2017 Think Corner

Eyes on Cobalt
December 2017

CEE Cobalt Demand Scenarios


Consuming more than 42% of the world’s total cobalt production, the battery industry is the largest demand driver for cobalt. Currently, consumer electronics account for almost 90% of battery demand, but in the future, electric vehicles will drive battery demand if some of the growth scenarios are realized. Cobalt supply will need to grow at unprecedented levels to match demand. Depending on the scenario, CAGR from 2016 to 2025 range from 5.5% to 9.7% as compared to 1.7% between 2010 and 2016, or 5.8% between 2005 and 2016. Cobalt price has increased more than 150% between January 2016 and late 2017.

Cobalt mining is highly concentrated in the Democratic Republic of Congo (62% of global mine production in 2016). Almost exclusively, China buys cobalt exports from DRC and the rest of Africa. China has the world’s largest cobalt refining capacity and investing in more capacity. Negative news from DR (e.g., child labor, environmental damage, and political unrest) has increased recently. Hence, there are significant geopolitical risks associated with the supply chain of cobalt. Companies dependent on batteries are taking measures to mitigate these risks. See snapshot for our take on these issues.


22nd CEE Annual Meeting:
Houston Branch - Federal Reserve Bank of Dallas Conference Center

December 12-13, 2017

December 12

  • 8:30 a.m. Welcome & Overview
    • "What Keeps You Up at Night" (WKYUAN) over the years (Michelle Michot Foss)
  • 9:00 a.m. RISK, Uncertainty and Outlooks – Just Because We Believe It, Ain’t It So?????? (An opening conversation about the vagaries of prognostications.)
  • 10:30 a.m. RISK, Uncertainty and Suspending Belief – Commodity Markets and Their Agonistes (The markets adjust! Get over it.)
    • Michelle Michot Foss, Facilitator
    • Luis Giusti, CSIS, CEE Global Advisors
    • Juan Eibenschutz, CNSNS-Mexico, CEE Global Advisors
  • 11:30 Lunch
    • Scott Tinker, Director, Bureau of Economic Geology
  • 12:15 p.m. Politics Schmolitics II – RISK and Uncertainty in Policy and Regulation (Ahead of the holidays, a (“2 sizes too small”) heart healthy diet of political views.)
    • Michelle Michot Foss, Ringmaster
    • Sheila Hollis, Duane Morris, CEE Global Advisors
    • Marc Spitzer, Steptoe & Johnson
    • Rick Smead, RBN Energy
  • 1:45 p.m. RISK, Uncertainty and Many More ELECTRIFYING Adventures
  • 3:45 p.m. The Financial Uncertainty of Creating and Destroying RISK
    • Michelle Michot Foss, Facilitator
    • Lane Dodds, Frost Bank
    • Chris Micsak, Haddington Ventures
    • Anders Johnson, Kinder Morgan
    • Deniese Palmer-Huggins, BEG/CEE
  • 5:30 p.m. Adjourn

December 13

  • 8:30 a.m. RISK and Uncertainty in Global Gas/LNG
    • Michelle Michot Foss, Facilitator
    • Andy Flower, Consultant
    • Ken Culotta, King & Spalding
    • Hisanori Nei, GRIPS, CEE Global Advisors
    • Miranda Wainberg, BEG/CEE
  • 10:30 a.m. RISK and Uncertainty in U.S. Gas
  • 12:00 Closing Luncheon - I Just Want to Be Alone (or let alone, or left alone……) How to deal with it all: the quandaries of RISK and Uncertainty and associated EEEK!onomics disruptions for senior management, C-suites and boards of directors across business and academics.
    • Michelle Michot Foss, Facilitator
    • Benigna Leiss, Chevron Africa/Latin America (ret.), CEE Global Advisors
    • Mike Juden, McKinsey
    • Bill Arnold, Rice University - Jones School
    • Nancy Sauer, Government Affairs Advisor

Current and Future Natural Gas Demand in China and India: Not What You Might Expect
April 2017

CEE China & India NG infraNatural gas infrastructure is a limiting factor, especially in India.

In recent years China and India have been viewed as potentially large markets for future natural gas consumption. In this report, we investigate the potential for natural gas demand growth in these countries by sector within their macroeconomic context, existing and emerging natural gas industry infrastructure and trends, and, most importantly, commercial frameworks within each country that can facilitate or hamper the development of a vibrant natural gas sector.

Both countries rely heavily on central planning rather than on markets, have large bureaucracies, and rely heavily on state-owned enterprises although they give lip service to increased private sector economic participation and a smaller economic role for the state, and to increased reliance on market forces.

As part of our analysis, we reviewed several public and private forecasts of natural gas demand in China and India in light of our demand driver analysis.



