Global Trend

Since the 1960s, we’ve seen the Malthusian “Limits to Growth” mindset repeatedly discredited by real world progress. Why? Because innovation continues to let us do more with less. In the process, mankind has moved ever-closer to what the Trends editors call the dematerialization frontier; that’s the point beyond which a civilization consumes finite resources at a declining rate, even as wealth continues to rise.

Because of this principle, “de-growth” policies not only reduce human standards of living but undermine long-term sustainability.

How is this possible?

Throughout human history, innovation has enabled us to overcome apparently insurmountable barriers. Until the industrial revolution began around 1770, this was a slow process playing out over centuries. Then suddenly, factories, railroads, electricity, assembly lines and myriad other advances enabled an astounding rise in living standards, with change accelerating in each subsequent generation.

 

Just in the past few years, new tools like robotic laboratories, data mining and artificial intelligence have enabled scientists and engineers to harness automation in scientific discovery similar to the way they had harnessed automation in 19th and 20th century manufacturing.

The recent rise of geopolitical tensions reminds us that the modern global economy is still dependent on access to crucial raw materials. For example, modern high-efficiency motors and generators, found in electric cars, windmills and other applications require durable, high-performance permanent magnets.

By 2027, some experts believe that the market for rare-earth magnets could grow to $37 billion a year as electric vehicles go mainstream. That’s not just a huge market, but it’s an indispensable input to a multi-trillion-dollar supply chain. And those magnets require the rare earth element neodymium.

China holds a virtual monopoly on neodymium and other rare earth elements.

As a result, it controls over 80% of the high-performance permanent magnet market and performs 87% of all rare earth processing. Both industries are expected to grow at exponential rates as the United States and EU scramble to implement a net-zero future.

On the plus side, many innovations are falling into place that might contribute to a net-zero carbon future by around 2060. Next-generation nuclear would enable affordable desalination and clean electricity on a regional scale.

Unconventional catalysts promise to eliminate the cost and supply constraints associated with hydrogen fuel cells. And biotech is rapidly increasing crop yields and turning algae into the ultimate animal feed.

Unfortunately, Green New Deal thinking in places like California typically tries to mandate existing linear solutions based on naïve assumptions, assuming that “experts” already know the answers.

However, real science is based on objective inquiry and experiments. And in many cases, the best solutions show up unexpectedly as we scan the environment.

Furthermore, as we’ve discussed in prior issues, known problems with the chemistry of batteries, the physics of power distribution networks, and limits to solar panel and windmill efficiency, render today’s vision underpinning environmental policies, fatally flawed.

Until recently, the geopolitical realities associated with permanent magnets also appeared to be a showstopper. That’s a big deal because permanent magnets are key to many high-efficiency solutions including automobiles, trucks, and aircraft powered by fuel-cells.

Fortunately, as we’ve repeatedly seen throughout history, time and imagination has yielded an apparent solution.

Scientist at Cambridge University recently discovered a practical way to synthesize tetrataenite, a magnetic molecule made from nickel and iron, previously found only in meteorites. Prior attempts to make tetrataenite in the laboratory relied on impractical, extreme methods.

However, as explained in the journal Advanced Science, the addition of the common element phosphorus makes it possible to produce tetrataenite artificially and at scale, without any specialized treatment or expensive techniques.

It is estimated that once the process is commercialized, tetrataenite magnets will be able to inexpensively replace rare-earth magnets in all but the most extreme applications.

That’s a big deal since, high-performance neodymium-iron-boron magnets are crucial for EV motors and wind turbine generators. Right now, demand is forecast to grow at 18% per annum through at least 2030.

However, neodymium-iron-boron magnet supply is expected to grow at a rate of less than 6% annually over the same period. This implies a huge demand-supply gap and profit windfall for China.

Since the Cambridge team estimates that commercialization of synthetic tetrataenite will require five to eight years, western companies will still scramble to mine and process neodymium from Australia, Malaysia and a few other sites.

What’s the bottom line?

Our civilization is advancing toward the dematerialization frontier at an accelerating pace. As in the case of tetrataenite, this often involves finding something which does not yet exist on earth and discovering ways to harness it to replace rare and expensive commodities using common inputs.

In this case, combining iron and nickel with a pinch of phosphorus could end up adding much more value than the alchemist’s dream of turning lead into gold.

History shows that real “scientific magic” happens naturally when we don’t let experts limit options by pre-supposing the path of future innovation.

Such game-changing breakthroughs involve letting imagination take its entrepreneurial course. This is precisely, what China and a lot of “green zealots” are unwilling to do.

Given this trend, we offer the following forecasts for your consideration.

Until the early 19th century, wool and linen were the dominant fabrics because cotton was too expensive to process. Then suddenly, the cotton gin changed all that, and made the southern United States rich.

China’s leverage vis a vis permanent magnets and other rare earth applications is about to evaporate much like that of the sheep herders. This is just one of many unfavorable trends which will undermine China’s 21st century strategic ambitions.

Working with engineers at four U.S. national laboratories, researchers at the University of California Irvine have devised a way to make lithium-ion battery cathodes without using cobalt, which is plagued by price volatility and geopolitical problems.

As explained in the journal Nature, the scientists overcame thermal and chemical-mechanical instabilities of cathodes composed substantially of nickel, an abundant substitute for cobalt; they did so by mixing in several other metallic elements.

Unlike cobalt, nickel is one of the most abundant metals found in North America. With China interfering with America’s relationships in central Africa, this breakthrough will help eliminate another potential supply-chain vulnerability.

For years, the Trends editors have argued that “fuel cell electric vehicles,” fueled by ammonia or methanol, offer the best route to delivering zero-emission transportation in the first half of the 21st century.

Today, the cost premium of these solutions is due to the precious metal catalysts required to turn the fuel into electricity. - One exciting solution would cost-effectively leverage two big breakthroughs in catalysis. The first, described in the journal ACS Catalysis, involves a state-of-the-art Nickel-catalyst, supported by a calcium-imide, that can efficiently releases hydrogen from ammonia at operating temperatures below 100o C.

The second, described in Nature Catalysis involves a catalyst using only the cheap and readily available elements iron, carbon, and nitrogen to efficiently transform hydrogen released from the methanol or ammonia into electricity used to power the vehicle. These or similar solutions will make both internal combustion engines and battery-electric engines, essentially obsolete over the next 20-to-25 years. And,

The laws of physics, chemistry and economics render this vision implausible. The big danger lies in wasting finite resources on this “pipe dream,” as many in the “expert class” want to do. Next generation nuclear fission, combined with coal, natural gas and petroleum will enable virtually all of human civilization to cross the dematerialization frontier by 2100.

The breakthroughs discussed in this segment simply demonstrate why the “limits to growth” mindset dominating so many of today’s experts is fatally flawed. - Because of its unique culture of entrepreneurial innovation coupled with unparalleled access to human capital, minerals, energy, and food, the United States will be the biggest winner.

Meanwhile, China will be a big loser as its repressive culture, demographic decline and limited natural resources impede its upward progress. Europe, South Korea and Japan can still win big by aggressively innovating.