Green Energy: 4 facts that will give you a reality check

By Larissa Fernand |  14-03-22 | 

Renewable and green energy are all the rage. This article in Enterprising Investor presents us with a reality check in the midst of all the hype. Below is an extract.

FACT: Any type of energy comes with some cost to the environment.

One MW of solar electricity requires 5 to 10 acres of land to generate. If New York City consumes around 53,500,000 MW of electricity, then 5,350,000 acres of solar panels might be needed to power the city. That’s an area about the size of the state of New Jersey.

A single 3-MW wind turbine may contain 335 tons of steel, 4.7 tons of copper, three tons of aluminium, and 700-plus pounds of rare-earth materials. This doesn’t include the aluminium and copper wires or the related towers and electrical infrastructure that deliver the power to the consumer.

As for the operational environment, most wind turbine blades are made of nonrecyclable composites. So, when they’re retired, they are cut up and sent to landfills.

The rare-earth metals required for solar and wind energy are supply constrained. Neodymium, dysprosium, indium, selenium, etc., are only available in a handful of countries. Rare earths harbour a dark secret: To mine and refine them is an energy-intensive process and creates considerable pollution, among other environmental and social costs.

FACT: There will be supply constraints with respect to Lithium.

Lithium is the key ingredient in the rechargeable batteries that power Teslas and other electric vehicles (EVs). Global lithium metal production stood at about 82,000 metric tons (MT) in 2020. As the U.K. and particular U.S. jurisdictions begin phasing out the sale of traditional gas-powered autos in 2025, their demand for lithium will increase seven-fold, from 200,000 MT to over 1,400,000 MT by 2030. And lithium demand will grow elsewhere as well, whether for EV batteries, for batteries for tools, computers, and homes, or for lubricants and glassmaking.

There won’t be enough lithium to meet the demand now or in the future. Lithium will be in short supply for at least a decade.

FACT: Coal energy won’t be phased out anytime soon.

According to this article in TIME, the world generated more power from coal in 2021 than ever before. The increase is driven by China, India, the U.S. and the E.U.

As Keisuke Sadamori, the IEA’s director of energy markets and security, observed, “The pledges to reach net zero emissions made by many countries . . . should have very strong implications for coal — but these are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action.” Do read the report by the Internationals Energy Agency.

The U.S. and the EU have their own domestic production issues. Copper is an essential metal for green and renewable energy. While a significant source of copper, the U.S. is still a net importer. Copper mines in Arizona and a copper-nickel mine in Minnesota have run into difficulties as the Biden administration has exerted its influence in the permitting process. The administration also momentarily paused the sale of new oil and gas leases. Such choices will make the U.S. more sensitive to supply shocks.

Likewise, the EU’s decision to shut down coal plants, reduce the use of nuclear energy, and rely on green and renewable energy comes amid greater potential for disruptions. In late August and early September 2021, Europe endured a heat wave. The surge in energy demand coupled with a lack of wind caused natural gas prices to spike by 325% over the prior year. The drive for carbon neutrality by 2050 has rendered domestic power unreliable and increased European dependence on Russian natural gas.

FACT: The EV supply chain is hardly a paradigm of ESG considerations.

Think illegal mines and child labour on top of mining-related environmental degradation. Such excesses are hard to square with the Electric Vehicle sector’s supposed ESG bona fides.

Another problem: The electrical infrastructure is not capable of handling the power requirements of a rapidly expanding fleet of EVs. Power grid failures in Europe, California, and Texas demonstrate the system’s fragility. When California’s grid buckled amid peak demand this summer, the state’s EV drivers were asked not to charge their vehicles.

What if the lithium battery technology is not yet ready for automobiles? Much smaller lithium batteries have earned bad reputations. Samsung’s Galaxy Note 7 phones were so notorious for exploding, they were banned from aircraft, and e-cigarettes and other lithium batteries from checked luggage. The Chevy Bolt EV has been recalled, creating a billion-dollar hit to GM’s balance sheet, and even Boeing had problems with its 787 lithium batteries.

Lithium battery fires burn at over 3,500 degrees Fahrenheit. They cannot be put out with water. Lithium battery fires are so hot they split water molecules into hydrogen and oxygen, creating a flammable hydrogen gas cloud. Their heat can damage or destroy the tendons that give prestressed concrete slabs their strength. These slabs are found in parking garages and apartments and on bridges. Where will EVs park if they aren’t safe in parking garages?

The above has been taken from Green and Renewable Energy: Not So Fast?

More on ESG

Add a Comment
Please login or register to post a comment.
Mutual Fund Tools
Ask Morningstar