of real DPI. In reality, since many of the mortgages done over the last decade required little or no money down, that number is actually substantially higher. You get the point. With real disposable incomes stagnant, a rise in interest rates and inflation makes that 23% of the budget much harder to sustain.



In 1968 Americans paid 7% of their disposable income for a house. Today that’s 23%. That’s as scary as that first graph above on the stock markets. It’s hard to say where the eventual peak will be, but it should be clear that it can’t be too far off. And Yellen and Draghi and Carney are talking about raising those rates.

What Lance is warning for, as should be obvious, is that if rates would go up at this particular point in time, even a lot less people could afford a home. If you ask me, that would not be so bad, since they grossly overpay right now, they pay full-throttle bubble prices, but the effect could be monstrous. Because not only would a lot of people be left with a lot of mortgage debt, and we’d go through the whole jingle mail circus again, yada yada, but the economy’s main source of ‘money’ would come under great pressure.

Let’s not forget that by far most of our ‘money’ is created when private banks issue loans to their customers with nothing but thin air and keyboard strokes. Mortgages are the largest of these loans. Sink the housing industry and what do you think will happen to the money supply? And since inflation is money velocity x money supply, what would become of central banks’ inflation targets? May I make a bold suggestion? Get someone a lot smarter than Janet Yellen into the Fed, on the double. Or, alternatively, audit and close the whole house of shame.

We’ve had bubbles 1, 2 and 3. Stocks, student debt and housing. Which, it turns out, interact, and a lot.

An interaction that leads seamlessly to bubble 4: subprime car loans. Mind you, don’t stare too much at the size of the bubbles, of course stocks and housing are much bigger issues, but focus instead on how they work together. As for the subprime car loans, and the subprime used car loans, it’s the similarity to the subprime housing that stands out. Like we learned nothing. Like the US has no regulators at all.

Fears Mount Over a New US Subprime Boom – Cars

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud. Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017. A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide. Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis.

 But since the Great Recession, business has exploded. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion were, topping average pre-crisis levels, according to Wells Fargo. Few things capture this phenomenon like the partnership between Fiat Chrysler and Banco Santander. [..] Santander recently vetted incomes on fewer than one out of every 10 loans packaged into $1 billion of bonds, according to Moody’s.

If it’s alright with you, we’ll deal with the other main bubble, no.5 if you will, another time. Yeah, that would be bonds. Sovereign, corporate, junk, you name it.

The 4 bubbles we’ve seen so far are more than enough to create a huge crisis in America. Don’t want to scare you too much all at once. Just you read the news again tomorrow. There’ll be more. And the US Senate is not going to do a thing about it. They’re too busy not getting enough votes for other things.

Book review of Failing states, collapsing systems biophysical triggers of political violence by Nafeez Ahmed

6 06 2017

I have written at length about the collapse of Egypt over the years, and Syria too. I’ve also discussed Nafeez Ahmed’s views on the unraveling now happening in the Middle East, and my most recent item here from the Doomstead Diner has attracted a lot of attention….. including from Alice Friedemann who pointed out to me that she has published an extensive review of Ahmed’s new book “Failing states, collapsing systems biophysical triggers of political violence”. It’s a long read (the references alone are almost as long as the article and would keep you busy for weeks!), but I was totally riveted by it and felt the compulsion to republish it here as it needs to be read as widely as possible. In fact, this review is so good, you may not need to buy the book……. as I’ve been saying for a very long time now, 2020 is when things start to get really ugly, all the way to 2030, by which time it’s likely the state of the world will be unrecognisable.

The overview of biophysical factors table below is alone really telling……

If after reading this latest piece you are not convinced collapse is indeed underway, then there’s no hope for you….!


alice_friedemann[ In this post I summarize the sections of Nafeez’s book about the biophysical factors that bring nations down (i.e. climate change drought & water scarcity, declining revenues after peak oil, etc.) The Media tend to focus exclusively on economic and political factors.

My book review is divided into 3 parts: 

  • Why states collapse for reasons other than economic and political
  • How BioPhysical factors contribute to systemic collapse in Syria, Yemen, Iraq, Saudi Arabia Egypt, Nigeria
  • Predictions of when collapse will begin in Middle East, India, China, Europe, Russia, North America

In my opinion, war is inevitable in the Middle East where over half of oil reserves exist.  Oil is life itself.  If war happens,  collapse of the Middle East, India, and China could happen well before 2030.  If nuclear weapons are used, most nations collapse from the nuclear winter and ozone depletion that would follow.   Indonesia blew up their oil refineries to keep Japan from getting oil in WWII. If Middle Eastern governments or terrorists do the same after they’re attacked, that brings on the energy crisis sooner.  Although this would leave some high EROI oil in the ground, the energy to rebuild refineries, pipelines, oil rigs, roads, and other infrastructure would lower the EROI considerably.

Alice Friedemann  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

Ahmed, Nafeez. 2017. Failing States, Collapsing Systems BioPhysical Triggers of Political Violence. Springer.

1) Why states collapse for reasons other than economic and political

Since the 2008 financial crash, there’s been an unprecedented outbreak of social protest: Occupy in the US and Western Europe, the Arab Spring, and civil unrest from Greece to Ukraine, China to Thailand, Brazil to Turkey, and elsewhere. Sometimes civil unrest has resulted in government collapse or even wars, as in Iraq-Syria and Ukraine- Crimea. The media and experts blame it on poor government, usually ignoring the real reasons because all they know is politics and economics.

In the Middle East, experts should also talk about geology.  Oil-producing nations like Syria, Yemen, Egypt, Nigeria, and Iraq have all reached peak oil and declining government revenues after that force rulers to raise the prices of food and oil.  This region was already short on water, and now climate change (from fossil fuels) is making matters much worse with drought and heat waves causing even greater water scarcity, which in turn lowers agricultural production.  Many of these nations have some of the highest rates of population growth on earth at a time when resources essential to life itself are declining.

The few nations still producing much of the oil – Russia, Saudi Arabia, and the U.S. are about to join the club and stop exporting oil so they can provide for their domestic population.

Ahmed points out that “because these and other factors are so nested and interconnected, even small perturbations and random occurrences in one can amplify effects on other parts of the system, sometimes in a feedback process that continues.  If thresholds are reached, these tipping points can re-order the whole system”.  These ecological and geological factors result in social disorder, which makes it even harder for government to do anything, such as putting more money into water and food production infrastructure, which accelerates climate change and energy decline impacts, which leads to even more violence at an accelerating rate until state failure.

2) How BioPhysical factors contribute to systemic collapse in Syria, Yemen, Iraq, Saudi Arabia Egypt, Nigeria


Table 1. Overview of biophysical factors (water scarcity, peak oil, population) for nations Ahmed discusses in this book

The UN defines a region as not having water scarcity above 1700 cubic meters per capita (green).  Water stressed nations have 1000 to 1700 cubic meters per capita (yellow).  Water scarcity is 500-1000 per capita (orange) and absolute water scarcity 0-500 (red).  Countries already experiencing water stress or far worse include Egypt, Jordan, Turkey, Iraq, Israel, Syria, Yemen, India, China, and parts of the United States. Many, though not all, of these countries are experiencing protracted conflicts or civil unrest (Patrick 2015).


The media portray warfare in Syria as due to the extreme repression of President Bashar al-Assad and the support he receives from Russia.  Although there has been awareness that climate change drought played a role in causing conflict, there is no recognition that peak oil was one of the main factors.

Here’s a quick summary of how peak oil and consequent declining revenues from oil production, rising energy and food prices, drought, water scarcity, and population growth led to social unrest, violence, terrorism and war.

It shouldn’t be surprising that peak oil in 1996 triggered the tragic events we see today.  After all, the main source of Syrian revenue came from their production of 610,000 barrels per day (bpd).  By 2010 oil production had declined by half. Falling revenues caused Syria to seek help from the IMF by 2001, and the onerous market reform policies required resulted in higher unemployment and poverty, especially in rural Sunni regions, while at the same time enriching and corrupting ruling minority Alawite private and military elites.

In 2008 the government had to triple oil prices resulting in higher food prices. Food prices rose even more due to the global price of wheat doubling in 2010-2011. On top of that, the 2007-2010 drought was the worst on record, causing widespread crop failures. This forced mass migrations of farming families to cities (Agrimoney 2012; Kelley et al. 2015). The drought wouldn’t have been so bad if half the water hadn’t been wasted and overused previously from 2002 to 2008 (Worth 2010). All of these violence-creating events were worsened by one of the highest birth rates growth on earth, 2.4%.  Most of the additional 80,000 people added in 2011 were born in the hardest-hit drought areas (Sands 2011).

Rinse and repeat.  Social unrest and violence led to war, oil production dropped further, so there is even less money to end unrest with subsidized food and energy or more employment, aid farmers, and build desalination plants.

Syria, once able to feed its people, now depends on 4 million tonnes of grain imports at a time when revenues continue to drop.  Syrian oil production didn’t really take off until 1968 when there were 6.4 million people.  Since oil revenues allowed their population to explode, another 13.6 million have been born.


Like Syria, Iraq’s agricultural production has been reduced by heat, drought, heavy rain, water scarcity, rapid population growth, and the inability of government to import food and provide goods and services as oil revenues decline.  ISIS has worsened matters and filled in the gaps of state-level failure.  Peak oil is likely by 2025.  Or sooner given the ongoing war, lack of investment to keep existing production flowing, and low oil prices (Dipaola 2016).


Like Syria, Iraq, and Iran, Yemen has long faced serious water scarcity issues. The country is consuming water far faster than it is being replenished, an issue that has been identified by numerous experts as playing a key background role in driving local inter-tribal and sectarian conflicts (Patrick 2015).

