Energy Transition, Risks and Opportunities…

Energy Transition, Risks and Opportunities…

Alain_Vignette2

Alain E. Roch, MBA

President and CEO

Alain.Roch@bluebridge.ca

The energy transition, which consists of gradually moving from using non-renewable fossil resources to green technologies, is underway.

Consumption of the three main sources of energy used around the world (coal, oil, and gas) should level off or decrease. Industries will become less and less dependent on fossil fuels and increasingly rely on new “green” technologies.

Ceasing to use fossil fuels in the near future is certainly commendable, but what will replace them?

It’s important to know that these “green” technologies are mainly developed using the incredible magnetic and chemical properties of rare metals such as vanadium, tungsten, germanium, and cobalt. These are very rare in the Earth’s crust and can require, for example, chemically refining more than 1,200 tonnes of rock to produce one kilo of lutetium. Purifying each tonne of rare earth requires using at least 200 cubic metres of water that, in the process, will become loaded with acids and heavy metals!

Extracting rare metals is extremely polluting. The pollution created by rare metals is not limited to China, where most of these metals come from today. It concerns all producing countries, like the Democratic Republic of Congo, which supplies more than half of the world’s demand for cobalt. Extracting this resource, which is essential for manufacturing several types of batteries used in electric cars, occurs in archaic and extremely polluting conditions.

So-called “green” technologies really require just as many raw materials as older technologies.

Inside our electric cars, rechargeable batteries, wind turbines, solar panels, and all kinds of new technologies (smartphones, computers, televisions, etc.), there are rare metals: a 7 MW offshore wind turbine contains more than a tonne of rare earth metals, for example.

Recently, Mr. Carlos Tavares, CEO of the PSA automobile group (Peugeot, Citroën, etc.), spoke about the harmful effects of electro mobility on the environment. Indeed, throughout its life cycle, one electric car will generate three quarters of the carbon emissions of a car that runs on gas. It could even emit more CO2 if the electricity that it consumes comes primarily from coal-fired power plants. These observations are counterintuitive, but they were reconfirmed in December 2017 by a study conducted jointly by the French Environment & Energy Management Agency (ADEME), the Fondation pour la nature et l’homme, and the European Climate Foundation.

What’s more, rare metals have proven to be essential for new information technologies. Digital devices require considerable quantities of rare metals and use an enormous amount of electricity: one email with an attachment takes the same amount of electricity as a lightbulb uses in one hour! Every hour, 10 billion emails are sent around the world — the equivalent of the electricity generation of 15 nuclear power plants in one hour. If the cloud were a country, it would rank 5th in the world in terms of demand for electricity!

Like Mr. Bertrand Piccard, inventor of the Solar Impulse plane, should we simply conclude “the necessity of regulating mining operations”? According to him, “We can’t do just anything. But that shouldn’t undermine the necessity of pursuing the energy transition. The pollution created by these mines is localized, and must be monitored. I prefer a few more cobalt mines to a few more degrees in the atmosphere.” He believes that it’s possible to strike a balance between profit and ecology and even that this is the only way to advance the cause of sustainable development. His new foundation has set a goal of labelling 1,000 environmentally friendly and profitable innovations!

Another focus for development and investment is the circular economy, or recycling, and in particular large-scale rare metals recycling. Currently, the rate of rare earth metal recycling does not exceed 2%, as opposed to more than 50% for more common materials like copper, but with the current prices of rare earth metals, recycling is not yet cost-efficient. Nevertheless, many companies have still taken on the challenge. In Japan, automakers Toyota and Honda have created rare metal recycling programs for their batteries and vast collection campaigns have been organized and supported by local stars. But simply collecting is not enough and Tokyo has also invested hundreds of millions of dollars in scientific research to find alternatives to the rare earth metals contained in new technologies.

As we can see, the energy transition proposed today actually has a very significant environmental impact! We must become aware of this very quickly and adapt our energy transition model. That’s where we come in, because, as investors, we have an important role to play by supporting ethical projects that minimize environmental and social harm.

 

Bibliography

Beauté, B. Métaux rares. La nouvelle guerre des ressources. Swissquote. 2018

Pitron, G. (s.d.). La guerres des métaux rares. LLL. 2018

Fizaine, F. Les métaux rares : opportunités ou menaces ? Editions Technip, 2015

Tison, C. et Lichtenstein, L. Internet : la pollution cachée. Documentaire, Camicas Productions, 2012

lemonde.fr Bertrand Piccard : « Il existe des solutions environnementales rentables ». 8 septembre 2018