Economics-Watching: Does Monetary Policy Affect Non-Mining Business Investment in Australia?

[from the Reserve Bank of Australia, by Gulnara Nolan, Jonathan Hambur and Philip Vermeulen]

Summary

Business investment is a key driver of economic growth. When investment is strong, workers have access to more capital and equipment, making them more productive and able to contribute to stronger productivity growth. Business investment is also thought to be an important driver of economic cycles and stimulating business investment is one of the key mechanisms through which monetary policy is thought to work.

However, non-mining business investment in Australia was fairly weak over much of the 2010s, despite declines in interest rates and moderate economic growth. While several explanations have been put forward, one potential explanation is that monetary policy is not very effective at stimulating business investment or has become less effective over time.

This study examines the effect of monetary policy changes on non-mining business investment using a variety of national and firm-level investment data, exploring both the aggregate effect of monetary policy and the channels through which monetary policy affects investment.

Abstract

We provide new evidence on the effect of monetary policy on investment in Australia using firm-level data. We find that contractionary monetary policy makes firms less likely to invest and lowers the amount they invest if they do so. The effects are similar for young and old firms, indicating that the decline in the number of young firms in Australia over time is unlikely to have weakened the effect of monetary policy. The effects are also broadly similar for smaller and larger firms. This suggests that evidence that some, particularly large, firms have sticky hurdle rates does not mean that they do not respond to monetary policy. It also suggests that overseas findings that expansionary monetary policy lessens competition by supporting the largest firms likely do not apply to Australia. We find evidence that financially constrained firms, and sectors that are more dependent on external finance, are more responsive to monetary policy, highlighting the important role of cash flow and financing constraints in the transmission of monetary policy. Finally, we find evidence that monetary policy affects firms’ actual and expected investment contemporaneously, suggesting that expectations are reactive and will tend to lag over the cycle.

Read the full paper [archived PDF].

Economics-Watching: FTC Returns More than $3 Million to Businesses that Paid for HomeAdvisor Memberships, Announces Claims Process for Additional Refunds

Agency charged that the company deceptively marketed home improvement project leads

[from the Federal Trade Commission]

The Federal Trade Commission is sending more than $3 million in refunds to businesses that paid for memberships to HomeAdvisor, Inc., a company affiliated with Angi (formerly known as Angie’s List). The agency is also sending claim forms to businesses that are eligible for additional refunds.

The refunds stem from FTC allegations that HomeAdvisor used deceptive marketing tactics when selling home improvement project leads to service providers, including small businesses operating in the “gig” economy. The FTC’s March 2022 complaint alleged that since at least mid-2014, HomeAdvisor made false, misleading, or unsubstantiated claims about the quality and source of the leads it was selling to home service providers in search of potential customers. The agency also charged that HomeAdvisor told businesses that their annual membership would include one free month of mHelpDesk, an optional scheduling and payment processing service marketed by HomeAdvisor, but in reality, the company charged an additional $59.99 for the first month.

The FTC is sending 110,372 checks to eligible home service providers. These refunds are related to the FTC’s allegations that HomeAdvisor misled businesses about the quality of customer leads they would get with their membership. Recipients should cash their checks within 90 days, as indicated on the check.

The agency is also sending 91,273 claims forms to businesses that paid for mHelpDesk. The deadline to submit a claim is February 26, 2024. More information about the refund process is available at ftc.gov/HomeAdvisor or by calling the refund administrator, Rust Consulting, Inc., at 1-833-915-1144. The Commission never requires people to pay money or provide account information to get a refund.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases. In 2022, Commission actions led to more than $392 million in refunds to consumers across the country.

Science-Watching: New Insights into Polyamorphism Could Influence How Drugs Are Formulated

[from the Royal Society of Chemistry’s Chemistry World, by Patrick de Jongh]

Results from a study combining experiments and simulations could overturn the assumption that amorphous forms of the same compound have the same molecular arrangement. The team behind the work claims to have prepared three amorphous forms of the diuretic drug hydrochlorothiazide and determined that they have distinct properties and distinct types of disorder. ‘If polyamorphism is proved in the future to be a universal—or at least not a very rare—phenomenon, then the pharmaceutical industry will need to make screens for polyamorphism and this will also be an opportunity for patenting,’ comments Inês Martins, from the University of Copenhagen in Denmark, who led the work with Thomas Rades.

