The future of your travel is not Lithium but Carbon

Its going to be a longish article, so apologies in advance.

Two news items caught my eye today. One was an announcement by Subhash Chandra on his next bet on Lithium Ion Batteries, which i read and then quickly moved on. There is no future there. I will explain why a little later.

Another was the constant push by Trump to lower the oil prices to below 50 USD. Every single US media article and bank has come out claiming that its bad for US, but this decision of his makes me think Trump is smarter than he lets on. We are headed to a much peaceful and prosperous world if the Oil Prices go down. I will again explain why below.

Because both of above may seem disconnected, but are more connected than you think.

First Let's look at the Oil Situation with a quick political history

The world was in turmoil between 1914 - 1950, largely because the World order had not been established. There were countries still trying to grab power and running colonies. So the two world wars were more like revolutions on world level. After that we saw 40 years of Cold war which was again more to establish economic policy, capitalism vs communism.

Iran and rise of OPEC

During the second world war, Iran suffered more than its share. It had been freed from British in 1921 after prolonged agitation only to be in Hitler's cross-hairs because of Oil. It therefore allowed Britain and Russia to use its territories to defend from Germany, but when war ended Russia refused to leave. More agitation.Even after leaving, Russia installed two puppet regimes and drew a huge concession on Oil prices.

1946 - Finally Russian puppet regime was overthrown in 1946 and normal life resumed.

1948 -UK carved out Israel/Palestine in 1948 from Arab territories under its occupation. US has supported and immediately given it recognition. Israel was an ancient claim from an ancient people, but was an eyesore for the countries that had lost land to it. 1948 saw an Arab-Israeli war in which Syria, Jordan, Iraq and Egypt participated.

1953 - Struggle for Iran wasn't over. It barely ran a democratic government for 7 years when US removed it's Prime Minister via a covert operation and made the Shah all powerful. The Shah was thankful to US and diplomatic ties with US sweetened. This was viewed very suspiciously by the Arabs and Iranians alike. In the eyes of Arabs, US was one of the reasons for creation of Israel.

1960 - In 1960, the Shah joined forces with Iraq, Kuwait, Venezuela and Saudi to form OPEC to control oil prices. This was the time when world's largest oil fields were being discovered and entered into the production in Middle East and elsewhere. Till this time, US was the world's largest consumer and producer of Oil.

1971 - Between 1946 and 1971 Britain freed up some 6 countries on the Arabian peninsula which joined OPEC. OPEC was an international oil cartel which now represented more than half of world's oil production and one no one had seen coming. It is because of OPEC that politics and business became entangled in the middle east and one can't look at Oil without looking at politics.( UAE freed 1971, Qatar freed 1971, Bahrain freed 1971, Yemen 1967, Kuwait freed 1961, Israel 1948, Jordan 1946,)

1973 - Israel faced a surprise attack from Egypt & Syria with support from a host of Arab Nations and Soviet Union. Israel fought back and US initiated an extensive re-supply to Israel. Iran stayed out of this war due to Shah's proximity with US and bad memories of Russia. This didn't go down well with Iranians and a new populist leader (Ayatollah) started grinding this point home. Israel was able to defend territories.

1973- Oil Embargo As a retaliation Arab countries lobbied the OPEC for an oil embargo on countries that were supporting Israel. Oil prices grow from 3$ to 12$. Middle East countries are flush with more cash than they can handle. Inflation grows.

Oil Shock : The embargo quadrupled the price and US economy faced a huge shock as its oil production at home had gone down in the last decade. The fuel tanks dried and petrol pumps started seeing snake like queues.

1975 - Iranian economy Can't handle the cash as inflation grows and everything becomes more and more expensive. Projects stall and it goes into a recession. Seeds of political turmoil have been sown.

1978 US- By late 70's this oil crisis had such an impact that it almost killed the US car industry and made imported compact Japanese Cars a norm.

No one had thought that something like Oil could be scarce. The terrible economic shock faced by US made its entry into the Middle east a necessity. . Soon it was back, dabbling with its ally Iran to influence oil production and secure its future.

