Renewable Energy Highlights and Commentary

In Part I, I presented the notes on renewable energy that I took as I read through the 2008 International Energy Agency (IEA) World Energy Outlook. Here in Part II, I organize those notes, and then provide some general comments and conclusions. I am now offline for a few days. Happy holidays to those who celebrate Thanksgiving.

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As I read through the 2008 International Energy Agency (IEA) World Energy Outlook, I had the distinct impression that I was reading contributions from people with completely opposite points of view. The pessimist warned that we are facing a supply crunch and much higher prices. The optimist in the report said that oil production won’t peak before 2030.

This trend held in the section on renewable energy. The optimist noted that renewable energy is expected to ramp “expand rapidly.” The pessimist noted that biofuels are predicted to only supply 5% of our road transport fuel in 2030. And so the report goes, part rampant optimism and part rampant pessimism.

I guess the good news then is that there is something in there that will appeal to everyone, regardless of your outlook. The bad news? The claims that are directly opposed to your views will have you questioning the credibility of the report. And if you are like me – and note that between last year’s report and this year’s report they dropped their 2030 oil demand forecast by 10 million bpd – you are left wondering whether there is any credibility at all in forecasts that far out.

But for what’s worth, here’s what the IEA had to say about renewable energy.

Report Highlights

World energy demand is forecast to grow from 11,730 Mtoe (million metric tons of oil equivalents) in 2006 to 17,010 Mtoe in 2030. Fossil fuels, with oil as the primary source, will account for 80% of energy used in 2030.

China and India will be responsible for over half of the increased energy demand between now and 2030. Global demand for oil (excluding biofuels) is forecast to rise from 85 million bpd in 2007 to 106 million bpd in 2030. This forecast was revised downward by 10 million bpd since last year’s forecast.

World demand for electricity forecast to rise from 15,665 TWh in 2006 to 28,141 TWh in 2030. Renewable energy will displace gas to become the second largest producer of electrical energy by 2015, but will still lag far behind coal. For OECD countries, the increase in renewable electricity is greater than the increase in electricity from fossil fuels and nuclear. The share of nuclear power in the world energy mix falls from 6% in 2008 to 5% in 2030.

Electricity generation from PV and CSP in 2030 is forecast to be 245 TWh and 107 TWh, respectively. Solar PV will continue to have the highest investment cost of all commercially deployed renewable energy sources.

Geothermal and wave technologies are forecast to produce 180 TWh and 14 TWh of electricity in 2030. Over 860 TWh of electricity from biomass is forecast to be produced in 2030. Present conversion of biomass to electricity is at 20% efficiency.

Global output of wind power is forecast to grow from 130 TWh in 2006 to more than 660 TWh in 2015 to 1,490 TWh in 2030. It will become the 2nd largest source of renewable electricity (after hydropower) by 2010. Potential for hydropower in non-OECD countries is still large. Most good sites in OECD countries have been utilized.

Energy storage is rarely the cheapest way of dealing with variability of wind and solar power, but several next generation storage technologies are under development. These include ultracapacitors, superconducting magnetic systems, and vanadium redox batteries. Electrolysis to produce hydrogen, later used in fuel cells on demand is an option, but the overall efficiency is only 40%.

Carbon dioxide emissions from coal combustion are forecast to rise from 11.7 billion metric tons in 2006 to 18.6 billion metric tons in 2030. The ability of carbon sequestration to limit carbon dioxide emissions by 2030 is limited.

The reference scenario presumes that by 2030 the U.S. will only meet 40% of the biofuel mandate set in 2007. In Brazil, biofuels are projected to account for 28% of road-transport fuel demand by 2030. The present amount supplied is equivalent to 13% of road-transport fuel demand. Demand for biodiesel is expected to grow faster than demand for ethanol.

Biofuels in 2006 provided the equivalent of 0.6 million bpd, representing around 1.5% of global road transport fuel demand. The United States is the largest user of biofuels, and most of the recent growth has been in the U.S.

The share of biofuels in road transport fuels is forecast to grow from 1.5% in 2006 to 5% (3.2 million bpd) in 2030. Second generation biofuels based on lignocellulosic biomass, converted via enzyme hydrolysis or biomass gasification (BTL) are expected to become commercially viable. However, the contribution will be minor, and not until after 2020. Capital costs for cellulosic ethanol are “significantly more” than sugarcane or grain-based facilities. As a result, full commercialization hinges on “major cost reductions.”

The United States and Brazil both export soybean biodiesel to the EU. Some countries are beginning to scale back their biofuels policies due to concerns about environmental sustainability. Shortages of water availability will be a potential constraint for further expansion of biofuels.

Most biomass will still come from agricultural and forestry residues in 2030, but a growing portion will come from biomass farmed for biofuels. A growing share of biomass is also projected to fuel combined heat and power (CHP) plants.

There is considerable room for growth of solar water heating (water heating consumes 20% of all residential energy consumption). China currently has 60% of the world’s installed solar water heating capacity. Solar water and space heating projected to grow from 7.6 Mtoe in 2006 to 45 Mtoe in 2030.

Hybrid vehicles are commercially viable today; electric vehicles have yet to gain traction. Electric vehicle technology is advancing rapidly, but further improvements in storage technology are needed for efficiency and cost improvements. Long term, electric hybrids, fully electric vehicles, and fuel cell vehicles have the most potential for minimizing the need for oil-based fuels. In the very long term – projecting out to 2050 – fuel cell vehicles are forecast to make up 33% to 50% of new vehicle sales in the OECD.

Cumulative investment in renewable energy between 2007 and 2030 is projected to be $5.5 trillion, with 60% of that for electricity generation.

