FutureGen Project Stopped

The FutureGen Project, a clean coal demonstration plant that would have included carbon capture and sequestration (and was #8 on My Top Energy Stories of 2007) has been cancelled. The culprit? Cost overruns of about 80%, and a lot of competing projects. It turns out that carbon sequestration isn’t cheap, and the DOE decided the price tag was too high for this project:

U.S. pulls the plug on funding for FutureGen

The Department of Energy on Wednesday officially quashed a $1.8 billion clean-coal project slated for central Illinois, leaving the experimental venture to capture carbon emissions dependent on Congress for survival.

The FutureGen Industrial Alliance was cooperating with the Energy Department to develop a coal-fired power plant designed to gasify and store carbon emissions deep within the Earth, a process known as sequestration. But the Energy Department withdrew its support because of ballooning cost estimates on what was initially supposed to be a $1 billion project.

The surprise move transformed a short-lived celebration after Mattoon, Ill., was selected last month as the plant’s home into a legislative battle, once the Bush administration chose instead to spread funding across multiple facilities planned nationwide.

Carbon sequestration, however, is certainly not off the agenda:

During a conference call Wednesday, Deputy Secretary of Energy Clay Sell said circumstances have changed since the program’s conception in 2003, noting there are 33 applications to build similar coal power plants. Under the new plan, the Energy Department would fund the capture and storage of carbon emissions, while utilities cover the cost of power generation. The Department of Energy estimated the new plants would join the grid starting in 2015.

FutureGen executives were confused by the decision:

Department of Energy officials in April expressed reservations about rising costs, leading to a series of meetings with FutureGen executives that failed to produce a meaningful conclusion. Mudd said his organization does not understand the rationale behind the Energy Department’s announcement, noting that its decision squanders four years spent reviewing the science and regulatory framework in a historically unprecedented effort.

It’s not so hard to understand. When you have huge cost overruns, you run the risk of having your project cancelled. It’s the same in industry. I know it is very easy to underestimate project costs, because I have seen it done again and again. That’s why I always take those claims of “We will produce (ethanol, biodiesel, gasoline) for less than $1/gal” with a big grain of salt.

Future Reserves

Just going through some files on my hard drive, and I ran across the following story. Unfortunately, I don’t have the source. But it’s an interesting look at where projected future oil reserves are expected to come from. It also reinforces the difficulty that the international oil companies are going to have replacing their reserves - as most of the remaining reserves are in the hands of national oil companies.

Who Will Supply the World?

Africa

The continent has about 10 per cent of proven global oil reserves and 8 per cent of the world’s gas. The biggest oil producers are Nigeria, Algeria, Libya and Angola, which account for roughly three- quarters of Africa’s oil production. West Africa has become a focus for exploration and has attracted huge investment, such as BP’s dollars 900m deal with Tripoli. The US is expected to buy about 25 per cent of its oil from the area within the next 10 years, up from 15 per cent, which accounts partly for an increase in US military cooperation with African states. China is also securing exploration and drilling licences.

Saudi Arabia

The kingdom accounts for 19 per cent of world oil exports. Many analysts expect it to supply a quarter of the world’s added production over the next few years. And as the only producer with significant excess capacity, it has played a crucial role in alleviating temporary supply disruptions. The Saudis won’t say how much oil they are extracting from individual wells, or what reserves remain in individual oil fields. But the total amount that the kingdom produces has been declining, down a million barrels a day over the last two years. Giant oil reserves were discovered six years ago in the vast desert known as the Empty Quarter. According to estimates, the new fields could produce up to 2.2 million barrels a day for another 50 years.

Iran

Less than 10 per cent of its territory has so far been prospected for oil. Given adequate investment and technological modernisation, Iran could more than double its present production levels to eight million barrels a day, a capacity it had in the early 1970s when oil prices hovered around dollars 11 per barrel. In real purchasing power, today’s oil price is cheaper than it was then.

