Articles in Category: Green

An article in the Financial Times this week reporting on recent research done by the Trancik Lab at MIT and the Norwegian University of Science and Technology last year suggests that the future for low-emissions vehicles might simply be smaller vehicles.

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Both pieces of solid research support the fact that larger, electric-powered vehicles have a higher life cycle carbon footprint than smaller combustion engine autos.

Let us first define what the research is saying about life cycle emissions. To capture an electric car’s full environmental impact, the research says regulators need to embrace life cycle analysis that considers car production, including the sourcing of rare earth metals that are part of the battery, plus the electricity that powers it and the recycling of its components. The most crucial elements appear to be the source of the electricity used to charge the batteries and the size (and therefore quantity of lithium and cobalt) of the batteries.

Early early vehicles (EVs) were small vehicles with limited batteries and limited ranges, but Tesla changed all that with the model S. With the marker they laid down to the market, vehicle sizes and the range they can offer on a single charge have risen. As a result, so has the size of the batteries, to the point where a model S can weigh up to 2,250 kilograms, but a significant part of that is the massive battery that powers its impressive range.

Source: Financial Times

According to data from the Trancik Lab quoted by the Financial Times, a Tesla Model S P100D saloon driven in the U.S. Midwest produces 226 grams of carbon dioxide (or equivalent) per kilometer over its life cycle. That numbers comes in less than an equivalent large luxury internal combustion engine (ICE) saloon, but much more than a smaller ICE vehicle that may produce less than 200g/km over its life cycle.

Note the reference to the location, as part of the calculation takes account of the electricity-generating capacity — in a solar- or wind-rich environment like Spain or Nevada, it will have a lower carbon footprint than in a coal-rich area, like Poland.

And therein lies part of the problem for legislators, keen to drive our migration to a “zero emission” transport future.

Of course, that is a fiction — all power, even renewables, has a carbon footprint. Power sources, however, vary considerably. To guide both automotive policy and power generation, legislators need to start looking at this more holistically than simply just, in the case of cars, what comes out the tailpipe.

Source: Financial Times

Size for size, EV has some 50% lower life cycle emission signature than an equivalent size ICE. The MIT research acknowledges that fact, but the drive for ever longer ranges (required in only a tiny fraction of real life journeys) will reduce the benefit a switch to EV could deliver. The irony is that by the time legislators get around to working out how to incentivize and/or penalize better car choices, the market will be evolving to negate the benefits. The rise of sharing services will mean journeys will be completed less in our own vehicles and more in hired services, so that we do not make purchase choices based on range and where transport providers could coordinate vehicles for longer distances. Battery technology will also improve in the next decade, increasing power density per kilogram of lithium and potentially reducing, or even removing, the need to cobalt altogether.

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While legislators fumble forward trying to accommodate the fact they are encouraging poor buying choices and the development of technologies in the wrong direction, be prepared for the fact that we see about turns in EV incentives from the current “all EVs are good” to “some EVs are good —  but some are going to be taxed.”

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Much like governments encouraged millions to switch to diesels, only for them to heavily penalize diesel cars less than 10 years later, we could see an equally ham-fisted about change on EV tax legislation down the road.

The Renewables MMI dropped a few points this month, falling from 83 for a November reading of 80.

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The sub-index dropped for the second consecutive month after hitting a 2017 high of 84 for the September reading.

Within the basket of metals, Japanese steel plate, Korean steel plate, U.S. steel plate and U.S. grain-oriented electrical steel (GOES) coil all posted price drops. Chinese steel plate, however, posted a slight price increase.

Cobalt in Cobalt

As demand for electric vehicles (EVs) increases, so, too, will demand for that rare but vital metal: cobalt.

Most of the world’s cobalt is mined in the Democratic Republic of Congo — political instability there this year has led to production slowdowns and skyrocketing prices, leading some batterymakers to recalibrate their battery formulas to make their batteries less dependent on cobalt.