Commentary

The report reiterates the points I have argued on numerous occasions: Biofuels will not scale up to produce more than a small fraction of our fuel demand, and even then with potentially serious consequences. While the report spreads the blame for higher food prices on a combination of competition with biofuels, higher energy prices, poor harvests, and various agricultural policies, it correctly identifies water as a (highly underrated) issue in the future scaling of biofuels. On the other hand, the report identifies Latin America and Africa as regions with the potential for boosting biomass production by modernizing farming techniques.

I think the report correctly identifies renewable electricity and renewable heating (especially solar water heating) as areas poised for growth. However, it also predicts that carbon dioxide emissions will continue to rise. This was a controversial issue I tackled earlier in the year, when I predicted “we won’t collectively do anything that will reduce worldwide greenhouse gas emissions.”

The following figure was very interesting to me:

This figure suggests that by 2030, the cost for solar PV and CSP will still be higher than all other renewable technologies are today. And not just a little higher; solar PV is predicted to be twice as expensive in 2030 as hydro and onshore wind are today. So much for Moore’s Law applying to solar PV.

However the nagging issue for me is the credibility of the predictions. How much stock can I put into the renewable energy predictions from an agency that thinks oil production won’t peak until 2030, and that demand will exceed 100 million bpd (contrary to the opinions of two Big Oil executives)?

Conclusions

The renewable energy portion was a tale of two technologies: Renewable electricity and renewable biofuels. Renewable electricity is forecast to grow rapidly, and make up an increasing portion of electricity supplies. The share of nuclear power falls, but coal usage is projected to rise 60% by 2030 (with 90% of that increase in non-OECD countries). The expected increase in coal usage helps explain why greenhouse gas emissions are forecast to continue rising.

Renewable biofuels, by contrast, are forecast to still make a very small contribution to overall road transport fuel by 2030. Cellulosic ethanol will be slow to be commercialized, and the contribution to fuel supplies by 2030 is small. Concerns about negative externalities will grow, and the impact of biofuel production on water supplies will be hotly debated.

Renewable Energy Highlights and Commentary

In Part I, I presented the notes on renewable energy that I took as I read through the 2008 International Energy Agency (IEA) World Energy Outlook. Here in Part II, I organize those notes, and then provide some general comments and conclusions. I am now offline for a few days. Happy holidays to those who celebrate Thanksgiving.

————————-

As I read through the 2008 International Energy Agency (IEA) World Energy Outlook, I had the distinct impression that I was reading contributions from people with completely opposite points of view. The pessimist warned that we are facing a supply crunch and much higher prices. The optimist in the report said that oil production won’t peak before 2030.

This trend held in the section on renewable energy. The optimist noted that renewable energy is expected to ramp “expand rapidly.” The pessimist noted that biofuels are predicted to only supply 5% of our road transport fuel in 2030. And so the report goes, part rampant optimism and part rampant pessimism.

I guess the good news then is that there is something in there that will appeal to everyone, regardless of your outlook. The bad news? The claims that are directly opposed to your views will have you questioning the credibility of the report. And if you are like me – and note that between last year’s report and this year’s report they dropped their 2030 oil demand forecast by 10 million bpd – you are left wondering whether there is any credibility at all in forecasts that far out.

But for what’s worth, here’s what the IEA had to say about renewable energy.

Report Highlights

World energy demand is forecast to grow from 11,730 Mtoe (million metric tons of oil equivalents) in 2006 to 17,010 Mtoe in 2030. Fossil fuels, with oil as the primary source, will account for 80% of energy used in 2030.

China and India will be responsible for over half of the increased energy demand between now and 2030. Global demand for oil (excluding biofuels) is forecast to rise from 85 million bpd in 2007 to 106 million bpd in 2030. This forecast was revised downward by 10 million bpd since last year’s forecast.

World demand for electricity forecast to rise from 15,665 TWh in 2006 to 28,141 TWh in 2030. Renewable energy will displace gas to become the second largest producer of electrical energy by 2015, but will still lag far behind coal. For OECD countries, the increase in renewable electricity is greater than the increase in electricity from fossil fuels and nuclear. The share of nuclear power in the world energy mix falls from 6% in 2008 to 5% in 2030.

Electricity generation from PV and CSP in 2030 is forecast to be 245 TWh and 107 TWh, respectively. Solar PV will continue to have the highest investment cost of all commercially deployed renewable energy sources.

Geothermal and wave technologies are forecast to produce 180 TWh and 14 TWh of electricity in 2030. Over 860 TWh of electricity from biomass is forecast to be produced in 2030. Present conversion of biomass to electricity is at 20% efficiency.

Global output of wind power is forecast to grow from 130 TWh in 2006 to more than 660 TWh in 2015 to 1,490 TWh in 2030. It will become the 2nd largest source of renewable electricity (after hydropower) by 2010. Potential for hydropower in non-OECD countries is still large. Most good sites in OECD countries have been utilized.

Energy storage is rarely the cheapest way of dealing with variability of wind and solar power, but several next generation storage technologies are under development. These include ultracapacitors, superconducting magnetic systems, and vanadium redox batteries. Electrolysis to produce hydrogen, later used in fuel cells on demand is an option, but the overall efficiency is only 40%.

Carbon dioxide emissions from coal combustion are forecast to rise from 11.7 billion metric tons in 2006 to 18.6 billion metric tons in 2030. The ability of carbon sequestration to limit carbon dioxide emissions by 2030 is limited.

