The Economic Impact of the E-Cat

The emergence of the E-Cat on the world energy scene is likely to have a huge economic impact, but the nature of that impact is not easy to predict. Could a clean, abundant and cheap source of energy be anything other than positive news than the world economy? Or could the shock of such a disruptive technology on the scene upset an already fragile global economy to the point of causing turmoil and disorder?

Andrea Rossi has said that he will be selling thermal and electric energy to E-Cat customers at 10 percent of the going market rate — certainly an extremely competitive price point, and one which  is likely to attract a rapid rate of adoption of the technology.

Looking the business world, there will be very few businesses that would not benefit from heat, hot water, air conditioning and power at one tenth of current costs. Energy is used in all business activity, from small offices to large factories. Companies are always looking at ways to reduce overhead costs, and utilities are usually one of the major expenditures of most businesses. A 90 per cent reduction in utility payments would make free funds to allow businesses to such things as expand operations, hire more employees, do more research and development, reduce the cost of goods and services sold, and increase corporate giving for philanthropic purposes.

If the E-Cat is adopted on a wide scale, there will have to be a new industry built to allow for the proliferation of the technology. Factories and employees will be needed to build the devices, and there will be a need for skilled workers to install and maintain the E-Cats. We know that the E-Cats need to be refueled every six months or so, so a whole new distribution and delivery system for the nickel, hydrogen and catalyst will be required.  Again, this would mean a whole new area of economic activity.

What will be the E-Cat’s impact on the existing energy industry? And how will that impact affect the overall economy? Rossi has said that he expects the E-Cat to fit in with the existing energy industry — that will likely be true in the short term, because of the magnitude of the existing energy infrastructure — it’s simply not possible to replace what is currently in place in a short time. But if the E-Cat becomes the energy source of choice for say, power stations, there will certainly be an impact on the coal and natural gas industries. Coal is currently considered by many as a necessary evil — it gives us cheap electricity, but at the cost of unpopular carbon emissions. If the E-Cat were to replace coal for power production, then the mining industry and all those who rely on it for a living would be deeply affected.

The oil industry could also be impacted. An early application of E-Cat technology is likely to be in commercial and home heating. It will be a much cheaper alternative to heating oil and propane (which is a partially a by-product of oil refining). Wikipedia states that heating oil accounts for about 25 per cent of the yield of a barrel of crude oil, so if the E-Cat replaced oil only in the heating sector, it would have a substantial impact on demand for oil. Andrea Rossi believe it will take a long time for the E-Cat toe be employed in automobiles, but he does see an early use for it in ships and trains, which would again have in impact on oil useage. Entire countries are heavily dependent upon oil for economic activity and government revenues. There could be fallout on the international level if the E-Cat replaces oil in any substantial amount.

The E-Cat would almost certainly be seen as a better alternative to current fission-base nuclear power. Current nuclear plants are likely to be decommissioned very rapidly if the E-Cat emerges as a viable competitor.

When any industry is affected by a disruptive technology there is inevitably an knock-on effect in the financial markets. If you look in the portfolio of any investment fund that is invested in the stock market you will almost certainly find some exposure to energy-based stocks. So there is a real possibility that the E-Cat could have a depressive effect on portions of people’s retirement and other savings accounts. It may be that other stocks do much better becaus of the E-Cat, so the overall impact might not be negative, but people who are heavily invested in the energy sector could see a loss in value or their investments.

These are just some suppositions based on what would seem to be logical deduction. It could be that my analysis is missing something important — if so, please let me know! Undoubtably, if the E-Cat is a real alternative there will be unexpected consequences, especially if the new kind of nuclear reaction leads to the development of technologies not yet forseen. It will be certainly interesting to see how things progress once the E-Cat is introduced on a commercial level — but it could be a wild ride.

  • Johnny

    I think you missed one big implication – pretty much every new technology has been also developed by the military – imagine a bomb with a nuclear reaction that does huge damage but leaves no radiation! It will be the ultimate warhead for the tactical missiles, so if the technology is real, it will definitely be weaponized.
    It will be a shame for such a technology to be used for this purposes but unfortunatelly the history tells us different story.

  • Martin

    I don’t think it is going to make booom and will be facing a different world.

    Here my 5 cts.

    Up to now the e-cat is “nothing more” then a steam producing apparatus. We are not talking about a ready to install heating system, air conditioning system or power generating system.
    Therefore the 1st application will be what it is: a steam producing equipment for power plants.
    I don’t think it will be a disruptive technology in the short term.

