The energy transition according to Elon Musk

His excesses, his megalomania, and his very personal conception of governance have made Elon Musk a particularly divisive figure. However, whether you like him or not, the fact remains that the plan to decarbonise the economy presented last month by Tesla is worth looking into.

Elon Musk, an insolently successful entrepreneur who has become a guru for some, a symbol of unbridled capitalism for others.

Whether you like him or not, he is undeniably a visionary. However, a tree (the incessant polemics) now hides the forest (an ambitious plan to decarbonise the economy). So much so that at a time when we must take a path that is as complex as it is perilous to limit global warming, his proposals almost go unnoticed.

We believe that the plan presented by Tesla last month, modestly named „Master Plan 3“, should have been widely publicised. Subtitled Sustainable Energy for All of Earth, this document of some forty pages[1] is in fact a structured and pragmatic roadmap for moving towards a low-carbon economy.

Many organisations, led by the IEA[2], regularly present this type of projection and communicate on what a net zero trajectory could/should look like. While the approach is neither unique nor new, there are elements of Tesla’s Plan that are worth mentioning.

What is in Master Plan 3?

The study proposes a „path to reach a sustainable economy“, while quantifying its cost and estimating its feasibility.

The plan to eliminate fossil fuels

Tesla/Musk propose six steps, most of which are fairly standard (such as switching to 100% renewable electricity generation, moving to heat pumps or electrifying transport). More innovative, the sixth point studies the industrial aspect of the transition. In other words: how to build the production capacities necessary for the envisaged transformation of the economy?

This last point has become a major stumbling block in the climate debate. Indeed, future mineral shortages, the lack of factories or skilled workers, are regularly evoked to question the feasibility of the transition… or to justify a certain immobility. Tesla provides a detailed response on these subjects and considers that, on the industrial issue, the transition will certainly be costly (see below) but that it is perfectly feasible. It is difficult to dismiss Tesla’s opinion on this subject when one considers that the company’s success is linked to its operational excellence in production.

The results of the model

The Plan emphasises the inefficiency of our fossil fuel-based energy model. Only 36% of primary energy is currently transformed into heat or „useful“ energy for the economy. For example, electric vehicles are 4 times more efficient than thermal vehicles and heat pumps are 3 times more efficient than gas boilers. Therefore, in a decarbonised economy we will consume much less energy.

According to the Plan, we will be able to replace 125PWh per year[3] from fossil fuels with „only“ 70PWh per year from renewables (a -44% decrease thanks to electrification), of which 4PWh will be for industrial production of renewables.

To produce such a quantity of energy, and therefore electricity, a total capacity of 12.1TW of wind and 18.3TW of solar would be needed, i.e. a total of 30.3TW (of which 4.3TW for green hydrogen production alone, i.e. 14% of the world’s production capacity).

The Plan also estimates total battery requirements at 240TWh. Counter-intuitively, the switch to EVs represents less than half of the total needed (112TWh), which confirms the colossal storage needs for sectors other than transport.

Investment needs

The Plan estimates the initial investment needed to build the industrial infrastructure to achieve a low-carbon economy at USD 5’200bn, including USD 890bn for EV plants, USD 1’090bn for battery plants and USD 577bn for electrolysers.

Including maintenance investments, the „bill“ would total USD 10’000bn over 20 years. But the study points out that these amounts are much lower than the investments that fossil fuels would need over the same period: USD 14’000bn, i.e. a potential saving of USD 4’000bn.

Mining and recycling

The Plan highlights several trends that are regularly highlighted by experts in the sector:

  1. Huge investment needs estimated at USD 1’160bn
  2. 57% of these investments would be devoted to the refining part (against 43% for the mining activities themselves), often identified as a possible bottleneck
  3. By mineral, the largest investments will be for lithium (USD 374bn) and graphite (USD 282bn). Copper production, less often mentioned as a transition mineral, would need USD 215bn.
  4. The investments to be made in ore recycling are also very substantial, estimated at USD 215bn, but will take off from the next decade onwards.

The report concludes that, provided the above investments are made, there is no risk of a sustained shortage of any of the minerals needed for the transition.

Should we still listen to Elon Musk?

We think so. French film buffs know the adage: „When 130-kilo guys say certain things, 60-kilo guys listen.[4]

So to paraphrase, we would tend to say that when the man who anticipated the electrification of transport and the economy a decade before anyone else talks about how he sees the energy transition, it would be a shame not to listen.

Here is the conclusion of Master Plan 3: „Modelling reveals that an electric and sustainable future is technically feasible and requires less investment and extraction of raw materials than the continuation of our unsustainable economic model.“

[1] Tesla-Master-Plan-Part-3.pdf

[2] IEA: International Energy Agency

[3] PWh = PetaWatt / hour (1 PWh = 1000 TeraWatt / hour – RTE estimated French energy consumption in 2021 at 1600TWh or 1.6PWh)

[4] Phrase de Michel Audiard tirée du film Greed in the sun