Siberia

The discovery of new fields in Eastern Siberia could provide between two and three billion tons of oil. In the past two to three years the Natural Resources Ministry has offered a significant number of fields in tenders in Sakha Republic (Yakutia) and Irkutsk region.

China

In the next decade, PetroChina plans to increase its proven oil reserves to 100 million metric tons a year at its Daqing oilfield to meet rising energy demand.

Iraq

Important new fields are being prospected all the time, most notably and recently in the Anbar province, where al-Qaeda forces have been making their strongest challenge. Iraq has the third largest oil reserves of any nation, and that’s if you take the lowest estimate of its reserves. Its oil is of purer quality, and nearer to the surface, than that of many of its rivals. Basra could be as rich as Kuwait in five years.

Brazil

A huge offshore oil discovery could help Brazil join the ranks of the world’s major exporters, but full-scale extraction is unlikely until 2013 and will be very expensive. The “ultra-deep” Tupi field off the coast of Rio de Janeiro could hold eight billion barrels of recoverable light crude, and initial production should exceed 100,000 barrels daily.

Brazilian state oil company Petrobras will start pilot pumping in 2010 or 2011, but full production will take several more years. Getting the oil out will be an expensive and formidable challenge because the oil is so deep under the earth’s surface. The lag time before production means that any impact on world oil prices won’t come soon.

This Week in Petroleum 1-30-08

Updated

Gasoline inventories did in fact edge upward, as gasoline imports were very strong. Had that not been the case, gasoline inventories would have definitely come down, as utilization continues to trend down. In fact, just glancing over the data, more gasoline may have been imported this January than in any other January before. As long as that continues, gasoline prices won’t gain much traction. But European refiners have to take turnarounds as well, so gasoline imports typically fall off in February and March.

Here is the summary:

Summary of Weekly Petroleum Data for the Week Ending January 25, 2008

U.S. crude oil refinery inputs averaged 14.6 million barrels per day during the week ending January 25,down 302,000 barrels per day from the previous week’s average. Refineries operated at 85.0 percent of their operable capacity last week. Gasoline production edged slightly lower compared to the previous week, averaging about 8.9 million barrels per day. Distillate fuel production fell last week, averaging nearly 3.9 million barrels per day.

U.S. crude oil imports averaged about 10.1 million barrels per day last week, down 100,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.1 million barrels per day, unchanged from the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged nearly 1.2 million barrels per day. Distillate fuel imports averaged 277,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 3.6 million barrels compared to the previous week. At 293.0 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories increased by 3.6 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories declined by 1.5 million barrels, and are in the lower half of the average range for this time of year. Propane/propylene inventories decreased by 3.0 million barrels last week. Total commercial petroleum inventories decreased by 1.0 million barrels last week, and are in the middle of the average range for this time of year.

Pre-Release Commentary

OPEC is meeting later this week, but the comments coming from various members indicate that they are unlikely to boost production. I think this continues the theme that we saw most of last year, where truly low inventories were mostly prevented by higher prices, and then OPEC used the inventory situation to suggest that markets are adequately supplied - which completely ignores the price signal. But certain OPEC members have now grown dependent upon the revenues provided by $100 oil. As long as they maintain solidarity, it is unlikely they will allow the price to drop too much - recession or now.

Here is what analysts are forecasting for this week:

A Reuters poll of analysts ahead of weekly U.S. government inventory data forecast a 2.1-million-barrel rise in crude stocks, a 1.9-million-barrel draw in distillate inventories and a 2-million-barrel build in gasoline stockpiles.

If spring turnarounds are indeed starting early, then the only way gasoline stockpiles will build is if gasoline imports remain strong (which they were last week). If that is the case, then $4 gasoline will remain elusive, as imports will keep pressure off of inventories.