Crystalline active pharmaceutical ingredients (APIs) often suffer from poor solubility. A common strategy to circumvent this problem is converting APIs into their amorphous form. This has been demonstrated for various APIs, including hydrochlorothiazide. However, the physical properties of polyamorphs are dependent on how they were prepared. Given there are no straightforward techniques to study how molecules interact and organise themselves in amorphous materials, the area is poorly understood.

Nevertheless, a team surrounding Rades and Martins set out to identify how amorphous forms of the same API, presenting different physicochemical properties, differ from each other. They decided to study hydrochlorothiazide as it was previously shown to have polyamorphs with glass transition temperatures above room temperature, which facilitates the preparation, isolation and analysis of its different polyamorphs. Starting from crystalline hydrochlorothiazide, they produced three polyamorphs: polyamorph I via spray-drying, polyamorph II via quench-cooling and polyamorph III by ball-milling. Thermal analysis revealed a significantly lower glass-transition temperature for polyamorph I (88.7°C), whereas polyamorphs II and III had similar glass-transition temperatures (117.5°C and 119.7°C, respectively). The polyamorphs also demonstrated very different shelf-life stabilities against crystallisation.

Subsequently, they studied polyamorphic interconversions by submitting the polyamorphs to the preparation conditions used for other polyamorphs. For example, polyamorph I (obtained by spray-drying) was subjected to quench–cooling or ball-milling. Identifying temperature as a critical parameter, they observed that polyamorph II could be obtained from polyamorphs I and III, but the reverse pathway was not possible. Meanwhile, they observed polyamorph I and polyamorph III interconvert. These results demonstrate polyamorph II is the most stable amorphous form.

Source: © Thomas Rades/University of Copenhagen
Researchers used a variety of techniques to elucidate the different polyamorphs that can be produced from crystalline hydrochlorothiazide and the polyamorphic interconversions that occur when a specific amorphous form is submitted to temperature or milling treatments

‘The problem out of the gate with polyamorphism as a concept is how to tell the difference between a well-defined metastable amorphous structure and an unrelaxed one that simply results from kinetically trapped defects introduced during processing. This is hard to define since the amorphous structure is statistical in any case,’ comments Simon Billinge, who studies the structure of disordered materials at Columbia University in the US. ‘They process the samples very differently. We know—from our own work—that this results in amorphous phases with very different stabilities against recrystallisation, for example, but is this polyamorphism? On the other hand, they find that the pair distribution functions of each of their “forms” are identical. There is no experimental evidence for a distinct structure. Taken together, the results do little to advance my understanding of polyamorphism.’

Distinct dihedral angle distributions

To get further information on how the polyamorphs are different on a molecular level, Martins and Rades turned to molecular dynamics simulations, comparing the dihedral angles around the sulfonamide groups in polyamorphs I and II. ‘Polyamorph I, which has a large number of the molecules with a dihedral angle similar to the one reported for crystalline hydrochlorothiazide, has a lower physical stability and faster structural relaxation time than polyamorph II, which has a broader dihedral angle distribution. Our findings indicate that a broader dihedral angle distribution seems to contribute to a better physical stability and slower structural relaxation,’ says Martins. They therefore hypothesise that having half the molecules with a conformation closer to crystalline hydrochlorothiazide and half of the molecules with a different conformation could help in establishing specific molecular arrangements that would favour the stability of the amorphous form.

The team also says the simulations corroborated its experimental results that polyamorph I can transform into polyamorph II, while the opposite conversion did not take place.

However, Billinge does not believe the computational studies provide conclusive evidence: ‘There is a detailed molecular dynamics analysis where different annealing conditions in the simulations give some slightly different statistics on the molecular conformations, but despite their claim, the resulting computed pair distribution functions do not look like the measured ones, so we have no way of knowing if the molecular dynamics is capturing what is happening in the real material. For amorphous materials, it is very difficult to equilibrate them in a molecular dynamics simulation, so you will be looking at artefacts of how the ensemble was created. Any claims to have found polyamorphism from molecular dynamics simulations by themselves are therefore questionable.’

