Mark Mills: The energy transition delusion: inescapable mineral realities

Hydroelectric dams in Norway produce power 16 times more efficiently than wind and solar arrays (dams last 4x longer and produce 4x more energy per dollar invested), but this 16-fold advantage cannot be exported globally because most regions lack Norway's geographic conditions.

“the Renewables that Norway likes uh to use and is dominantly using have a particular Advantage the the Machinery Hydro dams last about four times longer than the Machinery of preference in the energy transition when melson solar arrays and they produce roughly four times more energy per dollar of capital invested so that 16-fold energy economics Advantage”

Decoupling of economic growth from material consumption is a common claim—Western countries produce one unit of dollar GDP with one kilo of CO2, while China produces with half that (0.5 kg CO2/$) and industrializing countries with one-third (0.33 kg CO2/$)—but this is a monetary decoupling, not a physical decoupling; the physical quantity of materials extracted has quadrupled (from 25 to 100 gigatons) while GDP increased 12-fold.

“the uh what technology does is it creates economic value so you can accelerate economic value more than you accelerate the quantity of consumption of materials and energy we've been doing that for hundreds of years so you get more dollars for Less input of other materials or energy that's been going on for a long time it will continue but that's not a physical decoupling...the physical quantities of materials we went from 25 gigatons of materials consumed globally to 100 gigatons of all materials but the GDP of the world so that's a four-fold increase in physical stuff the GDP of world over that time went up more than 12-fold so you have a decoupling in that sense but people think that means using less it's less per dollar it's beyond obvious a different thing”

Lithium chemistry was invented by Exxon chemists in the mid-1970s but not commercialized until nearly 20 years later by Sony in the early 1990s, and only reached scale production with the Tesla S in 2009—20+ years after commercial introduction—demonstrating that industrial-scale battery technology cycles take decades, not years.

“the lithium chemistry was discovered invented if you like in the mid-1970s you may all know this by Exxon chemist and was commercialized until by Sony until almost 20 years later in the early 1990s and of course famously it became possible as economies of scale and Manufacturing expertise improved almost 20 years later with the emergence of the first Tesla S sedan 2009 if I recall correctly so this is a very long cycle from new chemistry to at scale new classes of industrial batteries”

The speaker questions why EVs were not adopted universally in the 100 years since EV trucks were driving around Norway if they were truly cleaner, responding that engineers knew batteries were not cleaner but different—a trade-off, just as all engineering involves trade-offs without perfect solutions.

“curiously we had trucks EV trucks driving around Norway 100 years ago...well first because they uh Engineers knew that the batteries weren't cleaner they were different from the very beginning”

Energy is functionally infinite in the universe; the challenge for humanity has always been designing machines that extract energy and convert it into useful forms at a price we can afford, and price includes economic, social, environmental, and geopolitical costs that all distill to money.

“there is no shortage of energy energy is not in short supply in the physics of the universe we live in energy is in fact an infinite supply energy for functional purposes all forms of energy are functionally in infinite Supply the challenge for Humanity has always been in figuring out how the systems work in nature designing machines that can extract Nature's natural energy sources and convert it into forms that are useful for humans at a price we can afford and price is principally economic but price also includes social environmental and geopolitical features these are all costs but they all distill ultimately to money”

Norway achieved 80% EV penetration in new car sales last year and sources 90% of its electricity from renewables, while being 700% wealthier than the world average and exporting approximately $25,000 per capita in oil and gas sales—making it the model the global energy transition aspires to replicate.

“Norway last year is I'm sure you all know had the uh the record in the world 80 percent of all new cars were electric that were purchased here a Norway gets uh 90 of electricity from Renewables against half of its primary energy from Renewables...Norway also enjoys the benefit of exporting uh in dollar terms uh something on the order of twenty five thousand dollars per capita of oil and gas sales to the world”

China has become the world's largest refiner of energy minerals (not extractor), commanding a market share in global energy minerals refining more than double OPEC's share in oil markets—a deliberate 20-year strategy announced in China's 10-year plans that has profound geopolitical and economic implications.

“China is not the world's biggest minor they are the biggest refiner and when you measured in energy minerals terms again this is iea data China's share of refining...China has chosen to become the world's energy minerals refiner this was not a secret policy they announced it 20 years ago they announced it in their 10-year plan 10 years ago and today China enjoys a market share in global energy minerals refining that is more than double opec's market share in oil markets”

Different battery chemistries (lithium iron phosphate, lithium manganese phosphate, etc.) can be substituted without material difference at the high-level abstraction; typical EV batteries weigh about half a ton and require approximately 250 tons of mined materials regardless of chemistry, so hopes for 'magic batteries' that solve material constraints are misplaced.

“a typical electric vehicle battery with a without regard to the chemistry it uses weighs about half a Time requires about 250 tons of materials to be mined somewhere on the planet to make that battery it doesn't matter what classic chemicals you use and the idea that we will fix this problem by having new magic batteries batteries that are profoundly better than the batteries are using today is not a bad not a bad response that technology does get better”

Energy transition machines (batteries, solar arrays, wind turbines, EVs) require 1,000-2,000% more minerals per unit of power than combustion turbines, and 400% more metals and minerals per EV compared to conventional vehicles—understating the actual requirement because wind/solar produce less energy per dollar than hydro.

