Car Talk
It seems that people finally are starting to understand that the energy problem is not about alternatives (especially ethanol, which is counter-productive). It’s about making cars and trucks operate on electricity that is generated by alternatives. We can have all the cheap renewable electricity we want - and I’m convinced we will have it in a surprisingly short time - but the electricity will do no good for solving our peak oil energy crisis if cars don’t run on electrons.
Over the past month I’ve been surprised to learn that the pleasant vision I had come to think would eventuate in a few years, lithium ion batteries powering plug-in hybrid electric vehicles (PHEV’s), may be an illusion. It seems that neither the cost nor the safety of large scale li-ion batteries is secure, which would explain why Toyota and Honda are planning for their next generation of HEV’s and PHEV’s to contain upgraded versions of the NiMH battery currently in use.
If the next five years of HEV and PHEV development are dominated by NiMH and not Li-ion batteries, two investment implications fall out. First, the lithium franchise of SQM becomes less compelling. Second, there will be a substantial need for more Rare Earth Elements that are used in NiMH batteries. One of my readers has kindly been educating me about these vital elements, their growing scarcity, and an investment opportunity related to them. I will be writing about all that soon.
Another potential option for bringing an affordable electric vehicle to market quickly is the ultracapacitor route being pursued by a small Canadian firm, Zenn Motors (Zero Emissions, No Noise). I’m intrigued by this possibility of an electric car with the range and power comparable to gasoline powered vehicles and the ability to recharge quickly. I’ve bought a few shares of Zenn (ZNNMF) and plan to learn more about the company and the EEStor ultracapacitor on which Zenn’s new product is based and in which Zenn has an equity interest.
Apparently EEStor is a very secretive private company about which two things are “known.” First they are funded, supposedly, by Kleiner Perkins, the highly successful Silicon Valley venture firm. And second, they recently got an ultracapacitor order from McDonald Douglass for a military aircraft. The buzz is that somehow EEStor’s proprietary technology allows for very rapid recharging while also allowing for slow discharge of its stored energy. If true, the product would seem to operate like a battery but one that is easily recharged. Moreover, the cost is said to be “low.” Whether true or not, the president of Zenn, who has been privy to inside knowledge of EEStor, seems to be betting his company on it.
The sum and substance of all this car talk is that the place to focus one’s attention in the “alternative energy” space is on batteries. An effective, cheap, safe battery system is what stands between our society being squeezed to death by high oil prices or being able to progress to the next level of clean, affordable, and independently produced personal transportation.
I think there is no question that the next five years will see cheap renewable electricity being produced from wind, thermal solar, PV solar, geothermal, and possibly wave technologies. But I have a lot of doubts about whether a new battery technology will allow all this electricity to do us any good in terms of solving our addiction to oil.
What About Natural Gas?
The other potentially game changing development according to some true believers is using natural gas to power cars and trucks. As I wrote, some leaders are increasingly advocating this route. The question, I think, is how many North American vehicles could be converted to natural gas before the demand for gas pushed up its price closer to energy equivalency, after which there would be little point to the exercise.
I don’t know the answer to that question, but I suspect it may be “not that many.” While natural gas supply is expanding in North America, I doubt that it can expand enough to handle a large amount of passenger transportation before the price would rise to the point at which it is no longer economical to spend a few thousand dollars to add a natural gas capacity to one’s car.
My guess is that demand for gas to generate electricity will increase as unstable renewable sources like wind and solar increase their penetration. That new gas demand by itself is likely to strain natural gas supplies over the next five years without accounting for even a single passenger car converting to natural gas. In sum, I am not a believer in the natural gas “solution” to our peak oil problems. I think we need to find the right new battery to solve this problem.
Meanwhile, here’s hoping that I will be proved wrong in my pessimistic expectation for the next phase of the economy and the stock market.
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