Rades says their results can change the field of pharmaceutics: ‘We expect that other drug molecules may exhibit polyamorphism and the question would be which structural parameters would be different. In the case of hydrochlorothiazide, the dihedral angle distribution was found to be a parameter contributing for the formation of different polyamorphs. In other drugs, maybe the dihedral angle distribution (molecular conformations) could be different as well, but also maybe the type of intermolecular interactions can play a more important role in the formation of polyamorphs.’

The team now hope the pharmaceutical industry will look at amorphous systems differently and not assume that all amorphous forms of the same compound are the same. ‘Knowing this and considering that a certain polyamorph will have better physical stability, solubility or dissolution properties than another polyamorph, this will be an opportunity for the pharmaceutical industry to prepare tablets of a drug where the dose could be lower than tablets containing the crystalline form,’ concludes Rades.

Economics-Watching: Fed Transparency and Policy Expectation Errors: A Text Analysis Approach

[from the Federal Reserve Bank of New York, written by Eric Fischer, Rebecca McCaughrin, Saketh Prazad, and Mark Vandergon]

This paper seeks to estimate the extent to which market-implied policy expectations could be improved with further information disclosure from the FOMC. Using text analysis methods based on large language models, we show that if FOMC meeting materials with five-year lagged release dates—like meeting transcripts and Tealbooks—were accessible to the public in real-time, market policy expectations could substantially improve forecasting accuracy. Most of this improvement occurs during easing cycles. For instance, at the six-month forecasting horizon, the market could have predicted as much as 125 basis points of additional easing during the 2001 and 2008 recessions, equivalent to a 40-50 percent reduction in mean squared error. This potential forecasting improvement appears to be related to incomplete information about the Fed’s reaction function, particularly with respect to financial stability concerns in 2008. In contrast, having enhanced access to meeting materials would not have improved the market’s policy rate forecasting during tightening cycles.

Read the full article [archived PDF].

World-Watching: Container Shipping Financial Insight, Nov. 2023

[from Drewry Shipping Consultants]

Driven by weak 3Q23 financial results, the Drewry Container Equity Index decreased 3.7% last month (as of 22 Nov 2023). Additionally, asset prices continue to fall due to the supply-demand imbalance.

  • Container shipping companies’ 3Q23 financial results showcased a sharp dip in profits or even losses. On a group level, eleven liners (which report quarterly results) among our portfolio of 13 companies reported an average slump of 54.6% YoY in their 3Q23 topline. Operating costs declined 18.1% YoY amid falling chartering costs and lowering bunker prices. However, the cost reduction was insufficient to offset the plunge in topline; thus, EBIT contracted 94.1% YoY on average.
  • The Drewry Container Equity Index tumbled 28.1% YTD 2023 (ending 22 November), driven by lowering freight rates (WCI: -30.7% in YTD 2023), which squeezed earnings over the quarters. On the contrary, the S&P 500 posted an 18.4% growth. The Drewry Container Equity Index declined 3.4% in the month ending 22 November 2023. Talking about equity prices individually, APMM’s stock price fell 9.0% amid EBIT loss for its Ocean segment in 3Q23, staff cuts and reduced capex guidance, highlighting APMM’s efforts toward reducing costs faced with the bleak industry outlook. Hapag-Lloyd’s stock price slumped 22.2% as its EBIT margin (3Q23: 5.1%) slid below its pre-pandemic level (3Q19: 7.8%). ZIM became the first carrier to report impairment of assets worth USD 2.0bn in 3Q23, and its stock price fell 18.1%. Meanwhile, China-exposed container companies benefitted from the positive sentiment arising from the proposed fiscal stimulus by the Chinese government, possibly boosting the out-of-China and intra-Asia trades. Asian stocks in the broader index rose 2.0% to 19.4% in the month ending 22 November 2023.
  • Mainly driven by weak earnings prospects, the Drewry Container Equity Index trades at a P/B of 0.5x, a 47.5% discount to its pre-pandemic average (2013-19). We expect freight rates to fall sharply in 2024 and increasingly incur losses. Thus, we expect the multiple to remain suppressed.
  • As the fleet of container shipping companies expands, the charter market softens. For instance, 1-year TC rates declined 14.2% and 52.5% YoY in October for vessels sized 1,110 teu and 8,500 teu. Rates declined more for larger vessels as these constitute the majority of the order book and new deliveries. The YoY decline has continued since October 2022, but rates improved slightly during April-May 2023. However, this was not due to the fundamentally strong market but MSC and CMA CGM’s aggressive chartering of vessels to expand their fleets. Now that the two companies have stopped chartering in vessels, the charter market continues to decline.
  • Driven by the softening charter market, second-hand asset prices are also weakening. In October, on a YoY basis, prices for five-year-old vessels (2,700 teu and 7,200 teu) contracted 30.6% and 31.5%, and for 10-year-old ships, prices tumbled between 36.7% and 53.2%. Contrary to the sale and purchase market, newbuild prices (1,500 teu and 14,000 teu) continue to increase and rose by an average of 2.2% YoY, led by a shortage of capacity in shipyards.
  • The charter market and the S&P market have a direct impact on container shipping companies’ earnings. Costs related to chartering-in slots or vessels from other non-operating vessel owners form a significant portion of container shipping companies’ cost structure. In the 3Q23 results, this cost was reduced,
    marginally relieving downside pressure on the operating margin of container shipping companies. In line with the declining charter market, we expect this trend to continue in 4Q23. We also expect other companies to follow ZIM in reporting impairment losses as prices for older vessels continue to fall.

