Electrification To Fight Climate Change: The Challenge Of A Lifetime

President Biden’s Goal Of Electrification

As the American Jobs Plan, President Biden’s $2.25 trillion infrastructure package proposes a $174 billion investment ‘’to win the EV [electric vehicle] market." The goal of 500,000 charging stations across the U.S. by 2030 is big probably not ambitious enough. The American Energy Alliance, for instance, reports that “wouldn’t even amount to 50% of what is needed in California alone.” There’s also a strong push to electrify school buses and transit vehicles. As for electricity to power heavy-duty trucking (e.g., a climate mandate in California), some experts believe that sheer weight might make it physically impossible.

The climate goal of electrification is a triad: transportation, industry, and buildings. For example, some “blue” states such as California and Washington are banning direct usage of natural gas in homes in favor of electricity, while “red” states such as Oklahoma and Louisiana are doing the reverse, preemptively “banning the bans” against gas.

Electrification Could Surge The Need For Electricity

The reality is obvious: the climate goal of electrification could surge U.S. electricity demand. As we seek to decarbonize, more of our economy electrifies and more of the load shifts to the grid. In the U.S., this is a really big deal. Hovering around 4,100 terawatt hours, most Americans probably do not realize that our national power consumption has been flat since The Great Recession of 2007-2009. No wonder then that the coal industry might be electric cars’ biggest fan.

A overwhelming statistic illustrates our Herculean task for electric cars: we have 270 million oil-based cars (i.e., internal combustion engine) and only around 2 million that run on electricity. The amount of electricity that could be needed to change this may be incalculable but we know it is immense. Packing a mighty punch, oil-based gasoline has 100 times the energy density of a lithium-ion battery utilized in electric cars.

Experts at the University of California, Berkeley calculate that by 2050 the U.S. will need almost 90% more electricity than it did in 2018, in a scenario where all new passenger vehicles sold by 2030 are electric, with buildings and factories also electrifying quickly. This analysis is part of a comprehensive 2020 study looking at what it would take to make the power grid 90% carbon-free by 2035.

Again, none of this is hard to imagine. All we have to do is look at Norway, where electric cars account for about 55% of new sales, thanks to a plethora of government incentives. At an astounding 26,500 kWh per person per year, Norway has the second highest (after Iceland) electricity use rate in the world, more than double that of the U.S. And at almost $70,000/capita/year/, Norway is one of the richest countries in the world, so residents can afford much higher cost electric cars. For measure, the U.S. has nearly 65 times more people and 100 times more vehicles than Norway.

Americans will not buy into the “electrify to fight climate change” goal if costs are too high. We are engaged in a very delicate dance on climate policy. Public opinion polls show that nearly 70% of Americans would not pay just $10 a month in higher electric bills to combat climate change. The wind and solar power and CO2 reduction schemes that we want to utilize have already been proven expensive, as seen in such green-tinted policies coming from California, Germany, Denmark, Australia, and Ontario.

To illustrate, we already know that the Biden administration might up the tax credit for anybody buying an electric car 33% to $10,000. One could argue that this runs contrary to our goals of racial equity and advancing low-income Americans. I say that because in truth only the better off that can afford electric cars are usually in the market to buy them.

Thus, the opportunity costs of the administration’s electric car goals are going ignored – how that lost tax income could have been used to help communities of color is a question unfairly not being asked.

The U.S. Thus Needs Dependable, Reliable Electricity Supply

Especially as we turn toward more intermittent renewables, electrification and the need for much more electricity must be met with reliability and resiliency. If not, as devastatingly seen during the Texas energy crisis in February, Americans can literally lose their lives. The inevitable need for more electricity will require demand response, peak load management, and other demand side measures to reduce or constrain incremental needs. As an example, we need better planning to encourage cars charging at off-peak night and electric arc furnaces to supply industrial heat and even make steel.

But make no mistake, our electrification climate goals will require an immense build-out in new generation capacity. This could mean hundreds of thousands of solar farms and wind turbines, many more nuclear plants, 10s of gigawatts of storage batteries, weatherization of our systems, thousands of miles of high-voltage transmission lines, and other infrastructure that many of our policymakers have previously opposed.

