LP Vol. 41 - Concrete, the Geopolitics of Solar, Gaming Beyond the Console, and Jon Stewart talks Rogan
Welcome to the Weekly SIND - your smorgasbord of intellectual delight. In this week's roundup - a deep dive into global concrete trends, pondering the role of solar power in geopolitics, contextualizing a wave of major acquisitions in the gaming space, and Jon Stewart on the latest Joe Rogan brouhaha.
Let's get after it.
It's a Concrete World
Brian Potter at Construction Physics has a great deep dive into the global use, and emissions effect, of concrete as the current default building material of human civilization:
The construction industry is (slowly) beginning to see increased focus on the environmental impacts of buildings and construction. One area that seems to be getting a lot of attention recently is the carbon emissions due to cement and concrete. This seems at least partly due to Bill Gates’ book “How to Avoid a Climate Disaster”, which talks about emissions from cement (and I’ve been told everyone in Silicon Valley read.) Cement production is a huge industry, and is responsible for somewhere around 5-10% of global CO2 emissions. Because concrete is such a fundamental part of the built environment, it’s worth taking a look at this problem in the context of how, as a civilization, we use concrete.
And boy oh boy, use it we do:
The most important thing to understand about concrete is the scale of its production. The world produces somewhere around 4.25 billion metric tons of cement annually, which works out to about 30 billion tons of concrete produced each year. How much is 30 billion tons? It’s not easy to get a sense of scale once you start to deal with numbers this big (billion doesn’t feel 1000 times bigger than million). One way of looking at it is we produce around 4 metric tons, or just under 60 cubic feet, of concrete for each person on the planet every year (this is a cube just under 4 feet on a side).
Our species use of concrete is so prolific that if current trends hold, the amount of concrete produced will exceed the entire dry biomass of the Earth (!):
China has been a prolific producer/consumer of concrete as it has modernized, supposedly using more of the material during a 3-year period than was used by the US in the entirety of the 20th century, but it should be the rise of India, Southeast Asia and the Middle East that will cause these trends to continue:
One reason you see this volume of concrete use in lower income, urbanizing countries is that concrete construction is comparatively labor intensive. The materials for concrete are extremely cheap, and much of the cost (especially in high-cost labor countries, such as the US) is due to the labor to produce it - building and setting up the formwork, laying out the reinforcing, placing the embeds, etc. If you’re a country with a lot of low-cost labor, this is a pretty good tradeoff.
In addition to the current largest users, one trend to keep an eye on long-term is India’s concrete use. If it ever proceeds on a path of mass-urbanization similar to China, (as some folks speculate it will), we could see a massive uptick in global concrete output - India’s current urbanization rate of 34% is around where China was in the late 90s. A shift in India towards a per-capita cement consumption more consistent with the rest of southeast Asia (say, around 600 kg/capita) would increase worldwide cement consumption by about 13%, and it does seem as if India’s cement use is trending upward.
The essay closes by mentioning some of the more environmentally friendly alternatives to Portland Cement that consume byproducts from other industrial processes and don't carry a direct carbon penalty, as well as noting that concrete is capable of absorbing CO2 from the atmosphere.
Geopolitics of Solar ($)
Back in LP 32, I highlighted an excellent deep dive by Samo Burja on the Turkish drone industry. He is out with another banger (sadly $) on the geopolitical significance of the solar energy industry and some great background on how China has come to dominate:
The total amount of solar energy that reaches the Earth’s surface each year is roughly 750,000 petawatt-hours (PWh), more than 5000 times global energy consumption in 2015.¹ This abundance means there are few other sources of energy that could prove as disruptive to global energy markets and geopolitics as solar power. Since the year 2000, solar power has rapidly grown from a curiosity into a notable source of energy. From 2000 to 2020, global electricity consumption soared by 75% to 25.8 PWh and solar’s contribution grew 788-fold to 0.8 PWh—or 3.3% of all consumption.² The price of solar power dropped dramatically from $359 per MWh to $37 per MWh between 2009 and 2020,³ and solar industry revenues soared to US$170 billion in 2020.⁴
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Solar power promises to be a critical part of the proposed transition to renewable energy championed by institutions in the developed world. While a transition to renewables is presented in the West as an environmental issue, any such transition from fossil fuels to an alternative—be it renewables, nuclear power, or even fusion—would both change the tax power of states as well as completely alter the balance of energy that underwrites international institutions. The growth of the photovoltaic industry thus has implications that go far beyond energy production. But rather than the West, it is China that is poised to accrue advantages from further progress in solar technology. China dominates the photovoltaic industry, controlling 79% of cell production in 2019.⁸ As has become common, Western institutions call for a future that is ultimately built in China.
China took advantage of cheap labor and cheap coal to dominate the supply chain for the production of key photovoltaic components. The solar industry in China employs over 4.5 million people, which dwarfs the roughly 230,000 solar jobs in America.
Understanding the tactical and operational realities of solar is important, because Burja points out that real and perceived energy needs have been at the core of geopolitical conflict for the past 60 years. A material shift over the next several decades to substantial energy production from solar has huge geopolitical implications:
When it comes to energy, oil has been the most globalizing force in modern history, because oil is the easiest energy source to ship anywhere in the world. It makes the economics of importing energy less onerous, allowing development even in countries with few fossil fuel deposits. Though there still isn’t quite a true global market, changes in oil production in the Middle East matter for production and consumption as far away as China or America, giving rise to the political need of great powers to try and manage oil prices globally. The effect is particularly legible not just to states but to the population as well. By subsidizing low prices at the gas pump, many governments hope to avoid unrest. Oil-importing countries with stronger economies use taxes on this consumption as a way to raise their revenues.
