Wantability, Well-Being and Risk

I’ve been mulling a name change for the blog for some time. The name the “The Rational Pessimist” was a riposte to Matt Ridley’s book “The Rational Optimist“. Ridley’s book is a paean to global free markets and human innovation–and in parts is correct. Since the industrial revolution commenced, technology coupled with capitalism has lifted the bulk of the world’s population out of a Hobbesian life that was “nasty, brutish and short”. But where I differ from Ridley is in believing that a 200-year data set of economic growth can fully capture all future risk.

Ridley’s book is Panglossian. He believes that every problem we face–from climate change to resource depletion–is relatively minor, just waiting to be solved by a technological fix. For him, price always trumps scarcity. Whenever something looks like it is running out, the magic of markets will  always lead to new discoveries or acceptable substitutes.

As an economist by training, I accept that the everlasting dance between supply, demand and price is something of beauty. But I also believe that it has its limitations. A backward-looking empirical observation that things haven’t run out is different from a forward-looking theoretical prediction that things won’t ever run out. North Sea oil is running out regardless of price, and a global supply of oil is not qualitatively different from a local one.

Of course, technology may provide a perfect, or dare I say it better, substitute for fossil fuels. But then again it may not. That is uncertainty, and the consequences of that uncertainty is the concept of risk.

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Battery Banter 5: The Relevance (or Not) of Moore’s Law

Concurrently with writing this series of blog posts, I have been reading Steve Levine’s newly published book “The Powerhouse: Inside the Invention of a Battery to Save the World“.  The book is a bit of a mess, full of random jumps, wrong turns and dead ends. Perhaps that is appropriate, since it describes a battery development process that is full of random jumps, wrong turns and dead ends.

While the back cover blurb tells me that the book reads like a thriller, it is more like Sir Arthur Conan Doyle’s tail “The Dog That Didn’t Bark”. We have two questing groups of heroes: the public-sector Argonne National Laboratory battery guys and the plucky privates-sector upstarts at Envia Systems. Yet the book peters out at the end, with both teams abjectly failing in their respective quests to find the super battery Holy Grail. Argonne’s new version of nickel manganese cobalt batteries (NMC 2.0) suffers from chronic voltage fade (meaning that the performance of the battery slumps after repeated recharging cycles). Meanwhile, Envia’s super battery is spectacularly flawed, based on a collapsing anode and dodgy intellectual property.

Despite the book being in need of a good edit, it is still full of interesting insights into the battery development process. In a chapter recounting conversations with Don Hillebrand, an old school auto expert working at Argonne, Levine makes this observation:

Unlike microchips, batteries don’t adhere to a principle akin to Moore’s law, the rule of thumb that the number of switches on a chip–semiconductor efficiency–doubles every eighteen months. Batteries were comparatively slow to advance. But that did not make electronics superior to electric cars.

Consumer electronics typically wear out and require replacement every two or three years. They lock up, go on the fritz, and generally degrade. They are fragile when jostled or dropped and are often cheaper to replace than repair. If battery manufacturers and carmakers produced such mediocrity, they would be run out of business, sued for billions and perhaps even go to prison if anything catastrophic occurred. Automobiles have to last at least a decade and start every time. Their performance had to remain roughly the same throughout. They had to be safe while moving–or crashing–at high speed.

At this point, I want to refer you back to the original 1965 article by Gordon Moore that ushered in Moore’s Law entitled  “Cramming more components onto integrated circuits.” From this, we have the quintessential exponential chart, which delivers a straight line if you put the y-axis onto a logarithmic scale (click for larger image):

Moore's Law Paper jpeg

This is the world of Ray Kurzweil‘s singularity which I blogged on in a post a couple of years back called “Singularity or Collapse: Part 1 (For Ever Exponential?“. As knowledge increases by powers of 10, virtually every challenge faced by mankind dissolves. Continue reading

Battery Banter 4: Could the Grid Cope with a Next Generation EV?

In my last series of posts, I focussed on the war of attribution between electric vehicles (EVs) and traditional internal combustion engine vehicles (ICEs).  Due to the recent slump in oil prices, EVs are on the defensive. They need increased volume to get down their cost curves and punch out of their current redoubt of super cars (Tesla) and green credential statement cars (Nissan Leaf). Low gasoline prices has made such an offensive a lot more tricky to pull off.

But let us suppose that a commercial super battery were to emerge that had high energy density and was cheap. What would happen next? Let’s run this thought experiment in a UK context.

First, let’s look a the UK’s existing fleet. Great Britain has a population of 64 million people, who between them drive around 29 million registered cars (source: here, click for larger image).

Registered Cars UK

And annually each car is driven for an average of 8,000 miles, which translates into 22 miles per day (click for larger image; also remember we are smoothing out weekends and holidays).

