Ferg's Finds

This is a short weekly email that covers a few things I’ve found interesting during the week.

Article(s)

I've rarely read the WSJ, but I noticed that mainstream media is finally starting to cover the failure that is green policies.

A 2019 University of Oregon study had already revealed the empirical truth: Green energy doesn’t replace fossil fuels, it enables more energy consumption overall. That same year the EPA calculated that the potential emissions savings from subsidizing electric vehicles had been offset five times over by the pickup truck and SUV boom Team Obama facilitated to assure the success of its auto bailout.

Last year, the premier journal Science put a nail in the question: 96% of policies supported worldwide as “reducing” emissions failed to do so, consisting mostly of handouts to green-energy interests.

Podcast/Video

I've been digging into the potential upside to Argentina's production, a supply story I missed in my recent oil piece and will cover in part 2.

This interview was quite insightful: "Argentina May Be Unrecognizable 10 Years From Now, Like It Used To Be" Featuring Bill Von Gonten.”

Quote

“Most modern efficiencies are deferred punishment.”

- Nassim Taleb

Tweet

I don’t see that non-OPEC+ supply growth showing up, only the demand…

Charts

Of all the silly assumptions the IEA slips into its stated policies, the reductions in oil and gas demand due to efficiency gains are the dumbest.

IEA Energy Efficiency 2024 < Jevons paradox

The Jevons paradox occurs when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the falling cost of use induces increases in demand enough that resource use is increased, rather than reduced

Yet supposedly we will reduce 10mb/d with efficiency and another 4mb/d with behaviour by 2050.

Something I'm Pondering

I'm pondering what battery market share sodium ion will take.

I enjoy reading these outlooks and seeing what they are forecasting: BNEF 2024 Electric Vechicle Outlook & Global EV Outlook 2024.

Which battery technology is the ultimate winner went in the too-hard basket for me, so I avoided lithium, nickel, and cobalt investments altogether.

That said, it's interesting that neither IEA nor BNEF gives sodium ion any market share in forecasts.

There isn’t a big difference between NMC batteries (0.13 kg of lithium carbonate equivalent (LCE) per kWh) vs LFP battery (0.12 kg of LCE per kWh).

The more important factor has been the rise of PHEVs which requires 70-80% less lithium than a BEV whether the battery is NMC or LFP.

The real kicker will be if sodium-ion battery technology takes off. Since the switch from NMC to LFP removed cobalt and nickel, the switch from LFP to sodium-ion will remove the need for lithium.

Yes sodium ion requires graphite which China has covered (I touched on it here: 78% of battery making graphite (BAM) is synthetic.)

To me, sodium ion is likely to gain significant market share as it'sits economics are superior (especially if inflation kicks in), and all the concerns with battery energy density aren't an issue with a PHEV.

BYD has already sunk $1.4 billion into a new sodium ion battery plant: BYD starts construction of 30 GWh sodium-ion battery plant in China.

If you assume a PHEV requires a battery size of 10-15 kWh per vehicle, 30GWh plant gives you 2-3m PHEVs annually. Checking BYDs PHEV production as of December 2024 they are at 2.5m PHEVs which is a YOY increase of 78% and 58% if their total production (BYD production and sales volume for December 2024).

I continue to track this closely as am tempted to lean into the investment thesis I outlined here: The "New Energy Vehicles" Pivot.

I hope you’re all having a great week.

Cheers,

Ferg

P.S. If you’re interested in my story and why I started this Substack, you can read the story here.