Speaking of cobalt, one aptly named town is experiencing a boom related to the metal.

Bloomberg earlier this week reported on the town of Cobalt in Canada’s Ontario province.

Ironically, the town was built on another metal — silver — but a recent “cobalt rush,” in line with growing global demand for cobalt, has breathed new life into the small town, Bloomberg reported.

While the DRC produces a majority of the world’s cobalt, Canada sits at third in cobalt production behind China, contributing about 6% of global supply. As the Bloomberg report indicates, political instability in the DRC could lead to growing demand from other sources, like Canada, where the business climate is more predictable.

“This area’s seen more airborne surveys in the last year than in the last hundred,” said Gino Chitaroni, a local prospector and geologist, to Bloomberg. “Two years ago, if you had a cobalt property you couldn’t give it away. All of a sudden, within six months, everything changed.”

Cobalt, Ontario, is just one example of a town experiencing such a boom. As EVs become more and more prevalent, there’s no doubt others will follow in its footsteps.

The Kobe Steel Saga

Kobe Steel, Japan’s third-largest steelmaker, has been in the news in recent weeks because of the firm’s quality data falsification scandal.

Of relevance here, as reported by Reuters, is the fact that steel plate is included in the scope of the problems for Kobe.

According to Reuters on Oct. 19, Kobe Steel Executive Vice President Naoto Umehara said the company had found a new case of falsification of data at a unit that cuts and processes steel plate.

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An interesting article in The Telegraph this week explores the challenge facing the U.K.’s industrial sector in terms of power costs and the government’s competing priority of decarburizing the U.K.’s economy.

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The U.K. is not alone in this.

Much of Europe and the U.S. face a similar challenge of rising energy costs and concerns that industry is disadvantaged relative to competitors due to high energy costs and that retail consumers are being forced to pick up much of the bill for the government’s green agenda.

According to the article, British industry already pays well above the average for Europe, and Europe itself is a high-power-cost region relative to many other parts of the world.

Source: Telegraph

Only Denmark has higher industrial power costs than the U.K. Denmark generates much of its electricity from wind turbines, for which the technology is only just becoming economically viable, without subsidy and without costing in the backup generating capacity the variability of wind demands.

Decarburization and social policies, which includes subsidies for renewables but also programs to improve energy efficiency, add 20% to U.K. bills at present. But — and it’s a big “but” — they are rising fast.

Levies for such programs are estimated by Andrew Buckley, a director at the Major Energy Users Council (MEUC), to reach 40% by 2020, according to The Telegraph. Some major users, such as the steel industry, have been made a special case and the government has reluctantly granted an 85% rebate of green taxes for steelmakers. However, that makes the problem worse for firms that do not qualify; every subsidy for one is pressure to increase costs on another.

Some firms are moving off grid, investing in their own turbines, solar parks or micro gas plants, sometimes backed up by battery storage if based on renewables.

Rather than ease the problem for those left on the grid, it makes the situation worse. Funding a network with fewer consumers spreads the fixed costs over those that are left.

Of course, the U.K. is not alone in this, but policymakers create different policies in different countries depending on their priorities. Consumers, even in common markets like the EU, can therefore find themselves paying substantially more than their neighbours.

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For the top ten highest energy users, the annual energy bills stands at around £120 million ($155 million). If they are paying 20% or more than their neighbor, that could equate to a £24 million disadvantage before they produce a single ton of product.

No wonder energy is becoming such a hot topic despite low oil and coal prices.

If there’s one success story being written in India, it’s that of renewable energy.

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By the government’s own reckoning, despite India’s energy needs likely to double over the next seven years (going by the current rate of economic growth), the nation is likely to meet two-fifths of its electricity needs with renewable sources by 2030.

Power and Renewable Energy Minister R K Singh told reporters recently that the efficiency of solar panels itself had already reached 30%, and prices were likely to reduce due to an increase in usage.