Read the report [archived PDF] for additional graphs.

Economics-Watching: Money Transmitter Regulation: Key to Payments Modernization

[from the Federal Reserve Bank of Atlanta, by Claire Greene, payments risk expert in the Retail Payments Risk Forum]

In October, I wrote about the potential for standards to make business-to-business payments more efficient. Today, let’s talk about standards again, this time for money transfer businesses and the state regulations covering them.

We all know these businesses: Venmo, Western Union, MoneyGram, PayPal, CashApp. The roster seemingly grows by the day. Many crypto firms also are registered money transfer businesses. Money transfer businesses typically are nationwide and global in scope. Nevertheless, these multi-state and multi-national businesses are regulated under the separate licensing rules of individual states and US territories. Federal laws, including the Bank Secrecy Act and the Electronic Fund Transfer Act, also apply to money transfer businesses.

For new and established money transfer businesses and for state regulators, the hodgepodge of state regulations creates headaches. To do business everywhere in the United States, money transfer businesses must register separately in each state and US territory and meet license requirements that can vary from state to state. They can face multiple state examinations, also with different requirements, simultaneously (and annually). During examinations, regulators review operations, financial condition, management, and compliance with anti-money laundering laws.

Fortunately, many states have acted to address this confusing and inefficient situation by adopting the Model Money Transmission Modernization Act (MTMA) [archived PDF], sample legislation developed by the Conference of State Bank Supervisors to establish nationwide standards and requirements for licensed money transmitters. Fourteen states have adopted some version of the MTMA: Arizona, Arkansas, Georgia, Hawaii, Indiana, Iowa, Minnesota, Nevada, New Hampshire, North Dakota, South Dakota, Tennessee, Texas, and West Virginia. In my home state of Massachusetts, the legislature’s Joint Committee on Financial Services heard testimony on a version of this bill just last month. For traditional money transmitters and new fintech entrants, the MTMA aims to reduce the substantive and technical differences among the various state laws and regulations. This kind of change has the potential to reduce compliance burdens, encourage innovation, and remove barriers to entry for new market participants.

The MTMA is important given the prodigious growth in person-to-person, or P2P, payments via apps. Among all US consumers, half of P2P payments were sent using noncash methods in 2022, up from less than 30 percent in 2020 (see the chart). From Massachusetts alone, money transmitters sent $31 billion in 2022, according to the state’s Division of Banks.

Half of P2P payments were made electronically in 2022.

The MTMA also has the potential to create efficiencies for state supervisors. For example, the Conference of State Bank Supervisors (CSBS) has facilitated a collaborative exam program for nationwide payments and cryptocurrency firms to undergo one exam, each facilitated by one state overseeing a group of examiners sourced from across the country. According to the CSBS, transmitters in more than 40 states that have laws addressing core precepts can benefit from the streamlined exams.

