If we can pause endless rehashing of the same old political conversations, here’s something else to ponder.
Tesla Energy’s opportunity is a direct function of the total addressable market for kWh of electricity. ...... Oil and gas are mostly used for burning, but our civilization’s sustainability is also threatened by our utter reliance on mined hydrocarbons for chemical production.
It doesn’t have to be this way much longer. Synthetic hydrocarbon production from CO2 capture and solar power can solve both of these problems and I believe the capital markets have not done the math on the gigantic amount of demand for electricity this will create once solar and battery power reach sufficiently low prices.
I even think that that last bullet point is probably right on. This industry at scale might use the majority of the world’s electricity in the future. Why is no one talking about this?
This stuff does get talked about a lot and has been for many many decades, though those conversations tend to be between oil & gas practitioners (or sci fi nerds, and there is an overlap) so understandably most folk here abouts have never participated. (Though I recognise from the monikers that have been hereabouts that over the years some of you have been participants). If you search through wherever archived copies are of TOD (The Oil Drum) you'll surely find some stuff, but even then it was a known path.
Yes indeed this will come in some way or other, but exactly how and when, and to what extent, and using which conversion pathways, and who will capture how much value (and who will get hit with big losses) is not clear.
Some not entirely random thoughts:
- Synthetic Liquid Fuels (SFL) are a big buzzword in O&G investments. The O&G markets have bet about 6x as much on SFLs as they have on hydrogen/ammonia, so that gives an insight. There are a variety of SFL pathways though, some less fundamentalist than the strip it all down to hydrogen and start again version. I put a link to an article on the Daily Energy News thread recently. That is the first-adopter market along this pathway, especially for aviation, and of great strategic significance and known value.
- If batteries do become too-cheap-to-meter then the resultant power is also too-cheap-to-meter and that in turn does away with a lot of the intermittency markets that SFL/hydrogen/ammonia are aimed at addressing. So that only leaves the chemicals & products volumes. If you look at a global Sankey diagram (or indeed observe with a thoughtful eye any large refinery & petrochem complex) you can see that the %mass O&G going into the chemicals/products markets is actually quite a small fraction. (Conversely if batteries don't get cheap, then SFLs remain expensive but valuable and needed. Irony).
- The value in that fraction is not as great as you might think. People ponder for a very long time before investing in a downstream basic products plant. These things can also be huge stranded asset liabilities.
- There are few (or no) defensible barriers. Once the economic conditions are right to make synthetic nitrogen fertilisers in one place, they are pretty much right everywhere. It remains to be seen if they are going to be viable in intermittent operation. If not the most optimal locations are either the most equatorial (as you've pointed out, for solar-battery coupling) or the ones that are best at the three-way optimisation of solar-wind-battery. (My hunch is the latter, running on a continuous basis).
- There are a lot of other substitutes out there that can be employed. No need to put liquids in PET bottles, just use glass. Especially if recyling loops are well closed and energy is cheap. Take a good look at wood and paper and the various product streams that come out of that, a really good look. Ditto fabrics. Once you've done all that looking there is (obviously, ish) a very large volume nitrogen-fertiliser market (i.e. a commodity ... which at low energy prics is a low margin commodity); and lots of very small volume/mass markets that are in climate-change terms practically irrelevant. (Plus SFL for aviation).
- Whether nitrogen fertilisers are the holy grail is debatable. The soil quality people have holy wars and crusades on that issue. Over to them. (Halving the world's human population over a 50+ year period would be a very good thing indeed for planet Earth).
- And all along the transfer path the current incumbents (ROPEC+) will happily keep pushing crack from their underground stockpile into the market, inevitably keeping margins low and boom'n'bust cycles bankrupting everyone trying to get a stable competitive alternative going. (One needs CBAM Carbon Borders to adddress that - so eventually the USA will do what the EU is doing). It may well be that ultimately the right thing is to never really transfer the last few % across from hydrocarbons on Earth, as it is better just to do some (genuine) carbon-sinking of an offset.
- Off-Earth, yes that is different.
www.wsj.com