That same story also had a note about speculative positions:

U.S. regulator data on Friday showed NYMEX crude oil speculators slashed their bets on rising prices in the week to Jan. 22 to their lowest since mid-December, cutting net long positions by nearly 50,000 lots to 37,000. “It shows the large speculative funds reducing aggressively their net length exposure on futures through a combination of long liquidation and fresh short positions,” said Olivier Jakob at Petromatrix.

There is concern about a recession dropping prices, but I think the counter to that is that OPEC would probably be willing to cut if prices dropped too much. I will update following the release of the report.

The Manpower Shortage Worsens

Now for a short personal note. It’s been several days since I last updated, but there’s been a lot going on.

There have been a lot of stories in the past year about the manpower shortages in the oil and gas industry. I have decided to make the shortage worse by one, as I have announced my intention to leave the industry on March 1, 2008.

There were multiple factors behind the decision, none of which involved dissatisfaction with my employer or my job. I will get into specific details later of what I will be doing, but I will primarily be working with two different companies. Both companies are involved in sustainability issues. The first is called Accsys Technologies PLC, based in London. Essentially, they have a commercial chemical process that can convert fast-growing softwoods like pine into something with the durability of the best hardwoods. From an environmental perspective, this is very attractive, because it takes pressure off of tropical rainforests (a major source of hardwoods). This wood is being used to replace steel and aluminum in certain applications, which amounts to a major improvement in the carbon footprint (which I am still working to quantify).

The way I became involved with this company was that the new CEO, Finlay Morrison, was my former OXO business line manager when I was with Celanese. After he was named CEO, Finlay contacted me about a job. After telling him “No” several times, he told me that “No” wasn’t an answer he would accept. (Those Scots are a persistent bunch). So, I accepted the position of Engineering Director for the company. I will be relocating in the short term to Arnhem, in the Netherlands. I will also spend considerable time in China. My base location will be Dallas, which was attractive for the family because it is a short distance from extended family. (My kids have until now lived far from grandparents, cousins, etc.) I am not crazy about the travelling aspect, but the benefits far outweighed the inconveniences.

The second company I am involved with will have to remain unnamed for now. While some are doing press releases on how they are going to win the cellulosic ethanol race, this other company I am involved with has quietly developed a technology that I believe will trump them all. But, for now they prefer to continue developing business plans and remain out of the spotlight. (They are really a modest bunch). Hopefully sometime soon I can talk them into going public with what they are doing. And no, I won’t tell you who they are if you e-mail me.

I intend to continue writing about energy and sustainability issues. But by making this change, I also intend to make a more substantial contribution toward a more sustainable world.

Recession-Proof Jobs

I sometimes get questions from people wondering what kinds of jobs will be safest in the future. I always recommend that people look for something that interests them in either the energy or health care field. I am not as familiar with the manpower issues in the health care field, but we have serious shortages in the energy sector.

This is also consistent with my investment strategy. I invest primarily in energy, health care, international stocks, and environmental companies. Today, Yahoo published an article that suggests that these sectors - plus the education and security sectors - are exactly where jobs will be safest from a recession:

Recession-Proof Jobs in 2008

John Challenger, CEO of outplacement firm Challenger, Gray and Christmas, told Yahoo! HotJobs that careers in the following fields may offer a good chance of weathering a storm this year.

* Education. The U.S. Bureau of Labor Statistics has historically shown teaching to be relatively recession-proof. But demographics are important: High-growth areas like the Sun Belt offer much better prospects than the Rust Belt.

* Energy. “This is a major issue for the global economy, and jobs related to oil and gas, alternative energy and even nuclear are likely to see strong growth,” Challenger said.

* Health care. Almost half the 30 fastest growing occupations are concentrated in health services — including medical assistants, physical therapists, physician assistants, home health aides, and medical records and health information technicians — according to the U.S. Bureau of Labor Statistics.

* International business. “If you have a strong knowledge of other cultures, and an ability to work in another country, you’ll find plenty of opportunities,” according to John Challenger. “If you’re first generation Chinese, with business skills and Chinese language skills, you’re in good shape.

