The Dot-Com Bubble and Green Energy
Bill Clinton has all the answers. He knows how to fix the economy. How to fine tune it so it purrs. Just like he did during the dot-com boom and bust (see It’s Still the Economy, Stupid by Bill Clinton posted 6/19/2011 on Newsweek).
When I was president, the economy benefited because information technology penetrated every aspect of American life. More than one quarter of our job growth and one third of our income growth came from that. Now the obvious candidate for that role today is changing the way we produce and use energy.
But most of it was just an illusion. It was a bubble. There was an explosion in dot-com companies trying to be the next Microsoft. Investors bid Stocks up into the stratosphere. Alan Greenspan called it irrational exuberance. It wasn’t healthy economic growth. It was only a bubble. And the bubble eventually popped. As they always do. And with the bubble went a lot of those jobs.
Of course, when he says energy, he doesn’t mean drilling for oil. He means green energy. As in batteries. For all those electric cars the president is urging GM to build.
On the day President Obama took office, the U.S. had less than 2 percent of the world market in manufacturing the high-powered batteries for hybrid or all-electric cars. On the day of the congressional elections in 2010, thanks in large part to the cash—incentive policy, we had 20 percent of global capacity, with 30 new battery plants built or under construction, 16 of them in Michigan, which had America’s second—highest unemployment rate. We have to convince the Republican Congress that this is a good thing.
One thing Bill Clinton is right on is the similarity between information technology and green energy. One was a bubble. And the other is sure to be one, too.
The Biggest Problem of Electric Cars is the Battery
The all-electric car is an elusive dream. Hybrids have had some moderate success. Because they come with a backup internal combustion engine that makes up for all the shortfalls of an all-electric car. The battery (see Better Batteries Will Save the World by Farhad Manjoo posted 6/21/2011 on Slate).
If we had batteries that matched the price and performance of fossil fuels, we would not only have cleaner cars, but we might be able to remake much of the rest of the nation’s energy infrastructure, too. Wind and solar power are generated intermittently—sometimes the wind doesn’t blow and the sun doesn’t shine—and batteries can moderate that volatility. Stores of batteries placed in the electric grid could collect energy when the sun shines or when the wind blows and then discharge it when we need it. Not to put too fine a point on it, but you might say that the future of the world depends on better batteries—a better battery would alter geopolitics, mitigate the disasters of climate change, and spur a new economic boom.
This glosses over an important point that few discuss. Batteries are not energy. They store energy. Energy that we have to create. And right now, because we don’t have a massive infrastructure to store energy when the wind does blow and the sun does shine, that leaves fossil fuels. Which means there is no net saving in carbon emissions if we start driving electric cars. This just transfers the pollution our cars emit to the power plants. Most of which use the most polluting of all fossil fuels. Coal. So going all electrical in our cars may actually increase pollution.
This aside there are other problems with batteries that make gasoline a better choice.
The fundamental problem with batteries is the existence of gasoline. Oil is cheap, abundant, and relatively easy to transport. Most importantly, it has a high “energy density”—meaning that it’s phenomenally good at storing energy for its weight. Today’s best lithium-ion batteries can hold about 200 watt-hours per kilogram—a measure of energy density—and they might theoretically be able to store about 400 watt-hours per kilogram. Gasoline has a density equivalent of around 13,000 watt-hours per kilogram.
The only reason electric cars might one day compete with cars that rely on internal combustion is that gasoline engines are highly inefficient; nearly all of the energy stored in gasoline is lost to heat. But gasoline makes up for that flaw with another advantage: When your car’s out of gas, you can refill it in a few minutes. With today’s electrical infrastructure, batteries need many hours to recharge. There’s some hope that we might one day install fast-charging stations across the country, but the researchers Fletcher interviews point out that this is a daunting challenge. The battery in today’s Tesla roadster needs about four hours to charge. If you wanted to charge that battery in 15 minutes, you’d need a 200-kilowatt electric substation feeding the charging station. “Your house takes 1 kilowatt,” one expert tells Fletcher. “If you want to have something like a gasoline fuel station that is all electrical, you’re talking about multimegawatts of power at that station. And I just don’t see that happening.”
It’s that energy density of gasoline that lets you sit in rush hour traffic in February with your lights on and your heater keeping you toasty warm. And alive. But should you run low on gas you can always take 10 minutes and fill your tank. Then you can rejoin that rush hour traffic. And sit in it. With your lights on. And your heater still keeping you toasty warm. And alive.