Yemen is one of the most water-scarce countries in the world. In 2012, the average Yemeni had access to just 140 cubic meters of water a year for all uses and just three years later a catastrophic 86 m3, far below the 1000 m3 level minimum requirement standards.    Cities often only have sporadic access to running water— every other week or so.  Sanaa could become the first capital in the world to run out of water (IRIN 2012).

Yemen reached peak oil production in 2001, declining from 450,000 barrels per day (bpd) to 100,000 bpd in 2014, and will be zero by 2017 (Boucek 2009).   This has led to a drastic decline in Yemen’s oil exports, which has eaten into government revenues, 75% of which had depended on oil exports. Oil revenues also account for 90% of the government’s foreign exchange reserves. The decline in post-peak Yemen state revenues has reduced the government’s capacity to sustain even basic social investments. When the oil runs out … the capacity to sustain a viable state-structure will completely collapse.

Yemen has 25 million people and an exorbitantly high growth rate and predicted to double by 2050. In 2014 experts warned that within the next decade, these demographic trends would demolish the government’s ability to meet the population’s basic needs in education, health and other essential public services. This is already happening to over 15 million people (Qaed 2014).  Over half the Yemeni population lives below the poverty line, and unemployment is at 40% (60% of young people).

To cope, too many people have turned to growing qat (a mild narcotic) on 40% of Yemen’s irrigated land, increasing water use to 3.9 billion cubic meters (bcm), but the renewable water supply is just 2.5 bcm. The 1.4 bcm shortfall is made up by pumping water from underground water reserves that are starting to run dry.

Energy, overpopulation, drought, water scarcity, poverty, and a government unable to do much of anything without oil revenue is in a downward loop of social tensions, local conflicts and even mass displacements.  This in turn adds to the dynamics of the wider sectarian and political conflicts between the government, the Houthis, southern separatists and al-Qaeda affiliated militants.

Violence undermines food security, feeding back into the downward spiraling loop.  Making matters worse is that rain-fed agriculture has dropped by about 30% since 1970, making Yemen ever more food import dependent at a time when revenues are shrinking. The country now imports over 85% of its food, including 90% of its wheat and all of its rice (World Bank 2014). Most Yemenis are hungry because they can’t afford to buy food, which also rises in price when global prices rise.  The rate of chronic malnutrition as high as 58%, second only to Afghanistan (Arashi 2013).

Epidemic levels of government corruption, mismanagement and incompetence, have meant that what little revenue the government receives ends up in Swiss bank accounts.  With revenues plummeting in the wake of the collapse of its oil industry, the government has been forced to slash subsidies while cranking up fuel and diesel prices. This has, in turn, cranked up prices of water, meat, fruits, vegetables and spices, leading to fuel and food riots (Mawry 2015).

Is Saudi Arabia Next?

Summary: Within the next decade, Saudi Arabia will become especially vulnerable to the downward feedback loop of peak oil.  The most likely date for peak oil is 2028 (Ebrahimi 2015). But because the Saudi exports have been going down since 2005 at 1.4% a year as their own population rises and consumes more and more, world exports could end as soon as 2031 (Brown and Foucher 2008).

Saudi revenues will decline to zero, so the Saudis will be less able to buy their way out of food shortages.  Their own food production will drop as well from drought and water scarcity — the kingdom is one of the most water scarce in the world, at 98 m³ per inhabitant per year.

Most water comes from groundwater, 57% of which is non-renewable, and 88% of it goes to agriculture. Desalination plants produce 70% of the kingdom’s domestic water supplies. But desalination is very energy intensive, accounting for more than half of domestic oil consumption. As oil exports run down, along with state revenues, while domestic consumption increases, the kingdom’s ability to use desalination to meet its water needs will decrease (Patrick 2015; Odhiambo 2016).

According to the Export Land Model (ELM) created by Texas petroleum geologist Jeffrey J Brown and Dr. Sam Foucher, the key issue is the timing of when there will be no more exports because the domestic population of oil producing nations is using it all for domestic consumption.   Brown and Foucher showed that the tipping point to watch out for is when an oil producer can no longer increase the quantity of oil sales abroad because of the need to meet rising domestic energy demand.

Saudi Arabia is the region’s largest energy consumer. Domestic demand has increased 7.5% over the last 5 years, mainly due to population growth. Saudi population may grow from 29 million people now to 37 million by 2030, using ever more oil and therefore less available for export.

Declining Saudi peak oil exports will affect every nation on earth that imports Saudi oil, especially top customers China, Japan, the United States, South Korea, and India.  As Saudi oil declines, there will be few other places oil for importing nations to turn to, since other exporting nations will also be using their oil domestically.

A report by Citigroup predicted net exports would plummet to zero in the next 15 years. This means that 80% of money from oil sales the Saudi state depends on are trending downward, eventually terminally (Daya 2016). In this case, the peak oil production date could happen well before 2028, as well as violent social unrest, since so far, Saudi Arabia’s oil wealth, and its unique ability to maintain generous subsidies for oil, housing, food and other consumer items, has kept civil unrest at bay. Energy subsidies alone make up about a fifth of Saudi’s gross domestic product. But as revenues are increasingly strained by decreasing exports after peak oil, the kingdom will need to slash subsidies (Peel 2013).  Even now a quarter of the Saudi’s live in poverty, and unemployment is 12%, especially young people who have a 30% unemployment level. [Saudi Arabia recently started taxing fuel at the bowsers]

Saudi Arabia is experiencing climate change as temperatures rise in the interior and far less rainfall occurs in the north.  By 2040, local average temperatures are expected to increase by as much as 4 °C at the same time rain levels are falling, resulting in more extreme weather events like the 2010 Jeddah flooding when a year of rain fell in 4 hours.  The combination could dramatically impact agricultural productivity, which is already facing challenges from overgrazing and unsustainable industrial agricultural practices leading to accelerated desertification (Chowdhury 2013).

80% of Saudi Arabia’s food requirements are purchased through heavily subsidized imports.  Without the protection of oil revenue subsidies, and potential rises in the global prices of food (Taha 2014), the Saudi population would be heavily impacted. But with net oil revenues declining to zero—potentially within just 15 years—Saudi Arabia’s capacity to finance continued food imports will be in question.


Like Syria, Egypt has had increasing problems paying for food, goods, and services after peak oil in 1993 while at the same time population keeps growing.   Worse yet, there are no oil revenues at all, because since 2010 the population has been using more oil than what is produced and has had to import oil, with no oil revenues to pay for food, goods, and services.  Two-thirds of Egypt’s oil reserves have likely been depleted and oil produced now is declining at 3.4% a year.

Nor are there revenues coming from natural gas sales made up for the loss of oil revenues.  Over the past decade domestic use nearly doubled to consumption of nearly all the production (Kirkpatrick 2013a).

The Egyptian population since 2000 has grown 21% to 88 million people and isn’t slowing down, with 20 million more expected over the next 10 years.  A quarter are children half of them living in poverty and unemployed  (EI 2012) at the same time the elites have grown wealthier from IMF and World Bank policies.

In the 1960s there were 2800 cubic meters of water per capita, now just 660 – well below the international standard of water poverty of 1000 per person (Sarant 2013).   Water scarcity and population growth lave led to tens of thousands of hectares of farmland to be abandoned.  There is some water that can be obtained, but most farmers can’t afford the price of diesel fuel to power pumps  (Kirkpatrick 2013b)

Egypt was self-sufficient in food production in the 1960s but now imports 70% of its food (Saleh 2013). One of the many reasons Mubarak fell was the doubling of wheat prices in 2011 since half of Egypt’s people depend on food rations.  But the democratically-elected Muslim Brotherhood party and their leader Morsi couldn’t alleviate declining government revenues due to the biophysical realities of food, water, and energy shortages either.  Morsi desperately tried to get a $4.8 billion IMF loan by slashing energy subsidies and raising sales taxes, but the economic crisis made it hard to make the payments and wheat imports dropped to a third of what was imported a year ago.

This led to Morsi being ousted by army chief Abdul Fateh el-Sisi in a coup.  Like his predecessors, El-Sisi has also been unable to meet IMF demands for increased hydrocarbon production and has resorted to unprecedented levels of brutal force to crush protests. He has also rationed electricity, which led to key industries cutting production, leading to further economic losses, declining exports and foreign reserves.  Without more money, energy companies can’t be paid, so energy production continues to drop, and debt goes up, reducing the value of Egyptian currency and higher costs for imports and shortages of energy for industrial production. Egypt’s energy and economy find themselves caught in an amplifying feedback loop (Barron 2016).

How Boko Haram arose in Nigeria

Nigeria’s climate change has led to water and land shortages from desertification, which in turn has led to illness, hunger, and unemployment followed by conflict (Sayne 2011).

Perhaps the Boko Haram wouldn’t have arisen, if the Maitatsine sect in northern Nigeria hadn’t been hit so hard by ecological disasters.  To survive they fanned out to search for food, water, shelter, and work (Sanders 2013).  Niger and Chad refugees from drought and floods also became Boko Haram foot soldiers, some 200,000 displaced farmers and herdsmen.

In northern Nigeria, where Boko Haram is from, about 70% of the population subsists on less than a dollar a day. As noted by David Francis, one of the first western reporters to cover Boko Haram: “Most of the foot soldiers of Boko Haram aren’t Muslim fanatics; they’re poor kids who were turned against their corrupt country by a charismatic leader” (Francis 2014)

The Nigerian military sees a correlation between regional climatic events, and an upsurge in extremist violence: “It has become a pattern; we saw it happen in 2006; it happened again in 2008 and in 2010. President Obasanjo had to deploy the military in 2006 to Yobe State, Borno State and Katsina State. These are some of the states bordering Niger Republic and today they are the hotbeds of the Boko Haram” (Mayah 201).

