Will Trump Pump the Brakes on Greentech?

Both in the US and globally, the green energy transition has been all the rage for the past few years. With President Trump’s second term kicking off, how will it impact the green transition domestically and beyond?

For the green folks outside of the US, the impact should be minimal. Since the US doesn’t manufacture most Greentech components or provide much financial support, Trump’s influence is (mostly) contained to the US. But the story isn’t so pretty for those in the US.

The main challenges for the green transition in the US are transmission infrastructure and financing. Federal support is crucial for developing the infrastructure to get the energy from where it is generated to where it will be used. Trump could make this development and coordination process much harder. Wind and solar projects require more robust financing than a traditional fossil fuel plant, so cuts to federal incentives or subsidies could make these projects unviable.

Without federal backing, many of these green projects would stall. Private investors might try to step in, but they can’t match federal funding levels. Trump has the ability to significantly slow down the green transition, but at least that doesn’t extend beyond the US.

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

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Transcript

Hey, all Peter Zeihan here coming to you from Colorado today. We’re taking a question from the Patreon page. And that’s specifically what sort of impact can Donald Trump have on the green transition, both in the United States and wider abroad? Abroad, very, very little. The solar panels aren’t made here. The wind turbines are not made here. And U.S. financial support for anyone else’s transition is well below $1 billion a year. 

So, you know, you know, whatever. It’s all about what would happen here and here. The the federal government has a lot of, means for changing the way the green transition works. A couple things to keep in mind. Number one, green technologies, as a rule, require a great deal more transmission infrastructure because where most people live is where it rains. 

And so you can grow your own food. We don’t have a lot of desert cities. So in most cases we generate power with coal, nuclear, and natural gas relatively close to where we live. And so transmission for most power plants is well under 50 miles. But most of the places that are very sunny or very windy are not within 50 miles of where we live. 

It’s in the Great Plains, it’s in the desert southwest. And so you have to build these pieces of infrastructure to generate power well away from where people are. And then you have to wire that power to somewhere else. And that often means crossing jurisdictions. And if you cross a economic or political jurisdiction, the regulatory burden becomes more robust. 

And it’s up to the federal government to try to smooth that out. So if all Donald Trump does is not smooth things out, becomes a little bit more onerous to build green tech anywhere because you can’t hook it up to a source of demand, then that’s problem one. Problem two is much bigger. You see, if you’re doing a conventional, facility, whether it’s coal, natural gas or a nuke, only about one quarter of the cost of the facility is in the upfront construction. 

And then linking that up to the grid, most of the rest is fuel, especially for coal and natural gas. So as a rule, it varies based on where you are and how close you are to the fuel source. As a rule, about 80% of the cost of the lifetime cost of a coal or natural gas facility is the fuel. You basically buy it and burn it as you go. And so with that sort of model, you only have to finance the initial 20% that it’s required for the construction of the facility and looking it up to the grid and everything else. 

You have an income stream to defray and ultimately overpower the cost of the fuel moving forward. It’s not how green tech works. The whole point of solar and wind is that you don’t have fuel. The fuel is free. Well, that means that most of the costs, almost all the costs are upfront. Over two thirds go to the construction and linking it up to the grid. 

So the degree of financing you need megawatt for megawatt is more than triple what you need for a more conventional fuel system. Now, one of the things to keep in mind in the United States is that capital costs have roughly increased by a factor of four since 2019, as the baby boomers have retired, and the money that they used to have in stocks and bonds, that fueled the sort of capital environment that we had ten years ago just no longer exists. 

They’ve all been liquidated and they’ve gone into T-bills in cash, which is driven up the cost of financing for almost everything, including power plant expansion. Well, if you’ve seen the cost of capital increase by a factor of 4 or 5, and you have to finance three times as much for wind and solar as you do for core natural gas, you can see where the problem is. 

This is normally where the government would step in with concessionary deals on whether it’s on taxes or directly on financing in order to help bridge that gap. And so all Donald Trump has to do is say, I’m not going to finance this stuff anymore, and a lot of it is going to go away, even if, as isn’t the case in the desert southwest or in the Great Plains, solar or wind are already cheaper on an all in cost basis over the entire life of the project. 

