Block’s Indicator of Sustainable Growth

by Ray Block

Two years ago, the US House of Representatives passed the Waxman Markey Bill regulating greenhouse gases. Two years later, the Senate is still wrestling with its version of the same bill.

The latest version by Senators John Kerry, the Massachusetts 2004 defeated Democratic candidate for President and Joe Lieberman, the independent senator from Connecticut introduced the American Power Act.

However, unlike last year, when the US Senate was debating climate action, and there was a powerful supporter of the legislation in Lindsey Graham, the moderate Republican from South Carolina, who holds a significant influence among the moderates, this year the coalition for the legislation has no bipartisan support.

As a result, the bill has little chance of reaching a majority of 60, the magic number preventing a minority of opposition senators from a filibuster, delaying endlessly a vote on the floor of the chamber.

The bill would mandate a 17 per cent reduction in greenhouse gases from 2005 levels by 2020, and 83 per cent by 2050. As the New York Times Green blog pointed out on March 12 2010, there are concessions for every major player.

“Loan guarantees for nuclear plant operators, incentives for use of natural gas in transportation, exemptions from emissions caps for heavy industries, free pollution permits for utilities, modest CO2 limits for oil refiners and expansion of offshore drilling for those states willing to accept the risks.”

The likelihood of an expansion in offshore drilling comes at an unfortunate time, with BP’s devastating oil spill in the Gulf of Mexico, potentially the largest oil spill on record. Coastal states worried about how drilling off the coast of one state could affect their state would have the ability to veto drilling projects.

US Public opinion has increasingly downplayed fears of global warming. The opinion poll, Rasmussen Reports in its April 19 2010 release said that only 54 per cent of voters “still believe global warming is a serious problem,” with “48 per cent saying global warming is caused by long term planetary trends, and only 33 per cent blaming human activity.”

A May 10 2010 Rasmussen Reports said that even after the Gulf oil spill was the dominant news item on the web, TV newscasts and newspapers front pages, 58 per cent of respondents still favoured offshore drilling.

Still a big majority for Big Oil, but a 14 per cent drop from the larger 72 per cent majority in favour of offshore drilling after Barack Obama announced at the end of March, the US Government opening new areas to exploratory offshore drilling for the first time in more than two decades.

Reuters summed up on the US public’s wavering opinions (May 10 2010): “(The oil slick) hasn’t really reached the Gulf Coast yet. Let’s start counting now to see how many polls on these contentious issues arrive before (a) the spill is cleaned up and (b) the bill either becomes law or fails to gain congressional approval.”

by Ray Block

The European Union in a new vehicle strategy released last year is committed to spend E5 billion. The EU’s Green Car Initiative is designed in a multi prong approach to cut carbon emissions, and in providing financial support for research in electric and hybrid vehicles, encourage a growing number of electric cars on the market.

The International Energy Agency (IEA) forecast last year that sales of electric vehicles and plug-in hybrids should reach at least five million globally by 2020, which would catapult to a 50 per cent market share by 2050. Along these lines, Germany as the largest state in EU is planning on one million vehicles on its roads by 2020.

Nissan’s Leaf all-electric car, for release in 2011 was unveiled at the 80th Geneva International Motor Show in the March quarter 2010. Nissan has already flagged that the US price will be US$ 32,780, and there will be substantial discounts by the US and state governments.

As the first of the major car companies to offer electric cars in substantial volumes at a near affordable price, the Leaf promises zero tailpipe emissions, and a range of 160 km (100 miles) on a single lithium-ion battery charge. A 50 kW direct current charger will be available to charge the battery up to 80 per cent in under 30 minutes.

The compact AC electric motor in the front of the car driving the front wheels delivers a power output of more than 90 kW of power and 280 Nm (newton metres) of torque. Maximum speed is more than 140 km/h (90 mph).

Nissan is saying that a later model will have a range of 320 km (200 miles), but you may have to wait a long time for this to eventuate. In the meantime, US researchers are almost convinced that the next wave of electric car, with a long range on a single charge will come from a lithium air battery.

Three research laboratories- MIT in Cambridge (MA), IBM at the Almaden Research Centre in San Jose (CA), and Argonne National Laboratory, close to Chicago (IL) are all working on lithium air batteries. There is great promise about their research.

You can understand the enthusiasm when researchers say lithium-ion, the current vehicle battery choice, with its limited energy capacity, has the potential to deliver only about 585 watt-hours of electricity per kilogram. This compares with a lithium sulphur battery, with a theoretical potential of about 2,600 watt-hours, and lithium air batteries with an even higher potential of 5,000 watt-hours.

Currently, BYD, the Chinese car and battery producer has on the market an electric car with a lithium sulphur battery.