Drought caused desertification is decreasing food production, in turn leading to “economic decline; population displacement and disruption of legitimized authoritative institutions and social relations.” The net effect was an acceleration of the attractiveness of groups like “Boko Haram and other forms of Jihadi ideology,” resulting in escalating “herder-farmer clashes emanating from the north since 1980s” (Onyia 2015).

The rapid spread of Boko Haram also coincided with Lake Chad’s shrinking from 25,000 square km in 1963 to less than 2500 square km today, mainly due to climate change. At this rate, Lake Chad is will dry up in 20 years, and has already caused millions of people to lose their livelihoods.

The government has exacerbated problems by cutting fuel subsidies, which led to fuel shortages, angering the public who engaged in civil unrest  (Omisore 2014).

A senior Shell official said that crude oil production decline rates are as high as 15–20%.  But Nigeria doesn’t have the money to explore to find more oil to offset this high decline rate. Nigeria’s petroleum resources department said that Nigeria had reached a plateau of production in the Niger Delta and were already going down (Ahmed 2014).

About $15 billion of investment is required just to maintain current production levels and compensate for a natural decline in production of about 250,000 b/d each year. A 2011 study by two Nigerian scholars concluded that “there is an imminent decline in Nigeria’s oil reserve since peaking could have occurred or just about to occur (Akuru and Okoro 2011). A 2013 report backs this up, finding that Nigeria’s crude oil production has decreased since its peak in 2005, largely due to the impact of internal conflicts, leading to the withdrawal of oil companies and lack of investments. Since then production has fluctuated along a plateau. The UK Department for International Development report noted that new offshore fields might bring additional oil on-stream, surpassing the 2005 peak—but also noted that rising domestic demand “at some point in the future may cut into the amount of oil available for export” (Hall et al. 2014).

POPULATION. With Nigeria’s population expected to rise from 160 to 250 million by 2025 and oil accounting for some 96% of export revenue as well as 75% of government revenue, the state has resorted to harsh austerity measures. Sharp reductions in public spending, power cuts, fuel shortages and conditional new loans will probably widen economic inequalities and further stoke the grievances that feed groups like Boko Haram in the North. With domestic oil production decline undermining Nigeria’s oil export revenues and consequent fuel subsidy cuts, the public grows poorer and increases the number of young men more likely to join Islamist terrorist groups.

3) Predictions of when collapse will begin in Middle East, India, China, Europe, Russia, North America

When will  Middle-East oil producing nations fail?

Ahmed says that so far after peak oil production, Middle-Eastern economies have declined as revenues declined, leading to systemic state-failure in roughly 15 years, more or less, depending on how hard hit a nation was by additional (climate-change) factors such as drought, water scarcity, food prices, and overpopulation.

Saudi Arabia, and much of the rest of Arabian Gulf peninsula, may experience state-failure well within 10 to 20 years. If forecasts of Saudi oil depletion are remotely accurate, then by 2030 the country will simply not exist as we know it. Coupled with the accelerating impacts of climate-induced water scarcity, the Kingdom is bound to begin experiencing systemic state-failure at most within 20 years, and probably much earlier.

Marin Katusa, chief energy strategist at Casey Research, reports that “many Middle Eastern countries may stop exporting oil and gas altogether within the next few years, while some already have” (Katusa 2016). Oil analysts at Lux Research estimate that OPEC oil reserves may have been overstated by as much as 70%. True OPEC reserves could be as low as 429 billion barrels, which could mean a global net export crunch as early as 2020 (Lazenby 2016).

The period from 2020 to 2030 will see Middle East oil exporters experiencing a systemic convergence of energy and food crises.

When will India & China collapse?

India and China are widely assumed to be the next superpowers, but at this stage of energy and resource depletion, can’t possibly mimic the exponential growth of the Western world.

India, South Asia, and China face enormous ecological challenges Irregularities in the pattern of monsoon rains and drought are likely to lower food production and increase water scarcity, while higher temperatures will increase the range of vector-borne diseases such as malaria and become prevalent year-round (DCDC 2013). As sea levels rise, millions of people will be displaced permanently.

These impacts will unravel regional political and economic order well within 20 years and manifest at first as civil unrest.  Depending on how the Indian and Chinese states respond, it is likely that these outbreaks of domestic disorder will become more organized, and will eventually undermine state territorial integrity before 2030.  Near-term growth will further undermine environmental health and deplete resources, making these nations even more vulnerable to climate and food crises.

European and Russian collapse timeframe

Within Europe, resource depletion has meant that the European Union as a whole has become increasingly dependent on energy imports from Russia, the Middle East, Central Asia and Africa. Yet exports from these regions will become tighter as major oil producers approach production limits.

The geopolitical turmoil that has unfolded in Ukraine provides a compelling indication that such processes are rapidly moving from the periphery of the global system into the core. For the most part, the Euro-Atlantic core—traditionally representing the most powerful sections of the world system—has insulated itself from global crisis convergence impacts by diversifying energy supply sources. However, there is only so much that diversification can achieve when the total energetic and economic quality of global hydrocarbon resource production is declining.


Faced with these converging crises, the Euro-Atlantic core will continue to see the creation of cheap debt-money through quantitative easing as an immediate solution to generate emergency funds to stabilize the financial system and shore-up ailing industries. This will likely play out in one of these business-as-usual scenarios:

  1. The lower resource quality (EROI) of the global energy system may act as a fundamental geophysical ceiling on the capacity of the economy to grow. It may act as an invisible brake on growth in demand, so fossil fuel prices would remain at chronically low levels, endangering the profitability of the fossil fuel industries. This would lead to an acceleration of the demise of the fossil fuel industries, which could lead to debt-defaults across industries in the financial system. Declining hydrocarbon energy production would cause a self-reinforcing recessionary economic process. This would escalate vulnerability to water, food and energy crises and hugely strain the capacity of European and American states to deliver goods and services to even their own populations, and other nations dependent as much on importing food as they are oil.
  2. Scarcity of net exports on the world market may raise oil prices and provide some sectors of ailing fossil fuel industries to be profitable again. But previous slashing of investments and cutbacks in exploration will mean that only the most powerful sections of the industry would be able to capitalize on this, which means production is unlikely to return to former high levels. Price spikes would trigger economic recession, causing a drop in demand, while lower production levels would exacerbate the economy’s inability to grow substantially, if at all. In effect, the global economy would likely still experience a self-reinforcing recessionary economic process.

In both scenarios, escalating economic crises are likely to invite the Euro-Atlantic core to respond by using debt-money to shore-up as much of the existing core financial and energy industries as possible. Prices spikes and shortages in water, food and energy would be experienced by general populations as a dramatic lowering of purchasing power, leading to an overall decrease in quality of life, an increase in poverty, and a heightening of inequality. This would undermine their internal cohesion, giving rise to new divisive, nationalist and xenophobic movements, and lead states into a tightening spiral of militarization to police domestic order. As instability in the Middle East and elsewhere intensifies, manifesting in further unrest, political violence and terrorist activity, states will also be drawn increasingly into short- sighted military solutions. In particular, scarcity of net oil exports on the world market will heighten geopolitical and military competition to control and/or access the world’s remaining hydrocarbon energy resources. With the Middle East still holding the vast bulk of the world’s reserves, the region will remain a central flashpoint for such competition, even as major producers such as Saudi Arabia approach systemic state-failure due to reaching inevitable production declines.

It is difficult to avoid the conclusion that as we near 2045, the European and American projects will face escalating internal challenges to their internal territorial integrity, increasing the risk of systemic state-failure. Likewise, after 2030, Europe, India, China (and other Asian nations) will begin to experience symptoms of systemic state-failure.


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Why I am still anti Lithium and EV

13 04 2017

Originally published at Alice Friedemann’s excellent blog,

[This is by far the best paper explaining lithium reserves, lithium chemistry, recycling, political implications, and more. I’ve left out the charts, graphs, references, and much of the text, to see them go to the original paper in the link below.]


I personally don’t think that electric cars will ever be viable because battery development is too slow, and given that oil can be hundreds of times more energy dense than a battery of the same weight, the laws of physics will prevent them from ever achieving enough energy density — see my post at Who Killed the Electric Car. (and also my more-up-to-date version and utility-scale energy storage batteries in my book When Trains Stop Running: Energy and the Future of Transportation.  Some excerpts from my book about lithium and energy storage:

Li-ion energy storage batteries are more expensive than PbA or NaS, can be charged and discharged only a discrete number of times, can fail or lose capacity if overheated, and the cost of preventing overheating is expensive. Lithium does not grow on trees. The amount of lithium needed for utility-scale storage is likely to deplete known resources (Vazquez, S., et al. 2010. Energy storage systems for transport and grid applications. IEEE Transactions on Industrial Electronics 57(12): 3884).

To provide enough energy for 1 day of storage for the United states, li-ion batteries would cost $11.9 trillion dollars, take up 345 square miles and weigh 74 million tons (DOE/EPRI. 2013. Electricity storage handbook in collaboration with NRECA. USA: Sandia National Laboratories and Electric Power Research Institute) 

Barnhart et al. (2013) looked at how much materials and energy it would take to make batteries that could store up to 12 hours of average daily world power demand, 25.3 TWh. Eighteen months of world-wide primary energy production would be needed to mine and manufacture these batteries, and material production limits were reached for many minerals even when energy storage devices got all of the world’s production (with zinc, sodium, and sulfur being the exceptions). Annual production by mass would have to double for lead, triple for lithium, and go up by a factor of 10 or more for cobalt and vanadium, driving up prices. The best to worst in terms of material availability are: CAES, NaS, ZnBr, PbA, PHS, Li-ion, and VRB (Barnhart, C., et al. 2013. On the importance of reducing the energetic and material demands of electrical energy storage. Energy Environment Science 2013(6): 1083–1092). ]

Vikström, H., Davidsson, S., Höök, M. 2013. Lithium availability and future production outlooks. Applied Energy, 110(10): 252-266. 28 pages



Lithium is a highly interesting metal, in part due to the increasing interest in lithium-ion batteries. Several recent studies have used different methods to estimate whether the lithium production can meet an increasing demand, especially from the transport sector, where lithium-ion batteries are the most likely technology for electric cars. The reserve and resource estimates of lithium vary greatly between different studies and the question whether the annual production rates of lithium can meet a growing demand is seldom adequately explained. This study presents a review and compilation of recent estimates of quantities of lithium available for exploitation and discusses the uncertainty and differences between these estimates. Also, mathematical curve fitting models are used to estimate possible future annual production rates. This estimation of possible production rates are compared to a potential increased demand of lithium if the International Energy Agency’s Blue Map Scenarios are fulfilled regarding electrification of the car fleet. We find that the availability of lithium could in fact be a problem for fulfilling this scenario if lithium-ion batteries are to be used. This indicates that other battery technologies might have to be implemented for enabling an electrification of road transports.