But that’s not the number that matters. Part of the problem that I’ve always had with the green communities, they keep using this thing called levelized cost of power, which shows how over the life of a project, the cost of solar and wind has gone down and gone down and gone down. And it has. But they assume that there’s no problem with intermittency. 

So like when the sun sets, solar doesn’t work anymore. If you pair a more realistic cost structure because you know you want electricity after the sun goes down. Hello. With financing the issue, then the federal presence in the financing world really is critical. And even in projects that make a huge amount of sense, not just environmentally but economically. 

If you can’t get that financing right, you can’t have the project. Private industry can step in, but it’s going to be a hard sell to do financing for something on concessionary terms, for something that it’s going to take longer to pay out as compared to a colder natural gas plant. And you might get local and state governments kicking in some for political and environmental reasons. 

But there’s no way that they can compete with the sheer volume that the federal government can come up with. So we should expect a lot of these projects to slow down quite a bit. Even if Donald Trump doesn’t call them out by name is something that he doesn’t like. You interrupt the financing and you simply don’t get much new construction.

Are Rare Earths Really That Rare?

A close up photo of colbat rocks

Rare earths are back in the headlines, but is all the hype worth it? Let’s breakdown what these are and how “rare” they actually are.

Rare earths are byproducts of mining for other metals like nickel, copper, and uranium. While not rare on Earth, they are rarely found in sufficient abundance in a single location for their mining to be economically viable. The only real challenging aspect lies in the refining process, which is just dirty, time-consuming, and expensive…but not all that difficult to do.

China dominates rare earths because they have subsidized production (artificially lowering the price) and they’ve been doing it for decades. So, other countries haven’t had any incentive to turn on their refining capacity, yet. Once the Chinese overplay their hand or the system crumbles, other nations will just ramp up production.

This isn’t really something to fear, other than a few months of issues. However, the US should be more concerned with other critical supply chains like aluminum, steel, and lithium, where the US has yet to build out sufficient infrastructure.

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey, all, Peter Zeihan, coming to you from a very, very chilly Colorado. Today we’re taking a question from the Patreon page that’s been popping up a lot in the news about rare earths. There’s a lot of angles to this, but basically, it seems that the Trump administration is really interested in getting some production of the stuff. And the question is, how does it work? 

What do we need? Where do we go? You may recall recently Trump, falling to Russian propaganda again said that, Ukraine owes the United States $500 billion and it should pay for it with rare earths and not get a security guarantee in exchange. By the way, total USA to Ukraine at this point, according to US government sources, is less than $100 billion, of which two thirds is weapons that were just sitting in warehouses that we were going to blow off anyway. 

Anyway, rare earths, unlike the name rare earths are not rare. They are produced as a byproduct of mining. When you’re doing nickel or copper or platinum? Uranium? Palladium. That’s a platinum group. Coal ash, phosphates, sometimes lead. 

I said iron ore already. Aluminum. Bauxite. Anyway, there’s like 20 different, macro metals that you mined for, plus coal ash, that produce Rees as a small soda product. 

And so what usually happens is you produce the primary thing that you’re after. And then with the waste from your refining process, you maybe do another run of that in order to concentrate the earths a little bit more. But then that next stage of taking that kind of slag that’s been partially refined and turn it into useful rare earth metals, is very dirty. 

It’s very polluted, and it takes a lot of time. So usually what happens is you take that slag and you to ship it off to China. Because back in the 1980s and 90s, the Chinese were looking for industries that they could corner and their technology was not very good. And they settled on rare earths because it was expensive and it was dirty. 

But they have a very capital flush system where they basically print currency and confiscate everybody’s bank deposits to pay for whatever development plan they want. So what they do is they you build a couple hundred vats of acid and you dissolve everything in the first bout, and then you get the remnants. You put that in a second batch, and then the remnants from that third, that remnants of the fourth that intruded. 