* Environmental sector. There is a huge and growing industry geared to combat global warming. “Not only will professionals with skills in sustainability issues be in demand through the end of the decade, we are likely to shortages of professionals with ‘green’ skills,” said Rona Fried, president of sustainablebusiness.com, a networking service for sustainable businesses.

* Security. “Crime doesn’t stop during a recession, and police officers, port security specialists and international security experts will continue to be in demand,” Challenger emphasized.

The article also warned that anything around the housing sector was a danger zone:

“The housing slump will touch anything related to housing, from real estate to investment banks, to engineering and architecture,” Koropeckyj said. Though public sector jobs grew at a fast clip in the last five years, state and local government jobs are likely to slow as home values, and, consequently, tax revenues, sink.

The housing slump could even extend to industries dependent on discretionary spending, like restaurants and retail, she indicated. Manufacturing, too, long in dire need of an upswing, is likely to keep waiting for one through 2008, Koropeckyj said.

People are going to need energy, even though they may despise the people that provide it for them. They are going to need health care. Find an interest in those fields, and you should have a relatively stable job.

This Week in Petroleum 1-24-08

Updated:

Not too much to get excited about. Those reports of some refineries coming down early for turnarounds due to low margins look to be accurate, given the drop in refinery utilization. That would also explain the rise in crude inventories, but typically you start to see gasoline inventories coming down as the refineries come offline. Gasoline production did fall, as one would expect as turnaround season begins. However, gasoline inventories increased on the back of very strong gasoline import numbers.

The highlights:

Summary of Weekly Petroleum Data for the Week Ending January 18, 2008

U.S. crude oil refinery inputs averaged 14.9 million barrels per day during the week ending January 18, down 91,000 barrels per day from the previous week’s average. Refineries operated at 86.5 percent of their operable capacity last week. Gasoline production moved slightly lower compared to the previous week, averaging about 9.0 million barrels per day. Distillate fuel production fell last week, averaging 4.1 million barrels per day.

U.S. crude oil imports averaged about 10.2 million barrels per day last week, down 233,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged nearly 10.1 million barrels per day, or 0.1 million barrels per day more than averaged over the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.2 million barrels per day. Distillate fuel imports averaged 242,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 2.3 million barrels compared to the previous week. At 289.4 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories increased by 5.0 million barrels last week, and are above the upper limit of the average range. Distillate fuel inventories declined by 1.3 million barrels, and are near the middle of the average range for this time of year. Propane/propylene inventories decreased by 3.3 million barrels last week. Total commercial petroleum inventories increased by 2.2 million barrels last week, and are in the middle of the average range for this time of year.

Pre-Release Commentary

This week’s inventory report will be delayed until Thursday due to Monday’s holiday. As we move toward spring, inventory levels will be influenced by 1). Spring turnaround season; and 2). The return of summer gasoline blends. Typically, turnaround season doesn’t really kick off until late February to early-March, but a note from the OPIS report that came out on Wednesday stated “Apparently, the 2008 refinery turnaround season has been launched early, particularly at the U.S. Gulf Coast.” In the face of horrible margins, it makes sense to move turnarounds up and take the outages now, as opposed to later when margins should firm up.

If lots of refiners do push up their turnarounds, we will see crude inventories start to build earlier than normal (which may have already started), and gasoline inventories will start to be pulled down as they were last spring. Gasoline inventories have recovered from the record low levels of last year, and are setting in pretty good shape heading into the turnarounds. Whether we reach $4 gasoline is going to depend on the draw down rate, which last spring was very steep.

Back to the OPIS reports, last Friday’s report contained a very interesting story that I have not seen reported in the media. Here is an excerpt:

A couple of traders and refiners on the U.S. West Coast may have found an outlet for the burgeoning gasoline stocks after fixing two ships to sail to Asia or Australia, industry sources said on Friday.