  • Review of reserves, resources and key properties of 112 lithium deposits
  • Discussions of widely diverging results from recent lithium supply estimates
  • Forecasting future lithium production by resource-constrained models
  • Exploring implications for future deployment of electric cars


Global transportation mainly relies on one single fossil resource, namely petroleum, which supplies 95% of the total energy [1]. In fact, about 62% of all world oil consumption takes place in the transport sector [2]. Oil prices have oscillated dramatically over the last few years, and the price of oil reached $100 per barrel in January 2008, before skyrocketing to nearly $150/barrel in July 2008. A dramatic price collapse followed in late 2008, but oil prices have at present time returned to over $100/barrel. Also, peak oil concerns, resulting in imminent oil production limitations, have been voiced by various studies [3–6].

It has been found that continued oil dependence is environmentally, economically and socially unsustainable [7].

The price uncertainty and decreasing supply might result in severe challenges for different transporters. Nygren et al. [8] showed that even the most optimistic oil production forecasts implied pessimistic futures for the aviation industry. Curtis [9] found that globalization may be undermined by peak oil’s effect on transportation costs and reliability of freight.

Barely 2% of the world electricity is used by transportation [2], where most of this is made up by trains, trams, and trolley buses.

A high future demand of Li for battery applications may arise if society choses to employ Li-ion technologies for a decarbonization of the road transport sector.

Batteries are at present time the second most common use, but are increasing rapidly as the use of li-ion batteries for portable electronics [12], as well as electric and hybrid cars, are becoming more frequent. For example, the lithium consumption for batteries in the U.S increased with 194 % from 2005 to 2010 [12]. Relatively few academic studies have focused on the very abundance of raw materials needed to supply a potential increase in Li demand from transport sector [13]. Lithium demand is growing and it is important to investigate whether this could lead to a shortfall in the future.


[My comment: utility scale energy storage batteries in commercial production are lithium, and if this continues, this sector alone would quickly consume all available lithium supplies: see Barnhart, C., et al. 2013. On the importance of reducing the energetic and material demands of electrical energy storage. Energy Environment Science 2013(6): 1083–1092.]

Aim of this study

Recently, a number of studies have investigated future supply prospects for lithium [13–16]. However, these studies reach widely different results in terms of available quantities, possible production trajectories, as well as expected future demand. The most striking difference is perhaps the widely different estimates for available resources and reserves, where different numbers of deposits are included and different types of resources are assessed. It has been suggested that mineral resources will be a future constraint for society [17], but a great deal of this debate is often spent on the concept of geological availability, which can be presented as the size of the tank. What is frequently not reflected upon is that society can only use the quantities that can be extracted at a certain pace and be delivered to consumers by mining operations, which can be described as the tap. The key concept here is that the size of the tank and the size of the tap are two fundamentally different things.

This study attempts to present a comprehensive review of known lithium deposits and their estimated quantities of lithium available for exploitation and discuss the uncertainty and differences among published studies, in order to bring clarity to the subject. The estimated reserves are then used as a constraint in a model of possible future production of lithium and the results of the model are compared to possible future demand from an electrification of the car fleet. The forecasts are based on open, public data and should be used for estimating long term growth and trends. This is not a substitute for economical short-term prognoses, but rather a complementary vision.

Data sources

The United States Geological Survey (USGS) has been particularly useful for obtaining production data series, but also the Swedish Geological Survey (SGU) and the British Geological Survey (BGS) deserves honourable mention for providing useful material. Kushnir and Sandén [18], Tahil [19, 20] along with many other recent lithium works have also been useful. Kesler et al. [21] helped to provide a broad overview of general lithium geology.

Information on individual lithium deposits has been compiled from numerous sources, primarily building on the tables found in [13–16]. In addition, several specialized articles about individual deposits have been used, for instance [22–26]. Public industry reports and annual yearbooks from mining operators and lithium producers, such as SQM [27], Roskill [28] or Talison Lithium [29], also helped to create a holistic data base.

In this study, we collected information on global lithium deposits. Country of occurrence, deposit type, main mineral, and lithium content were gathered as well as published estimates for reserves and resources. Some deposits had detailed data available for all parameters, while others had very little information available. Widely diverging estimates for reserves and resources could sometimes be found for the same deposit, and in such cases the full interval between the minimum and maximum estimates is presented. Deposits without reserve or resource estimates are included in the data set, but do not contribute to the total. Only available data and information that could be found in the public and academic spheres were compiled in this study. It is likely that undisclosed and/or proprietary data could contribute to the world’s lithium volume but due to data availability no conclusions on to which extent could be made.

Geological overview

In order to properly estimate global lithium availability, and a feasible reserve estimate for modelling future production, this section presents an overview of lithium geology. Lithium is named after the Greek word “lithos” meaning “stone”, represented by the symbol Li and has the atomic number 3. Under standard conditions, lithium is the lightest metal and the least dense solid element. Lithium is a soft, silver-white metal that belongs to the alkali group of elements.

As all alkali elements, Li is highly reactive and flammable. For this reason, it never occurs freely in nature and only appears in compounds, usually ionic compounds. The nuclear properties of Li are peculiar since its nuclei verge on instability and two stable isotopes have among the lowest binding energies per nucleon of all stable nuclides. Due to this nuclear instability, lithium is less abundant in the solar system than 25 of the first 32 chemical elements [30].

Resources and reserves

An important frequent shortcoming in the discussion on availability of lithium is the lack of proper terminology and standardized concepts for assessing the available amounts of lithium. Published studies talk about “reserves”, “resources”, “recoverable resources”, “broad-based reserves”, “in-situ resources”, and “reserve base”.

A wide range of reporting systems minerals exist, such as NI 43-101, USGS, Crirsco, SAMREC and the JORC code, and further discussion and references concerning this can be found in Vikström [31]. Definitions and classifications used are often similar, but not always consistent, adding to the confusion when aggregating data. Consistent definitions may be used in individual studies, but frequently figures from different methodologies are combined as there is no universal and standardized framework. In essence, published literature is a jumble of inconsistent figures. If one does not know what the numbers really mean, they are not simply useless – they are worse, since they tend to mislead.

Broadly speaking, resources are generally defined as the geologically assured quantity that is available for exploitation, while reserves are the quantity that is exploitable with current technical and socioeconomic conditions. The reserves are what are important for production, while resources are largely an academic figure with little relevance for real supply. For example, usually less than one tenth of the coal resources are considered economically recoverable [32, 33]. Kesler et al. [21] stress that available resources needs to be converted into reserves before they can be produced and used by society. Still, some analysts seemingly use the terms ‘resources’ and ‘reserves’ synonymously.

It should be noted that the actual reserves are dynamic and vary depending on many factors such as the available technology, economic demand, political issues and social factors. Technological improvements may increase reserves by opening new deposit types for exploitation or by lowering production costs. Deposits that have been mined for some time can increase or decrease their reserves due to difficulties with determining the ore grade and tonnage in advance [34]. Depletion and decreasing concentrations may increase recovery costs, thus lowering reserves. Declining demand and prices may also reduce reserves, while rising prices or demand may increase them. Political decisions, legal issues or environmental policies may prohibit exploitation of certain deposits, despite the fact significant resources may be available.

For lithium, resource/reserve classifications were typically developed for solid ore deposits. However, brine – presently the main lithium source – is a fluid and commonly used definitions can be difficult to apply due to pumping complications and varying concentrations.

Houston et al. [35] describes the problem in detail and suggest a change in NI 43-101 to account for these problems. If better standards were available for brines then estimations could be more reliable and accurate, as discussed in Kushnir and Sandén [18].

Environmental aspects and policy changes can also significantly influence recoverability. Introduction of clean air requirements and public resistance to surface mining in the USA played a major role in the decreasing coal reserves [33].

It is entirely possible that public outcries against surface mining or concerns for the environment in lithium producing will lead to restrictions that affect the reserves. As an example, the water consumption of brine production is very high and Tahil [19] estimates that brine operations consume 65% of the fresh water in the Salar de Atacama region. [ The Atacama only gets 0.6 inches of rain a year ]

Regarding future developments of recoverability, Fasel and Tran [36] monotonously assumes that increasing lithium demand will result in more reserves being found as prices rise. So called cumulative availability curves are sometimes used to estimate how reserves will change with changing prices, displaying the estimated amount of resource against the average unit cost ranked from lowest to highest cost. This method is used by Yaksic and Tilton [14] to address lithium availability. This concept has its merits for describing theoretical availability, but the fact that the concept is based on average cost, not marginal cost, has been described as a major weakness, making cumulative availability curves disregard the real cost structure and has little – if any – relevance for future price and production rate [37].