And over the course of months, starting with tons of slag material, you might end up with an ounce of a rare earth metal. Anyway, the Chinese cornered this market because it was something that no one else was like, oh, I want to do that. And so they ended up super saturating the market because Chinese economics are about throughput rather than efficiency. 

And they continue to subsidize the industry today, which is why, based on the Earth, somewhere between 50% and 95% of it comes out of China, the refined metal. And then, of course, in the last 10 or 15 years, they tried to go, downstream, into processing and building product out of those things. Be even less successful in that. 

Anyway, this technology is based on the 1920s. So there’s nothing that’s difficult about this, and it doesn’t really take a lot of time to set up. It’s just that once you actually start putting your slag into the acid, it’s going to be months before you get any material. So the problem is not rare earths per se. The problem isn’t even production. 

Rare earths are a byproduct of any number of industrial, mining and purification processes. The problem is building out that processing capacity. Now, how long does that take? I would argue that in Australia, Malaysia, France and the United States, most of that work has already been done. But nobody wants to turn it on because you’ve got several months where you’re not getting any product. 

And the Chinese continue to super saturate the market and provide the world with below cost rare earths. So at some point, a switch is going to be flipped, and everyone’s mind when they realize either that the Chinese are overplaying their hand with their control of the processing capacity or trying to just brakes. And everyone realizes that if they still want the stuff, they’re going to have to make it themselves. 

Once that happens, all of this spare refining capacity around the world will spring up. And the problem we solved in six months to a year. Until then, we are in the unfortunate position that the US government seems to be beholden to Chinese and Russian propaganda on the rareness of rare earths, and that, unfortunately, is shaping policy in a number of places. 

It’s like if you want to be paranoid about things that the Chinese dominate. This isn’t where you go. You should be concerned of other types of processing, such as turning bauxite into aluminum, turning iron ore into steel, turning lithium concentrate into lithium metal because those are places we’re setting up the, replacement infrastructure. The United hasn’t really started at scale yet. 

And if the Chinese break before that’s done, we will then have to build out that infrastructure in an environment when we can’t get the intermediate product. And that will generate the mother of all inflation pulses. So, you know, one miracle at a time, I’d argue that this specific problem, rare earths, is not all that much of a problem. 

There’s plenty of streams coming from plenty of places. We just have to turn on a few things to solve it.

Counting (Lithium) Chickens Before They Hatch

Photo showing trucks at a lithium mine

Some new advancements in AI and geology have revealed a massive lithium deposit in Arkansas’s Smackover Formation (great name by the way). While this is good news, we still have a lot of work to do before this lithium sees the light of day.

Traditional methods of lithium extraction aren’t going to work in Arkansas, so Exxon is pioneering a chemical extraction process, which is showing promise. Again, we’re early stages in what this will look like, but it has solid potential.

This deposit might not solve the demand EV’s are bringing about, but there is huge potential to improve grid storage. This would allow excess renewable energy to be stored, addressing rising energy demands in the US. Again, this is still early on, but energy storage could be transformed by 2030.

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey everybody. Peter Zeihan here, coming to you from Portsmouth, New Hampshire, which is not only disturbingly pleasant—I mean, it’s kind of surreal—but there are more good food options within a two-block radius than in the entire Denver metro, which kind of pisses me off anywho. I’m here near Market Square, and today we’re going to talk about the new…

Well, it’s not all that new, but the popularization of the lithium deposit that was found in Arkansas. Now, like I said, it’s not new. This is called the Smackover formation, which is a great name. I want to buy a drink for whoever named it. Anyway, it’s been producing bromide for the better part of a century, so the geology is reasonably well known.

What has happened is one of the breakthroughs with AI is being able to look at the geology from new angles, and correlate it with updates in understanding for mining and geology that have come in the decades since. And they think that there’s more than enough lithium there to supply global supplies for like a factor of nine or something. Ridiculous.

Now, I don’t want to overstate this, because just because the lithium is there doesn’t mean it can be harvested. For example, 90% of the oil in the world that we are aware of will never be able to produce. It’s too deep, it’s too technically challenging, the bits are too small—whatever it happens to be. But in the case of the Smackover, in specifically the Arkansas part of it, there’s already production in this zone, and it has been for decades.