The reference scenario presumes that by 2030 the U.S. will only meet 40% of the biofuel mandate set in 2007. In Brazil, biofuels are projected to account for 28% of road-transport fuel demand by 2030. The present amount supplied is equivalent to 13% of road-transport fuel demand. Demand for biodiesel is expected to grow faster than demand for ethanol.

Biofuels in 2006 provided the equivalent of 0.6 million bpd, representing around 1.5% of global road transport fuel demand. The United States is the largest user of biofuels, and most of the recent growth has been in the U.S.

The share of biofuels in road transport fuels is forecast to grow from 1.5% in 2006 to 5% (3.2 million bpd) in 2030. Second generation biofuels based on lignocellulosic biomass, converted via enzyme hydrolysis or biomass gasification (BTL) are expected to become commercially viable. However, the contribution will be minor, and not until after 2020. Capital costs for cellulosic ethanol are “significantly more” than sugarcane or grain-based facilities. As a result, full commercialization hinges on “major cost reductions.”

The United States and Brazil both export soybean biodiesel to the EU. Some countries are beginning to scale back their biofuels policies due to concerns about environmental sustainability. Shortages of water availability will be a potential constraint for further expansion of biofuels.

Most biomass will still come from agricultural and forestry residues in 2030, but a growing portion will come from biomass farmed for biofuels. A growing share of biomass is also projected to fuel combined heat and power (CHP) plants.

There is considerable room for growth of solar water heating (water heating consumes 20% of all residential energy consumption). China currently has 60% of the world’s installed solar water heating capacity. Solar water and space heating projected to grow from 7.6 Mtoe in 2006 to 45 Mtoe in 2030.

Hybrid vehicles are commercially viable today; electric vehicles have yet to gain traction. Electric vehicle technology is advancing rapidly, but further improvements in storage technology are needed for efficiency and cost improvements. Long term, electric hybrids, fully electric vehicles, and fuel cell vehicles have the most potential for minimizing the need for oil-based fuels. In the very long term – projecting out to 2050 – fuel cell vehicles are forecast to make up 33% to 50% of new vehicle sales in the OECD.

Cumulative investment in renewable energy between 2007 and 2030 is projected to be $5.5 trillion, with 60% of that for electricity generation.

Commentary

The report reiterates the points I have argued on numerous occasions: Biofuels will not scale up to produce more than a small fraction of our fuel demand, and even then with potentially serious consequences. While the report spreads the blame for higher food prices on a combination of competition with biofuels, higher energy prices, poor harvests, and various agricultural policies, it correctly identifies water as a (highly underrated) issue in the future scaling of biofuels. On the other hand, the report identifies Latin America and Africa as regions with the potential for boosting biomass production by modernizing farming techniques.

I think the report correctly identifies renewable electricity and renewable heating (especially solar water heating) as areas poised for growth. However, it also predicts that carbon dioxide emissions will continue to rise. This was a controversial issue I tackled earlier in the year, when I predicted “we won’t collectively do anything that will reduce worldwide greenhouse gas emissions.”

The following figure was very interesting to me:

This figure suggests that by 2030, the cost for solar PV and CSP will still be higher than all other renewable technologies are today. And not just a little higher; solar PV is predicted to be twice as expensive in 2030 as hydro and onshore wind are today. So much for Moore’s Law applying to solar PV.

However the nagging issue for me is the credibility of the predictions. How much stock can I put into the renewable energy predictions from an agency that thinks oil production won’t peak until 2030, and that demand will exceed 100 million bpd (contrary to the opinions of two Big Oil executives)?

Conclusions

The renewable energy portion was a tale of two technologies: Renewable electricity and renewable biofuels. Renewable electricity is forecast to grow rapidly, and make up an increasing portion of electricity supplies. The share of nuclear power falls, but coal usage is projected to rise 60% by 2030 (with 90% of that increase in non-OECD countries). The expected increase in coal usage helps explain why greenhouse gas emissions are forecast to continue rising.

Renewable biofuels, by contrast, are forecast to still make a very small contribution to overall road transport fuel by 2030. Cellulosic ethanol will be slow to be commercialized, and the contribution to fuel supplies by 2030 is small. Concerns about negative externalities will grow, and the impact of biofuel production on water supplies will be hotly debated.

The 2008 IEA WEO – Renewable Energy Highlights

I am working on an essay on the renewable energy portion of the recently released 2008 IEA World Energy Outlook. In Part I, I merely present some of the highlights of the report (actually the notes I jotted down as I read it). Part II will involve more commentary and analysis. Note that these are the IEA projections, and do not necessarily reflect my opinion.

Report Highlights

World energy demand is projected to grow from 11,730 Mtoe (million metric tons of oil equivalents) in 2006 to 17,010 Mtoe in 2030.

Fossil fuels, with oil as the primary source, will account for 80% of energy used in 2030.

China and India will be responsible for over half of the increased energy demand between now and 2030.

Global demand for oil (excluding biofuels) is forecast to rise from 85 million bpd in 2007 to 106 million bpd in 2030. This forecast was revised downward by 10 million bpd since last year’s forecast.

Solar PV has the highest investment cost of all commercially deployed renewable energy sources.

The share of nuclear power in the world energy mix falls from 6% in 2008 to 5% in 2030.

Renewable energy will displace natural gas to become the second largest producer of electrical energy by 2015, but will still lag far behind coal

Carbon dioxide emissions from coal combustion are forecast to rise from 11.7 billion metric tons in 2006 to 18.6 billion metric tons in 2030.

The ability of carbon sequestration to limit carbon dioxide emissions by 2030 is limited.

Biomass, geothermal, and solar thermal are forecast to grow from 6% of total global heating demand in 2006 to 7% in 2030.