    – power is generally produced centralized. Big companies, in many countries state owned.
    – to challenge their market position you need a product that can be used by the consumer directly
    – if you want to produce your own electricity, you need a product powered by the e-cat and that is not available by now. It needs to be developed, will take time and this will depend greatly on the license strategy opted by Rossi
    – the product needs to be introduced into the market and more time will be needed
    – people need to be able to afford such a product. While 5000 U$ might not be much for some in the US or Europe, it still is a lot of money for many other persons in other counties
    – we don’t have the infrastructure yet for producing energy decentralized. You would need to install a huge capacity to cover your private peak energy demand. Rossi might be able to produce 1 kWh/ct, but that is probably around the clock, so a more detailed look at the amortization is advised. So if you need to install a capacity 4 or 5 times higher then your average demand, your cost per kWh will probably be close to 4 to 5 times higher. Financing the investment will become an issue (and btw. … 1 ct for sure is without distribution and taxes).
    – Optional: Smart Grid. … And that is probably the future of the e-cat. But it is almost non existent in most places of the earth. Again: it will take time.

    – Electricity producing companies will face the problem of profitability. Upgrading their facilities and adapt to the steam producing e-cat. Might be feasible for these companies after all, but it also means, that savings will not be that high. Usually 25% of the electricity price we pay today is for the distribution of electricity. This would not cause any shocks in this part of the economy, but in the mining/oil industry in the long run.

    – Once oil/coal/gas consumption starts to fall, prices for oil/coal/gas will start to fall. Switching from those energy resources to the e-cat will be less attractive. Lets not forget: the e-cat might produce cheap energy but it is still not for free.

    – Be sure: taxes will be raised … somewhere. Just imagine how much taxed any country collects due to energy consumption.

    So what is my guess on what will happen (IF IT REALLY WORKS)

    1. The 1MW prototype will be produced, tested and considered a huge achievement
    2. Rossi will give a exclusive license to a few partners, no competition and a slow development of applications will begin
    3. Power generating applications have to be developed and installed (several 100 MW in one equipment) to replace the steam producing part of current power plants (5-10 years)
    4. Heating/cooling systems for homes might be developed (3-5 years) (but it will only be available for a few or industrial applications)
    5. Prices for oil/gas/coal will fall, causing political turbulences in the Middle East, parts of Africa and Latin America.
    6. Smart grid and decentralized power generation will be developed and introduced an available in a large scale (15-30 years)

    So overall:
    – yes, it will bring changes
    – it will take time, so everybody has time to adapt

    Biggest challenges:
    – oil/mining industry might disappear, at least strongly reduced, but that happens to certain industries anyhow sometimes regularly and will happen eventually once we used all the reserves
    – countries dependent on oil and mining would be facing a huge problem and maybe facing social unrest and poverty (if not facing them today already), but again … would happen anyhow eventually

    Biggest obstacles:
    – a license option that allows competition for the best applications to affordable prices. This will determine the speed of the changes
    – a infrastructure for decentralized energy generation (smart grid) to maximize the effectiveness of this application
    – financing

    and btw. … we still need water … lots of water for all the steam … at least for the cooling system … therefore even with this solution it will still not be that easy to make this energy source available to everybody.

    Would be interesting to hear what you guys think. At first I thought this could have a real disruptive impact on society and our economy, but after rethinking it I am not so sure anymore.

  • Pacifist Joe

    Johnny, I can’t imagine a way to use the E-Cat as a bomb. I think there is no way to do so … The E-Cat could be used as propulsion for military airplanes and submarines, but not as a bomb.

  • John D

    Here’s a link to an article written in 1997 about the economic implications of cold fusion. Just overlook the deuterium and palladium talk and substitute Ni-H fusion in its place, and the rest of the article becomes surprisingly relevant:

    I think everyone is underestimating the impact that unlimited energy would have on the economy. According to thermoeconomics, most of the cost of a good or service can be traced to its embodied energy content which is higher than the average person thinks. That is because energy is input at every level of the industrial chain from resource extraction to final consumption, and accumulates from the bottom level up. Its difficult to calculate but consider your own expenses as an example. You probably pay for gasoline, electricity, and maybe natural gas for heating. That’s straight forward. But what about your water bill? Energy was used to drill the well, to produce the well drilling equipment, to process the materials of the distribution pipes, to run the pumps that move the water, to build those pumps, to feed the people whose labor was needed…and so on. Its not easy to calculate because it is all so convoluted in its interconnection. The same reasoning applies to everything you pay for. Absolutely everything!
    If energy prices trend to zero, and the entire cost of a good or service is its embodied energy, it follows that the price of everything will trend to zero. While this is an unobtainable ideal, the implication is that cheap energy would usher in an era of abundant wealth and the consequences would be amazing. Every aspect of life would be affected…not just the amount on our power bill.

    Thanks to admin for bringing up this very interesting subject.

  • I don’t think governments are going to like the Ecat very much. At present, they take hundreds of billions on fossil fuel taxation, and they’re working hard to increase that with cap-and-trade / carbon taxes on CO2 emissions. They won’t sit still if the Ecat starts to threaten that income. Look out for heavy taxation and regulation as soon as the Ecat is a commercial reality. 1c/kWh is way too cheap for them – they’ll tax it up to 5 or 6 c/kWh, so that it is just a little cheaper than the alternatives, and the introduction will be made much, much slower as a consequence.