Just not for lithium. Quick review of lithium production. There are two types: you’ve got rock formations and rock mining, which is what dominates in Australia. It’s a little bit more expensive than the other method, because you actually have to pull the ore out of the ground and grind it up and process it to extract the lithium from everything else.

But it is a relatively quick way of doing it, even if it is involved. It’s rock mining, so, you know, you’re going to have all the tailings, you’re going to have all the processing issues, and all the at-long costs. It’s energy-intensive—all that good stuff. Second, you have brine mining, which is what they have in Chile.

There, there’s a subsurface water source that is rich in dissolved lithium. You pull the liquid out, you pour it into an evaporation pond, and over the next 18 months, you, you know, basically wait for it to concentrate. So it’s cheaper than rock mining in Australia, but there’s a really long lag time, and you need a specific sort of surface.

Up on top, in order to do the extraction.

So the Atacama Desert in Chile is one of the driest parts of the world, and the mines are about 7,500 ft. So you have a lot of sun, you’ve got a desert, you’ve got low vapor pressure, and it still takes 18 months to concentrate the brine down to something that can actually use. In the case of all, in case of Arkansas, it is a brine formation.

The Smackover. But you’re talking about a state where the highest point in the entire state is like 2,500 ft, and where the mines would be, they’re significantly lower. And you don’t have the large, flat, dry areas. Arkansas is pretty humid, so doing traditional evaporation is just completely a no-go. And if that was the only technology in play, this wouldn’t work at all.

But it’s not the only technology in play. There is a relatively new method for lithium extraction from brine, which is basically a direct extraction that uses chemical catalysts and similar things to extract the lithium from the water. Now, the concentration in Arkansas is about 300 mg/L versus 400 mg/L in Chile.

So the Arkansas deposit isn’t as good in terms of quality as a Chilean one, but there’s a lot of infrastructure in place already, and Exxon is the primary company that is involved. And, you know, Exxon doesn’t pull things out of the ground unless it thinks it can make money. And so it has pioneered this direct extraction technology in a number of test wells already on site in Arkansas.

So the only thing that has really changed is that we’ve had this new AI model saying that there’s a lot, a lot, a lot, lot more than we originally thought. And in the next three years, Exxon expects to have first commercial volumes. Now, they’re not telling us what “commercial volumes” are, so we’re going to have to wait and see.

But, one of the things that has been a limiting factor on a lot of the green transition is batteries, and I have not made any secret of my general opposition to lithium use in transport, because it’s a horrible battery chemistry. It charges too slowly. It discharges too slowly. It heats up and swells. It’s just a bad idea to put on something that moves.

But if you were to make a lot of small- to medium-sized batteries, put them in series, and just put them in a building where the heat and the swelling could be maintained or even harvested, you could use it for grid storage very, very, very easily. So this isn’t going to revolutionize the world of EVs, but it might, if it works, revolutionize the world of electricity.

One of the problems we’re going to have in the United States over the next ten years is as the Chinese system vanishes from the world, we’re going to have to expand our industrial plant. That means we need at least 50% more electricity generation than we currently have. And until and unless we can build the infrastructure to link the entire country together so that anyone can generate power anywhere and send it anywhere else—which is a tall order.

The easier patch is to put a lot of batteries in a lot of places, so that during periods of high supply and low demand—for example, solar shining during the day—you capture the extra and then use it at night. Everyone’s asleep at night. You burn your natural gas at night, when normally you would cycle. Now you just pour that energy into a power, into a battery pack, and then you use it during the day.

You know, you could use this in any possible grid if we can produce enough lithium at a low enough cost. And I have to say, between the engineering, the technology, and the geology, this does look promising. Just keep in mind: first commercial production, 2027, which means first large-scale batteries, 2030. This isn’t going to solve everything overnight, but it’s a very promising step in the right direction.

US Discovers Huge Lithium Deposit: What It Means…

Well, it sounds like the US finally decided to join in on the fun and make a lithium discovery of their own. This deposit is – supposedly – the largest ever, and it is located in the McDermitt Caldera near the Oregon-Nevada border.