1978 IRAN- Ayatollah had become the all powerful voice. He had been advocating removal of Shah. After various tactics by Shah to wrest popular support from Ayatollah fail, the Shah abdicates and Ayatollah becomes the ruler. He immediately consolidates power and starts preaching conservatism by closing the universities for 3 years

1979 US - Auto industry is failing massively and there are cries from Detroit for a bailout. US bails out Chrysler and a few companies. There is an urgent need for immediate action. Meanwhile Iraq has used its Oil money to build huge stashes of American arms and ammunition. The global Oil production had reached a new peak in 1980, something that will again be achieved only in 1995.

Rise and fall of Iraq: Iran- Iraq war (1980-88)

To counter Ayatollah, US looked to Iraq which had age old disputes with Iran. US supplied a new Iraqi leader called Saddam Hussein with arms and ammunition. Once you hand arms to a dictator, you know what's going to happen. Saddam had been eyeing some lucrative oil fields just across the border and was also worried that the Iranian revolution will cross borders into Iraq.

Above all, no one had forgotten that Iran had not participated in the 1973 War with Israel, except the Oil embargo bit.The time too was ripe for an attack as Iran was still recovering from political upheaval after Shah's exit.When Iraq attacked in 1980, Iran had few friends who could help it, and it lost territories to Iraq for the first two years.

Ayatollah remembered of Shah's old ally US. US has been waiting for this opportunity to make a deal. It secretly supplied arms and on the side and secured some lucrative oil deal. (Don't believe me? Look up Iran-Contra affair on wikipedia)

Iraq had imagined a quick victory, but the arms supplied by the US tilted the balance, and made this into an 8 year long war. After the first two years, Iran was mostly on the offensive till the UN stepped in with a ceasefire mandate. It was not good for the Iraqi morale or Saddam's ego.

US was the real winner Iran - Iraq war

Wars cost money. Money for these countries meant selling more Oil quickly. Selling more Oil meant prices coming down. US won three fold. US secured arms deal with Saddam. It secured arms deal with Iran. It secured Oil deals with both at lucrative prices to pay for the arms. Sadly, Arabs understood this a little late, and when they realized it, they never forgot.

When you watch all those emotionally charged videos of Arabs and Iranians declaring US as their number one enemy, this is the reason. They feel back stabbed during the Israel war, they feel stabbed during the Iran Iraq war. For the first 4 years global Oil production declined, but as the tide turned it peaked again by the end of the decade.

US from it's standpoint had very good reasons to do what it did. If OPEC hadn't translated a territorial war with Israel to a financial war with supporters of Israel, may be the world would have been a very different place. And again US surely hadn't planned on Iran-Contra affair or its dealings with Saddam to come out.

Iran-Iraq War aftermath : The Gulf war

Saddam had raked up a huge debt from kuwait to fund the war, and lost. After the ceasefire was declared, Kuwait started asking for loan repayments, and Saddam just turned around and attacked.

1990 was particularly bad for everyone

1980-88 had been good for US.But after Iraq attacked Kuwait (1990) and set some kuwaiti wells ablaze, the US energy security was again in turmoil.

The oil prices rose everywhere.

USSR collapsed

Japan's economy crashed

India was staring at balance of payments issue.

China was under political turmoil after Tianmen square and purging leaders

The Only one good news was that Germany was reuniting.

And oil was flowing high. It would reach its 1980 levels in 1995.

Aftermath of Gulf War: The Arabian Narrative is easy to understand

As US oil insecurity grew, its meddling in Middle East grew. These missteps fell like dominoes one after the other culminating US declaring the Gulf war in 1991. This invasion by US soldiers on its ground was barely 20 years after the last colonists had left the Arabian peninsula.