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If oil has a globalizing effect, natural gas has a regionalizing effect, as it is usually delivered through pipelines. In 2021, 46% of the European Union's total natural gas imports came from Russia.⁹ This dependency, especially of much wealthier Germany, has allowed Russia to use restrictions and threats of restrictions of natural gas export as an effective tool of foreign policy numerous times throughout the 2000s, while rewarding friendly client states with subsidized gas.¹⁰ The technology to liquefy natural gas then is a way to avoid such pressure, making gas more similar in its shipping constraints to oil. This means progress in such technology pushes towards globalization and weakens regional powers. A commonality that the oil and gas industries share is that they can generate great tax revenues even for states with low state capacity, allowing for militarily powerful and politically unified states with weak economies. States like Saudi Arabia, Iran, and Russia depend on their energy sector for both funding their armed forces and keeping the citizenry content. Compared to oil and natural gas, solar power is quite limited as a tactical weapon. If China were to congest the photovoltaic supply chain, there would be no immediate blackouts or even spikes in the price of electricity. It couldn’t use its leadership in manufacturing photovoltaics the way Russia can use gas or Saudi Arabia can use oil to achieve rapid realignment.
And while the focus of climate action in Western democracies like Germany and the United States are on net zero emissions, Burja rightly points out the objective function being deployed tries to reduce the negative externalities of shifting to renewables at the expense of increased energy consumption (like by shutting down existing nuclear facilities). China, meanwhile, has allocated $440b of investment towards nuclear between now and 2035 and is investing in next-generation electrical transmission lines that would allow gigantic remote solar installations to provide cheap power for major cities. The US is failing to rise to the occasion on similar investments.
Where does this leave us?:
Low energy consumption in one country, as practiced by Germany for example, is a self-limiting strategy. The carbon not emitted and cheap energy not tapped will instead be emitted and tapped by new industrial giants such as China and, eventually, India. Rather, localized and abundant solar energy seems to be one of the only politically viable solutions. Localizing energy markets would help break international coordination based on oil and gas. If those local solar markets achieve electricity too cheap to meter, as nuclear once promised to do, the market would become an enemy, rather than a friend, to the coal industry^^. This approach isn’t favored in developed countries because it would disrupt current political patronage in a way that promises of energy stagnation do not. Moreover, it fails to satisfy environmentalists and skeptics of technology, because although it would solve the problem of carbon emissions-driven climate change, it doesn’t resolve any of the other environmental⁹¹ or social⁹² problems of industrial society. The question then is whether any live players can change the developed world’s approach to energy after 50 years on a road to nowhere.
Well said.
Burja’s Substack isn’t cheap, but it consistently delivers unique insight and synthesis I see from few other publications. I’m glad to be a subscriber.
Gaming Beyond the Console
Ben Thompson has the definitive take on what the flurry of recent acquisition activity means for the future of gaming:
Another week, another gaming acquisition. First Take-Two acquired Zynga, then Microsoft acquired Activision-Blizzard, and now Sony just announced the acquisition of Bungie.
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When it comes to mobile gaming, the dominant Aggregators on the top right side of the curve are Apple and Google and their respective App Stores; the most cynical interpretation of ATT is that Facebook was superseding both to become the most important way in which people discovered apps, and Apple, thanks to its OS-level control, cut them off at the knees, pushing Facebook down to the middle. The response from content makers, then, has been to consolidate and increase the leverage that comes from differentiated content.
Xbox Game Pass, meanwhile, is an attempt to build a position as an Aggregator; the initiative will be successful to the extent that gamers play games because they are in Game Pass, and increasingly shun games that have to be purchased individually (incentivizing holdouts to join Microsoft’s subscription). Microsoft is kick-starting this effort by buying its own differentiated content and overlaying their long-term incentives over any individual game studio’s incentives to maximize their short-term revenue by selling a game individually.
Sony is pursuing a similar strategy, but with a different business model: whereas Microsoft is increasingly device-agnostic (of course it helps that they sell both Xbox consoles and Windows), Sony is doubling down on the integration of hardware and software. Their best content is designed to not only make money in its own right but to also persuade customers to buy PlayStation consoles; the more PlayStation consoles there are the more attractive the platform is to 3rd-party developers.
Thompson concludes that these acquisitions are a healthy sign for the power of creators, but also for platforms that successfully aggregate users:
[S]o much of our thinking about competition is rooted in the analog world, a world of scarcity where there really was limited shelf space or limited telephone lines or limited railroad access; that just isn’t the case on the Internet, where anyone has access to everyone. This has dramatically increased the power of creators, who can not only go direct, but also plays Aggregators off against each other — that is the realm of competition that matters. If we must accept a world where platforms like the App Store have total power within their domains, then the answer is to build up alternative Aggregators that have compelling content of their own, waging a proper fight for the only scarce resource there is on the Internet: time.
Jon Stewart on Joe Rogan
The amount of oxygen being wasted on Rogan right now is depressing. Jon Stewart has been the closest so far to nailing how I come down on this particular issue:
That’s it for this week.
XO,
W