Global output of wind power is forecast to grow eleven-fold by 2030, and become the 2nd largest source of renewable electricity (after hydropower) by 2010.

The share of biofuels in road transport fuels is forecast to grow from 1.5% in 2006 to 5% in 2030. Second generation biofuels (e.g., cellulosic ethanol) will make a very small contribution by 2030.

Shortages of water availability are a potential constraint for further expansion of biofuels.

Most biomass will still come from agriculture and forestry residues in 2030, but a growing portion will come from biomass farmed for biofuels.

A growing share of biomass is projected to fuel combined heat and power (CHP) plants.

Latin America and Africa are regions that can boost agricultural production by modernizing farming techniques.

Renewable-based electricity is forecast to grow dramatically. Most of the increase is expected to come from hydro and onshore wind power.

For OECD countries, the increase in renewable electricity is greater than the increase in electricity from fossil fuels and nuclear.

Costs for renewable power expected to continue to fall.

Potential for hydropower in non-OECD countries is still large. Most good sites in OECD countries have been utilized.

Global wind power expected to increase from 130 TWh in 2006 to more than 660 TWh in 2015 to 1,490 TWh in 2030.

Energy storage is rarely the cheapest way of dealing with variability, but several next generation storage technologies are under development. These include ultracapacitors, superconducting magnetic systems, and vanadium redox batteries.

Electrolysis to produce hydrogen, later used in fuel cells on demand is an option, but the overall efficiency is only 40%.

World demand for electricity forecast to rise from 15,665 TWh in 2006 to 28,141 TWh in 2030.

Electricity generation from PV and CSP in 2030 is forecast to be 245 TWh and 107 TWh, respectively.

Geothermal and wave technologies are forecast to produce 180 TWh and 14 TWh in 2030.

Over 860 TWh of electricity from biomass is forecast to be produced in 2030. Present conversion of biomass to electricity is at 20% conversion efficiency.

Biofuels in 2006 provided the equivalent of 0.6 million bpd, representing around 1.5% of global road transport fuel demand. The United States is the largest user of biofuels, and most of the recent growth has been in the U.S.

In 2030, total biofuel supply is expected to be 3.2 million bpd, amounting to only 5% of worldwide demand.

Reference scenario presumes that by 2030 the U.S. will only meet 40% of the biofuel mandate set in 2007.

In Brazil, biofuels are projected to account for 28% of road-transport fuel demand by 2030. The present amount supplied is equivalent to 13% of road-transport fuel demand.

Demand for biodiesel is expected to grow faster than demand for ethanol.

Second generation biofuels based on lignocellulosic biomass, converted via enzyme hydrolysis or biomass gasification (BTL) are expected to become commercially viable. However, the contribution will be minor, and not until after 2020.

Some countries are beginning to scale back their biofuels policies due to concerns about environmental sustainability.

Food prices are being driven by a combination of competition with biofuels, higher energy prices, poor harvests, and various agricultural policies.

The United States and Brazil both export soybean biodiesel to the EU.

Capital costs for cellulosic ethanol are “significantly more” than sugarcane or grain-based facilities. As a result, full commercialization hinges on “major cost reductions.”

There is considerable room for growth of solar water heating (water heating consumes 20% of all residential energy consumption).

China currently has 60% of the world’s installed solar water heating capacity.

Solar water and space heating projected to grow from 7.6 Mtoe in 2006 to 45 Mtoe in 2030.

Cumulative investment in renewable energy between 2007 and 2030 is projected to be $5.5 trillion, with 60% of that for electricity generation.

Mega-Bear versus Super-Spike

Update: Never say never. Today, the prediction I made in 2005 that WTI would never again fall below $50 has fallen. Front month WTI as of this writing has dipped to $49.75. But it will never fall below $40.

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In 2005, with oil trading in the $40’s and $50’s, Goldman Sachs raised some eyebrows when they predicted that we could soon be looking at a ’super-spike’ and oil prices going as high as $105. As this scenario played out this year, the analyst who made that call – Arjun Murti – raised the ante and said that we could soon see oil at $200. The New York Times, in an article in which they dubbed him an ‘oracle of oil’, reported:

An Oracle of Oil Predicts $200-a-Barrel Crude

Arjun N. Murti remembers the pain of the oil shocks of the 1970s. But he is bracing for something far worse now: He foresees a “super spike” — a price surge that will soon drive crude oil to $200 a barrel.

Mr. Murti, 39, argues that the world’s seemingly unquenchable thirst for oil means prices will keep rising from here and stay above $100 into 2011. Others disagree, arguing that prices could abruptly tumble if speculators in the market rush for the exits.

There are some things to be said about predictions. If a person makes enough predictions, they are going to miss some – no matter how well they know their subject matter. On the other hand, when many people are making predictions, some will inevitably get it right for the wrong reasons.

Today I spotted a story in CNN that contrasted Mr. Murti’s prediction with that of Paul Sankey at Deutsche Bank:

Deutsche Bank ‘Mega-Bear’ Stomps Goldman’s Oil ‘Super-Spike’

I have a lot of respect for Paul Sankey. In my opinion he is very knowledgeable about the fundamentals of the oil markets. I commented on his 2007 testimony to the Senate Committee on Energy and Natural Resources on oil prices previously here. So where does Sankey think things are headed?

NEW YORK -(Dow Jones)- Oil prices could fall as low as $40 a barrel next spring as an overhang of new, efficient refineries come on line, an analyst at Deutsche Bank said Wednesday.

Calling it the “mega-bear” case for oil, analyst Paul Sankey said the combination of weak demand for gasoline and other products, coupled with the start-up of 2 million barrels a day of processing capacity at a new generation of refineries in India and China and expansion projects in the U.S. will combine to depress oil prices.