Its easy to see the narrative from the Arabian side, for whom the increase in oil prices was their right. The western powers had colonized it, then created Israel from their lands by force which they had no business doing. Now when they needed money to grow the economy or fight wars, all they could do was sell Oil. When they wanted to sell a limited natural resource for whatever price they wanted, US was not letting them. From their point, US was being a bully by taking away Oil by force and by making neighbors fight.This was a big affront on the self respect of a lot of political leaders, who created figures like Bin Laden to hit back with tactics like terrorism and guerrilla warfare.

2000- Now - US

It wasn't until mid 2000's that US finally found an economic way to extract Oil out of its shale reserves in North America and became energy secure. But till it reached that point, its armies were to suffer in Middle East. As US oil production at home grew, it started withdrawing from Middle East and is now literally out of their hair. The withdrawal of its troops has been in sync with its oil production at home, and now, it's an oil surplus country. If you thought it was Obama, IMHO that was purely coincidental.

As Oil prices decrease, Middle east starts spending on infra

Middle east is also seeing the financial impact of lower oil prices. Private capital has started fleeing from Saudi Arabia and its started a big impetus to reduce its dependence on Oil income and proactively build an economy modeled on Dubai.

The regional politics is also bearing brunt of low oil prices. Last year Saudi had severed diplomatic relations and claimed that Qatar was funding Islamic extremists. Qatar has one of world's largest gas reserves and after the diplomatic action is pumping money to become self sufficient in a lot of aspects for which it depended on neighbors. On 3 December 2018 it also announced that it will be leaving OPEC. The reason cited is that it's being asked to cut production to keep Oil prices high, and it doesn't want to cut production. It is worthy to note that Qatar and Iraq have an American military base on its soil.

Any war, guerrilla or terrorism needs cash to fund it and the source of this cash is growing thinner and thinner.

So we are unlikely to see radical action from the Middle East anytime soon. ISIS was its last sigh. Pakistan, which was home to Osama for few years, is running from pillar to post trying to raise money with lukewarm response. You see what i mean.

Saudi needs an Oil price of about 70 USD to remain above water. And therefore if Trump is pulling the prices down to 50 USD, it means that the Middle Eastern countries will be busy building infrastructure to safeguard their future. Killing of Saudi journalist Jamal Khashoggi hasn't helped anyone on the diplomatic front.

If world goes electric, then Oil will become Coal.

Fuel/Oil is just one of the ways to store energy in your car's gas tank.A big leap in this since 2000's has been the rise of Tesla and the improvement of Lithium ion battery technology.

Tesla's growth has also shown the world that battery power can run premium cars. Chinese companies have jumped in and are apparently doing better than Tesla on the mass production front.

In Europe, Volvo claimed that it will NOT make Internal Combustion engine cars (ICE) from 2019 and every single car company out there is working on an electric car project. China has already declared its 2015 decision to completely move to electric vehicles by 2030. Something that has also made India work on it.

See, none of these companies or countries Needed to put their weight behind electric cars. They have done so because now the technology has become cost effective to produce and there is one company doing it profitably.

There was a time when world followed Coal Prices. No one does that anymore. Same will happen with Oil.

Then the Oil rich countries would do what anyone in competition does, you lower prices, increase production and cut margins. You get as much money possible out of a natural resource going down in value and you convert that money into a different asset that grows with time, gives better returns.

That is what Saudi, UAE and Qatar are doing. Iran however is being a bottleneck as it wants the same money to protect its borders. It is also the country closest to having a nuclear weapon, and doesn't want to stop now. Some of Iran's position makes sense as even though Iran has a conservative Islamic government now, it has not attacked any country in the 20th or 21st century but has been attacked multiple times.This includes a covert US attack with Israel using the STUXNET virus that was aimed at its uranium enrichment centrifuges and succeeded in killing a lot of them. This has been followed by attacks by ISIS and other armed uprisings on multiple border fronts.

A nuclear arms race can change power dynamics and put the region back to its 1980's days. US had reached an agreement on nuclear energy with Iran during Obama administration but now after Trump has unilaterally gone back to impose economic sanctions on it. I guess we will keep seeing those hate videos for some more time on social media.

