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A “Pick and Shovel” Play on Battery Breakthroughs

Green is the new black. The symbolic environmental color has become a de rigueur fashion statement, both on Main Street and on Wall Street.

image of a hand holding a bright light bulb outdoors with trees in the background

Source: Shutterstock

Some folks display their “greenness” by toting reusable shopping bags to Whole Foods and loading them up with organic vegetables and vegan snacks.

“Green” investors turn up their noses at buying an eco-pariah stock like Yanzhou Coal Mining Co. Ltd. (OTCMKTS:YZCAY) in order to buy a stock like Tesla Inc. (NASDAQ:TSLA).

We’ve come to that socioeconomic moment when both consumers and investors are jockeying to “out-green” one another. But at the same time, many of us turn a blind eye to the less-than-green facets of many “green” products or services, which aren’t as environmentally friendly as advertised.

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Most of us focus on the “greenness” of a finished product… without paying much attention to the nongreen processes that delivered that product to our door… or to the nongreen aspects of using that product day-to-day… or to the nongreen aspects of that product’s end-of-use disposal.

But any honest evaluation of environmental impacts must include every facet of a product’s life cycle — from the preproduction phase to the disposal phase.

This inconvenient truth will matter in ways that produce significant commercial impacts in the renewable energy marketplace.

It will also produce, as I’ll show you in today’s issue, significant opportunities for investors.

Dirty Clean Energy

No honest assessment can ignore the nongreen aspects of electric vehicles (EVs), solar panels, wind turbines, or any other “green” energy source or product.

Producing an EV, for example, requires about twice as much energy as producing an internal combustion engine vehicle. This differential results mostly from battery production, which uses a lot of energy to extract and refine metals like copper and nickel.

Even after an EV rolls off the showroom floor, it is only as green as the fuel that sends electricity to its charging station. A coal-fired power grid is obviously less green than a solar-powered one.

According to a study from the Mobility, Logistics, and Automotive Technology Research Centre at the Free University of Brussels (VUB), a battery-powered electric vehicle that uses electricity generated by fossil fuels will produce slightly more carbon emissions over its lifetime than a diesel-powered car.

On the other hand, EVs that use renewably generated electricity sources over their lifetimes will produce just one-sixth the carbon emissions of a traditional vehicle.

Applying this theoretical difference to real-world circumstances, the World Economic Forum (WEF) calculated the carbon-emissions “breakeven” timelines in select European countries.

In Germany, for example, where about 40% of the energy mix is produced by coal, the WEF determined that a midsized EV must put about 78,000 miles on its odometer before its carbon footprint would break even with a diesel-powered car, and about 37,000 miles to match a gasoline-powered vehicle.

Based on these estimates, and on typical German driving behavior, the WEF concluded that the average EV would require about nine years to become greener than a diesel car.

A variety of other studies produce more favorable calculations than this one. But they all reach a common conclusion: EVs are not “zero emission” vehicles in a real-world sense.

Even so, these studies do not imply that EVs are a waste of time or some sort of fraud. On the contrary, they underscore the value of shifting power production from fossil-fueled sources to renewable ones.

On any environmental scorecard, both solar and wind energy would rank higher than coal-fired power. But at the same time, neither of these renewable technologies can boast an unblemished environmental profile.

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On the plus side, solar panels generate a lot more energy over their lifetimes than the amount of energy used to manufacture them. In general, solar panels achieve this environmental breakeven point (EPBT) in less than two years.

Wind turbines score even better on this metric — breaking even in less than one year.

Despite these positives, however, solar power can cause serious environmental negatives. Disposing of old panels is probably the biggest one because of the toxic chemicals the panels contain.

After a solar panel spends just a few months in a landfill, the toxic lead and cadmium it contains can leach into the soil and groundwater. Wind turbines produce a similar environmental blight. Most of them end up in a landfill.

Clearly, disposing of either wind turbines or solar panels is a significant problem. That said, neither one produces an ounce of carbon emissions while operating, which is reason enough to boost their efficiency by combining them with energy storage capability.

However, not all energy storage technologies are equally green.

Lithium-ion batteries, for example, produce a range of environmental negatives. For example, on average, every dollar spent to recycle a lithium-ion battery yields only about $0.33 worth of reclaimed metal.

Because of this “bad math,” about 95% of all lithium-ion batteries end up in landfills.

By contrast, one competing energy storage technology does lend itself to economic recycling.

The Truly Green Battery

That technology is called a vanadium redox flow battery (VFRB).

Unlike solid-state lithium-ion batteries, VFRBs are basically water tanks that contain a vanadium electrolyte solution of differing oxidation states. A proton exchange membrane separates the two tanks.

Because of their size and weight, VFRBs are not suitable for EVs. But for energy storage applications, they offer a compelling alternative to lithium-ion batteries… especially when one considers their environmental superiority.

Although VFRBs remain relatively unknown, they are attracting a growing worldwide demand.

And my latest recommendation — which I just put out yesterday in the brand-new Fry’s Investment Report April issue — is well positioned to capitalize on this emerging trend.

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The Second Electric Revolution is powering ahead… and it is creating spectacular opportunities everywhere it goes. But finding the best ways to invest in this revolution is no easy task.

Many leading companies in the EV and energy storage sectors are losing money. The Chinese EV company Nio Inc. (NYSE:NIO) is one high-profile example, but it’s hardly alone.

Therefore, rather than invest in money losers in the EV sector, I have recommended “pick and shovel” plays that provide essential ingredients to the EV and energy storage industries.

I’m talking about “battery metals.”

EV and energy storage technologies — a major part of the “Technochasm” theme we talk about here — require vast amounts of metals like lithium, copper, nickel, and manganese. The average battery-electric vehicle, for example, contains about 180 pounds of copper — that’s about half as much as the average American home.

So, it’s likely that the boom in EVs and energy storage will create major “echo booms” in several metal markets.

To capitalize on these prospective booms, I’ve recommended battery metals plays, like Freeport-McMoRan Inc. (NYSE:FCX).

And in the brand-new issue of Fry’s Investment Report, I added a new name to the list.

Go here to learn how to get that issue.

Regards,

Eric Fry

P.S. Hundreds of thousands of folks saw my “Technochasm” viral video from earlier this year.

Well, the whole world has changed since then… and I’m back to talk about the Technochasm, the biggest megatrend in investing, in ways I couldn’t before… and discuss opportunities for even bigger market gains… the kind to keep you from falling behind. And I’m bringing along investing legend Louis Navellier to join me on camera for the first time ever.

Click here to check out our conversation — and to get our No. 1 stock pick right now.

On the date of publication, Eric Fry did not own either directly or indirectly any positions in the securities mentioned in this article.

Eric Fry is an award-winning stock picker with numerous “10-bagger” calls —in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.


Article printed from InvestorPlace Media, https://investorplace.com/2021/04/a-pick-and-shovel-play-on-battery-energy-breakthroughs/.

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