I want to make clear that these are only estimates, so don’t pop the bubbly quite yet. On top of that, permitting and infrastructure buildout will take years to complete. Even when all that is done, lithium’s battery chemistry remains sub-optimal and has several limitations.

Despite these challenges, the McDermitt Caldera lithium deposit has the potential to shake up the industry. The US needs to balance this discovery with investments in researching better battery chemistry alternatives.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado. A lot of you have written in asking me what I think about this new supposedly lithium deposit that has been found near the Oregon Nevada border. That’s in a place called the Mcdermitt Caldera, which, if you’re familiar with plate tectonics, is where the Yellowstone supervolcano used to be. Basically, the Yellowstone supervolcano is a hotspot, and this is where it was ages ago.

Anyway, volcanoes bring stuff up from the mantle and even the core, and they tend to be a little interesting from human point of view. And so the minerals in the caldera are undoubtedly interesting and supposedly they found a whole lot of lithium. But if the estimates prove true, it will be the world’s single largest deposit, bigger than what is in Chile or Bolivia or Argentina or Australia for that matter.

So, you know, potentially groundbreaking. And I think this is great, obviously, but for things to keep in mind, number one perspective, estimated potential real exploration has not yet been done. And until it does, you know, don’t count those chickens. Number two, let’s assume that it’s as good as we think it is. Well, you still have to build the mine.

And from the day that all the permits are approved to the day that you get first large scale production, it’s still going to be in excess of four years out in the permitting process. You’re going to add another 2 to 3. And a lot of this is on Native American land. So there’s a whole nother level of politics and negotiation that goes into it.

So I would be surprised, even in the best case scenario, if we saw a meaningful output out of this thing in less than eight years, ten is probably more likely. So the chicken counting is going to have to wait third. Let’s say we manage to get all this out of the ground and it looks really promising. Well, then you have lithium or it still needs to be processed into some sort of intermediate form, like concentrate.

And only then can it be refined into metal, and only then can it be turned into things like batteries. So there’s an entire manufacturing supply chain that has to be built up. Now the United States is starting on this. We’re working with the Australians on some of this, but this is again something that takes a minimum of 2 to 4 years to get going at scale.

I would argue that we should work on the processing regardless that way, even if this new source of or doesn’t work out, we can still tap water from places like Chile or Argentina and have more and more of the supply chain within the Western Hemisphere. Okay. What else? Oh, yeah. One more thing. Lithium sucks. I mean, we use it as our dominant battery chemistry because we don’t have anything better, but it’s not particularly energy dense.

It can only work for so many recharge cycles, and it tends to swell and heat up when you use it. So it can start fires, which is one of the many, many, many, many, many reasons why on flights they tell you that if you have a lithium battery, don’t put it in your checked bag because no one’s down there to check on it.

You have to carry it with you. Hopefully over the next decade we will figure out a and easier battery chemistry, maybe even one that’s a little bit more, I don’t know, environmentally friendly because the mining and refining that’s necessary to do lithium at scale is pretty messy. We need several hundred billion dollars into new materials science research for GreenTech and in none of the subfields is it more important than figuring out something that works for batteries better than lithium?

But until that happens, lithium is the best that we have. So this Mcdermitt Caldera, the Thacker Pass mine area, looks promising.

Processing: The Greatest Threat to US Economic Security

As we continue down the path of deglobalization, the US has checked most of the boxes needed to thrive in a disconnected world. Between shifting supply chains and moving manufacturing closer to home, there is still one box that the US hasn’t checked off – processing.

That unchecked processing box just so happens to be the most significant threat to economic security for the US. The US needs to flesh out its processing capabilities in three major areas of concern: industrial materials, agriculture, and oil.

The US must develop processing capabilities and partnerships for materials like lithium, copper and iron ore to support the industrial buildout. To improve food security and avoid famines down the road, finding ways to add value and expand food production close to home will be essential. The US is already a significant oil refiner and exporter, but there is a mismatch in the type of crude produced domestically and what US refineries can process; to reduce import dependency, the US will need to retool its refineries to process domestic crude.

