Volt Rush - Book Review - Foreign Policy Magazine

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https://foreignpolicy.com/2022/09/04/vo ... sla-green/


What Do Electric Cars Really Cost?
“Volt Rush” examines the price of a dirty green business—and China’s role.

Review by Bob Davis - a reporter who covered U.S.-China economic relations for decades for the Wall Street Journal; he is the co-author of Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War.
September 4, 2022


Clean cars drive some very dirty businesses and grubby regimes. That’s the main takeaway from Henry Sanderson’s fine new book Volt Rush: The Winners and Losers in the Race to Go Green. Among the winners he describes are copper miners exploiting child labor, nickel miners dumping tons of waste into the sea, corrupt businesspeople paying off venomous African politicians, and a host of Chinese billionaires. It’s a far cry from the sanitized vision sold to Tesla owners.

Volt Rush is a useful corrective to the utopian rhetoric that portrays electric vehicles as cost-free environmental saviors. Sure, they help limit the greenhouse gas emissions pouring into the atmosphere and heating the planet. But the shift to Teslas and their competitors, financed by tens of billions of dollars of government subsidies worldwide, also involves significant environmental and geopolitical damage.

Happily for readers, Sanderson hasn’t produced a 288-page guilt trip. While the author is clearly a geek—he says the most exciting part of electric cars is the battery—he has written a rollicking tale of greed, politics, and technology populated by a remarkable assortment of brigands, despicables, and visionaries.

They include an ultra-Orthodox Israeli who has exploited the Democratic Republic of the Congo on the scale of King Leopold II of Belgium, a Chilean whose marriage to the daughter of the country’s dictator helped him dominate the lithium mining business, a onetime pal of Apple co-founder Steve Jobs who pitches mining as humanity’s salvation, and a Chinese billionaire who bought an Airbus A319 to chauffer his wife and lover.

Batteries are the heart of electric vehicles, and China is at the heart of advanced battery production. According to Sanderson, the industrial policy that helped turn China’s Contemporary Amperex Technology Co. Ltd., or CATL, into the global battery leader involved subsidies and protectionism—unsurprising given China’s goal of dominating the next generation of cars and trucks. Beijing has mandated that 40 percent of vehicles sold in China by 2030 must be electric.

As part of its strategy, Beijing denied subsidies for several years to electric vehicles using foreign batteries, making the foreign battery-makers uncompetitive in China. That gave CATL a protected market and a big advantage over South Korean firms, which were ahead at one point technologically and remain big rivals.

But government aid doesn’t fully explain the company’s success. Beijing and local governments in China also encouraged entrepreneurship, relentless cost-cutting, and foreign investment—even under the turn to state-owned firms that began in 2013 under Xi Jinping. In CATL’s case, founder Robin Zeng ditched his job at a state-owned company in Fujian province and began working on batteries, initially with a former IBM scientist from Taiwan. Eventually, Zeng cut a deal with BMW’s Chinese joint venture to produce electric vehicle batteries. BMW’s stringent requirements helped raise CATL’s game high enough for it to become the go-to supplier for other automakers.

CATL now looks to emulate telecommunications giant Huawei Technologies Co. in selling leading-edge equipment globally. In other words, in some clean industries China now isn’t ripping off innovation but producing breakthroughs.

One overlooked secret to China’s renewable energy success is ruthless domestic competition that drives down prices globally. While rock-bottom Chinese prices for solar materials and components, for instance, pushed European, Japanese, and U.S. competitors into bankruptcy, they also helped make solar power affordable. The question for policymakers then becomes whether to shut off Chinese imports to help domestic businesses or open the doors wider to help domestic consumers. University of Wisconsin solar specialist Gregory Nemet has called China’s solar cost-cutting a “gift to the world.”

Sanderson is a reliable guide to China’s global technology role. As a Bloomberg reporter in China, where we crossed paths, he co-wrote China’s Superbank, a look at how China Development Bank bankrolled the global expansion of Chinese firms. Then as a commodities reporter at the Financial Times and executive editor at Benchmark Mineral Intelligence, a market research firm, he poked around in mines from Chile to China to Congo.

For Chinese firms to play a leading role in electric vehicles, they needed to expand into global mining—with government financing—because they lacked the raw materials at home. Lithium-ion batteries—the energy source of choice for electric vehicles—require big supplies of lithium, copper, nickel, and cobalt. Chinese mines don’t produce nearly enough of any of these minerals, so Beijing had to look abroad. That created what Sanderson calls a “raw material rush.”

It’s a messy business. Electric cars require about three times as much copper as gasoline-powered ones. For electric buses, the difference can be as much as 16-fold. Mining requires lots of energy, often provided by coal-fired plants, which cuts deeply into the overall emissions savings from electric cars versus conventional ones.