“to build a machine to replace combustion turbines uh what this shows you is that you need between one thousand and two thousand percent more minerals to deliver the same unit of power and you need some on the order 400 percent more minerals and metals to deliver the same vehicle so an electric vehicle requires 400 percent more metals and minerals to build it compared to a conventional uh car”

An International Monetary Fund analysis concluded that energy transition plans will cause all major metals to reach historic price levels for an unprecedented length of time, with inflationary effects lasting approximately one decade as demand pressures overwhelm production capacity.

“they've looked at a century of trailing data on Supply demand metrics for metals and they point out that the energy transition plans will put pressure on metals that will cause all metals to reach historic price levels for an unprecedented length of time they think it for about a decade so Metals then go from being just uh volatile and short time frames with being volatile over a much higher price space”

It takes an average of 16 years globally to find and open a new mine, meaning that if investment were authorized today, the first new mines required for the transition would not begin production for 16 years—long after transition aspirations have kicked in.

“the average is about 16 years to find and open a new mine globally if you think about this in very simple terms that means that if we tomorrow started investing net the necessary amount of capital and exploration efforts it'll be 16 years before the first mines that we need will be open”

Global absolute energy demand has increased year-on-year for 50-70 years with virtually no periods of sustained absolute decline; periods of demand reduction have 'evaporated' and the world needs more energy every year, meaning demand for energy minerals and materials will increase, not decrease, for the foreseeable future.

“the most important takeaway from this this trend line in the world is below the axis the periods of time and the frequency and the depth of declines in absolute demand for energy have evaporated the world needs more energy every year and there are very few periods in modern history for the last 50 to 70 years but there's been any absolute decrease in energy demand year on year”

Over one century of IEA energy demand data shows that the absolute rate of percentage increase in world energy demand is declining, but it's declining over a much larger base; the percentage increases on larger numbers require more absolute energy input than percentage increases on small numbers.

“this over one century of data again this is iea data of the year on year change in energy demand for the world now what what you can see is that the absolute percentage rate increase is declining but it's declining over a larger base so you all know what that means in investment terms 10 percent of the big number is much more than 20 on a small number so the percentage increases [36:11] are decline but they're on a much bigger base”

Every EV purchased in Norway has consumed 20-30 barrels of oil equivalent of energy in its manufacturing before it ever drives, with fully half of that energy content being oil and the rest almost entirely coal and natural gas—embodying hydrocarbons, not replacing them.

“every Norwegian that buys an electric vehicle has essentially purchased 20 to 30 barrels of oil equivalent of energy being consumed somewhere else and fully half of that energy content in fact is oil and the rest is almost entirely coal in natural gas so the single EV that is purchased in Norway and when it goes on the roads before it's seen its first electron move into its batteries has already consumed at least 25 barrels of oil equivalent of energy in hydrocarbons”

The Electric Power Research Institute concluded that it is not structurally possible to make the energy transition in the way currently imagined, focusing on structural engineering issues rather than cost—yet typical responses advocate spending more money, which cannot solve structural problems.

“I show you uh the conclusion from a very recent Electric Power Research Institute study which is a non-profit research group in the United States for the electric industry that looked at the structural issues with respect to the transition not the cost issues but the structural issues and reach reach the conclusion [7:21] that it doesn't look like it's structurally possible to make the transition in the way imagined the typical response to that is we should spend more money and try harder”

The internal combustion engine prevailed historically not because it was universally better but because it offered superior performance for the specific use cases that mattered; the speaker expects EVs will eventually reach 20-30% of the light-duty vehicle fleet, a 30x growth from 1%, yet this would impact global oil demand by only 2 percentage points.

“the reason the internal combustion engine won is because it's better not because it's better everywhere and all the time...I think that we'll probably see a world or something on the order and I'll pick a number based on my research but let's just say 20 or 30 percent of all light duty Vehicles will be electric at some point roughly speaking which would be quite remarkable would be a massive growth than where we are of on the road one percent of all light duty vehicles are electric so that'd be a massive growth but it would impact Global oil Demand by about two percentage points”

Copper has no substitute for electrical purposes in EVs and most other energy transition applications, only aluminum can substitute for copper in high-voltage long-distance transmission lines, making copper a binding constraint on the transition.

“the copper is not as it turns out it's one of the metals it's not does not have a substitute it's not replaceable the only place copper for electrical purposes has a substitute is aluminum for high dis high voltage long distance transmission transmission lines it does not for electric vehicles”

Over all of history, the ore grade (percentage of rock containing desired metal) for higher-value metals like copper, nickel, molybdenum, and magnesium has been declining; typical copper ore grades are 1%, meaning mining 1 ton of ore yields only 20 pounds of copper plus tons of overburden rock.

“the grade of ore that we mined has been declining and especially for the the higher value metals like copper not iron ore as much but copper and nickel and molybdenum and magnesium and the orgrade I mean I assume you know what our grade is our grade is the [32:36] percentage of the rock that you're mining that contains the thing you want so copper or grades are typically one percent that arithmetically means that you have to dig up a ton of ore to get to 20 pounds of copper and that doesn't count the tons of rock overburden that are in the way of the ore that you want to get to so you dig up tons of material to get to pounds of metal uh that has relevance that has relevance and cost that has relevance in environmental sense it also has to the point I made earlier at his relevance [33:06] the carbon dioxide emissions and the energy consumed”