The MIT researchers in a paper published in the journal Electrochemical and Solid-State Letters, demonstrated that electrodes with gold or platinum as a catalyst in lithium air prototypes would also be substantially much lighter, a key issue for electric vehicles.

The future of electric cars seems unbounded.

by Ray Block

The Washington Post published an article by Robert Bryce relating to myths about green energy. Bryce is a senior fellow at the Manhattan Institute, and has published a book “Power Hungry: The Myths of ‘Green’ Energy’ and the Real Fuels of the Future.” The book was published in the USA on April 27 2010.

Bryce’s point, although he overdoes it, is that renewable and alternative energy technologies have great emotional and political appeal, but don’t reduce CO2 by much, don’t reduce dependence on imported oil, nor create many new jobs, and so the list goes on and on.

It is true that the hype about renewable/ and alternative energy can be overdone, they are also costly in subsidies, and the reduction in carbon dioxide in the atmosphere is currently minute.

Bryce makes an important point that in the case of hybrids and electric vehicles, the electric motor consumption of rare earth elements is unduly dependent on the only abundant global supplier, which just happens to be China, which by 2012 is expected to be the dominant supplier of hybrids and electric vehicles for domestic and international sales. Consequently, there may not be any surplus of rare earth elements available for export.

Bryce says that solar and wind energies “require huge amounts of land to deliver relatively small amounts of energy, disrupting natural habitats. Even an ageing natural gas well producing 60,000 cubic feet per day generate more than 20 times the watts per square metre of a wind turbine. A nuclear power plant cranks out about 56 watts per square metre, eight times as much as is derived from solar photovoltaic installations.”

All true, but so what. As I have said repeatedly, renewable (and alternative) energy industries, which are still in their infancy will ultimately become the giant industries of the future. These industries are still to reach their peak efficiency levels and become fully competitive with industries relying on coal and oil. But there are no alternatives on offer.

by Ray Block

In was not until 1982, before the first motor vehicle was assembled in China. And it took a further 10 years before one million vehicles were sold in any one year. But over the last 18 years, an astonishingly giant industry has been created to become in 2009 the largest auto market in the world.

And having come this far, it is inevitable that like the steel industry, where the Chinese produce about 50 per cent of global supply, the same trends are emerging in motor vehicles.

In hybrids and fully electric cars, China with its still current 200 auto manufacturers will dominate this space, with the government goal for 2011 of 500,000 electric vehicles seen as a modest beginning.

All the major international auto companies, with hopes of marketing success in the hybrid and electric vehicle space, with affiliates in China are extremely busy right now.

Indeed, all of the majors, whether joint ventures with foreign auto companies, state owned, municipal owned, or private owned are currently working two and three shifts throughout the week, with an almost endless supply of customers.

Passenger car sales rose 63 per cent to 1.26 million vehicles in March 2010, and commercial vehicles rose even more strongly to 470,000 units over the same month, according to the China Association of Automobile Manufacturers (CAAM).

In 2009, vehicle sales totalled 13.6 million units, a gain over the previous year of 45 per cent. CAAM expects the domestic auto market to grow 15 per cent this year suggesting a total market of 15-16 million. Another auto trade association, Shanghai based China Passenger Car Association is even more confident, suggesting that China’s vehicle sales will surpass 17 million units in 2010.

In 2008, the Ministry of Science and Technology mandated that 10 per cent of Chinese cars will run on alternative fuels by 2012 and called for research subsidies. The Ministry of Finance announced a new commitment to promote new energy vehicles in the country’s 13 largest cities- Beijing, Shanghai, Chongqing, Zhangchun, Dalian, Hangzhou, Jinan, Wuhan, Shenzhen, Hefei, Kunming and Nanchang.

The mandate called for public services to begin buying alternative fuel vehicles in these cities and provide subsidies for their production and purchasing. The subsidies included 50,000 yuan for hybrids and 60,000 yuan for pure electric cars.

A revised subsidy scheme is eagerly expected for new energy vehicles. China Daily (April 9 2010) reported that electric cars qualifying for subsidies are those that have received the government’s production license and are assembled in China, regardless whether they come from domestic or joint venture firms.

Zero emission pure electric cars is now the preferred technology path for new energy cars in China, which will be reflected in the new stimulus plan. Where hybrids and hydrogen fuel cell vehicles fit in is not clear, as they were targeted as the priority for new energy vehicle development in China’s 11th Five Year Plan (2005-2010).

Zhang Jinhua, vice secretary general of the Chinese Society of Automotive Engineers, who is also an official for the national 863 research program on energy saving and new energy vehicles says that China’s roadmap for new energy cars has shifted in “giving priority to pure electric cars and taking hybrid cars as complement.”