The MTMA is another example showing that standards create efficiencies that are good for businesses, good for regulators and, by extension, good for consumers.

Economics-Watching: How Green Innovation Can Stimulate Economies and Curb Emissions

[from IMF Blog, by Zeina Hasna, Florence Jaumotte & Samuel Pienknagura]

Coordinated climate policies can spur innovation in low-carbon technologies and help them spread to emerging markets and developing economies

Making low-carbon technologies cheaper and more widely available is crucial to reducing harmful emissions.

We have seen decades of progress in green innovation for mitigation and adaptation: from electric cars and clean hydrogen to renewable energy and battery storage.

More recently though, momentum in green innovation has slowed. And promising technologies aren’t spreading fast enough to lower-income countries, where they can be especially helpful to curbing emissions. Green innovation peaked at 10 percent of total patent filings in 2010 and has experienced a mild decline since. The slowdown reflects various factors, including hydraulic fracking that has lowered the price of oil and technological maturity in some initial technologies such as renewables, which slows the pace of innovation.

The slower momentum is concerning because, as we show in a new staff discussion note, green innovation is not only good for containing climate change, but for stimulating economic growth too. As the world confronts one of the weakest five-year growth outlooks in more than three decades, those dual benefits are particularly appealing. They ease concerns about the costs of pursuing more ambitious climate plans. And when countries act jointly on climate, we can speed up low-carbon innovation and its transfer to emerging markets and developing economies.

IMF research [archived PDF] shows that doubling green patent filings can boost gross domestic product by 1.7 percent after five years compared with a baseline scenario. And that’s under our most conservative estimate—other estimates show up to four times the effect.

The economic benefits of green innovation mostly flow through increased investment in the first few years. Over time, further growth benefits come from cheaper energy and production processes that are more energy efficient. Most importantly, they come from less global warming and less frequent (and less costly) climate disasters.

Green innovation is associated with more innovation overall, not just a substitution of green technologies for other kinds. This may be because green technologies often require complementary innovation. More innovation usually means more economic growth.

A key question is how countries can better foster green innovation and its deployment. We highlight how domestic and global climate policies spur green innovation. For example, a big increase in the number of climate policies tends to boost green patent filings, our preferred proxy for green innovation, by 10 percent within five years.

Some of the most effective policies to stimulate green innovation include emissions-trading schemes that cap emissions, feed-in-tariffs, which guarantee a minimum price for renewable energy producers, and government spending, such as subsidies for research and development. What’s more, global climate policies result in much larger increases in green innovation than domestic initiatives alone. International pacts like the Kyoto Protocol and the Paris Agreement amplify the impact of domestic policies on green innovation.

One reason policy synchronization has a prominent impact on domestic green innovation is what is called the market size effect. There’s more incentive to develop low-carbon technologies if innovators can expect to sell into a much larger potential market, that is, in countries which adopted similar climate policies.

Another is that climate policies in other countries generate green innovations and knowledge that can be used in the domestic economy. This is known as technology diffusion. Finally, synchronized policy action and international climate commitments create more certainty around domestic climate policies, as they boost people’s confidence in governments’ commitment to addressing climate change.

Climate policies even help spread the use of low-carbon technologies in countries that are not sources of innovation, through trade and foreign-direct investment. Countries that introduce climate policies see more imports of low-carbon technologies and higher green FDI inflows, especially in emerging markets and developing economies.

Risks of protectionism

Lowering tariffs on low-carbon technologies can further enhance trade and FDI in green technologies. This is especially important for middle- and low-income countries where such tariffs remain high. On the flipside, more protectionist measures would impede the broader spread of low-carbon technologies.

In addition, and given evidence of economies of scale, protectionism—with ultimately smaller potential markets—could stifle incentives for green innovation and lead to duplication of efforts across countries.

The risks of protectionism are exacerbated when climate policies, such as subsidies, do not abide by international rules. For example, local content requirements, whereby only locally produced green goods benefit from subsidies, undermine trust in multilateral trade rules and could result in retaliatory measures.

