Since my A Case for Reverse Marek, I got quite a bit of new subscribers, will I am grateful. For those who don’t know, I am a complex system man focusing on interdisciplinary analysis. A virus post will come soon.
Well well well, who would have thought that, under conditions where other forms of energy generation, countries would turn themselves to coal ? Well, anyone with half a brain, and I said as many months ago, some countries will go as far as try to push coal as “kinda green”.
Under potential blackouts, energy shortage and the possibility of affecting economic recovery, countries will only accept pressure so much, before saying damn it all. China has showed this multiple times, consuming more coal than the rest, and projections see even higher consumption in the next 10 years. The more elites push for ESG and green future, the more dirty energy grows. It’s inevitable.
The aluminum story is quite telling, after all, the more you look into green companies, the more you find how dirty they actually are. Which I find ironic, since the elites themselves will tell you, nothing they want to do will bear any meaningful results. It’s like they are using this as an excuse for something else… nah, I am just crazy, they are benevolent people.
Both Argentina and Poland news are just examples of what I said at the start of January, Omicron would wipe out a already stretched out work force and stupid Covid policies would take care of the rest and disrupt countries at a systems level. And people wonder why so many EU countries are ditching their suicidal strategies and reverting to what common sense tells anyone to do.
The one talking about Supply Chain in 2022 is excellent, and you should read it in its entirety, it explains a few of the reasons why there will be no recover 2022, and why some itens might actually drop in price, while most of the needed ones keep their inflated prices.
And for the sole purpose of solidifying the opinions on my last two posts (non virus or mimesis related). Conflict in Ukraine will not only inflate wheat and other grain prices to historical levels, it will inflict localized famine in parts of the world. Plus disruption on energy, metals, the list is fairly big, and it’s cascade effects, massive.
I feel black swans were and are being formed these past few weeks…
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Far From Dying, the Coal Industry Is Actually Booming
In late 2021, diplomats spent hours arguing over whether to "phase-out" or "phase-down" coal in the final communique of the COP26 climate change summit. Under pressure from China and India, the watered-down second choice prevailed. Still, it was good enough for the United Nations to proclaim that the dirtiest fuel was being "consigned to history."
The gap between the world’s ambition to get rid of coal and the reality of its energy system hasn’t been wider. China is a key reason why demand climbed so much last year, and continues to do so in 2022. Facing electricity shortages, Beijing ordered its state-owned coal miners in late 2021 into Stakhanovite efforts to avoid blackouts. The result was that the Asian giant dug more coal than ever in November and December.
Argentine truckers stranded at Chilean border by slow COVID testing
Thousands of truck drivers from Argentina were stuck at the Chilean border on Saturday due to slow COVID-19 testing, as Chile faced its second transport delay crisis.
Omicron Surge May Cripple Poland’s Already Stretched Workforce
Poland’s record surge in Covid-19 infections is leaving the workforce of many companies severely depleted, raising concerns the economy will suffer.
The European Union’s fifth most-populous nation currently has more people in quarantine than the number of registered unemployed, and as much as a quarter of its 16.2 million workforce could end up unable to work due to sickness or self-isolation in the coming weeks, according to the Strategy for Covid Fight published on the government website.
Florida farmers fear major crop damage from cold spell
Produce supply could be affected as temperatures plunge into the 30s
During the winter months, South Florida is responsible for about half the produce Americans consume, and millions of dollars worth of those fruits, vegetables and nursery plants could be lost in just one morning.
“We’re concerned,” said Charles LaPradd agricultural manager for Miami-Dade County. “Possibly our coldest spell we’ve seen in years. ... We are looking at some possible damages to that, certainly supply interruptions if that occurs.
“If it gets very cold and you have a lot of wind, then you can get a lot of ice and that can actually be more damaging,” LaPradd said.
And wind is expected this weekend.
Supply chains in 2022: shortages will continue, but for some sellers the problem will be too much stock
It’s worth reflecting that the shortages have happened for many reasons. During the early 2020 lockdowns, a sudden run on essentials such as toilet paper and pasta left shelves around the world bare. Singapore ran out of eggs as consumers hoarded them, for example. Retailers ordered more eggs, desperate to satisfy demand. But once the demand had been satisfied, there was suddenly an oversupply. In June of that year, distributors threw away 250,000 eggs.
This is what happens when demand temporarily changes. The effect magnifies with each tier of the supply chain as every supplier adds an extra buffer to their order to be on the safe side. Minute changes in customer demand can therefore result in huge extra demand for raw materials. This is called the bullwhip effect. As with a whip, a small flick of the wrist can lead to a big crack at the other end.
Containers were left in wrong locations as trade shifted, shipping capacity was reduced and vessels couldn’t land where and when they intended. Coupled with congested ports and problems with timely unloading and onward transportation, a typical container now spends 20% longer in transit than before the pandemic.
Shipping rates have soared in this environment. Prices on major east-west trade routes have increased by 80% year on year, which is bad news for economic recovery. Even a 10% increase in container freight rates can reduce industrial production by around 1%.