U.S. Coal Plant Retirements: The Calm Before the Storm?
April 2017

U.S. utilities have retired 45.6 GW of coal generation capacity since 2011 as a series of major environmental regulations brought unprecedented challenges to coal plants. Among the factors contributing to retirement decisions, Mercury and Air Toxics Standards (MATS) appear to be the key driver. The pace of coal plant retirements slowed down after utilities invested in MATS compliance for 87 GW of existing coal capacity during 2015 and 2016. This snapshot is part of CEE’s Electric Power Research, which focuses on the forces disrupting electric power markets.


CEE 2017 Mid-Year Meeting:
Houston Branch - Federal Reserve Bank of Dallas Conference Center

June 1, 2017


  • 8:30 a.m. Welcome & Overview
    • Evolution of "energy policy" in the U.S.: cheap energy ⇒ clean energy ⇒ back to cheap energy or decarbonization
      • Federal vs. States                                                                                                                             Joseph Fontana, Ernst & Young
  • 9:15 a.m. Natural Gas Deliverability: At what price? For how long? Where?
    • Bureau shale resource assessment, breakeven analysis, production outlooks, and cost drivers                          John Browning, BEG
      • Technology advances, efficieincy gains, oil price                                                                                              
    • Producer financial health & capital markets: 2016 update on CEE Upstream Matters                                  Danny Quijano, BEG/CEE
    • Midstream: Update on CEE Midstream Research                                                                         Deniese Palmer-Huggins, BEG/CEE
  • 11:00 a.m. Natural Gas Demand
    • Power: Uncertainties (coalnuclear, other) & CEE scenarios                                                                        Chen-Hao Tsai, BEG/CEE
    • Industrial: Updated CEE industrial projects database                                                                                    Danny Quijano, BEG/CEE
    • Exports: LNG & pipelines                                                                                                              Guy Dayvault, Energy Deal Solutions
    • Global gas demand uncertainties: China & India                                                                                      Miranda Wainberg, BEG/CEE
  • 12:00 Lunch - State policies, impact on wholesale & retail prices: the role of regulators                                Ken Rose, Consultant
  • 1:15 p.m. Electric Power
    • Future of retail electricity markets                                                                                                                 P.J. Popovic, Direct Energy
    • Understanding cost of electricity
    • Generation sources, costs, financing, & development                                                                                           Chris Micsak, HVLLC
      • Development cycle, finance, & timing of generation assets
    • Shortcomings of LCOE                                                                                                                                    Gurcan Gulen, BEG/CEE
    • Financial health of renewables companies & capital markets                                                        Deniese Palmer-Huggins, BEG/CEE
  • 3:15 p.m. Economics of minerals resources                                                                                                              Rahul Verma, BEG
    • Frac sand quality - Texas resources vs. Northern White sand
    • Lithium prospects and implications for batteries: Texas' produced water & Global mining, 
  • 4:00 p.m. Adjourn


Competitive Electricity Markets: What Future?
March 2017

The electric power industry has been going through yet another period of significant change, driven by a complex web of technological advances on both supply and demand sides of the market. Commercial frameworks have been shifting: existing market structures—various forms of experimentation across states with competitive supply, delivery and pricing with regulatory oversight and regional independent grid manager rules—are not likely to be sustained. There has been wide‐spread coverage of many of the issues and uncertainties affecting electric power today; however, a holistic, historical, multi‐dimensional, and multi‐jurisdictional context is missing. This context is important as we consider what is achievable within the construct of competitive markets. See our new research note describing our views on market structures and what implications this has on the future of competitive electricity markets.


U.S. Nuclear Power Reactors: At a Crossroads
January 2017

U.S. nuclear power plants have supplied roughly 20% of domestic electricity fairly consistently since 2001, running at an average capacity factor of 90%, and constituting the majority of emission-free generation. However, as reactors age, some experience higher costs, and some plant owners are deciding to retire older reactors prematurely under the pressure of low electricity prices. Many 60-year licenses will start expiring in the early 2020s; extending the life of these plants to 80 years might require large capital investments that are difficult to justify under current market conditions. We tested the retirement of 43 GW of nuclear capacity by 2025 with our dispatch modeling. You can find some of the impacts on CO2 emissions and gas burn for power generation in this snapshot. We also discuss state interventions to save nuclear plants and their implications for competitive electricity markets. This snapshot is part of our CEE’s Electric Power Research, which focuses on the forces disrupting electric power markets.


North American FracSand Consumption Will Grow with Drastic Shift in End Users
January 2017

How much sand will oil and gas producers need?  Looking ahead to expected drilling activity 2017-2018, expectations are that frac sand could be a factor affecting costs and speed of drilling response to commodity price moves.  While the industry has converged around premium white sand sourced mainly from Wisconsin, Texas “brown” can be used for many well locations.  Texas has abundant sand resources but supporting logistics are lacking.  For that matter, logistics – including both transportation and staging inventory for delivery to well sites – are likely to be a pressure point for drilling and completion cost management.  BEG’s Economic Minerals Program, in collaboration with CEE, initiates a look at the overall problem, opportunities for frac sand development in Texas, and the key considerations on cost and logistics.