Production and occurrence of lithium

The high reactivity of lithium makes it geochemistry complex and interesting. Lithium-minerals are generally formed in magmatic processes. The small ionic size makes it difficult for lithium to be included in early stages of mineral crystallization, and resultantly lithium remains in the molten parts where it gets enriched until it can be solidified in the final stages [38].

At present, over 120 lithium-containing minerals are known, but few of them contain high concentrations or are frequently occurring. Lithium can also be found in naturally occurring salt solutions as brines in dry salt lake environments. Compared to the fairly large number of lithium mineral and brine deposits, few of them are of actual or potential commercial value. Many are very small, while others are too low in grade [39]. This chapter will briefly review the properties of those deposits and present a compilation of the known deposits.

Lithium mineral deposits

Lithium extraction from minerals is primarily done with minerals occurring in pegmatite formations. However, pegmatite is rather challenging to exploit due to its hardness in conjunction with generally problematic access to the belt-like deposits they usually occur in. Table 1 describes some typical lithium-bearing minerals and their characteristics. Australia is currently the world’s largest producer of lithium from minerals, mainly from spodumene [39]. Petalite is commonly used for glass manufacture due to its high iron content, while lepidolite was earlier used as a lithium source but presently has lost its importance due to high fluorine content. Exploitation must generally be tailor-made for a certain mineral as they differ quite significantly in chemical composition, hardness and other properties[13]. Table 2 presents some mineral deposits and their properties.

Recovery rates for mining typically range from 60 to 70%, although significant treatment is required for transforming the produced Li into a marketable form. For example, [40, 41] describe how lithium are produced from spodumene. The costs of acid, soda ash, and energy are a very significant part of the total production cost but may be partially alleviated by the market demand for the sodium sulphate by-products.

Lithium brine deposits

Lithium can also be found in salt lake brines that have high concentrations of mineral salts. Such brines can be reachable directly from the surface or deep underground in saline expanses located in very dry regions that allow salts to persist. High concentration lithium brine is mainly found in high altitude locations such as the Andes and south-western China. Chile, the world largest lithium producer, derives most of the production from brines located at the large salt flat of Salar de Atacama.

Lithium has similar ionic properties as magnesium since their ionic size is nearly identical; making is difficult to separate lithium from magnesium. A low Mg/Li ratio in brine means that it is easier, and therefore more economical to extract lithium.

Lithium Market Research SISThe ratio differs significant at currently producing brine deposits and range from less than 1 to over 30 [14]. The lithium concentration in known brine deposits is usually quite low and range from 0.017–0.15% with significant variability among the known deposits in the world (Table 3).

Exploitation of lithium brines starts with the brine being pumped from the ground into evaporation ponds. The actual evaporation is enabled by incoming solar radiation, so it is desirable for the operation to be located in sunny areas with low annual precipitation rate. The net evaporation rate determines the area of the required ponds [42].

It can easily take between one and two years before the final product is ready to be used, and even longer in cold and rainy areas.

The long timescales required for production can make brine deposits ill fit for sudden changes in demand. Table 3. Properties of known brine deposits in the world.

Lithium from sea water

The world’s oceans contain a wide number of metals, such as gold, lithium or uranium, dispersed at low concentrations. The mass of the world’s oceans is approximately 1.35*1012 Mt [47], making vast amounts of theoretical resources seemingly available. Eckhardt [48] and Fasel and Tran [36] announce that more than 2,000,000 Mt lithium is available from the seas, essentially making it an “unlimited” source given its geological abundance. Tahil [20] also notes that oceans have been proclaimed as an unlimited Li-source since the 1970s.

The world’s oceans and some highly saline lakes do in fact contain very large quantities of lithium, but if it will become practical and economical to produce lithium from this source is highly questionable.

For example, consider gold in sea water – in total nearly 7,000,000 Mt. This is an enormous amount compared to the cumulative world production of 0.17 Mt accumulated since the dawn of civilization [49]. There are also several technical options available for gold extraction. However, the average gold concentration range from <0.001 to 0.005 ppb [50]. This means that one km3 of sea water would give only 5.5 kg of gold. The gold is simply too dilute to be viable for commercial extraction and it is not surprising that all attempts to achieve success – including those of the Nobel laureate Fritz Haber – has failed to date.

Average lithium concentration in the oceans has been estimated to 0.17 ppm [14, 36]. Kushnir and Sandén [18] argue that it is theoretically possible to use a wide range of advanced technologies to extract lithium from seawater – just like the case for gold. However, no convincing methods have been demonstrated this far. A small scale Japanese experiment managed to produce 750 g of lithium metal from processing 4,200 m3 water with a recovery efficiency of 19.7% [36]. This approach has been described in more detail by others [51–53].

Grosjean et al. [13] points to the fact that even after decades of improvement, recovery from seawater is still more than 10–30 times more costly than production from pegmatites and brines. It is evident that huge quantities of water would have to be processed to produce any significant amounts of lithium. Bardi [54] presents theoretical calculations on this, stating that a production volume of lithium comparable to present world production (~25 kt annually) would require 1.5*103 TWh of electrical energy for pumping through separation membranes in addition to colossal volumes of seawater. Furthermore, Tahil [20] estimated that a seawater processing flow equivalent to the average discharge of the River Nile – 300,000,000 m3/day or over 22 times the global petroleum industry flow of 85 million barrels per day – would only give 62 tons of lithium per day or roughly 20 kt per year. Furthermore, a significant amount of fresh water and hydrochloric acid will be required to flush out unwanted minerals (Mg, K, etc.) and extract lithium from the adsorption columns [20].

In summary, extraction from seawater appears not feasible and not something that should be considered viable in practice, at least not in the near future.

Estimated lithium availability

From data compilation and analysis of 112 deposits, this study concludes that 15 Mt areImage result for lithium reasonable as a reference case for the global reserves in the near and medium term. 30 Mt is seen as a high case estimate for available lithium reserves and this number is also found in the upper range in literature. These two estimates are used as constraints in the models of future production in this study.

Estimates on world reserves and resources vary significantly among published studies. One main reason for this is likely the fact that different deposits, as well as different number of deposits, are aggregated in different studies. Many studies, such as the ones presented by the USGS, do not give explicitly state the number of deposits included and just presents aggregated figures on a national level. Even when the number and which deposits that have been used are specified, analysts can arrive to wide different estimates (Table 5). It should be noted that a trend towards increasing reserves and resources with time can generally be found, in particularly in USGS assessments. Early reports, such as Evans [56] or USGS [59], excluded several countries from the reserve estimates due to a lack of available information. This was mitigated in USGS [73] when reserves estimates for Argentina, Australia, and Chile have been revised based on new information from governmental and industry sources. However, there are still relatively few assessments on reserves, in particular for Russia, and it is concluded that much future work is required to handle this shortcoming. Gruber et al. [16] noted that 83% of global lithium resources can be found in six brine, two pegmatite and two sedimentary deposits. From our compilation, it can also be found that the distribution of global lithium reserves and resources are very uneven.

Three quarters of everything can typically be found in the ten largest deposits (Figure 1 and 2). USGS [12] pinpoint that 85% of the global reserves are situated in Chile and China (Figure 3) and that Chile and Australia accounted for 70 % of the world production of 28,100 tonnes in 2011 [12]. From Table 2 and 3, one can note a significant spread in estimated reserves and resources for the deposits. This divergence is much smaller for minerals (5.6–8.2 Mt) than for brines (6.5– 29.4 Mt), probably resulting from the difficulty associated with estimating brine accumulations consistently. Evans [75] also points to the problem of using these frameworks on brine deposits, which are fundamentally different from solid ores. Table 5. Comparison of published lithium assessments.


One thing that may or may not have a large implication for future production is recycling. The projections presented in the production model of this study describe production of lithium from virgin materials. The total production of lithium could potentially increase significantly if high rates of recycling were implemented of the used lithium, which is mentioned in many studies.

USGS [12] state that recycling of lithium has been insignificant historically, but that it is increasing as the use of lithium for batteries are growing. However, the recycling of lithium from batteries is still more or less non-existent, with a collection rate of used Li-ion batteries of only about 3% [93]. When the Li-ion batteries are in fact recycled, it is usually not the lithium that is recycled, but other more precious metals such as cobalt [18].

If this will change in the future is uncertain and highly dependent on future metal prices, but it is still commonly argued for and assumed that the recycling of lithium will grow significantly, very soon. Goonan [94] claims that recycling rates will increase from vehicle batteries in vehicles since such recycling systems already exist for lead-acid batteries. Kushnir and Sandén [18] argue that large automotive batteries will be technically easier to recycle than smaller batteries and also claims that economies of scale will emerge when the use for batteries for vehicles increase. According to the IEA [95], full recycling systems are projected to be in place sometime between 2020 and 2030. Similar assumptions are made by more or less all studies dealing with future lithium production and use for electric vehicles and Kushnir and Sandén [18] state that it is commonly assumed that recycling will take place, enabling recycled lithium to make up for a big part of the demand but also conclude that the future recycling rate is highly uncertain.

There are several reasons to question the probability of high recycling shares for Li-ion batteries. Kushnir and Sandén [18] state that lithium recycling economy is currently not good and claims that the economic conditions could decrease even more in the future. Sullivan and Gaines [96] argue that the Li-ion battery chemistry is complex and still evolving, thus making it difficult for the industry to develop profitable pathways. Georgi-Maschler [93] highlight that two established recycling processes exist for recycling Li-ion batteries, but one of them lose most of the lithium in the process of recovering the other valuable metals. Ziemann et al. [97] states that lithium recovery from rechargeable batteries is not efficient at present time, mainly due to the low lithium content of around 2% and the rather low price of lithium.