The West Coast gasoline stocks have reached the highest level since February 2006, prompting some traders to look for outlets in the East Coast in a potentially unprecedented move, and, possibly, the Gulf Coast, Asia, Australia or the west coast of Mexico.

As of Thursday, two ships were booked to load gasoline on the West Coast for delivery to Asia or Australia. Pacific Ruby was booked to load at the end of January, and Wang Chi was fixed to load on Feb. 1. These ships are likely to sail to Singapore or China or Australia.

“Those two vessels were booked earlier this week,” a source said. “A few ships were provisionally booked on Thursday for the same voyage, but all those fixtures failed.”

Good Resources

It goes without saying that the inventory reports from the EIA are must reads every week for me. There are several other resources that I utilize on a daily basis to keep up with what’s going on in the world of energy. One is The Oil Drum, where the important headlines are usually captured in the daily Drumbeat. The daily subscriber reports from OPIS are a very valuable source of information on the energy markets, and they often contain information that I never seen in any publicly available sources. The reports also have daily pricing updates for gasoline (and gasoline blending components), distillates, and ethanol. (I see that spot ethanol prices are headed back up, and are once again higher than spot premium gasoline on the West Coast).

Platts is another good resource that covers a lot of areas that OPIS doesn’t. Platts also has a blog, The Barrel, that usually covers supply/demand issues (and links back to both TOD and my blog). Finally, Rigzone usually keeps me updated on the latest exploration and discovery news. One source that I have available with my company is a daily news summary from various categories such as Energy, Oil, Alternative Energy, etc. Sometimes I spot a story there that I find particularly interesting, and I link to the original source and write about it. Anyway, just wanted to share some of the resources that I find especially useful.

I Want to be a Consumer Advocate

The job of “consumer advocate” has got to be one of the easiest jobs in the world. You don’t need any credentials, you don’t need to fact check, and you get to write your own press releases in which you liberally quote yourself as an authority. And the most important rule of all seems to be - Send out frequent, hysterical press releases so people will think you are relevant.

This latest release from the FTCR (which spawned Oil Watchdog) has got to be one of the most ill-informed pieces of tripe I have ever read. Does the press who decides to run this junk bother to critically analyze anything? Well, if they won’t, I will:

Foundation for Taxpayer and Consumer Rights: ConocoPhillips Rides Oil Prices to Record Earnings As Consumers Face Soaring Costs at the Gas Pump

SANTA MONICA, Calif., Jan. 23 /PRNewswire-USNewswire/ — ConocoPhillips reported a 37 percent increase in earnings, the best fourth quarter profits in its history, by benefiting from record crude oil prices at the expense of hard-pressed U.S. consumers facing soaring gasoline prices at the pump, consumer advocates said today.

The first of the Big Oil companies to report 2007 results, Conoco said income in the last quarter was $4.4 billion, or $2.71 per share, an increase from $3.2 billion or $1.91 a share in the comparable 2006 quarter.

That bit is accurate enough. The profits did come at the expense of consumers, as do all profits for all corporations. And oil prices are surely higher, and oil companies that produce oil benefit from that higher price. I don’t follow the fates of gold mining companies, but given record gold prices I suspect they had a pretty good year as well. That is the way it goes when one is producing a commodity.

Of course I should probably also point out that oil is a worldwide commodity, and the price is set on the world market. Furthermore, “Big Oil” pales in comparison to the national oil companies like Saudi Aramco. Those are the guys with pricing power. As big as ExxonMobil is, they control only 3% of the world’s oil.

These oil giants post obscene profits, regularly setting new records and then stick it to the consumer at the gas pump, said John M. Simpson, consumer advocate with the Foundation for Taxpayer and Consumer Rights. Then instead of using their gains to invest in research or to reduce outrageous prices, they simply buy back their stock.