Beyond embracing a rules-based approach to climate policies, the advanced economies, where most green innovation occurs, have an important responsibility: sharing the technology so that emerging and developing economies can get there faster. Such direct technology transfers hold the promise of a double dividend for emerging markets and developing economies—reducing emissions and yielding economic benefits.

—This blog reflects research by Zeina Hasna, Florence Jaumotte, Jaden Kim, Samuel Pienknagura and Gregor Schwerhoff.

Economics-Watching: FTC Action Leads to $18 Million in Refunds for Brigit Consumers Harmed by Deceptive Promises About Cash Advances, Hidden Fees, and Blocked Cancellation

[from the Federal Trade Commission]

Complaint alleges company violated FTC Act and ROSCA with false promises targeting consumers living paycheck-to-paycheck and by failing to deliver cash advances as advertised

The Federal Trade Commission is taking action against personal finance app provider Brigit, alleging that its promises of “instant” cash advances of up to $250 for people living paycheck-to-paycheck were deceptive and that the company locked consumers into a $9.99 monthly membership they couldn’t cancel.

Brigit, also known as Bridge It, Inc., has agreed to settle the FTC’s charges, resulting in a proposed court order that would require the company to pay $18 million in consumer refunds, stop its deceptive marketing promises, and end tactics that prevented customers from cancelling.

“Brigit trapped those consumers least able to afford it into monthly membership plans they struggled to escape from,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection.  “Companies that offer cash advances and other alternative financial products have to play by the same rules as other businesses or face potential action by the FTC.”

According to the FTC’s complaint [archived PDF], Brigit advertised its cash advance service online, through social media and through broadcast ads with claims that customers who subscribed to the company’s service would have access to “instant” cash advances of up to $250 “whenever you need it,” and could cancel anytime. Consumers could only access the cash advance features when they signed up for the $9.99 per month “Plus” subscription.

The FTC’s complaint, however, charges that consumers were rarely able to get an advance for the promised $250, and in many cases, consumers were not able to receive a cash advance at all. Despite Brigit’s promises that advances would be available with “free instant transfers,” the complaint notes that the company began charging consumers a 99-cent fee for an instant transfer. Consumers who did not pay the fee had to wait up to three business days for their advances.

In addition, the complaint charges that while Brigit claimed to offer “non-recourse” advances with no fees or interest, the company prevented consumers who had an open advance from cancelling their subscription and continued to withdraw $9.99 monthly from their bank account until the advance was paid off. Such monthly charges created significant additional hardship for consumers already struggling to pay off a cash advance.

Even when consumers without an open cash advance attempted to cancel the paid subscription, the complaint charges that the company employed dark patterns—manipulative design tricks—to create a confusing and misleading cancellation process that prevented consumers from cancelling their subscriptions, instead of offering a simple mechanism to cancel, as required by the Restore Online Shoppers’ Confidence Act (ROSCA) [archived PDF].

The proposed settlement order [archived PDF], which must be approved by a federal judge before it can go into effect, would require Brigit to pay $18 million to the FTC to be used to provide refunds to consumers. In addition, the order would prohibit Brigit from misleading consumers about how much money is available through their advances, how fast the money would be available, any fees associated with delivery, and consumers’ ability to cancel their service. The order would also require the company to make clear disclosures about its subscription products and provide a simple mechanism for consumers to cancel.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. The FTC filed the complaint and final order in the U.S. District Court for the Southern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter were Patrick Roy, Mark Glassman and James Doty of the FTC’s Bureau of Consumer Protection.

Science-Watching: Why Do Batteries Sometimes Catch Fire and Explode?

[from Berkeley Lab News, by Theresa Duque]

Key Takeaways
  • Scientists have gained new insight into why thermal runaway, while rare, could cause a resting battery to overheat and catch fire.
  • In order to better understand how a resting battery might undergo thermal runaway after fast charging, scientists are using a technique called “operando X-ray microtomography” to measure changes in the state of charge at the particle level inside a lithium-ion battery after it’s been charged.
  • Their work shows for the first time that it is possible to directly measure current inside a resting battery even when the external current measurement is zero.
  • Much more work is needed before the findings can be used to develop improved safety protocols.