    Completely different aspect: this may be very bad news for Taiwan. The PRC is discouraged from retaking Taiwan because the US Navy can cut them off from Middle East oil if they try anything. If that leverage disappears because PRC produces all its own energy using LERNs, well, lookout, Taipei.

    • admin

      Interesting points about taxation, Thon. I don’t know if it will be popular for political candidates to run on taxing the E-Cat. If they want to promote a low carbon source of energy they should go light on taxing the The E-Cat. Perhaps that may not be too realistic to expect. However, I do believe that initially at least there may be a period where taxation is light. Also, remember that the cost of government will be reduced if energy costs drop generally.

  • Ultimately, the eCat will increase unemployment in our society, since you can substitute energy for a lot of labor, and healthy humans only have so much demand for more stuff, Mainstream economics tends to assume infinite demand as well as that most human labor is irreplaceable, both of which are questionable assumptions at this point; mainstream economics also assumes wealth naturally tends to become evenly distributed, which also is questionable at this point.

    We may actually see a spike in labor demand in the short term from cheap energy, but in the long term, it will reduce the need for much labor. For example, if you can grow plants indoors in a structured environment, you need less labor to harvest them. If you can melt down trash into plasma with lots of energy and sort the matter electromagnetically, then you don’t need people to sort bottles and cans. Cheap energy from eCats means less need for people to run oil drilling platforms, and far fewer people will be needed to make and run eCats or mine nickel. And so on.

    We may also see some new growth areas, like indoor farming. But again, ultimately, this is not going to replace all the jobs eliminated by cheap energy increasing labor productivity.

    We need to make changes in our society to deal with this employment consequence of cheap energy, same as we need to deal with the consequences of cheap computing, cheap robotics, cheap biotech, better design, and voluntary social networks, which all also tend to reduce the demand for labor in a healthy society.

    I outline more aspects of the needed socioeconomic transformation here:

    In short, we can expect the balance between those four economies to change as our technology and society changes, perhaps with:
    * A subsistence economy through 3D printing and local PV solar panels or other clean energy technologies (like cold fusion or something else);
    * A gift economy through the internet, like sharing digital files to use with our 3D printers;
    * A planned economy on a variety of scales, including through taxes, subsidies and regulation affecting market dynamics; and
    * An exchange economy marketplace softened by a basic income.

    • John D

      Paul, you wrote “We need to make changes in our society to deal with this employment consequence of cheap energy”

      I think the needed change is a shift to shorter work weeks, earlier retirement, and longer vacations or some combination of these three. Here in Canada our workweek is 40 hours, we typically get 3 weeks of vacation, and retirement age is 65. My friend in France works a 35 hour workweek , gets 5 weeks of vacation and will retire when she’s 62. Factor in France’s lower labor participation rate and the per capita average hours worked is much lower than here, and yet we enjoy similar standards of living. So clearly people needn’t work as hard or long to sustain a high standard of living if they are more productive.

      Unlimited energy will lead to increased productivity, and sustained deflation. Less hours worked for less pay will be entirely acceptable in that context. Yay!

    • admin

      If you have very cheap energy, and the ability to “print” many goods on demand cheaply, then employment as we know it may become less desirable — most people go to work so they can afford the necessities of life. With lower agricultural costs, food should be cheaper, the same with construction materials. All this combined with cheap computing and communications could change the “workplace” drastically.

  • Big smiley picture for agriculture:

    Low oil/gas prices for chemical feedstock (because of vanished demand for oil-for-energy) = cheaper fertilisers, chemicals.

    There are lots of places around the world (usually with quite rugged topography) where there’s plenty of water available for irrigation, but the high energy cost of pumping kills it. Look for lots more land under irrigation. That means cheaper, more plentiful food.

  • yop

    I’m a bit sceptic about e-cat’s. I would like to see article from journalist in a reputed media. There is nothing on the web but this website.

  • LookMoo

    It will come much good out of the e-cat. It will basically change our total energy approach.

    Within a year alternative solutions and product (pirate copy) will be thrown into on the market.

    However, make no mistake. The changes are going to to be real and drastic. The power balance will start to swing and rock the strategic balance in many regions of the world, war will follow. The changes will be of the same magnitude as the industrial revolution. The changes will be worldwide and lasting.

  • What consequences would the e-cat get for producers of turbines? Would it still be a good idea to use huge turbines (like the ones used in nuclear power plants) combined with many e-cats or would that just be unnecessarily expensive?

  • Petronius.

    I suppose you ignored too easy the impact on the nickel price.

    The second step will be new generations of e-cats based on the same science, but powered by cheaper metals (maybe iron?).

    Of course, the mass production of home e-cats will create a huge demand for turbines, with the obvious need of strong magnets (rare earths from China!)

    Finally, do not forget recycling of “used” nickel (in fact, creation of new elements); what about those facilities? wat about the nature of the new contaminants? I suppose one day when the science behind will be mastered, the byproduct could be gold …