In this study we choose not to include recycling in the projected future supply for several reasons. In a short perspective, looking towards 2015-2020, it cannot be considered likely that any considerable amount of lithium will be recycled from batteries since it is currently not economical to do so and no proven methods to do it on a large scale industrial level appear to exist. If it becomes economical to recycle lithium from batteries it will take time to build the capacity for the recycling to take place. Also, the battery lifetime is often projected to be 10 years or more, and to expect any significant amounts of lithium to be recycled within this period of time is simply not realistic for that reason either.

The recycling capacity is expected to be far from reaching significant levels before 2025 according to Wanger [92]. It is also important to separate the recycling rates of products to the recycled content in new products. Even if a percentage of the product is recycled at the end of the life cycle, this is no guarantee that the use of recycled content in new products will be as high. The use of Li-ion batteries is projected to grow fast. If the growth happens linearly, and high recycling rates are accomplished, recycling could start constituting a large part of the lithium demand, but if the growth happens exponentially, recycling can never keep up with the growth that has occurred during the 10 years lag during the battery lifetime. In a longer time perspective, the inclusion of recycling could be argued for with expected technological refinement, but certainties regarding technology development are highly uncertain. Still, most studies include recycling as a major part of future lithium production, which can have very large implications on the results and conclusions drawn. Kushnir and Sandén [18] suggest that an 80% lithium recovery rate is achievable over a medium time frame. The scenarios in Gruber et al. [16], assumes recycling participation rates of 90 %, 96% and 100%. In their scenario using the highest assumed recycling, the quantities of lithium needed to be mined are decreased to only about 37% of the demand. Wanger [92] looks at a shorter time perspective and estimates that a 40% or 100% recycling rate would reduce the lithium consumption with 10% or 25% respectively by 2030. Mohr et al. [15] assume that the recycling rate starts at 0%, approaching a limit of 80%, resulting in recycled lithium making up significant parts of production, but only several decades into the future. IEA [95] projects that full recycling systems will be in place around 2020–2030.

The impact of assumed recycling rates can indeed be very significant, and the use of this should be handled with care and be well motivated.

Future demand for lithium

To estimate whether the projected future production levels will be sufficient, it isImage result for lithiuminteresting to compare possible production levels with potential future demand. The use of lithium is currently dominated by use for ceramics and glass closely followed by batteries. The current lithium demand for different markets can be seen in Figure 7. USGS [12] state that the lithium use in batteries have grown significantly in recent years as the use of lithium batteries in portable electronics have become increasingly common. Figure 7 (Ceramics and glass 29%, Batteries 27%, Other uses 16%, Lubrication greases 12%, Continuous casting 5%, Air treatment 4%, Polymers 3%, Primary aluminum production 2%, Pharmaceuticals 2%).

Global lithium demand for different end-use markets. Source: USGS [12] USGS [12] state that the total lithium consumption in 2011 was between 22,500 and 24,500 tonnes. This is often projected to grow, especially as the use of Li-ion batteries for electric cars could potentially increase demand significantly. This study presents a simple example of possible future demand of lithium, assuming a constant demand for other uses and demand for electric cars to grow according to a scenario of future sales of

electric cars. The current car fleet consists of about 600 million passenger cars. The sale of new passenger cars in 2011 was about 60 million cars [98]. This existing vehicle park is almost entirely dependent on fossil fuels, primarily gasoline and diesel, but also natural gas to a smaller extent. Increasing oil prices, concerns about a possible peak in oil production and problems with anthropogenic global warming makes it desirable to move away from fossil energy dependence. As a mitigation and pathway to a fossil-fuel free mobility, cars running partially or totally on electrical energy are commonly proposed. This includes electric vehicles (EVs), hybrid vehicles (HEVs) and PHEVs (plug-in hybrid vehicles), all on the verge of large-scale commercialization and implementation. IEA [99] concluded that a total of 1.5 million hybrid and electric vehicles had been sold worldwide between the year 2000 and 2010.

Both the expected number of cars as well as the amount of lithium required per vehicle is important. As can be seen from Table 9, the estimates of lithium demand for PEHV and EVs differ significantly between studies. Also, some studies do not differentiate between different technical options and only gives a single Li-consumption estimate for an “electric vehicle”, for instance the 3 kg/car found by Mohr et al. [15]. The mean values from Table 9 are found to be 4.9 kg for an EV and 1.9 kg for a PHEV.

As the battery size determines the vehicles range, it is likely that the range will continue to increase in the future, which could increase the lithium demand. On the other hand, it is also reasonable to assume that the technology will improve, thus reducing the lithium requirements. In this study a lithium demand of 160 g Li/kWh is assumed, an assumption discussed in detail by Kushnir and Sandén [18]. It is then assumed that typical batteries capacities will be 9 kWh in a PHEV and 25 kWh in an EV. This gives a resulting lithium requirement of 1.4 kg for a PHEV and 4 kg for an EV, which is used as an estimate in this study. Many current electrified cars have a lower capacity than 24 kWh, but to become more attractive to consumers the range of the vehicles will likely have to increase, creating a need for larger batteries [104]. It should be added that the values used are at the lower end compared to other assessments (Table 9) and should most likely not be seen as overestimates future lithium requirements.

Figure 8 shows the span of the different production forecasts up until 2050 made in this study, together with an estimated demand based on the demand staying constant on the high estimate of 2010– 2011, adding an estimated demand created by the electric car projections done by IEA [101]. This is a very simplistic estimation future demand, but compared to the production projections it indicates that lithium availability should not be automatically disregarded as a potential issue for future electric car production. The amount of electric cars could very well be smaller or larger that this scenario, but the scenario used does not assume a complete electrification of the car fleet by 2050 and such scenarios would mean even larger demand of lithium. It is likely that lithium demand for other uses will also grow in the coming decades, why total demand might increase more that indicated here. This study does not attempt to estimate the evolution of demand for other uses, and the demand estimate for other uses can be considered a conservative one. Figure 8. The total lithium demand of a constant current lithium demand combined with growth of electric vehicles according to IEA’s blue map scenario [101] assuming a demand for 1.4 kg of lithium per PHEV and 4.0 kg per EV. The span of forecasted production levels range from the base case Gompertz model

Concluding discussion

Potential future production of lithium was modeled with three different production curves. In a short perspective, until 2015–2020, the three models do not differ much, but in the longer perspective the Richards and Logistic curves show a growth at a vastly higher pace than the Gompertz curve. The Richards model gives the best fit to the historic data, and lies in between the other two and might be the most likely development. A faster growth than the logistic model cannot be ruled out, but should be considered unlikely, since it usually mimics plausible free market exploitation [89]. Other factors, such as decreased lithium concentration in mined material, economics, political and environmental problems could also limit production.

It can be debated whether this kind of forecasting should be used for short term projections, and the actual production in coming years can very well differ from our models, but it does at least indicate that lithium availability could be a potential problem in the coming decades. In a longer time perspective up to 2050, the projected lithium demand for alternative vehicles far exceeds our most optimistic production prognoses.

If 100 million alternative vehicles, as projected in IEA [101] are produced annually using lithium battery technology, the lithium reserves would be exhausted in just a few years, even if the production could be cranked up faster than the models in this study. This indicates that it is important that other battery technologies should be investigated as well.

It should be added that these projections do not consider potential recycling of the lithium, which is discussed further earlier in this paper. On the other hand, it appears it is highly unlikely that recycling will become common as soon as 2020, while total demand appears to potentially rise over maximum production around that date. If, when, and to what extent recycling will take place is hard to predict, although it appears more likely that high recycling rates will take place in electric cars than other uses.

Much could change before 2050. The spread between the different production curves are much larger and it is hard to estimate what happens with technology over such a long time frame. However, the Blue Map Scenario would in fact create a demand of lithium that is higher than the peak production of the logistic curve for the standard case, and close to the peak production in the high URR case.

Improved efficiency can decrease the lithium demand in the batteries, but as Kushnir and Sandén [18] point out, there is a minimum amount of lithium required tied to the cell voltage and chemistry of the battery.

IEA [95] acknowledges that technologies that are not available today must be developed to reach the Blue Map scenarios and that technology development is uncertain. This does not quite coincide with other studies claiming that lithium availability will not be a problem for production of electric cars in the future.

It is also possible that other uses will raise the demand for lithium even further. One industry that in a longer time perspective could potentially increase the demand for lithium is fusion, where lithium is used to breed tritium in the reactors. If fusion were commercialized, which currently seems highly uncertain, it would demand large volumes of lithium [36].

Further problems with the lithium industry are that the production and reserves are situated in a few countries (USGS [12] in Mt: Chile 7.5, China 3.5, Australia 0.97, Argentina 0.85, Other 0.135]. One can also note that most of the lithium is concentrated to a fairly small amount of deposits, nearly 50% of both reserves and resources can be found in Salar de Atacama alone. Kesler et al. [21] note that Argentina, Bolivia, Chile and China hold 70% of the brine deposits. Grosjean et al. [13] even points to the ABC triangle (i.e. Argentina, Bolivia and Chile) and its control of well over 40% of the world resources and raises concern for resource nationalism and monopolistic behavior. Even though Bolivia has large resources, there are many political and technical problems, such as transportation and limited amount of available fresh water, in need of solutions [18].

Regardless of global resource size, the high concentration of reserves and production to very few countries is not something that bode well for future supplies. The world is currently largely dependent on OPEC for oil, and that creates possibilities of political conflicts. The lithium reserves are situated in mainly two countries. It could be considered problematic for countries like the US to be dependent on Bolivia, Chile and Argentina for political reasons [105]. Abell and Oppenheimer [105] discuss the absurdity in switching from dependence to dependence since resources are finite. Also, Kushnir and Sandén [18] discusses the problems with being dependent on a few producers, if a problem unexpectedly occurs at the production site it may not be possible to continue the production and the demand cannot be satisfied.