From US perspective, blocking Iranian Oil gives more share of the global Oil income to Saudi and US to fund whatever it is that they are funding. Irony is that by not participating in the 1973 war with Israel, it lost the trust of its neighbors, got Ayatollah and was Islamised , fought an 8 year long war with Iraq, and is now facing sanctions .

In 50 years, countries that attacked Israel and pushed OPEC to raise Oil prices and killed the Detroit dominance in car manufacturing are working with US. But such is the world of foreign policy and diplomacy.

I easily get sidetracked. Coming back to it, the rise of Lithium Ion has not only shown us that there is an alternative, but its success has created a mobile electronics industry and accelerated research in battery technology.

A little on the Lithium Ion Battery

Lithium Ion battery uses Lithium which is mined in Australia, Chile, Argentina, China, Zimbabwe, Portugal, Brazil, US. Most of these countries have similar political ideology, culture and decades of great foreign relations. The countries are scattered over the globe and therefore cannot form a situation like OPEC which had geographical proximity and Islam as very solid binding forces.

The second ingredient that goes into the battery is Cobalt, which is a little problematic as Congo virtually has a monopoly on it. Still there are other countries which produce the mineral and if it comes to it, the next round of meddling may start in the African continent.

China has already started working with a lot of these countries and is already firmly established there to secure its energy future as far as Cobalt is concerned.

Lithium ion tech has plateaued

Then again, Lithium ion might not be much a of a problem as Oil was because it is a moving target. The batteries were first made by Sony for its Camcorder in 1991 and since then have seen an improvement of about 7% efficiency growth year on year. However, most of these improvements have been in manufacturing technique and not on the chemistry front. So as far as chemistry is concerned, the Lithium Ion part is still where it was in 1991, more or less.

All that is left now is to see how to closely pack cells together, which is a steep climb. Since last 3-4 years, scientists have barely been able to get additional 0.5% increase per year in energy storage capabilities.

Therefore if Subhash Chandra claims this to be his next bet, he is getting into a mature technology which is not going to grow. The search for next material and tech has already begun. By the time this news published today becomes a factory, and has completed its learning curve, the world will have moved on.

In short, getting into manufacturing of Lithium Ion batteries now is a bad bet. There are other reasons as well.

Why is Lithium Ion not as green as you think

Lithium is largely taken out from underground salt water deposits. The process is very similar to how salt is taken out from sea water. Large pools of water are collected and then allowed to dry for 18 months. The dry powder is then collected and processed in factories. This negatively impacts the water table.

The processing of lithium from drying to extraction creates more bad chemicals that poison the water and environment.

Therefore production hubs in countries like Chile and China are facing severe backlash from the local populations.

The second element is Cobalt, which has a similar problem. Congo, which has abundance of mineral has started depending on it so much that often families employ child labour to extract it. And the stinker is that Cobalt is one of the most poisonous substances to mine, and most of these countries are doing it with hand.

The problem with L-ion is Battery Architecture

Another challenge that faces L-ion battery is that Lithium is very volatile. As batteries are packed together to increase the charge, the risk factor of them exploding increases. This is what happened with Samsung note. After some number of charges or damage the internal circuit of the battery would short making the phones catch fire.

With every charge, the batteries expand. When they discharge, they contract.This limits the speed at which they can be charged and discharged as well. Throw in a lot of charge at the battery and it kills the battery.

The charger in your home is roughly a 3 KW charger. Tesla has been able to create superchargers which can charge a battery at 160KW, but for this to reach a consumer cars, the technology needs to improve.

This continuous charge and discharge creates additional chemicals that lock Lithium ions making the battery hold less charge. Therefore after some 1,000 charges, which happens in roughly 2 years, the battery needs to be thrown out.

Enter Carbon Ion Supercapacitor : ZapGo

Companies out there have literally gone through the entire periodic table to find the best chemicals to make the perfect battery. But as long as chemicals are used, the battery hits a limit pretty quickly.

Sony claims to have found the next technology called Lithium-Sulfur. We might start seeing it in 2020 in consumer products. But again it has incremental change.

