Juggling Dynamite

Despite naysayers who continually miss forests for trees, energy technology is rapidly evolving globally and “S” curve adoption is proceeding apace.

With a shrinking population and rising unemployment, China sees the imperative of improving efficiency and lowering operating costs through technology. To this end, the country is leading the world in the production of electric vehicles, renewable energy installations, and storage.

China recently put the first large-scale sodium-ion battery storage station into operation, marking the beginning of the adoption of the new, lower-cost battery for large-scale use.  See China’s 1st large-scale sodium battery energy storage station put into operation:

Compared with lithium-ion batteries, raw material reserves of sodium-ion batteries are abundant, easy to extract, low cost, better performance at low temperatures, and have obvious advantages in large-scale energy storage, China Southern Power Grid Energy Storage said.

When sodium-ion battery energy storage enters the stage of large-scale application, the cost can be reduced by 20 percent to 30 percent, and the cost per kWh of electricity can be reduced to RMB 0.2 ($0.0276), which is an important technical direction to promote the application of new energy storage, said Chen Man, a technical expert of China Southern Power Grid.

The 10-MWh sodium-ion battery energy storage station uses 210 Ah sodium-ion battery cells that can be charged to 90 percent in 12 minutes, according to the statement.

Battery recycling is another global preoccupation for efficiency and economic reasons. Components are too valuable to throw away so a new industry of recyclers is busy snatching them up. See Battery Recycling Shatters the Myth of Electric Vehicle Waste:

Traditional methods of ripping materials out of the ground and refining them for battery packs requires enormous amounts of energy. As a result, the initial carbon footprint of an EV is higher than a comparable internal combustion engine vehicle. Those upfront emissions are paid back over time with the superior efficiency of electric motors, leading to a 70% reduction in total emissions over the average life of the vehicle.

In the US, it takes about 25,500 miles (41,000 kilometers) of driving for an EV to break even, according to a BloombergNEF analysis. That payback figure, however, assumes that every EV is made with newly mined lithium, nickel and cobalt — as if all the materials will end up in a landfill at the end of a vehicle’s life.

Though still in its infancy, EV recycling is already profitable and capable of recovering more than 95% of the key minerals. A new analysis by Stanford University researchers, which is still under peer review, found that Redwood Materials’ recycling process produces up to 80% fewer emissions than the traditional supply chain using CO2 belching refineries. That’s enough to shorten an average EV’s environmental breakeven time with an internal combustion vehicle to less than 15,000 miles. Every mile thereafter is a carbon win against the internal combustion engine.

Governments worldwide are looking for ways to “ease the real estate crisis” now sweeping much of the developed world. The most popular ideas seek to prop up prices while enabling new buyers to obtain even more credit.

After decades of epic malinvestment in real estate, China is at the forefront of the spreading property crisis. Over the past four years, the government has directed a series of add-more-debt-and-stir efforts. However, with rising unemployment and unaffordability at multi-decade lows, buying ability and appetite are not reviving. In the first four months of 2024, China’s home sales fell about 47%, and unsold inventory hovered at an eight-year high.

At the April 30 Politburo meeting, China’s 24 most senior leaders said they were looking at ways to “digest” the existing stockpile of homes. This week, news of a new approach emerged: Local state-owned enterprises may be asked to help purchase unsold homes from distressed developers at steep discounts using loans provided by state banks, with many of the properties to be converted into affordable housing.

The trouble is that local governments’ debt levels are already high, and bank balance sheets are being eroded by rising bad loans and narrowing profit margins (below since 2013). Writing down asset values and bad debts seems an inevitable outcome. See: China Considers Government Buying of Unsold Homes to Save Property Market.

Bloomberg has learned that China is considering a proposal to have local governments across the country buy millions of unsold homes. This would be one of its most ambitious attempts yet to salvage the beleaguered property market. China Editor James Mayger and Chief North Asia Correspondent Stephen Engle analyze the plan on “Bloomberg: The China Show.” Here is a direct video link.

More malinvestment in propping up asset prices and the status quo is the opposite of what’s needed. The focus has to be on investments and incentives that increase longer-term efficiency and net income (with full cost accounting for the waste and harm created by different business models and revenue streams).

Andrew Grantham, senior economist at CIBC Capital Markets, talks with Financial Post’s Larysa Harapyn about how the headline jobs numbers are not telling the full story. Here is a direct video link.

Also see A Warning from the Breakdown Nations:

Take Canada first. Widely admired for how it weathered the global financial crisis of 2008, it missed the boat when the world moved on, driven by big tech instead of commodities. Canada’s per capita GDP has been shrinking 0.4 per cent a year since 2020 — the worst rate for any developed economy in the top 50. New investment and job growth is being driven mainly by the government.

Private-sector action is confined largely to the property market, which does little for productivity and prosperity. Many young people can’t afford to buy in one of the world’s most expensive housing markets. Pressed to name a digital success, Canadians cite Shopify — but the online store is the only tech name among the country’s 10 largest companies, and its shares are trading at half their 2021 peak.

…The takeaway here is not that smart countries somehow turned stupid. It is that hidden traps line the path of development and can spring on nations at every income level from the middle to the rich. One basic mistake or miss, and any country can find itself stuck — until it finds the leadership and vision to chart a way out. For current stars, the message is a warning: don’t take growth for granted.