As part of China’s new12th Five Year Plan, the National Development and Reform Commission (NDRC), China’s major planning body has highlighted nuclear energy, wind energy and new energy vehicles as priorities.

Frank Liao, chief engineer of Chery, now China’s fifth largest automaker, says that the first round of competition for the electric car market share would mainly be between medium and small sized domestic private automakers, and the large state owned domestic automakers ,which had acted “sluggishly” in electric car research and development.

There has since been an element of change, with even the highly profitable state and municipal owned SAIC, the No 1 auto company in China, too content in its cosy joint ventures, finally getting the message that the government wants the industry to accelerate change. SAIC is releasing a hybrid model this year, and a pure electric car in 2012.

A number of pure electric cars are about to enter the market. BYD, the 7.5 per cent affiliate of Warren Buffett’s Berkshire Hathaway was first in with its own hybrid F3DM introduced in 2009. BYD for “Build Your Dreams” started in 1995 in auto batteries, and it is only in recent years that it entered the vehicle market.

For many years, a notorious reverse engineering outfit, which never paid for foreign technology,was openly exposed as such in a prominent online piece by Caexon Online. BYD sold 430,000 vehicles in 2009, and is building a new plant to double that output. It now wants to do its own research and development, and is prominent in the export market.

Chery started in 1997, and became the fifth Chinese automaker to reach a production goal of two million vehicles, the first one million was in 2007, and the second in 2009. At the beginning of 2010, Chery began a $350 million R&D program to develop traditional automotive technologies and new energy technologies at the same time.

The aim is to continue a strong program of technical improvements spending around 4.6 per cent of yearly sales on R&D. Chery, which launched its S18 electric car in March 2009, the first of its S series of fully electric cars, has been concentrating on “high efficiency, energy saving, easy operation, continuous variable transmission and quietness.”

The largest of the private auto companies Geely, which nreleased its EK-1 fully electric car, has just concluded a deal with Ford to buy Volvo, the Swedish motor firm for $1.8 billlion. Whether the Chinese company can meet the full purchase price at this stage is up in the air, but they retain first right of refusal advantage to purchase the prestige marque.

To make the 500,000 electric car target by 2011, there are generous production subsidies, and there is a scramble among large state owned enterprises to set up charging stations to enable the new car revolution to take place.

by Ray Block

Preliminary figures of PV growth in calendar year 2009 by the European Photovoltaic Industry Association (EPIA) suggest that about 6.4 GW was installed worldwide last year reaching a total capacity of over 20GW (20,000 MW).

The growth, says EPIA, is particularly impressive given the weak level of demand at the height of the recession in the March quarter. A sizzling increase in global cumulative installed PV capacity is expected in 2010 by at least 40 per cent, with an annual growth expected to increase by more than 15 per cent.

The PV market survey firm Solarbuzz expects the first quarter 2010 to show global module production rising by 7 per cent, with a further 19 per cent in the second quarter. Thin film production is expected to account for 17 per cent of global shipments in the first half of 2010.

One word of caution is introduced with Germany, the largest PV market, which increased installations by about 3 GW in 2009 to a cumulative installed capacity of almost 9 GW will at some stage reduce the size of its gross-feed-in-tariff.

Italy is the second largest European market, with an expected 700 MW in 2009. Czech Republic also showed strong growth with 411 MW installed in 2009. Belgium, France, Portugal and UK showed positive growth. The 2008 leader Spain languished, as a result of the cap imposed by the government in 2008.

In other regions, USA achieved around 475 MW in installations in 2009, while Japan did even better with new installations of 485 MW. Promising markets in Canada, Australia, Brazil, Mexico, Morocco and South Africa are expected in future years.

The most exciting solar PV producer continues to be First Solar, now the largest PV module producer in the world, with Shyam Metha of Greentech Media (March 29 2009) demonstrating the profit potential of the solar market. First Solar is the dominant player in the thin film market specialising in (CdT) cadmium telluride.

Add these ingredients – high throughput (1,011 MW in 2009), competitive efficiency of 11 per cent, and industry leading cost. This is currently a sensational 83 cents per watt. A lot of the applied genius is due to investor/ entrepreneur Harold McMaster, who concluded in the early 1980s, that the “essential cost element of large area solar arrays was glass, and (he) could treat the actual solar cell as simply a different kind of coating on glass.”

Metha explains: “In other word, thin film PV represented a technology that could be manufactured using glass’ high throughput coating process instead of the slow, cumbersome batch process of traditional crystalline silicon wafer-based PV – an approach that had one hundredth the feedstock requirement.”