For sure, however, now easily the main source of U.S. power generation at 40%, natural gas will remain integral. Gas continues as an important fuel for baseload power, although today’s large combined cycle plants could be eventually displaced by more smaller-scale, quick-start combustion turbines that can compensate for localized intermittency from wind and solar. Our electrification goals could also probably use gas plants paired with onsite storage, as is under consideration in Texas with the Warren Buffet $8.3 billion plan for emergency power from gas.  

And to meet the proposed Clean Electricity Standard and carbon-free power by 2035 being promoted by the Biden administration, carbon capture and storage is getting more notice, especially since it enjoys bipartisan support (sadly, something that is becoming increasingly rare in today’s politics).

Decarbonized electrification is probably our defining climate challenge of the coming decades, so dismissing solutions out of hand could prove a catastrophic mistake far beyond what we saw in Texas. As extreme weather worsens and makes all of this more difficult, the reality is that each state will likely need to double its power capacity to meet our electrification climate goal.

Meeting the electrification challenge is a matter of our three “Es” for national security: energy, environment, and economic. By 2050, the share of U.S. economic activity that relies on the electricity grid will at least double or perhaps even triple. That is twice or thrice the economy depending on the dependable delivery of electricity, power’s position as the greatest invention of all time. Outages are therefore going to have devastating impacts, and integrated planning will be needed to avert even worse disasters in the future.

Lithium And Raw Materials problem

The massive amount of mining for critical materials (e.g., “rare earths”) required for the electric car and renewable power revolutions goes scarily unmentioned. The truth, however, is that such “green energy” is far more mineral intensive than the fossil fuel counterparts. Some 35 rare earth elements serve as key components to the energy transition, e.g., magnets in wind turbines, batteries in electric cars, and phosphors in energy efficient lighting. Wood Mac says that more than $1 trillion of investment will be needed in key metals – aluminum, cobalt, copper, nickel and lithium – over the next 15 years alone.

The national security concern is that the U.S. must import most of these critical materials, a growing problem since most of the world needs them for their own energy transitions. We now import 100% of our supply of 14 of the 35 elements and over 50% of 17 others. Not surprisingly, China controls much of the world’s production and the supply chains too. The U.S. riskily gets some 80% of its rare earths from China.

U.S. imports of lithium-ion batteries from Asia, especially China, are surging because of our rising appetite for electric cars, consumer electronics, and battery peaker plants to backup intermittent wind and solar power. In 2020, despite the destruction of Covid-19, imports of lithium-ion batteries jumped 85% to almost 160 million kilograms, up from 30% growth in 2019. The Wall Street Journal reported in early-March: “average prices for one battery chemical, lithium carbonate, have risen to around $9,000 per metric ton, from $6,000 at the end of last year.” Some experts have lithium prices doubling by 2025 on soaring demand.

China seems obsessed with lithium-ion battery production, with more than 50 lithium-ion "megafactories" in operation and another 60 or so planned. Without a wiser path, such headlines will become increasingly routine as the energy transition ensues: “China tightens rare earth regulations, policing entire supply chain.”

The U.S. has been moving forward. Tesla partnered with Panasonic on a large-scale lithium-ion battery manufacturing plant in Nevada and plans to ramp up another site in California. And just recently, two major South Korean battery suppliers, LG Chem and SK Innovation, settled a bitter legal battle over intellectual property for a lithium-ion battery factory in Georgia, a win for President Biden’s electric car goals.  

But the bigger challenge for us than battery production is accessing the raw materials. For the energy transition, the Biden administration will need to support the full battery supply chain. In announcing $30 million for critical minerals research:

• “America is in a race against economic competitors like China to own the EV market — and the supply chains for critical materials like lithium and cobalt will determine whether we win or lose. If we want to achieve a 100% carbon-free economy by 2050, we have to create our own supply of these materials, including alternatives here at home in America,” U.S. Energy Secretary Jennifer Granholm, March 2021

Overall, the U.S. has been appraised at ~$6.2 trillion in mineral resources, but we need a more streamlined permitting process. For example, considerable lithium reserves have been identified in Arkansas, California, Nevada, North Carolina and Utah.

Indeed, if we truly want to fight climate change, it’s time to dig.