Final remarks

Although there are quite a few uncertainties with the projected production of lithium and demand for lithium for electric vehicles, this study indicates that the possible lithium production could be a limiting factor for the number of electric vehicles that can be produced, and how fast they can be produced. If large parts of the car fleet will run on electricity and rely on lithium based batteries in the coming decades, it is possible, and maybe even likely, that lithium availability will be a limiting factor.

To decrease the impact of this, as much lithium as possible must be recycled and possibly other battery technologies not relying on lithium needs to be developed. It is not certain how big the recoverable reserves of lithium are in the world and estimations in different studies differ significantly. Especially the estimations for brine need to be further investigated. Some estimates include production from seawater, making the reserves more or less infinitely large. We suggest that it is very unlikely that seawater or lakes will become a practical and economic source of lithium, mainly due to the high Mg/Li ratio and low concentrations if lithium, meaning that large quantities of water would have to be processed. Until otherwise is proved lithium reserves from seawater and lakes should not be included in the reserve estimations. Although the reserve estimates differ, this appears to have marginal impact on resulting projections of production, especially in a shorter time perspective. What are limiting are not the estimated reserves, but likely maximum annual production, which is often missed in similar studies.

If electric vehicles with li-ion batteries will be used to a very high extent, there are other problems to account for. Instead of being dependent on oil we could become dependent on lithium if li-ion batteries, with lithium reserves mainly located in two countries. It is important to plan for this to avoid bottlenecks or unnecessarily high prices. Lithium is a finite resource and the production cannot be infinitely large due to geological, technical and economical restraints. The concentration of lithium metal appears to be decreasing, which could make it more expensive and difficult to extract the lithium in the future. To enable a transition towards a car fleet based on electrical energy, other types of batteries should also be considered and a continued development of battery types using less lithium and/or other metals are encouraged. High recycling rates should also be aimed for if possible and continued investigations of recoverable resources and possible production of lithium are called for. Acknowledgements We would like to thank Steve Mohr for helpful comments and ideas. Sergey Yachenkov has our sincerest appreciation for providing assistance with translation of Russian material.

Forget 1984…. 2020 is the apocalypse year

26 01 2017

The crescendo of news pointing to 2020 as the date to watch is growing apace…. it won’t be the year collapse happens, because collapse is a process, not an event; but it will definitely be the year this process starts to become obvious. To people other than followers of this blog at least…!

RIYADH, Saudi ArabiaAccording to the International Monetary Fund, Saudi Arabia’s economy is in danger of collapse as oil prices grow increasingly unstable.

The warning appeared in the “Regional Economic Outlook” for the Middle East and Central Asia published on Oct. 15, an annual report published by IMF economists. Adam Leyland, writing on Oct. 23 for The Independent, explained the grim prognosis for Saudi’s economy, which is almost completely dependent on fossil fuels:

“[T]he IMF said that the kingdom will suffer a negative 21.6 per cent ‘General Government Overall Fiscal Balance’ in 2015 and a 19.4 per cent negative balance in 2016, a massive increase from only -3.4 per cent in 2014.

Saudi Arabia currently has $654.5 billion in foreign reserves, but the cash is disappearing quickly.

The Saudi Arabian Monetary Agency has withdrawn $70 billion in funds managed by overseas financial institutions, and has lost almost $73 billion since oil prices slumped, according to Al-Jazeera. Saudi Arabia generates 90 per cent of its income from oil.”


Tax-free living will soon be a thing of the past for Saudis after its cabinet on Monday approved an IMF-backed value-added tax to be imposed across the Gulf following an oil slump.

A 5% levy will apply to certain goods following an agreement with the six-member Gulf Cooperation Council in June last year.

Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue.

Author Dr Nafeez Ahmed, a Visiting Fellow at Anglia Ruskin University’s Global Sustainability Institute, is making even more waves today, saying………:

“Syria and Yemen demonstrate how climate and energy crises work together to undermine state power and fuel terrorism. 

“Climate-induced droughts ravage agriculture, swell the ranks of the unemployed and destroy livelihoods.  Domestic oil depletion undercuts state revenues, weakening the capacity to sustain domestic subsidies for fuel and food.  As the state is unable to cope with the needs of an increasingly impoverished population, this leads to civil unrest and possibly radicalisation and terrorism. 

“These underlying processes are not isolated to Syria and Yemen.  Without a change of course, the danger is that eventually they will occur inside the US and Europe.”

Failing States, Collapsing Systems: BioPhysical Triggers of Political Violence, authored by Dr Nafeez Ahmed, published by Springer Briefs in Energy includes the following key points…:
  • Global net energy decline is the underlying cause of the decline in the rate of global economic growth.  In the short term, slow or absent growth in Europe and the US is complicit in voter discontent and the success of anti-establishment politicians. 
  • Europe is now a post-peak oil society, with its domestic oil production declining every year since 1999 by 6%.  Shale oil and gas is unlikely to offset this decline. 
  • Europe’s main sources of oil imports are in decline. Former Soviet Union producers, their production already in the negative, are likely to terminate exports by 2030.  Russia’s oil production is plateauing and likely to decline after 2030 at the latest. 
  • In the US, conventional oil has already peaked and is in sharp decline.  The shortfall is being made up by unconventional sources such as tight oil and shale gas, which are likely to peak by 2025. California will continue to experience extensive drought over the coming decades, permanently damaging US agriculture.
  • Between 2020 and 2035, the US and Mexico could experience unprecedented military tensions as the latter rapidly runs down its conventional oil reserves, which peaked in 2006. By 2020, its exports will revert to zero, decimating Mexican state revenues and potentially provoking state failure shortly thereafter.
  • After 2025, Iraq is unlikely to survive as a single state.  The country is experiencing worsening water scarcity, fueling an ongoing agricultural crisis, while its oil production is plateauing due to a combination of mounting costs of production and geopolitical factors.
  • Saudi Arabia will face a ‘perfect storm’ of energy, food and economic shocks most likely before 2030, and certainly within the next 20 years.
  • Egypt will begin to experience further outbreaks of civil unrest leading to escalating state failure after 2021.  Egypt will likely become a fully failed state after 2037.
  • India’s hopes to become a major economic player will falter due to looming food, water and energy crises.  India’s maximum potential domestic renewable energy capacity is insufficient to meet projected demand growth.
  • China’s total oil production is likely to peak in 2020.  Its rate of economic growth is expected to fall continuously in coming decades, while climate change will damage its domestic agriculture, forcing it to rely increasingly on expensive imports by 2022.

I wish Julian Simon could read this….. it seems all our limits to growth chickens are coming home to roost, and very soon now.

What is this ‘Crisis’ of Modernity?

22 01 2017

But why is the economy failing to generate prosperity as in earlier decades?  Is it mainly down to Greenspan and Bernanke’s monetary excesses?  Certainly, the latter has contributed to our contemporary stagnation, but perhaps if we look a little deeper, we might find an additional explanation. As I noted in a Comment of 6 January 2017, the golden era of US economic expansion was the ‘50s and ‘60s – but that era had begun to unravel somewhat, already, with the economic turbulence of the 70s. However, it was not so much Reagan’s fiscal or monetary policies that rescued a deteriorating situation in that earlier moment, but rather, it was plain old good fortune. The last giant oil fields with greater than 30-to-one, ‘energy-return’ on ‘energy-cost’ of exploitation, came on line in the 1980s: Alaska’s North Slope, Britain and Norway’s North Sea fields, and Siberia. Those events allowed the USA and the West generally to extend their growth another twenty years.

This week, there has been an avalanche of articles on Limits to Growth, just not titled so……. it’s almost as though the term is getting stuck in people’s throats, and are unable to pronounce them….


Alastair Crooke

This article by former British diplomat and MI6 ‘ranking figure’ Alastair Crooke, is an unpublished article I’ve lifted from the Automatic Earth…… as Raul Ilargi succinctly puts it…:


His arguments here are very close to much of what the Automatic Earth has been advocating for years [not to mention DTM’s…], both when it comes to our financial crisis and to our energy crisis. Our Primers section is full of articles on these issues written through the years. It’s a good thing other people pick up too on topics like EROEI, and understand you can’t run our modern, complex society on ‘net energy’ as low as what we get from any of our ‘new’ energy sources. It’s just not going to happen.


Alastair Crooke: We have an economic crisis – centred on the persistent elusiveness of real growth, rather than just monetised debt masquerading as ‘growth’ – and a political crisis, in which even ‘Davos man’, it seems, according to their own World Economic Forum polls, is anxious; losing his faith in ‘the system’ itself, and casting around for an explanation for what is occurring, or what exactly to do about it. Klaus Schwab, the founder of the WEF at Davos remarked  before this year’s session, “People have become very emotionalized, this silent fear of what the new world will bring, we have populists here and we want to listen …”.

Dmitry Orlov, a Russian who was taken by his parents to the US at an early age, but who has returned regularly to his birthplace, draws on the Russian experience for his book, The Five Stages of Collapse. Orlov suggests that we are not just entering a transient moment of multiple political discontents, but rather that we are already in the early stages of something rather more profound. From his perspective that fuses his American experience with that of post Cold War Russia, he argues, that the five stages would tend to play out in sequence based on the breaching of particular boundaries of consensual faith and trust that groups of human beings vest in the institutions and systems they depend on for daily life. These boundaries run from the least personal (e.g. trust in banks and governments) to the most personal (faith in your local community, neighbours, and kin). It would be hard to avoid the thought – so evident at Davos – that even the elites now accept that Orlov’s first boundary has been breached.

But what is it? What is the deeper economic root to this malaise? The general thrust of Davos was that it was prosperity spread too unfairly that is at the core of the problem. Of course, causality is seldom unitary, or so simple. And no one answer suffices. In earlier Commentaries, I have suggested that global growth is so maddeningly elusive for the elites because the debt-driven ‘growth’ model (if it deserves the name ‘growth’) simply is not working.  Not only is monetary expansion not working, it is actually aggravating the situation: Printing money simply has diluted down the stock of general purchasing power – through the creation of additional new, ‘empty’ money – with the latter being intermediated (i.e. whisked away) into the financial sector, to pump up asset values.