Sankey’s stance, while pessimistic, still anticipates slightly higher oil prices than the bank’s commodities analysts, who on Friday said that oil futures prices could fall further to $30 a barrel under their worst-case scenario.

While I don’t discount that Sankey could be right, I don’t think his reasoning in this case is sound. Added refining capacity does nothing to help add new crude supplies. New refinery capacity would primarily put downward pressure on gasoline and diesel prices. Of course if the added capacity is designed to primarily handle cheaper crudes that are heavier and more sour, then it would lessen demand for light, sweet crude and Sankey’s scenario could come to pass.

In some cases, those who get it right can be spectacularly wrong on their reasoning and may not really understand much about the fundamentals. I am not suggesting that Mr. Sankey or Mr. Murti fall into that category, but I have run across speculators who cited their conviction that Saudi production was on a steep decline as the reason they were betting on higher prices. For a while, it was difficult to argue with these people, as they could simply point to the oil price as vindication. In the short run, smart people can get it wrong and uninformed people can get it right. But those anomalies will tend to correct themselves in the long run.

Personally, I predicted in May of 2005 that we would never see oil prices drop below $50 again. While I have been correct for the past 3.5 years, when I checked prices last night after touching down from Europe I saw that I am coming increasingly close to being wrong on that account. Oil is now trading at $52 and change, so my prediction could be falsified any day now.

For me, the important thing is to understand why that prediction is on the verge of being falsified. Have I been one of the lucky who was right, but for the wrong reason? What I foresaw was continued tightening demand that kept upward pressure on oil prices. What actually happened played out like that at first, but then we saw a huge spike that ultimately crushed demand. I think without this summer’s huge spike that today we would be trading in the $70’s or $80’s as demand continued to creep ahead. So I think that even though my prediction may be falsified, the reasoning behind it is still sound.

In the long run, I still see the same thing. I believe we will revisit $100 oil within a couple of years (in my ’steady growth’ model, I foresaw us first cracking $100 in 2009). While there will be great volatility as we are seeing now, I don’t believe we will return to years of oil prices at this level. I think that we are bottoming out, and 20 years from now we will see a whip-saw on the graph for 2008, but we will continue the same upward trend that has been in place since 2002.

Saudi Oil Tanker Hijacked

I don’t know if this is a first, but it’s the first time I have heard of an oil tanker being hijacked:

Pirates attack Saudi ’super tanker’

(CNN) — Pirates in the Arabian Sea have hijacked a Saudi-owned oil tanker with 25 crew aboard, the U.S. Navy and the British Foreign Office confirmed on Monday.

Eleven vessels are currently being held by pirates hoping to secure ransoms for their release, according to The Associated Press. They include the Ukrainian-owned MV Faina, which was hijacked in September along with 200 crew and a cargo of weapons and T-72 tanks.

That is the picture that accompanied the CNN story. I have a hard time understanding this. How is it that a bunch of guys in speedboats can hijack so many ships?

Why is it that these ships don’t have a few mounted .50 caliber machine guns on board and some guys trained to use them? It looks to me like the boat above would be at a severe disadvantage in a situation like that. Sink a few, and the problem should diminish.

But it must not be as simple as it seems to me. What are the laws on the sea? Could you open fire on pirates and sink their boat? Or are there laws in place that limit this sort of response? There must be some sort of explanation for why this problem persists, but I don’t know what it is.

It will be interesting to see how the Saudis play this one.

Saudi Oil Tanker Hijacked

I don’t know if this is a first, but it’s the first time I have heard of an oil tanker being hijacked:

Pirates attack Saudi ’super tanker’

(CNN) — Pirates in the Arabian Sea have hijacked a Saudi-owned oil tanker with 25 crew aboard, the U.S. Navy and the British Foreign Office confirmed on Monday.

Eleven vessels are currently being held by pirates hoping to secure ransoms for their release, according to The Associated Press. They include the Ukrainian-owned MV Faina, which was hijacked in September along with 200 crew and a cargo of weapons and T-72 tanks.

That is the picture that accompanied the CNN story. I have a hard time understanding this. How is it that a bunch of guys in speedboats can hijack so many ships?

Why is it that these ships don’t have a few mounted .50 caliber machine guns on board and some guys trained to use them? It looks to me like the boat above would be at a severe disadvantage in a situation like that. Sink a few, and the problem should diminish.

But it must not be as simple as it seems to me. What are the laws on the sea? Could you open fire on pirates and sink their boat? Or are there laws in place that limit this sort of response? There must be some sort of explanation for why this problem persists, but I don’t know what it is.

It will be interesting to see how the Saudis play this one.

Seeking Reader Input for a Book Project

It should be clear that I enjoy writing. Over the past three years, I have written 665 essays for this blog, a book chapter on renewable diesel in Biofuels, Solar and Wind as Renewable Energy Systems, 130 essays for The Oil Drum, and essays for numerous other web sites. I write for different reasons, but primarily because I enjoy it and I like to share knowledge. I also enjoy the occasional sparring that goes along with the writing. (As someone once said to me, it seems that I like wearing a black hat).

I have been approached semi-seriously on a couple of occasions about writing a book, and on other occasions about giving up the blog to write exclusively for various media outlets. While I have given both options serious thought, I don’t like writing to deadlines. I also don’t like writing to assigned topics. While I may be able to whip out an essay on Miscanthus as an energy source in 20 minutes, if you asked me to write up an essay on Miscanthus it might take me two weeks to do it. The difference is writing something that struck me as interesting or important, or writing something because it is a job.