Annual Average Miles Travelled jpeg

From a previous blog post, I republish the following chart, which shows the kind of mileage per kilowatt-hour (kWh) a battery achieves at present. Continue reading

Battery Banter 3: Gasoline’s Dastardly Energy Density

In my last post, I talked about the challenge that low oil prices pose for the electric vehicle industry. The following chart from a 2012 McKinsey battery study shows the key tipping points (click for larger image):

McKinsey Battery Study jpeg

With US gasoline (petrol) prices currently running at $2.5 per gallon, we are falling into the bottom left corner of the chart. In short, the battery price for battery electric vehicles (BEVs in the chart) must plummet to keep EVs in the game. As stated yesterday, Nissan and Tesla are getting their battery costs down to around $300 per kilowatt-hour (kWh), but this is still far above the current sweet spot of $150-$200.

Previously, I also talked about the ‘learning rate': the rate at which battery prices could fall due to learning from experience manufacturing cost savings for every doubling of battery volume. The industry is in the ‘Catch 22′ position of not being able to crank up volume sufficiently to get down its cost curve since EVs are just too far adrift from internal combustion engine vehicles price-wise to secure volume sales. So what is to be done? Continue reading

Battery Banter 2: Sliding Down the Electric Vehicle Cost Curve

With impeccable timing (for my current blogging theme), Nature Climate Change has just published a commentary by Bjorn Nkyvist and Mans Nilsson reviewing the falling cost of battery packs for electric vehicles (source: here, but apologies as the article is behind a paywall). Bottom line: costs have been falling faster than predicted a few years ago (click for larger image).

Battery Electric Vehicle Costs jpeg

In line with Tony Seba’s estimates I blogged on two days ago (here), Nykvist and Nilsson saw total battery pack costs fall 14% per annum between 2007 and 2014 from $1,000 per kilowatt-hour (kWh) to $410. The market leaders in terms of auto battery technology, Tesla and Nissan, saw a slightly lower rate of decline of 6 to 9% since they have been at the cutting edge of improvements and have had less potential for catch-up than the industry as a whole. However, their costs per kWh are now seen at around $300 per kWh of battery capacity. Note that a BMW i3 has battery capacity of approximately 19 kWh, a Nissan Leaf 24 kWh and a top of the range Tesla 85 kWh. Continue reading

Battery Banter 1: Are Internal Combustion Engines Going the Way of the Horse?

A few days ago, a good friend of mine pointed me toward a presentation on disruptive technologies given by Tony Seba. A youtube video is available here:

The entire video is worth watching, but today I will restrict myself to the issues he raises relating to battery technology.

Seba stresses that technological change in the transport sector could happen at breakneck speed. With a pair of compelling photos of early-last-century New York, we are asked to remember that a grand disruption in transport has happened before. In the first photo, dating from April 1900, we play a game of spot the car (click for larger image).

Where Is the Car? jpeg

In the second, a mere 13 years later, the challenge is to spot the horse.

Where Is the Horse? jpeg

The lesson here is that once a disruptive technology reaches a particular tipping point, it doesn’t just take market share from the incumbent industry but rather completely replaces it. For Seba, we are close to reaching that point with electric vehicles.

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Charts du Jour, 18 March 2015: Shale and Seneca’s Cliff

In the words of the Roman philosopher Seneca:

Increases are of sluggish growth, but the way to ruin is rapid

Lucius Annaeus Seneca was musing on the accelerated rate of decline and fall of empires a couple of thousand years ago. The chemist and scholar of the post-growth world Ugo Bardi has borrowed the philosopher’s name for his idea of a Seneca Cliff–the precipice over which our complex society will likely (according to him) tip and fall.

While such ideas gained considerable traction a few years ago (fanned by rocketing fossil fuel prices and the impact of the Great Recession), they are now deeply out of fashion. Doesn’t Bardi know that we live in an age of abundance, or so the shale oil and gas story goes.

Befitting the name of his blog, Bardi remains a committed Cassandra, warning all those who will listen. To my shale oil production chart of yesterday, Bardi responds with this first (all is well in the world of cod):

Cod Landings jpeg

And then this (perhaps it was not as well as it seemed):

US Cod Landings Latest jpeg

Full blog post by Bardi on this theme is here. But does the argument “so goes cod, so will go shale” hold true?

This is certainly the view of the geoscientist J. David Hughes, who maintains a web site called “shalebubble.org“. On it, you will find a number of Hughes’ reports published under the imprint of the Post Carbon Institute, the latest going under the title of “Drilling Deeper‘. The full report is 300 pages long, but Hughes concludes that the US Energy Information Administration has built a production forecast on the back of a series of three false premises. Further, based on these, the US economy has taken as truisms a series of false promises (click for larger image).

False Premises and Promises jpeg

Should Hughes’ analysis be correct, then Seneca’s Cliff may beckon. Within a decade we will know one way or another. Never forget: Cassandra was proved right in the end.