The omicron variant is leading to more staff shortages as people take time off sick and suppliers navigate new restrictions. China’s zero-COVID strategy is likely to continue to disrupt both production and transportation of goods, possibly for the entire year.
Yet we might also see problems in the opposite direction, via another crack of the bullwhip. Back-orders in many sectors will have been filled, but consumer demand may well be cooling now that furloughs have ended and interest rates are beginning to rise. So some companies might find they end up with an over-supply of goods.
To avoid this, they will have to level their production rates with demand. Yet demand may still be difficult to forecast – and not only because of omicron and China.
Just-in-time gives way to "buy everything you can" as U.S. supply disruptions persist
Stephen Bullock eight months ago gave up on the idea of buying raw materials and parts only shortly before they were needed on his assembly line.
Wheat Traders Beware
uch an event, which is increasingly worrying NATO powers such as the UK and U.S., would likely have a huge impact on the grain markets as the country is a major player in the global export market for wheat.
“An armed conflict between Russia and Ukraine would likely propel prices higher,,” says a recent report from Jake Hanley, a portfolio strategist at ETF company Teucrium. The report, which was published before the news of Biden’s warning, points to forthcoming grain market volatility and limited chance of a drop in prices.
Ukraine, Russia, Both Big Wheat Suppliers
The wheat markets faces a multi-faceted problem. First, Russian and Ukraine together control around 29% of the global wheat export market, according to recent data from the U.S. Department Agriculture. That matters because it is the buying and selling of exports that determines world commodity prices including wheat.
A war in Ukraine could upset the harvest and sanctions on Russia may prevent grain flowing from Russia-controlled areas onto the world market. In other words, a war could lower global supply of the grain.
However, the matter is even more complicated. Already the whet market is that global wheat inventories are low in relation to likely consumption. And the Teucrium report notes that the USDA expects world wheat supplies will drop for the second straight year.
“During last summer, global droughts reduced [wheat] supplies to the lowest in more than 10 years,” states Jim Roemer, in a recent edition of his Best Weather newsletter.
An already-brutal U.S. freeze in mid-January has helped keep wheat prices robust. Such winter kills can hurt crop yields so lowering supply.
And more bad weather could be on the way.
Ukraine's rising role in grain exports complicates impact of crisis
Emissions from aluminum production are bad news for solar energy
Once solar panels are operative, they produce electricity without carbon emissions. But making and installing them involves some emissions. Most of the worries about solar panel production have focused on the elements that go into the panels themselves, like gallium, cadmium, germanium, indium, selenium, and tellurium. But according to new research, the massive amount of aluminum needed to house the solar rigs of the future could create further problems.
“I hadn’t realized just how much aluminum was required for the frames and the modules, mountings, and inverters,” Alison Lennon,.
In 2020, the World Bank released an oft-cited analysis called "Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition.” In this report, the authors identified aluminum as one of the minerals that would need to have its production scale by a large amount for the world to meet its climate goals. “PV was a large contributor,” Lennon said. “[This] made me think about the problem a bit more.”
However, Lennon said that the World Bank report assumed an early International Energy Agency clean energy roadmap, which predicted that only 4 TW of photovoltaics would need to be installed by 2050. This is a small sum compared to what many updated roadmaps are now predicting.
In Lennon’s paper, she and her team used the target of 60 TW, set by the most recent International Technology Roadmap for Photovoltaics (ITRPV). This would mean that the world would need to produce 4.5 TW of additional capacity each year until 2050 to reach net-zero emissions and limit global warming to under 2°C. For context, by the end of 2020, just over 700 GW were installed.
The total came to 486 million metric tons to be used for frames, mountings, and inverter casings. To put this number into context, the world bank had calculated around 100 million metric tons. “Our estimate is a lot larger than the World Bank’s estimates,” Lennon said. “The amount of aluminum we’re going to have to produce is going to have to increase an awful lot from what we have now.”
The problem is not that there’s not enough aluminum in the world—as it is both quite common and fairly easy to extract. Rather, the required extraction and production could lead to a lot of greenhouse gas emissions. Producing one tonne of aluminum from bauxite—a common source of the element—results in between 14 and 16 metric tons of CO2 or equivalent (the paper assumes the process is done in China), Lennon said. “That’s really high,” she said, adding that the smelting process can be quite energy-intensive. “If your electricity is sourced by coal-fired power or fossil fuels in general, the emissions intensity [can be] huge.”
Lennon noted that decarbonizing a country’s electricity system could cut down on the emissions. The study concludes that it is possible for the world to get enough aluminum for the photovoltaics but that it will require some changes to how it's produced. Another solution is to use recycled aluminum. Aluminum is “infinitely recyclable,” she said. “[W]e need to think carefully about how the aluminum is produced."
“I think it’s a good story for the PV industry, provided we can get the aluminum industry working along with us, helping to reduce those emissions," Lennon said.