I now have in front of me a serious proposal from a major publisher. Right now, all I have said is “maybe”, citing the time commitment. After all, the renewable diesel chapter took me a good month’s worth of work to complete. How long would it take me to write an entire book? Would it consume my Saturdays and Sundays for the next 3 years? Would I need to stop writing my blog? Could I perform my current job without having my attention constantly wandering? The fact is, I don’t know the answers to these questions. That’s one reason I haven’t said yes.

The second sticking point for me is the matter of original content. I would only write a book that could add something original, or explain a topic in a different way (potentially reaching a broader audience). Yet is is very hard to find a niche that someone hasn’t already filled. The proposal is pretty broad: “any aspect of environmental science, including (but not limited to) alternative energy sources.” My first thought was to just run down the list of all energy options available to us, presenting the pros and cons. A quick search of Amazon, and I find a book very near what I had in mind: Powering Our Future: An Energy Sourcebook for Sustainable Living. If I look through the contents, this book really covers the energy spectrum. Whether it does it well, I can’t say since I haven’t read it.

This issue almost kept me from ever starting my blog. I thought “there are a million blogs out there, and I will just be one more person writing things that only friends and family read.” Yet I think I finally found my niche. I could see that there were certain topics that either weren’t covered, or were explained in highly technical language. Eventually, I carved out my niche. There are still lots of blogs out there with a lot of overlap. Any story I write has been, or will be covered by others as well. All I can do is inject my own style into the story, and hope that my contribution is original enough to make reading it worthwhile.

So, with that very long-winded introduction (I guess I should ask to be paid by the word), I am seeking reader input. What sort of book on energy or the environment would you read? What topics haven’t been well-covered by previous books? If you have written a book, how did you find the experience?

If I do happen to write a book, certainly the contributions/ideas from readers of this blog will be acknowledged. While I can’t offer money (I hear the money for doing a book in this field is quite modest), if you suggest a specific idea that ends up being a part of a book, your specific contribution would be acknowledged by name. Once I am established, maybe I can sell out and write a steamy romance novel with more sales potential.

Thanks in advance for your suggestions.

Seeking Reader Input for a Book Project

It should be clear that I enjoy writing. Over the past three years, I have written 665 essays for this blog, a book chapter on renewable diesel in Biofuels, Solar and Wind as Renewable Energy Systems, 130 essays for The Oil Drum, and essays for numerous other web sites. I write for different reasons, but primarily because I enjoy it and I like to share knowledge. I also enjoy the occasional sparring that goes along with the writing. (As someone once said to me, it seems that I like wearing a black hat).

I have been approached semi-seriously on a couple of occasions about writing a book, and on other occasions about giving up the blog to write exclusively for various media outlets. While I have given both options serious thought, I don’t like writing to deadlines. I also don’t like writing to assigned topics. While I may be able to whip out an essay on Miscanthus as an energy source in 20 minutes, if you asked me to write up an essay on Miscanthus it might take me two weeks to do it. The difference is writing something that struck me as interesting or important, or writing something because it is a job.

I now have in front of me a serious proposal from a major publisher. Right now, all I have said is “maybe”, citing the time commitment. After all, the renewable diesel chapter took me a good month’s worth of work to complete. How long would it take me to write an entire book? Would it consume my Saturdays and Sundays for the next 3 years? Would I need to stop writing my blog? Could I perform my current job without having my attention constantly wandering? The fact is, I don’t know the answers to these questions. That’s one reason I haven’t said yes.

The second sticking point for me is the matter of original content. I would only write a book that could add something original, or explain a topic in a different way (potentially reaching a broader audience). Yet is is very hard to find a niche that someone hasn’t already filled. The proposal is pretty broad: “any aspect of environmental science, including (but not limited to) alternative energy sources.” My first thought was to just run down the list of all energy options available to us, presenting the pros and cons. A quick search of Amazon, and I find a book very near what I had in mind: Powering Our Future: An Energy Sourcebook for Sustainable Living. If I look through the contents, this book really covers the energy spectrum. Whether it does it well, I can’t say since I haven’t read it.

This issue almost kept me from ever starting my blog. I thought “there are a million blogs out there, and I will just be one more person writing things that only friends and family read.” Yet I think I finally found my niche. I could see that there were certain topics that either weren’t covered, or were explained in highly technical language. Eventually, I carved out my niche. There are still lots of blogs out there with a lot of overlap. Any story I write has been, or will be covered by others as well. All I can do is inject my own style into the story, and hope that my contribution is original enough to make reading it worthwhile.

So, with that very long-winded introduction (I guess I should ask to be paid by the word), I am seeking reader input. What sort of book on energy or the environment would you read? What topics haven’t been well-covered by previous books? If you have written a book, how did you find the experience?

If I do happen to write a book, certainly the contributions/ideas from readers of this blog will be acknowledged. While I can’t offer money (I hear the money for doing a book in this field is quite modest), if you suggest a specific idea that ends up being a part of a book, your specific contribution would be acknowledged by name. Once I am established, maybe I can sell out and write a steamy romance novel with more sales potential.

Thanks in advance for your suggestions.

The Energy Return of Tar Sands

When evaluating energy technologies – whether conventional fossil fuels or alternative energy – one thing that I pay close attention to is the Energy Return on Energy Invested (EROEI). While there are legitimate criticisms of the methodology, it can serve as a useful tool for comparing and contrasting various alternatives.

