“Net-zero by 2050” is a phony play to make Greens feel warm and fuzzy. They believe it to be the answer to something that is not even an issue - Carbon.  We need Carbon.  It is the building block of life and, contrary to the climate alarmists, the earth has become healthier as levels increased.  Their dreams will result in only one outcome: making energy more expensive while making zero change to carbon levels.  

The big push today is the conversion to Electric Vehicles (EV).  While it sounds great, it will be difficult to achieve. Both infrastructure and materials needed will be a roadblock to widespread adoption. Plus, the EV will not eliminate carbon.  Oil will always be needed to make the tires, lubricants, carbon fibre for frames, asphalt for cars to drive on, and fossil fuels will be needed in manufacturing and shipping.

Charging infrastructure will be an ongoing hurdle. While private enterprise is making small investments, the largest financiers are governments (which says enough).  President Biden announced the government will build 500,000 charging stations throughout the U.S. (they currently have 115,000 gas stations).  Here in Canada, only a few utility companies are installing them.  And when they do, there is maybe 1 for every 50 parking spots.  Petro Canada has made the biggest investment in Canada that we know of, by installing some at their gas stations along the Trans Canada Highway. With little infrastructure committed to, it is easy to conclude that private investors do not see this business model as a profitable venture at this phase in the game. Large subsidies the sector demands also confirm this.

A move towards the EV will increase demand for all sorts of resources and energy. The most obvious is electricity. It will cost the U.S. alone $7t to convert to an EV grid. Who is going to pay for this?    Charging stations will increase the demand for copper, plastics, aluminum, and carbon fibre which all rely on oil-based products and production. This will result in expanding mine operations on a grand scale, offsetting what lower emissions that might be created by the EV.

Lithium is the main hurdle to overcome. There is not enough of it. Lithium also has a large negative environmental impact which is never mentioned.   Lithium comes at the expense of farmland because it uses so much water that it causes drought in the surrounding area.  Mining 1 ton of lithium will supply only 90 EV’s and requires 500k gallons of water. Can you imagine how much water it will take to convert the 1.5 billion cars in the world to electric and then continue this cycle every time a car is retired (roughly every 10 years)? This means that governments will have to choose between agriculture and lithium mining.  For some reason, I think governments would prefer to keep the arable land to feed their people.

The price for one ton of the metal is $355U.S.  It is priced in China's currency because they are the world's biggest user.  There are numerous lithium reserves around the world, but most are not being mined because they are not profitable.  For it to become lucrative the price must increase, but this means more expensive batteries.  Will the consumer be willing to pay the added cost?  

Not only is it expensive to mine, but the supply is also questionable. A paper produced by Lappeenranta-Lahti University of Technology, in Finland, and the University of Augsburg, in Germany found that ‘when researchers examined various models to determine how much lithium remains on Earth, with estimates varying from 30-95 million tons (Mt)…a scenario which assumes 73 Mt of lithium supply left, using best policies (recycling, V2G, second-life) implemented and around 3 billion EVs produced sees lithium fully depleted a few years beyond 2100. If the same policies and number of cars were matched with just 26 Mt of lithium, but recycling efforts would only grow slowly, battery manufacturers will close shops even before 2040." If this is correct, we could expect the supply of Lithium would disappear before the next century if the world switched to the EV.      

There is no doubt that the EV is going to exist and grow in popularity. However, it will be a niche market utilized by specific businesses and consumers.  Cost savings will be the biggest stimulus. Currently, the only reason the EV is price competitive is because of very generous subsidies to consumers and manufacturers. With government deficits in record territory, cuts to subsidies will occur before tax hikes, and demand will increase the price of electricity and minerals.  The EV market does not look promising in the long-term.

We will one day move away from gas and diesel, but it will not be to the EV. There are too many cost constraints. It will most likely be a switch to cleaner carbon-based fuels such as hydrogen and natural gas.  The infrastructure is already in place and the technology to produce on a grand scale is getting near.   If you are an earnings investor, avoid all companies catering to the EV market.   

"Carbon dioxide from burning fossil fuels is the stuff of life, the staff of life, the currency of life, indeed the backbone of life on Earth." 

...Dr. Patrick Moore, cofounder of Greenpeace, 2015