Overcoming these processing challenges will prove crucial for the future of the US and its continued economic security. Regardless of political, ideological, or environmental stance, developing these processing capabilities will allow the US to prop up various industries and avoid catastrophe down the road.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everyone. Peter Zeihan here coming to you from the road in Colorado. Yesterday I gave you a quick talk about what I saw as the greatest national security threat to the United States for the next foreseeable future. I’d like to do the same thing now for economic security and in a word, processing. Before I explain what I mean by that, let’s go back a little bit.

The whole idea of globalization is that any product can go anywhere, take advantage of whoever can produce that product, the lowest cost and the highest quality, or at least that’s the theory in practice. As soon as countries realize they can reach into any economic space. They take steps to benefit themselves. Maybe they put in trade restrictions or in the case of processing, maybe they subsidize.

So different countries around the world are throwing a lot of money at making sure that certain industries are headquartered, or at least heavily emphasized in their own places. So Taiwan, Korea, Japan, they do this heavily with semiconductors to the tune of hundreds of billions of dollars of subsidies. The Russians use a lot of the d’etre is from the Soviet system, which used to supply a an empire which now only supplies them.

And, you know, they’re pretty economically backward. So they use all the extra stuff to produce things for export or in the case of the Chinese, in order to ensure mass development and mass employment. They throw basically bottomless supplies of capital at industries, really anything that they think that technologically they can handle. They want to be able to produce and if they can, cornered the market.

What this means is that other countries, United States, are reliant on countries that have put their thumb on the scales in order to participate by anything else. And now the globalization is breaking down. The United States is facing a double threat. Number one, a lot of manufacturing that used to be done here or could be done here or, you know, from an economic efficiency point of view should be done here, is done other places.

And so a lot of that has to be reshore at or near shore to French. Second, none of this works unless you have the processing. If you have iron ore, but you don’t have the processing to turn it into steel, you can’t do construction. If you have silicon, you don’t have the ability to process it in the silicon dioxide.

You can’t play in the semiconductor space and on and on and on. So things kind of fall to three general categories. The first are industrial materials like lithium and copper and iron ore and the rest. The United States in most of these is a bit player in the production and nearly a non-player in the processing. And since the United States is now attempting a mass industrial buildout, it needs to get good at that again.

It needs to make partnerships with the countries that have the raw materials. Australia is at the top of that list. Brazil’s probably close second. And then it needs to work with those countries either to do the processing in them or at home. Now, one of the things that I do like about the Biden administration’s economic policies and there aren’t a lot, is that the Inflation Reduction Act prioritizes this and says that in order to qualify for certain subsidies for things like EVs, the materials that go into them must be processed within a NAFTA country or an ally that is identified by negotiations such as Australia.

So we are moving in the right direction there, but we need to think of a much broader net. So for example, aluminum not only to the Russians and the Chinese dominate about three quarters of aluminum production in the world. Aluminum as a byproduct, generates a lot of trace materials like, say, gallium, which are really useful for solar panels.

Same thing with silver. Silver processing or copper processing generate a lot of the stuff that you need for rare earth metals. All of this stuff needs to be recaptured in some way. Otherwise, the industrial rail building that the United States is attempting really isn’t going to go anywhere. Because if you don’t have the materials to do it in the first place, it’s going to be kind of a pointless endeavor simply to build up what you would need to make them every single day.

That’s number one. Number two is food. The United States is the world’s largest food exporter and is the number one exporter of any number of materials and food products. But we don’t do a lot of the value add as part of those exports. This is missing a lot of really low hanging fruit. And if you look at the world writ large, the same thing that applies to globalization and processing applies to agriculture.

Lots of countries for food security issues, national security issues, protection issues whose have made it very difficult for the United States to export, say, soybean meal. But they still allow the import of soy by expanding the footprint in American agro industry so that we do more of the processing here. Not only do we get a higher value added product, but as global fertilizer markets around the world get problematic, a lot of major food producers are simply going to vanish because most food production outside of certain areas that have been producing it for centuries can only do so with massive applications of fertilizer.