To give a flavor for why this is, consider an example. Let’s say society as a whole produces 50 million barrels of oil equivalents (could be oil, nuclear, wind, solar, biofuels, or a combination). Consider a couple of energy options. Option A has an EROEI of 10/1 (Energy Output/Energy Input). Option B has an EROEI of 2/1. Option A has to consume 5 million barrels to produce 50, for a net of 45. This net is what would be left for powering transportation, heating homes, and fueling industry. Option B, however, requires an input of 25 million barrels, so the net from the initial 50 is only 25 million.

The implications of this are that as EROEI falls, society must produce a lot more energy just to stand still. Even if total energy produced is constant, a falling EROEI means that there is less net energy left over after the energy input bills are paid. And because the easy energy is produced first, as time goes by this is in fact what happens: EROEI declines, and then it takes more time, effort, and money invested across society to keep things running. (Or, as EROEI declines energy efficiency must increase at such a rate that what is lost from the decline is made up from increased efficiency).

That’s a very basic introduction to EROEI. For a much more detailed look, see Understanding EROEI. In that essay I look at a number of examples, and explain how the EROEI of Brazilian sugarcane ethanol is probably much less than the 8/1 that is generally claimed, but that model still works well because a large portion of the energy inputs are waste biomass left over from sugarcane processing.

Over the past few years, I have seen a lot of speculation about the EROEI of tar sands (also known by the more marketable term, ‘oil sands’). I had seen estimates ranging from as low as 1.5/1 up to 4 or 5/1. My own suspicion has been that the number was higher than that, and I once did a back of the envelope based on some industry energy usage numbers that put the number at about 8/1 (for just the oil production step).

But now I have a much better number, thanks to a recent discussion at The Oil Drum. A reader linked to the following story:

Q&A with Marcel Coutu of Syncrude

This is the best reference I have ever seen for the EROEI of tar sands. Here are the important bits:

Oilsands Review: How much energy do you consume for every barrel of oil you produce?

Marcel Coutu: About 1.5 gigajoules (1.5 MCF of natural gas equivalent) per barrel. That’s higher than 0.8 MCF, the number I mentioned earlier; that refers to purchased energy. The total energy we consume in our operations includes energy we generate as a by-product to our upgrading processes. It is largely electrical energy, in which we are more than self-sufficient.

We produce a lot of waste gas from our processes, and use that to fire gas turbines. We also have a lot of waste heat from our operations, and we raise steam with that heat and put that steam into steam turbines. This makes our operations more efficient.

So, what we have is that some of the energy that is used is produced by the process. This is the accounting that results in an 8/1 energy return for sugarcane ethanol. By sugarcane accounting the EROEI of tar sands is about 5.8 million BTUs (the value of a barrel of oil)/0.8 million BTUs (the approximate energy content of 0.8 MCF that was externally purchased), or 7.25. By true EROEI accounting – which includes the internally consumed energy as an input – the EROEI would be 5.8/1.5 = 3.9.

Of course then the oil has to be refined. For a light, sweet oil such as the output of a syncrude unit, that step is going to be 12/1 or better. Putting the two steps together, I calculate that I need to spend 1.5 million BTUs to produce the oil, and another 5.8/12 = 0.5 million BTUs to refine it to gasoline and diesel. Total process is then 5.8 million BTUs/2 = 2.9/1 for the production and refining processes. Conventional light, sweet oil is around 6/1 for the entire process of oil in the ground to gasoline in the tank.

Let’s look at one more example to understand the implications. Let’s say we want 10 gallons of gasoline equivalent for our car. We need to solve two equations: Net Energy = Energy Output – Energy Input; and EROEI = Energy Output/Energy Input. If we combine equations and solve, we find that for light, sweet oil at a 6/1 EROEI, the total energy that must be produced is 12 gallons of gasoline equivalent. Two gallons of gasoline equivalent were consumed in the process of producing the 12 gallons, netting 10 gallons for the end user.

If we wanted to produce gasoline out of tar sands at a 2.9/1 total ratio, then 15.3 gallons of gasoline equivalent must be produced. 5.3 gallons would be consumed in the process, netting 10 to the driver. What I conclude from that is the tar sands is more than 2.5 times as energy intensive to refine to gasoline than is conventional oil.

While I don’t know what the ‘real’ EROEI is of sugarcane ethanol, it is probably in the vicinity of tar sands. However, as stated the big difference is that the bulk of those energy inputs are waste biomass, which dramatically boosts the sustainability of that option. Sugarcane ethanol – even if it has a lower energy return than tar sands – far exceeds tar sands in the sustainability category. This is one of the weaknesses of EROEI accounting; accounting for energy inputs from diverse sources – some more sustainable than others.

Amyris is Looking Promising

As I have said before, an ideal biofuel would be one that phases out of water, and is therefore much less energy intensive to separate. One of the big energy sinks in ethanol production involves an energy intensive separation of ethanol from water. If ethanol was insoluble it would phase out of solution and could be skimmed off and separated for a fraction of the energy input.

This is the sort of model that companies like LS9 and Virent have adopted. They are using microorganisms to produce longer-chain hydrocarbons that not only are much easier to separate from water, but also have higher energy density. I have commented in the past that this is ‘Holy Grail’ stuff, but also would be technically challenging. But I think companies pursuing this line of research have a real shot at being ultimately successful.

Add Amyris to the list of companies competing for the Holy Grail. They also have a twist to their business plan that should give them an advantage over their competitors. Amyris has been mentioned on this blog a couple of times previously, but not in the same kind of detail as LS9. This post will rectify that by highlighting what they are doing.