The other nice thing about gasoline is that it’s pretty safe to handle. Most gas stations in America are self-serve. People pump gas without a second thought about safety. For an electrical ‘quick’ charge, though, you’re playing with electrical energy that typically only skilled electricians work with. After extensive safety training. And while wearing special protective clothing and gear. Probably not the kind of thing you want your daughter playing with on her way home from the big game. Unless she is a highly skilled electrician.
In theory, the lithium-air battery could store 11,000 watt-hours per kilogram, which makes it, Fletcher says, “the best chance battery scientists have to beat gasoline.” A lithium-air battery could allow a car to drive 500 miles before recharging. With that range, you wouldn’t need a nationwide system of quick-charging stations. You could drive pretty much wherever you wanted all day, and then recharge your car at night.
But lithium-air is the cold fusion of the battery world—a would-be game-changer that has the unfortunate downside of being impossible to achieve (probably).
There is a battery technology out there in the research and development stage. But it’s a long way from a manufacturing plant. Right now the electric car is far inferior to the gasoline-powered car. And if you want a car to take you to and from some place safely, you’re probably buying something with a gasoline engine. A car where you can use the heat and switch on the lights without worrying if you’ll have enough juice to make it home. And that’s just something the internal combustion engine will always be able to do better than the all-electric car. Get you home.
Electric Cars not Selling Well
With Bill Clinton convinced that car batteries for electric cars are an important part of our economic revival, let’s take a look at some electric car sales numbers. I mean, if everything is contingent on these things, let’s just make sure people are buying them to support this battery economy. Before we build more plants that may end up building something people don’t want to buy (see Sales update: Nissan Leaf hits 573, Chevy Volt at 493 in April posted 5/3/2011 on Autoblog).
The latest cumulative U.S. sales totals for the plug-in duo, since launching in late 2010, has the Volt leading the pack with 2,029 units sold, while the Leaf comes in at 1,044. Year-to-date, Volt sales stand at 1,703, while Nissan says Leaf production had, as of April 15th, hit nearly 8,000.
And it doesn’t look like people want to buy these electric cars. Nissan built 8,000 Leafs and only sold 1,044 of them. That’s pretty bad. There appears no point in building them anymore. Not with a backlog of just under 7,000. And with 87% of all Leafs built sitting unsold, there’s no point in building batteries for more of these cars.
Okay. Let’s take a closer look at the Volt to see how viable a business model that is (see Will GM’s 2011 Chevy Volt Evolve Or Become A Costly Dead End? by George Parrott posted 6/20/2011 on Green Car Reports).
While the 2011 Chevy Volt will find its way to between 10,000 and 15,000 U.S. buyers, that’s far from enough volume to make any car a production success–or to make it profitable.
Most mainstream car models must sell 100,000 or more units a year to produce black ink.
No point in making batteries for these cars either. No one’s buying them. Other than then environmentalists. Or rich people who can afford a toy car that they can take out for show while using their real internal combustion engine car to commute to work and take on vacations. And it’s a money hole for GM. Not exactly what they need while coming out of a ‘bankruptcy’. If they’re smart they’d give up on the Volt before they have another round of financial problems.
The Irrational Exuberance of Green Energy
There’s a similarity between information technology and green energy. And that similarity is irrational exuberance. The market for all those dot-com companies was illusionary. As is the market for electric cars. So it makes little sense in building more batteries for cars people aren’t buying.
Adding batteries to our electric grid will be an enormous investment of tax dollars to improve the efficiency of some of the most inefficient energy sources. Wind. And solar. Besides, for anyone who has suffered through multiple power outages each year, do you really want to add more complexity to the electric grid? Something else that lightning can strike? Something that is so complex that can’t be repaired or replaced as easily as a downed wire? I shudder to think about waiting for that power restoration.
The point of green energy is twofold. To get us off of expensive foreign oil. And to stop global warming. But the green energy solution is going to cost us more in the long run than foreign oil. And with the science telling us sunspot activity may be heading towards a Maunder Minimum, we’re probably going to see some global cooling coming our way. Not warming. So what’s the point? We don’t need green energy right now. Especially if it costs more than foreign oil. And we don’t need a bubble of green energy jobs to come back and bight us in the ass when that bubble pops. As all bubbles do.
We use a lot of oil. We should build on that. For now. Create some good, high paying jobs in the oil business. Drill for more oil. And bring it to market. To meet a soaring demand. You see, that’s an economic model that works. Meeting demand with supply. It works. Always has. And always will.