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It is directly driven by the cost of energy, as tomkinstinch brought up. China burns an incredible amount of coal for power, which brings the cost of energy dow
by Qworg 11y ago
It is directly driven by the cost of energy, as tomkinstinch brought up. China burns an incredible amount of coal for power, which brings the cost of energy down at the price of huge amounts of pollution.
As China and other places green, you can expect the price of aluminum to rise and production to float to other places.
- bildung 11y agoChina is pretty interesting in this regard. While they really do burn incredible amounts of coal, they are also worlds biggest producers of photovoltaic and wind energy and strife for a renewable share of 16% by 2020. https://en.wikipedia.org/wiki/Energy_policy_of_China#Renewables https://en.wikipedia.org/wiki/Energy_policy_of_China#Renewab...
- jerven 11y agoAnd it is starting to work http://www.reuters.com/article/2015/03/26/china-coal-idUSL3N0WL32720150326 http://www.reuters.com/article/2015/03/26/china-coal-idUSL3N... with decline in coal use starting.
- Qworg 11y agoActually, I think it is debatable - a large portion of the decline could be pinned on the reduction of demand. If China roars back, so will the coal plants.
- jerven 11y agoCould be, but I guess that burning coal will not lead to enough value and will roar back less than the other sources.
- toomuchtodo 11y agoBy the time China roars back (years, at least), coal won't be economically viable (as long as wind and solar manufacturers continue to manufacture at full tilt).
- justincormack 11y agoCoal is subsidised in China, and a lot is produced by state owned firms. So price does not necessarily matter so much, it is political will.
- drumdance 11y agoUnfortunately those numbers are suspect: http://www.nytimes.com/2015/11/04/world/asia/china-burns-much-more-coal-than-reported-complicating-climate-talks.html?_r=0 http://www.nytimes.com/2015/11/04/world/asia/china-burns-muc...
- jerven 11y agoThank you, interesting link.
- imaginenore 11y ago> As China and other places green, you can expect the price of aluminum to rise and production to float to other places. It's the opposite. As green energy gets cheaper than the traditional sources (subsidized or not), only then you get a massive shift to the green energy. Until then only very rich countries can subsidize enough green energy to make any meaningful changes.
- Qworg 11y agoI think there's a shared understanding about the dangers of coal. "Is it worth it?" isn't just a pure economic play at some point. Or, if you'd rather, you can't continue to externalize costs that come from using dirty coal.
- SixSigma 11y agoI would guess that the cost of bringing an aluminium smelting plant online is quite a barrier to entry. Your competitors will already have moved along the cost curve, gradually replacing equipment as they green. On top of the capital investment, margins will be thin in a commodity industry too. A new entrant in this future scenario will basically be saving the expense of shipping. If right now $1500 + shipping from China beats out $1800 made in the USA that means a capital investment for 10-15% margin.