It is time to put away the Keynesian presumed ‘wealth effect’ of high asset prices. It belonged to an earlier era. In fact, high asset prices do trickle down. It is just that they trickle down into into higher cost of living expenditures (through return on capital dictates) for the majority of the population. A population which has seen no increase in their real incomes since 2005 – but which has witnessed higher rents, higher transport costs, higher education costs, higher medical costs; in short, higher prices for everything that has a capital overhead component. QE is eating into peoples’ discretionary income by inflating asset balloons, and is thus depressing growth – not raising it. And zero, and negative interest rates, may be keeping the huge avalanche overhang of debt on ‘life support’, but it is eviscerating savings income, and will do the same to pensions, unless concluded sharpish.

But beyond the spent force of monetary policy, we have noted that developed economies face separate, but equally formidable ‘headwinds’, of a (non-policy and secular) nature, impeding growth – from aging populations in China and the OECD, the winding down of China’s industrial revolution,  and from technical innovation turning job-destructive, rather than job creative as a whole. Connected with this is shrinking world trade.

But why is the economy failing to generate prosperity as in earlier decades?  Is it mainly down to Greenspan and Bernanke’s monetary excesses?  Certainly, the latter has contributed to our contemporary stagnation, but perhaps if we look a little deeper, we might find an additional explanation. As I noted in a Comment of 6 January 2017, the golden era of US economic expansion was the ‘50s and ‘60s – but that era had begun to unravel somewhat, already, with the economic turbulence of the 70s. However, it was not so much Reagan’s fiscal or monetary policies that rescued a deteriorating situation in that earlier moment, but rather, it was plain old good fortune. The last giant oil fields with greater than 30-to-one, ‘energy-return’ on ‘energy-cost’ of exploitation, came on line in the 1980s: Alaska’s North Slope, Britain and Norway’s North Sea fields, and Siberia. Those events allowed the USA and the West generally to extend their growth another twenty years.

And, as that bounty tapered down around the year 2000, the system wobbled again, “and the viziers of the Fed ramped up their magical operations, led by the Grand Vizier (or “Maestro”) Alan Greenspan.”  Some other key things happened though, at this point: firstly the cost of crude, which had been remarkably stable, in real terms, over many years, suddenly started its inexorable real-terms ascent.  And from 2001, in the wake of the ‘bust’, government and other debt began to soar in a sharp trajectory upwards (now reaching $20 trillion). Also, around this time the US abandoned the gold standard, and the petro-dollar was born.


Source: Get It. Got It. Good, by Grant Williams

Well, the Hill’s Group, who are seasoned US oil industry engineers, led by B.W. Hill, tell us – following their last two years, or so, of research – that for purely thermodynamic reasons net energy delivered to the globalised industrial world (GIW) per barrel, by the oil industry (the IOCs) is rapidly trending to zero. Note that we are talking energy-cost of exploration, extraction and transport for the energy-return at final destination. We are not speaking of dollar costs, and we are speaking in aggregate. So why should this be important at all; and what has this to do with spiraling debt creation by the western Central Banks from around 2001?

The importance? Though we sometimes forget it, for we now are so habituated to it, is that energy is the economy.  All of modernity, from industrial output and transportation, to how we live, derives from energy – and oil remains a key element to it.  What we (the globalized industrial world) experienced in that golden era until the 70s, was economic growth fueled by an unprecedented 321% increase in net energy/head.  The peak of 18GJ/head in around 1973 was actually of the order of some 40GJ/head for those who actually has access to oil at the time, which is to say, the industrialised fraction of the global population. The Hill’s Group research  can be summarized visually as below (recall that these are costs expressed in energy, rather than dollars):



[This study was also covered here on Damnthematrix starting here…]

But as Steve St Angelo in the SRSrocco Reports states, the important thing to understand from these energy return on energy cost ratios or EROI, is that a minimum ratio value for a modern society is 20:1 (i.e. the net energy surplus available for GDP growth should be twenty times its cost of extraction). For citizens of an advanced society to enjoy a prosperous living, the EROI of energy needs to be much higher, closer to the 30:1 ratio. Well, if we look at the chart below, the U.S. oil and gas industry EROI fell below 30:1 some 46 years ago (after 1970):



“You will notice two important trends in the chart above. When the U.S. EROI ratio was higher than 30:1, prior to 1970, U.S. public debt did not increase all that much.  However, this changed after 1970, as the EROI continued to decline, public debt increased in an exponential fashion”. (St Angelo).

In short, the question begged by the Hill’s Group research is whether the reason for the explosion of government debt since 1970 is that central bankers (unconsciously), were trying to compensate for the lack of GDP stimulus deriving from the earlier net energy surplus.  In effect, they switched from flagging energy-driven growth, to the new debt-driven growth model.

From a peak net surplus of around 40 GJ  (in 1973), by 2012, the IOCs were beginning to consume more energy per barrel, in their own processes (from oil exploration to transport fuel deliveries at the petrol stations), than that which the barrel would deliver net to the globalized industrial world, in aggregate.  We are now down below 4GJ per head, and dropping fast. (The Hill’s Group)

Is this analysis by the Hill’s Group too reductionist in attributing so much of the era of earlier western material prosperity to the big discoveries of ‘cheap’ oil, and the subsequent elusiveness of growth to the decline in net energy per barrel available for GDP growth?  Are we in deep trouble now that the IOCs use more energy in their own processes, than they are able to deliver net to industrialised world? Maybe so. It is a controversial view, but we can see – in plain dollar terms – some tangible evidence fo rthe Hill’s Groups’ assertions:



(The top three U.S. oil companies, ExxonMobil, Chevron and ConocoPhillips: Cash from operations less Capex and dividends)

Briefly, what does this all mean? Well, the business model for the big three US IOCs does not look that great: Energy costs of course, are financial costs, too.  In 2016, according to Yahoo Finance, the U.S. Energy Sector paid 86% of their operating income just to service the interest on the debt (i.e. to pay for those extraction costs). We have not run out of oil. This is not what the Hill’s Group is saying. Quite the reverse. What they are saying is the surplus energy (at a ratio of now less than 10:1) that derives from the oil that we have been using (after the energy-costs expended in retrieving it) – is now at a point that it can barely support our energy-driven ‘modernity’.  Implicit in this analysis, is that our era of plenty was a one time, once off, event.

They are also saying that this implies that as modernity enters on a more severe energy ‘diet’, less surplus calories for their dollars – barely enough to keep the growth engine idling – then global demand for oil will decline, and the price will fall (quite the opposite of mainstream analysis which sees demand for oil growing. It is a vicious circle. If Hills are correct, a key balance has tipped. We may soon be spending more energy on getting the energy that is required to keep the cogs and wheels of modernity turning, than that same energy delivers in terms of calorie-equivalence.  There is not much that either Mr Trump or the Europeans can do about this – other than seize the entire Persian Gulf.  Transiting to renewables now, is perhaps too little, too late.

And America and Europe, no longer have the balance sheet ‘room’, for much further fiscal or monetary stimulus; and, in any event, the efficacy of such measures as drivers of ‘real economy’ growth, is open to question. It may mitigate the problem, but not solve it. No, the headwinds of net energy per barrel trending to zero, plus the other ‘secular’ dynamics mentioned above (demography, China slowing and technology turning job-destructive), form a formidable impediment – and therefore a huge political time bomb.

Back to Davos, and the question of ‘what to do’. Jamie Dimon, the CEO of  JPMorgan Chase, warned  that Europe needs to address disagreements spurring the rise of nationalist leaders. Dimon said he hoped European Union leaders would examine what caused the U.K. to vote to leave and then make changes. That hasn’t happened, and if nationalist politicians including France’s Marine Le Pen rise to power in elections across the region, “the euro zone may not survive”. “The bottom line is the region must become more competitive, Dimon said, which in simple economic terms means accept even lower wages. It also means major political overhauls: “I say this out of respect for the European people, but they’re going to have to change,” he said. “They may be forced by politics, they may be forced by new leadership.”

A race to the bottom in pay levels?  Italy should undercut Romanian salaries?  Maybe Chinese pay scales, too? This is politically naïve, and the globalist Establishment has only itself to blame for their conviction that there are no real options – save to divert more of the diminished prosperity towards the middle classes (Christine Lagarde), and to impose further austerity (Dimon). As we have tried to show, the era of prosperity for all, began to waver in the 70s in America, and started its more serious stall from 2001 onwards. The Establishment approach to this faltering of growth has been to kick the can down the road: ‘extend and pretend’ – monetised debt, zero, or negative, interest rates and the unceasing refrain that ‘recovery’ is around the corner.

It is precisely their ‘kicking the can’ of inflated asset values, reaching into every corner of life, hiking the cost of living, that has contributed to making Europe the leveraged, ‘high cost’, uncompetitive environment, that it now is.  There is no practical way for Italians, for example, to compete with ‘low cost’ East Europe, or  Asia, through a devaluation of the internal Italian price level without provoking major political push-back.  This is the price of ‘extend and pretend’.

It has been claimed at Davos that the much derided ‘populists’ provide no real solutions. But, crucially, they do offer, firstly, the hope for ‘regime change’ – and, who knows, enough Europeans may be willing to take a punt on leaving the Euro, and accepting the consequences, whatever they may be. Would they be worse off? No one really knows. But at least the ‘populists’ can claim, secondly, that such a dramatic act would serve to escape from the suffocation of the status quo. ‘Davos man’ and woman disdain this particular appeal of ‘the populists’ at their peril.