Since Simpson authored this piece, one wonders whether he was interviewing himself. Maybe it’s just me, but I find it highly amusing when people speak of themselves in the 3rd person. But this is where he starts opining on matters in which he is out of his depth. I would first ask Mr. Simpson to define terms. What is an obscene profit? How much profit is deemed reasonable when a company’s capital budget is $15.3 billion for the year? And speaking of capital budgets, didn’t you just say that they don’t invest their gains, but instead simply buy back stock? It seems in your rush to react to the profit announcement, you either failed to check facts, or knowingly put out false information. The stock buybacks are a fraction of the annual capital budget. Is that responsible journalism, Mr. Simpson.

“A responsible company would accept equitable profits and reduce prices to consumers or perhaps take the long view and make substantial investments in research and development,” said Simpson.

And a responsible journalist would bother to correctly report facts instead of rushing out to slander corporations on behalf of their trial-lawyer backers.

One Confused Economist

This story baffles me.

High fuel prices are puzzling

The middlemen who buy and sell fuel on the wholesale market have seen Los Angeles gasoline prices plunge more than 50 cents in the last two weeks.

Too bad drivers aren’t seeing the full benefit at the pump.

On Friday, the most recent trading day, the wholesale gasoline price in Los Angeles hovered around $2.17 a gallon — a figure roughly equal to a retail price of $2.77 a gallon after taxes and other costs were included.

OK, let’s set the scene. The wholesale market would be where refiners sell their fuel to jobbers and such. The jobbers then turn around and sell the fuel to gas stations. Now here is where the story gets bizarre:

But on Monday, service stations in the city were selling self-serve regular for an average of $3.221 a gallon. Consumer advocates and others smell a rip-off. As proof, they note that a few California refiners have reacted by cutting production, shutting down early for maintenance and lining up exports in an effort to shore up wholesale prices.

“The California economy has been penalized by high gas prices for months, and now, when the opportunity comes for a brief window of significantly lower prices, the workings of the market are being frustrated,” energy economist Philip K. Verleger Jr. said. “The people who own refineries are doing everything they can to prevent [the declining wholesale price] from trickling down to the consumer.”

Now hold on a second. Didn’t the story just say that wholesale prices had plunged? Refiners don’t own the gas stations (less than 5% of the retail gas stations are owned by major oil companies). I am surprised that someone like Philip K. Verleger would make such an uninformed statement. Refinery margins have been horrible for several months now. Why on earth wouldn’t they shut down early for maintenance, or find export outlets?

For crying out loud, Verleger is supposed to be an economist. The fact is, refiners have not been successful at keeping wholesale prices up - the wholesale price has plunged. So tell me, how exactly are the refiners culpable here for the high retail prices, when they are selling their product at a low wholesale price? Maybe Verleger was misquoted. That’s the only explanation I can come up with for what seems like a serious misunderstanding of who benefits when wholesale prices are low and retail prices are high.

Now That’s an About Face!

It’s been almost two years now that 60 Minutes did a special on ethanol, in which Dan Rather was just bubbly with enthusiasm. He had as a guest Berkeley Professor Dan Kammen, who heads up Berkeley’s Renewable and Appropriate Energy Laboratory (RAEL). (I frequently see visitors from RAEL showing up on my site meter). Anyway, Professor Kammen talked up the virtues of ethanol with Dan Rather, and also spoke very positively on ethanol in this article:

Ethanol can replace gasoline with significant energy savings, comparable impact on greenhouse gases

Boy, that takes me back. You have to love the appeal to authority:

Knowledgeable venture capitalists already are putting money behind ethanol and cellulosic technology, as witnessed by recent investments by Microsoft Corp. chairman Bill Gates and strong interest by Sun Microsystems co-founder Vinod Khosla.

How did those investments pan out, fellows? Oh, yeah. But I digress. A couple of Professor Kammen’s Berkeley colleagues, Alex Farrell and Michael O’Hare, also featured in the above report. Well, it seems that they have all gotten religion, as evidenced by a story in today’s WSJ Energy Roundup:

More Bad News for Ethanol

Academics tasked with plotting California’s transition to a low-carbon fuel have delivered more bad news: Ethanol appears to come with a higher greenhouse-gas price tag than previously thought — higher, indeed, than fossil fuel.