How likely would an electric vehicle battery self-combust and explode? The chances of that happening are actually pretty slim: Some analysts say that gasoline vehicles are nearly 30 times more likely to catch fire than electric vehicles. But recent news of EVs catching fire while parked have left many consumers – and researchers – scratching their heads over how these rare events could possibly happen.

Researchers have long known that high electric currents can lead to “thermal runaway” – a chain reaction that can cause a battery to overheat, catch fire, and explode. But without a reliable method to measure currents inside a resting battery, it has not been clear why some batteries go into thermal runaway, even when an EV is parked.

Now, by using an imaging technique called “operando X-ray microtomography,” scientists at Lawrence Berkeley National Laboratory (Berkeley Lab) and UC Berkeley have shown that the presence of large local currents inside batteries at rest after fast charging could be one of the causes behind thermal runaway. Their findings were reported in the journal ACS Nano.

“We are the first to capture real-time 3D images that measure changes in the state of charge at the particle level inside a lithium-ion battery after it’s been charged,” said Nitash P. Balsara, the senior author on the study. Balsara is a faculty senior scientist in Berkeley Lab’s Materials Sciences Division and a UC Berkeley professor of chemical and biomolecular engineering.

“What’s exciting about this work is that Nitash Balsara’s group isn’t just looking at images – They’re using the images to determine how batteries work and change in a time-dependent way. This study is a culmination of many years of work,” said co-author Dilworth Y. Parkinson, staff scientist and deputy for photon science operations at Berkeley Lab’s Advanced Light Source (ALS).

The team is also the first to measure ionic currents at the particle level inside the battery electrode.

3D microtomography experiments at the Advanced Light Source enabled researchers to pinpoint which particles generated current densities as high as 25 milliamps per centimeter squared inside a resting battery after fast charging. In comparison, the current density required to charge the test battery in 10 minutes was 18 milliamps per centimeter squared. (Credit: Nitash Balsara and Alec S. Ho/Berkeley Lab. Courtesy of ACS Nano)
Measuring a battery’s internal currents

In a lithium-ion battery, the anode component of the electrode is mostly made of graphite. When a healthy battery is charged slowly, lithium ions weave themselves between the layers of graphite sheets in the electrode. In contrast, when the battery is charged rapidly, the lithium ions have a tendency to deposit on the surface of the graphite particles in the form of lithium metal.

“What happens after fast charging when the battery is at rest is a little mysterious,” Balsara said. But the method used for the new study revealed important clues.

Experiments led by first author Alec S. Ho at the ALS show that when graphite is “fully lithiated” or fully charged, it expands a tiny bit, about a 10% change in volume – and that current in the battery at the particle level could be determined by tracking the local lithiation in the electrode. (Ho recently completed his Ph.D. in the Balsara group at UC Berkeley.)

A conventional voltmeter would tell you that when a battery is turned off, and disconnected from both the charging station and the electric motor, the overall current in the battery is zero.

But in the new study, the research team found that after charging the battery in 10 minutes, the local currents in a battery at rest (or currents inside the battery at the particle level) were surprisingly large. Parkinson’s 3D microtomography instrument at the ALS enabled the researchers to pinpoint which particles inside the battery were the “outliers” generating alarming current densities as high as 25 milliamps per centimeter squared. In comparison, the current density required to charge the battery in 10 minutes was 18 milliamps per centimeter squared.

The researchers also learned that the measured internal currents decreased substantially in about 20 minutes. Much more work is needed before their approach can be used to develop improved safety protocols.

Researchers from Argonne National Laboratory also contributed to the work.

The Advanced Light Source is a DOE Office of Science user facility at Berkeley Lab.

The work was supported by the Department of Energy’s Office of Science and Office of Energy Efficiency and Renewable Energy. Additional funding was provided by the National Science Foundation.

World-Watching: German Industry: Structural Change Underway

[from Deutsche Bank Research]

Production in major industrial sectors in Germany has developed very differently in recent years under the impact of the coronavirus pandemic and energy price shock. For example, manufacturing in electrical engineering rose by 18% compared with the start of 2015. In the chemical industry, there has been a 20% decline over the same period. The differences are not only cyclical, but also structural. In the future, it will be more important to distinguish between Germany as an industrial location and the German industry.

Read the Germany blog [archived PDF].