Volt Rush details how China acquired leading positions in the minerals it lacks. While Chinese foreign dealings are famously amoral, its tactics hardly stand out in that regard—especially in the cutthroat world of global mining. Consider Dan Gertler, the ultra-Orthodox Israeli adventurer who used his connections with Congolese President Joseph Kabila to acquire rights to Congolese cobalt and copper for a fraction of their worth, and who acted as an agent for commodities giant Glencore.

Between 2005 and 2015, the Justice Department later said, Gertler paid more than $100 million in bribes to get “special access” to Congo’s mining sector. The Treasury Department sanctioned him in 2017.

Chinese companies acquired cobalt in Congo, too. Huayou Cobalt Co. relied on what mining journalists bizarrely call “artisanal mining”—as if mining were like producing specialty wines. Instead, the term describes workers who dig on their own for cobalt for $2 to $3 a day without safety equipment, often using children as laborers. In 2019, China processed 90 percent of Congo’s cobalt, Sanderson reports, with Huayou as a big supplier.

After Amnesty International unloaded on Huayou in 2016 for relying on child labor, in a report called “This Is What We Die For,” Apple paused purchasing from the firm. In response, Huayou formed a Corporate Social Responsibility Working Committee, saying it wanted to be a world leader in ethical mining. Even so, Sanderson reports, the company continues to buy from artisanal miners.

Another Chinese firm, Tsingshan Holding Group, pursued a different strategy to corner nickel in Indonesia. Tsingshan’s founder, Xiang Guangda, isn’t “ostentatious personally,” Sanderson reports, though he owns a fleet of Bentleys and Hummers and may someday learn how to drive.

Early on, Tsingshan needed nickel to make stainless steel and opened a massive stainless steel factory powered by coal in nickel-rich Indonesia. When Indonesia banned nickel exports to create a domestic processing industry, Tsingshan was the chief beneficiary. To meet the surging demand for electric vehicles, the company used the nickel it mined in Indonesia to make battery materials there. Other Chinese companies followed suit and set up processing operations in Indonesia.

The mines and factories are often coal-powered, meaning that nickel produced for batteries in Indonesia probably produces triple the carbon emissions of similar operations in Canada and Australia, Sanderson estimates.

Volt Rush has all the advantages of a journalist-written book in terms of on-the-ground reporting and colorful, clear writing. But it has some of the disadvantages, too. The book lacks some needed analysis. The vivid examples of environmental depredation caused by mining left me wondering just how the math shapes up when it comes to electric vehicles and emissions, especially given that their supposed green virtues are a major selling point.

The book would have benefitted from some life-cycle accounting of the environmental costs of electric vehicles. Starting with the mining of lithium and other minerals through the typical lifetime of an automobile, what emissions advantage would a Tesla have versus a similar gasoline-powered car?

There are plenty of such estimates. Reuters last year calculated that a Tesla Model 3 in the U.S. had to be driven 13,500 miles before it produced less environmental damage than a Toyota Corolla. (An average American driver spends 13,476 miles behind the wheel each year.) These are complicated calculations to make, and the estimates vary. Sanderson is well placed to sort them out.

There’s also little in the book about what can be done to lessen the environmental damage or ease China’s geopolitical hold on the market. Sanderson discusses battery recycling, which would be useful but, as he notes, won’t be sufficient to keep up with demand for electric vehicles. He also plugs a plan to mine lithium in Cornwall, England, powered by presumably nonpolluting geothermal energy as a model. That’s fine if it works, but it’s hardly sufficient to meet the challenge.

What’s needed is an industrial policy capable of competing with China. The domestic components would include money for research and incentives to manufacture domestically. The Biden administration in the United States took a step in that direction with two bills that were recently signed into law. One subsidizes semiconductor manufacturing; the other subsidizes renewable energy, including electric vehicles and solar power.

Significantly, the legislation ended a decadeslong debate about how to define an American company eligible for help. During earlier administrations, “American” companies were those with headquarters in the country. Now, companies that manufacture in the United States qualify as American, presumably including Chinese-owned ones.

A clean-energy industrial policy would need a foreign component too—specifically, a way to reengage with Beijing at a time when politicians compete to be “tough on China.” The latter usually means a further decoupling of the two economies. But when China leads on significant technologies and industries, including solar and batteries, the smarter route is to encourage China to invest in the United States, send its researchers there, and count on U.S. openness to give America an edge.

But maybe that’s too much to expect from one book. Volt Rush makes a great contribution in understanding what a green future entail—and what costs it might involve right now.