Build Back Better -- How to Destroy a National Economy

Reaching Net Zero by expanding renewables is incompatible with the Build Back Better legislation now being considered in Congress. The U.S. needs mining and petroleum to source key materials in order to remain healthy and productive. The Build Back Better proposal now being considered in the U.S. Senate (BBB HR5376 was passed in the House of Representatives on November 19, 2021) is antithetical to achieving goals of IIJA and success of a renewable energy system. If passed, BBB would prevent access to and add cost to or prevent producing inexpensive oil and mining products.

Impact on U.S. Business that Assist Renewables

The BBB imposes serious damage on the U.S. energy and raw materials infrastructures. BBB cancels leases issued by the Trump Administration and outlaws drilling on the Outer Continental Shelves of the U.S. Atlantic, Pacific, and Gulf Coasts despite leases previously issued and despite untapped reserves known. Oil and natural gas supply over 80 percent of the world's energy, yet the BBB repeals leases on the ANWR on the North Slope of Alaska. BBB will end noncompetitive leasing on federal lands which for decades encouraged independent oil finders to aid the search for and produce oil. The BBB increases the minimum bid on new federal leases to $10 per acre from $2. The act adds severe penalties for not capturing methane produced with natural gas and increases royalties on oil produced from 12.5% to 20% and then to 25% after which royalties accelerate with inflation without a ceiling rate. BBB reduces leasing terms from ten to five years, greatly impeding development. New costs add to taxes on production and severance already in place by each state.

BBB damages mining as much or more than it damages oil and natural gas. BBB penalizes mining in three ways. BBB imposes a new seven cents per ton fee on mine waste rock, adds a new 8% royalty on gross revenues of minerals produced from federal land and increases the annual mining claim fees to $200 per claim. These activities are already covered by state laws in which mines pay property and severance taxes to states and municipalities. BBB levies additional and unnecessary burdens to the industry at a time when raw materials and metals are desperately needed to build renewable systems.

Building a system to produce electricity from wind turbines requires locating, mining, and manufacturing immense quantities of iron, copper, cobalt, nickel, lithium, and rare earth metals neodymium and dysprosium (Nd-Dy). BBB penalizes mines which are the source of these materials. Copper, cobalt, nickel, and lithium are needed to build electric vehicles with these metals coming from mines.

Comparisons of the value of petroleum and renewables provide valuable insights. A hundredfold growth in the number of electric vehicles on roads by 2040 saves 5% of global oil demand. Renewable energy must expand ninetyfold to replace oil and natural gas in two decades while a half century was required for global petroleum supply to expand tenfold. A $1 million investment in utility-scale wind or solar over its life will produce 50,000 MWh of electricity while the same invested in one shale well will produce 300,000 MWh or six times more. The costs to build one shale well or two wind turbines are the same; the latter produce seven-tenths of a barrel of oil (in energy equivalents) per hour while the shale well averages 10 barrels of oil per hour or 14 times more. In order to compensate for episodic wind/solar output, U.S. utilities are using oil- and gas-burning reciprocating engines (big cruise-ship-like diesels); three times as many have been added to the grid since 2000 as in the 50 years prior to that. It costs less than $0.50 to store a barrel of oil, or its equivalent in natural gas, but it costs $200 to store the equivalent energy of a barrel of oil in batteries.

The most serious challenge to building renewables is the scale and quantities of required materials. To equal the output of electricity from a single natural gas or coal-fueled power plant occupying one square mile requires wind turbines be erected across an area of 350 to 450 square miles to account for the dilute, episodic nature of wind.

EV Experiment

An estimate to transform the auto industry in the U.S. is patterned after an estimate made to replace the 31.5 million cars by EVs in the UK. Average need per vehicle is 6.6 kg cobalt, 8.4 kg lithium (as LCE), 0.5 kg Nd-Dy rare earth metals, and 90 kg copper. The number of cars in the U.S. is 12.94 times larger than in the UK or 287 million cars in 2019 in the U.S. ignoring electricity supplies needed elsewhere for truck, water, or rail transportation. The estimate includes vehicle raw materials and manufacturing using cobalt, copper, nickel, lithium and rare earth metals for power trains, batteries, and wiring in EVs and copper plus rare earth metals needed for wind turbines and their manufacture to provide electricity for recharging EV batteries. Nearly 100,000 wind turbines of 1.5 MW size operating at 40% efficiency are required to provide 314 terawatt-hours of electricity or about 8 percent of current U.S. electric generation. Metals required for wind turbines add 200 kg per MW REE and 4,700 kg copper per MW.

The raw metal needs, all of which exceeds the U.S. known reserve of each metal though supplies are already committed to current customers, are 2.69 million tons cobalt, 3.42 million tons lithium, 0.14 million tons rare earth metals, 31.7 million tons copper. In comparison to known reserves of these metals in the U.S. determined by U.S. Geological Survey, the need for cobalt is 50 times larger than known U.S. reserve, lithium need is five times larger, rare earth metal need is twice as large and copper need is about equal to reserve.   

BBB Sacrifices Industries Needed for Renewables

Fees proposed by BBB far exceed reason and would end mining.

Proposed fees are so excessive as to result in closure and an end of mines in the U.S. as a source of metals and materials to build renewables. It also would end jobs or tax benefits from an industry whose products after manufactured contribute 13% to GDP of the U.S.

BBB proposes a $1 trillion federal seven-cent per ton waste rock fee and $60 billion in federal 8% royalty, duplicates fees now paid to states, from one average copper-cobalt operation paid to produce 38 million tons of metal needed for renewables. The combined, supra-excessive waste+royalty fees equal 147% of total income (exceeds income by 47%) at present price of metals before spending a dollar to capital or operating expense.

This legislation potentially ends jobs for 2,079,900 career non-supervisory professional workers (includes partial support workforce) with combined wages with benefits of $197.4 billion annually. Their industry's contribution to federal and state income taxes and production taxes is immense, but inestimable.

Three reasons demonstrate why a net zero economy using renewables is an impossible dream. Comparing metal reserves and requirements to satisfy capacity shows first that spare capacity is consumed for the initial build of EVs preventing the building of a second generation of EVs. Second, it shows that no metal reserve remains available for other purposes, for example to convert homes, factories, and industry to an all-electric Net Zero economy. Third, new fees levied are so excessive as to prevent producing the metals needed for a renewable economy.

The Bureau of Mines that Pres. Clinton dismantled in 1996 is the only agency ever abolished. BBB finishes the task by removing "mining" from American's vocabulary. That mines and oil are unliked is less important to their dismantling than erasure of strength and contribution each imparts to its capital economy.

David Boleneus, retired, spent a career in the natural resources industries as a geologist and cost analyst.

Image: Adam Schultz

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