Again, in China is the case in point. The EU’s about five times as much nitrogen fertilizer as the global average. So not only with the United States earn a little bit more money and have more food security. If we did this, we’d also be able to step in and help other places that are suffering from famine more quickly because we’d actually have semi-finished or even finished food products rather than just the raw material.

And then the third one is one that the Biden administration is not going to like to hear about, and that is oil. Oil by itself is useless. It has to be refined into diesel and gasoline and naphtha and the rest. And the United States is the world’s largest oil refiner and the world’s largest exporter of refined product. However, there’s this huge mismatch within the American energy sector.

Back in the seventies, in the eighties, when we were all running out of oil, American refiners became convinced with good reason, that the future of global crudes were very heavy, very sour, very polluted crude streams. And so what they did was they refined the entire American refining complex to run on the crappiest crude you can imagine, stuff that’s just goo or even solid at room temperature.

But then we had the shale revolution. And the shale revolution is different in that the crude that is produced from it is super light and super sweet. So right now, American refiners prefer to import the heavy crap stuff from the white world, leaving the light sweet stuff. We produce ourself available for export. So the smart play here would be to retool or even better expand the American refining complex in order to process not just the crappy stuff in the world, but also the stuff that we produce ourselves.

So we are less dependent upon the inflows and outflows of exports and imports in order to keep our refining complex alive and keep fuel the tanks. And for those of you who are super ultra mega greens, who are convinced that the internal combustion engine is not the way of the future, that’s fine. Consider that the most aggressive, realistic plan.

And it’s not very realistic for getting the EVs on the road and and stopping the production of internal combustion engine vehicles is now before 2040, which means as late as 2050, the majority of the vehicles that are still on the road are still going to be internal combustion. So even in the most aggressive plan, we are still going to need tens of millions of barrels of gasoline and diesel and the rest for decades to come.

If we’re going to avoid an energy shock where the whole system just cuts down. All right. That everything. Yeah, I think that’s everything. So processing it. Lots of processing. Oh, yeah. And even if you don’t buy into the green transition or even climate change, we still need to do this because without the Chinese and the Germans and everyone else in global manufacturing, North America has to at least double the size of its entire industrial plant.

That’s a lot of steel, a lot of aluminum, a lot of copper and all the rest. So really, it doesn’t matter what your ideology is. We don’t have enough of the intermediate stage of process stuff that we need to even attempt to do everything else. So let’s focus on that first and then.

Greentech and the End of the World

My fourth book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization is scheduled for release on June 14. In coming weeks we will be sharing graphics and excerpts, along with info on how to preorder.

Much of the angst in geopolitics since 1950 has been about oil. The Americans promised their allies a safe, globalized economy. That required not only sourcing the oil, but then ensuring it could be transported to where it was consumed. And so the Americans by default had to guarantee both freedom of the seas and a degree of stability in the Middle East.
 
Looking back, the geopolitics of oil have proven to be surprisingly…straightforward. Oil exists in commercially accessible and viable volumes in only a few locations. We might not like the challenges of such locations, and those challenges may have absorbed an outsized chunk of everyone’s attention in the late-industrial and globalization eras, but at least we are familiar with them. You think that “moving on from oil” will put this issue to bed?
 
Just wait.
 
In “moving on from oil” we would be walking away from a complex and often-violent and always critical supply and transport system, only to replace it with at least ten more. A world in which we “electrify everything” requires an order of magnitude more copper and lithium and nickel and cobalt and graphite and chromium and zinc and rare earths and silicon and more. Take a peek at the graphic below from the industrial materials chapter of my upcoming book, The End of the World is Just the Beginning.
 
We won’t “simply” be dealing with Russia and Saudi Arabia and Iran; we will all need to engage regularly with Chile and Bolivia and Brazil and Japan and Italy and Peru and Mexico and Germany and the Philippines and Mozambique and South Africa and Guinea and Gabon and Indonesia and Australia and Congo and China and, oh yeah, still Russia.
 
The future is darker, and less green, than you think.