The government’s stipulated target is of 175 Gigawatt (GW) of renewable generation by 2022, which includes 100 GW of solar and 60 GW of wind generation, up from the current total renewable energy generation capacity of about 59 GW (with wind already now at about 33 GW).

What’s more, a report this month by the International Energy Agency (IEA) said India’s renewable energy capacity would more than double by 2022, which would be enough to overtake renewable expansion in the European Union for the first time.

India’s present-day renewable energy installed capacity is about 59 GW. “By 2022, India’s renewable capacity will more than double. This growth is enough to overtake renewable expansion in the European Union for the first time,” IEA said in its latest renewables market analysis and forecast.

The IEA added that the solar photovoltaic (PV) and wind together represented 90% of India’s capacity growth, as auctions yielded some of the world’s lowest prices for both technologies.

India needs an investment of around U.S. $100 billion to meet the target of 175 GW of renewable energy capacity by 2022.

As of now, China was the undisputed leader of renewable electricity capacity expansion over the forecast period, with over 360 GW of capacity coming online. China, as per the IEA, had already exceeded its 2020 solar PV target three years ahead of time and is set to achieve its onshore wind target in 2019.

China, India and the U.S. will account for two-thirds of global renewable expansion by 2022, according to the IEA report. The total solar PV capacity by then would exceed the combined total power capacities of India and Japan today, it added.

The power consumption of electric vehicles — including cars, two- and three-wheelers, and buses — was expected to double over the next five years. Renewable electricity is estimated to represent almost 30% of their consumption by 2022, up from 26% today.

This year’s renewable forecast was 12% higher than last year, mostly because of solar PV traction in China and India.

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Like “electricity for all,” the Indian government’s latest ambitious plan is for a complete transformation of its auto segment and move towards all electric vehicles (EVs) by 2030.

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Toward this goal, the government has started making the right moves, but the question on every one’s mind is simple: Is the plan possible?

The political will is there, but to have all vehicles on the road running on battery by 2030 seems like a pretty impossible dream.

Nitin Gadkari, India’s road transport minister, made the government’s intentions clear, rather forcefully, when he said recently, “We should move towards alternative fuel … I am going to do this, whether you like it or not.” He was addressing delegates of India’s automobile lobby group, SIAM. Gadkari made it clear he would “bulldoze the plan through.”

It’s really all about numbers, say the experts. After all, how does a country of over 1 billion people, where over 20 million vehicles are sold annually, embark on such an ambitious drive?

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Standing in for Fouad Egbaria, here is your morning in metals, folks.

Aluminum Highlights

Feeling behind on aluminum industry activity and economic drivers? Look no further than the Aluminum Association’s latest comprehensive rundown, including import trends and key raw material inputs such as energy.

According to their highlights, the majority of aluminum imports into the U.S. are in ingot form. “After three consecutive months of declining volumes, ingot imports increased 1.8 percent month-over-month in July,” the report states, citing U.S. Census Bureau figures. “Nevertheless, imports of ingot increased 19.0 percent year-over-year in July, and are up 22.7 percent year-to-date over the same period in 2016. While the growth has occurred across the spectrum of ingot importing countries, the largest year-to-date increases have originated from South Africa, India, and Australia.”

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EPA Clean Power Plan: Trump Takes Over Obama’s ‘Fuzzy Math’

President Trump made quick moves to ax the Clean Power Plan, whose benefits the previous administration said would dwarf its costs (of which, MetalMiner speculated, there would be many).

Now, Trump and his EPA chief, Scott Pruitt, are trying to massage the numbers behind those costs and benefits — and it may be a tough proposition to get things right.

Electric Cars All the Rage?

Arnoud Balhuizen, chief commercial officer at BHP, was quoted by Reuters as saying on Tuesday that 2017 will be a “tipping point” for electric cars, adding that “the impact for raw materials producers would be felt first in the metals markets and only later in oil,” according to the news service.