The University of California at Berkeley’s Transportation Sustainability Research Center told the California Air Resources Board that ethanol could be twice as bad as gasoline, from a carbon-emissions point of view. How? Basically by turning land now covered with trees, grass, and other natural “carbon sinks” into farmland for corn and other crops used for ethanol.

“Simply said, ethanol production today using U.S. corn contributes to the conversion of grasslands and rainforest to agriculture, causing very large GHG emissions,” wrote Berkeley profs Alex Farrell and Michael O’Hare in a January 12 memo to California regulators. “Even if only a small fraction of the emissions calculated in this crude way [through land use change] are added to estimates of direct emissions for corn ethanol, total emissions for corn ethanol are higher than for fossil fuels.”

Professor Kammen is listed as a co-author on the report, which appears to be an enormous position shift for him. Maybe his Berkeley colleague Tad Patzek finally showed him the light. Or maybe those many visits they made here slowly won them over.

Of course you had to know that some would immediately reach for the ad hom:

I would like to know who are backers of The University of California at Berkeley’s Transportation Sustainability Research Center? Exxon, Shell and Chevron?

Ah, yes. Good times. On the scientific front, this battle is being won. If we could only start convincing those darn lawmakers.

Now That’s an About Face!

It’s been almost two years now that 60 Minutes did a special on ethanol, in which Dan Rather was just bubbly with enthusiasm. He had as a guest Berkeley Professor Dan Kammen, who heads up Berkeley’s Renewable and Appropriate Energy Laboratory (RAEL). (I frequently see visitors from RAEL showing up on my site meter). Anyway, Professor Kammen talked up the virtues of ethanol with Dan Rather, and also spoke very positively on ethanol in this article:

Ethanol can replace gasoline with significant energy savings, comparable impact on greenhouse gases

Boy, that takes me back. You have to love the appeal to authority:

Knowledgeable venture capitalists already are putting money behind ethanol and cellulosic technology, as witnessed by recent investments by Microsoft Corp. chairman Bill Gates and strong interest by Sun Microsystems co-founder Vinod Khosla.

How did those investments pan out, fellows? Oh, yeah. But I digress. A couple of Professor Kammen’s Berkeley colleagues, Alex Farrell and Michael O’Hare, also featured in the above report. Well, it seems that they have all gotten religion, as evidenced by a story in today’s WSJ Energy Roundup:

More Bad News for Ethanol

Academics tasked with plotting California’s transition to a low-carbon fuel have delivered more bad news: Ethanol appears to come with a higher greenhouse-gas price tag than previously thought — higher, indeed, than fossil fuel.

The University of California at Berkeley’s Transportation Sustainability Research Center told the California Air Resources Board that ethanol could be twice as bad as gasoline, from a carbon-emissions point of view. How? Basically by turning land now covered with trees, grass, and other natural “carbon sinks” into farmland for corn and other crops used for ethanol.

“Simply said, ethanol production today using U.S. corn contributes to the conversion of grasslands and rainforest to agriculture, causing very large GHG emissions,” wrote Berkeley profs Alex Farrell and Michael O’Hare in a January 12 memo to California regulators. “Even if only a small fraction of the emissions calculated in this crude way [through land use change] are added to estimates of direct emissions for corn ethanol, total emissions for corn ethanol are higher than for fossil fuels.”

Professor Kammen is listed as a co-author on the report, which appears to be an enormous position shift for him. Maybe his Berkeley colleague Tad Patzek finally showed him the light. Or maybe those many visits they made here slowly won them over.

Of course you had to know that some would immediately reach for the ad hom:

I would like to know who are backers of The University of California at Berkeley’s Transportation Sustainability Research Center? Exxon, Shell and Chevron?

Ah, yes. Good times. On the scientific front, this battle is being won. If we could only start convincing those darn lawmakers.