There is one product which has been making waves since last couple of years and might hold the answer. This is called ZapGo.

They have very smartly sidestepped the chemical nature of the battery and used materials technology to advance the solution. Zapgo has created a battery that works on the concept of capacitor, though a highly modified one.

And it uses Carbon. Which means no issues related to explosion, environment pollution etc.

The company has over 30 patents. The battery can charge as fast at 350 KW (twice that of Tesla Lithium ion supercharger) and hold charge for as long as a lithium ion.

The company also claims that their batteries won't deplete for as long as 30 years. Infact one of the patents is to reduce efficiency for the battery artificially should a customer want planned obsolescence.

The picture is not all rosy. The problem with carbon super-capacitor is that it doesn't hold as much charge (Milli Ampere Hour) per battery. Zapgo claims to be working on expanding it to bring it at par with current Li-ion batteries.

Changing the world to electric cars is not as easy the Tesla way

Early problem with the electric car was range per charge. Tesla seems to have solved that comfortably in its models. But the time taken to charge a car still remains high. The market penetration of electric cars has also not grown because of the cost of the battery.

Tesla has come up with the concept of SuperCharger which can charge their original 85 kWH model in about 75 minutes. But it's still a far cry from the time taken to fill up your car. Plus supercharger needs special installation.

As I said earlier, a Tesla supercharger can charge with 160 KW which comes with its most premium model. But none of us have that kind of juice at home. This means that an entire new infra to deliver electricity to homes will have to be developed if the car indeed goes electric and has to be charged at home.

With a regular home electricity connection, you might have to charge your car for an entire night.

Such a high charging capacity infra cannot be free and someone will have to pay for it. Right now, the Electricity company and government pay for it for industries and commercial establishment. But if investment of such a high nature are to be made available for a common household, it will definitely mean that electricity will become expensive to recover costs !!

ZapGo claims that it can charge a 350 KW car in 5 minutes. In its vision, it wants to create large charging centers like todays petrol pumps with 1 million KW stored. From this storage, it can keep charging cars during the day, how you get fuel now.

At night, it claims it can charge its 1 MW with subsidised off peak hour rates electricity.

So what ZapGo means is that you can have a car much working in the same fashion like today if you have the right battery technology.

Conclusion

It was a long article and thanks for being with me. The purpose i wrote this is just one. To give you enough information so that you can send this to the researchers, scientists, businessmen and investors and make them think. This industry cannot change unless a large number of right people work on solving it.

Creating a Lithium Ion plant might be okay for us in the next 10 year horizon. But beyond that, we need to create technologies like ZapGo, which can only happen when we are aware of the problem.

Innovation doesn't have to follow the queue. So we don't need to follow the same trajectory going through L-ion and then moving up. See what we did with computers. We can do the same with energy technology.

If scientists and researchers today take this challenge up, 10 years from now, we will have indigenous tech and manufacturing.

So solve tomorrow's problem today, and again, thanks for being with me for such a long read.

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References:

1) https://www.wired.co.uk/article/lithium-batteries-environment-impact

2) https://www.wired.co.uk/article/smartphone-battery-life-lithium-ion-future

3)https://chargedevs.com/newswire/zapgos-carbon-ion-tech-combines-power-density-of-supercapacitors-and-energy-density-of-batteries/

4)https://www.energystoragenetworks.com/qa-zapgo-tries-solve-ev-challenges-carbon-ion-technology/

5) https://www.livemint.com/Auto/1gNNhXYoLzCYftQtiSuyfP/Subhash-Chandra-Lithium-ion-batteries-for-electric-cars.html

6)https://www.cnbc.com/2018/11/26/goldman-sachs-contradicts-trump-50-oil-is-bad-for-the-us.html

7)https://indianexpress.com/article/world/qatar-will-pull-out-of-opec-amid-tension-with-saudi-arabia-5476144/

Disclaimer: The views expressed in this article are my own and don't reflect the views of any of my employers present or past

Satyarth