“In September 2016 we published a blog and we set the question – could 2017 be the year of the electric vehicle revolution?” Balhuizen said in an interview, Reuters reported.

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MetalMiner’s correspondent in India, Sohrab Darabshaw, will have an upcoming piece later this week about how that very revolution is shaping up in the world’s second-most populous country – stay tuned!

The Renewables MMI rose seven points in August, reaching a reading of 84.

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The basket of metals in this sub-index posted a strong month. Steel plate from Japan, Korea and China rose in the month. U.S. steel plate, however, fell 4.6%.

Meanwhile, in the topsy-turvy world of grain-oriented electrical steel (GOES), the U.S. GOES price jumped 7.3%.

Of the nine metals in the sub-index, only one (U.S. steel plate) posted a drop in price as of Sept. 1. Chinese silicon, cobalt and neodymium all also posted price gains.

Charged Up for Cobalt

Last month, we wrote about cobalt, which is in high demand for its application in electric vehicle batteries. Cobalt is mined predominantly in the Democratic Republic of Congo, which has been shaken by violence and political instability this year.

The instability there has seen production in the DRC decrease this year, yielding significant price increases in the metal. As we wrote last month, the instability of cobalt (not to mention growing ethical concerns vis-a-vis child labor at mines) has some battery makers looking to adjust their metal formulas, in some cases suggesting the use of more nickel, instead.

According to a Reuters report, however, cobalt has been boosted by projections touting a rise in purchases of electric vehicles. According to the report, UBS forecasted electric vehicles will account for 3.1% of global car sales in 2021 and 13.7% in 2025, up from 1% this year.

In addition, cobalt listings have skyrocketed, the report says. As of the end of July, 100 companies that explore or mine for cobalt were listed on the Toronto Stock Exchange and TSX Venture Exchange, up from fewer than 30 in 2015, according to SNL Financial.

In short, despite issues of supply volatility — and, thus, material cost — cobalt’s profile continues to rise in tandem with the rise of electric vehicles.

What About U.S. Steel Plate?

Like the rest of the U.S. steel industry, steel plate producers are anxiously awaiting the Trump administration’s determination in its Section 232 investigation of steel imports.

The investigation, announced in April, has a January deadline. The investigation picked up steam earlier on in the summer, but has seemingly been put on the backburner for the time being. As such, initial optimism from U.S. steel producers regarding potentially imminent trade action stemming from the investigation began to wane.

In a letter to the Trump administration last week, the American Line Pipe Producers Association (ALPPA) urged the president to take action, also mentioning steel plate in the process.

“The ALPPA strongly supports the imposition of tariffs to address this crisis,” wrote Timothy Brightbill, counsel to the ALPPA. “With tariffs in place, we could quickly return to full capacity, adding hundreds of direct jobs in addition to upstream and downstream jobs as well.

“However, in order for tariffs to be effective for our industry, steel pipe must be included in any tariff covering steel coil and plate, as failure to do so would be devastating for domestic large diameter line pipe producers and workers.”

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Before you get into your planned Labor Day festivities, let’s take a look back at some of the stories here on MetalMiner from the past week:

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  • After a somewhat stagnant run, aluminum had a strong August — why? Our Stuart Burns covered aluminum’s upward momentum last week.
  • Ah, the North American Free Trade Agreement (NAFTA), the deal that’s stayed in the news for much of the year. President Donald Trump recently renewed rhetoric threatening the 23-year-old trade agreement on the heels of the completion of the first round of negotiating talks held in Washington, D.C. We recapped the recent developments in the ongoing talks held by trade representatives of the U.S., Canada and Mexico.
  • Speaking of trade agreements, talks are also underway between the U.S. and South Korea on KORUS, the free trade deal the two countries began in 2012.
  • China was reportedly amenable to making further significant cuts to tackle excess capacity, which has been a major talking point, not just for the U.S., but the global market. However, President Trump rejected China’s proposal. Burns offered his analysis on the situation.
  • It’s been a mostly good year for base metals — but not every metal has joined in on the fun, as our Irene Martinez Canorea wrote last week.
  • Hurricane Harvey inflicted a severe toll on the people of southeast Texas and southwest Louisiana. Now, there’s a long road ahead to recovery, both in terms of the humanitarian and economic impacts of the storm.
  • Burns looked to the the so-called “lucky country” of Australia, which is rich in iron ore. But what happens when iron ore reserves are exhausted? Answering the question briefly: look to the sun.

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Australia is sometimes called “the lucky country.”

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Although the phrase is usually meant positively to reflect its bountiful natural resources (and sometimes to its isolation from conflict and strife elsewhere in the world), the original meaning was not so complimentary.

At the start of the last chapter of Donald Horne’s book “The Lucky Country,” a passage reads  “Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”

Personally, my experience of Australians has been very favorable: there is no one we like better beating at sports, they have a good sense of humor and are one of the few societies that have maintained a reasonable work-life balance.

But maybe part of that comes from those bountiful natural resources, much like Norway and a few other mature but resource-rich economies. The country is partially supported by exports of commodities they have in abundance. The Reserve Bank of Australia estimated in 2014 that household incomes across the country were 13% higher than they would have been without the mining boom and real wages were 6% higher.

Just like a Norway without oil and gas, without iron ore, coal, natural gas and other natural resources Australia’s economy would have to work a whole lot harder to just tread water.

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The Renewables MMI, which tracks metals and materials going into the renewable energy industry, moved up by a single point for our July reading, up to 72 from last month’s 71.

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For just the second time this year, U.S. steel plate posted a price drop, falling 3.7% for this month’s reading. U.S. grain-oriented electrical steel (GOES) also fell, by 1.2%. GOES had alternated between price drops and rises all year until this month, when GOES dropped in price for the second month in a row.

Meanwhile, Chinese steel plate rose 1%. Chinese neodymium, cobalt cathodes and silicon also posted price increases.

Japanese and Korean steel plate both posted price drops, by 1.1% and 5.9%.

Feeling Green

The renewable metals market is potentially in for a jolt in the coming years, especially in light of the direction of the automotive industry.

Last week, Volvo announced that “every Volvo it launches from 2019 will have an electric motor, marking the historic end of cars that only have an internal combustion engine (ICE) and placing electrification at the core of its future business.” While the reviews are mixed regarding how revolutionary the announcement actually was, it is certainly a long-term boon for the metals used in electric vehicles.

In other automotive news, Tesla is preparing to debut its Tesla Model 3. According to a Reuters report Tuesday, the new sedan model is expected to increase Tesla’s sales by 500%.

While Tesla’s sales currently represent a tiny fraction of the sales of the traditional automotive heavyweights, its sales are on the rise.

According to Autodata Corp sales figures released earlier this month, Tesla’s U.S. sales in June amounted to 3,900 units, up by 25.8% from June 2016, and year-to-date sales in 2017 (23,550) were up 42.7% from the same time frame in 2016.

However, a Washington Post report earlier this week notes that electric-vehicles sales hit a wall in Hong Kong once tax breaks there expired.

In the short term, the same thing could happen as sales pick up in the U.S.

Currently, a maximum total credit of $7,500 is afforded for consumers who purchase plug-in electric vehicles. That credit, however, begins to be phased out once a manufacturer sells more than 200,000 vehicles in the U.S.

On a macroscopic scale, despite President Donald Trump’s decision to remove the U.S. from the Paris climate accord, renewable energy, in general, has picked up momentum.

While clearly a long-term goal, France announced it will ban the sale of petroleum- or diesel-fueled vehicles by 2040. Also, the U.S. Conference of Mayors voted in late June to approve a resolution to help cities establish a “community-wide target of powering their communities with 100 percent clean, renewable energy by 2035.”

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