First, what are they doing? In their own words:

Amyris technology makes it possible to alter the metabolic pathways of microorganisms such as yeasts, creating living factories that produce molecules with practical applications. While reading, writing, and analyzing the DNA of microbes once took years, Amyris can now reprogram microorganisms and test our ability to produce desired molecules in days to weeks. Our proprietary technology transforms plant-based feedstocks, such as sugarcane, into 50,000 different isoprenoids –molecules used in a wide variety of energy, pharmaceutical, and chemical applications.

So you have heard similar claims before. However, they are quite a bit farther along than many would-be biofuel companies. They just announced the ‘opening’ (I presume that means they aren’t starting up just yet) of their first pilot plant in Emeryville, California:

Amyris Opens Pilot Plant to Produce Renewable Diesel Fuel

California Facility Marks Step in Developing and Commercializing Viable Alternative to Petroleum Fuels

EMERYVILLE, Calif. – November 12, 2008 – Amyris Biotechnologies, Inc. today announced that it has opened its first pilot plant producing No Compromise™ renewable diesel fuel. The pilot plant, which was ompleted in September, is an important milestone for Amyris towards its goal of developing and commercializing its sustainable, hydrocarbon‐based fuel, which it expects to bring to market in 2010.

The plant serves as a technical gateway to commercialization in Brazil and other manufacturing locations. It will demonstrate Amyris’ technology in scaled down process equipment that is representative of full ommercial scale operations; generate essential engineering data for designing Amyris’ full scale plants; and produce product samples for performance testing.

Amyris’ diesel is characterized as a No Compromise™ fuel because it is designed to be a scalable, low‐cost enewable fuel with performance attributes that equal or exceed those of petroleum‐sourced fuels and urrently available biofuels.

Other attributes innclude:

• Superior environmental performance: Preliminary analyses show that Amyris diesel fuel has virtually no sulfur and signifiantly reduced NOx, particulate, carbon monoxide and hydrocarbon exhaust emissions relative to petroleum‐sourced diesel fuel.

• High blending rates: Because Amyris renewable diesel contains many of the properties of petroleum diesel, Amyris can blend the fuel at high levels ‐‐ up to 50 pecent ‐‐ compared with 10‐20 percent for conventional biodiesel and ethanol.

• Compatibility with existing infrastructure: Unlike many commercially available biofuels, Amyris expects to distribute its renewable diesel through the existing fuel distribution and storage infrastructure, thus speeding time to market while minimizing costs.

• Adaptive: Amyris can produce its fuels from a broad range of feedstock including sugar cane and cellulosic biomass. It is starting with Brazilian sugar cane because it provides the most environmentally sound, economical, and scalable source of energy available today.

“This new diesel fuel has all the characteristics to make an important contribution toward solving our global transportation energy and climate crisis,” said John Melo, chief executive officer of Amyris. “The opening of ur pilot plant is a significant business marker for us, taking us one step closer to bringing our diesel fuel to market.”

In parallel with this effort, Amyris will open a larger pilot plant in Campinas, Brazil in the spring of 2009 here it will finalize processes for Brazilian operations; transfer the technology to manufacturing sites in Brazil; and provide ongoing support for optimizing production in Brazil.

Earlier this year, Amyris established Amyris‐Crystalsev Biofuels, a Brazilian venture in partnership with Crystalsev, one of Brazil’s largest ethanol distributors and marketers, to work with Brazilian sugarcane mills and fuel producers to scale up production of Amyris diesel fuel. SantelisaVale, the second‐largest ethanol nd sugar producer in Brazil has committed two million tons of sugar cane crushing capacity for the initial roduction of Amyris diesel, including its flagship Santelisa mill.

Amyris’ proprietary synthetic biology platform enables Amyris scientists to engineer microorganisms such as yeast so that they can transform sugar into 50,000 different molecules used in a wide variety of energy, pharmaceutical, and chemical applications. Amyris is working on the development and commercialization of everal of these molecules to provide a range of renewable products, including diesel fuel, jet fuel and specialty chemicals.

The platform has already proven successful through the development of a strain of yeast to enable the production of a precursor to artemisinin, a key ingredient in anti‐malarial drugs, at significantly lower cost than can be achieved with conventional technologies. This technology was developed as a not‐for‐profit initiative, and has been transferred to sanofi‐aventis.

About Amyris

Amyris is applying a proprietary synthetic biology platform to create No Compromise™ products ‐‐ low cost renewable fuels and chemicals that are intended to be environmentally friendly, compatible with the existing infrastructure, and have performance attributes comparable to petroleum‐based fuels. Amyris has also developed a technology to produce a second supply of an anti‐malarial drug. Founded in 2003, Amyris has raised over $120 million in equity funding to‐date, including investments from Khosla Ventures, Kleiner Perkins Caufield and Byers, TPG Biotech, and DAG Ventures. Amyris has over 200 employees and facilities in meryville, California; Chicago, Illinois; and Campinas, Brazil. More information about Amyris is available at http://www.amyris.com/.

The really interesting aspect of their business model is the Brazil angle. The U.S. currently has an import tariff on Brazilian ethanol. However, that tariff does not cover other biofuels coming from Brazil. By utilizing low-cost Brazilian sugar to make their biofuel, they stand a good chance of meeting their cost projects. Further, by making diesel – which is looking to be in tighter demand than gasoline for years to come – they are getting into a market with much better profit margins than ethanol has.

This, and some other highlights from a Greentech Media story:

Amyris: We’re Better Than Biodiesel, Ethanol or Gas

Amyris, for instance, will be able to produce a form of diesel that it will sell at the wholesale level for $2 a gallon or less, or around the same price as conventional fossil diesel, said CEO John Melo.

“It will be around the same price as regular petrol diesel, but it will produce 80 percent less greenhouse gases, provide a 10 percent reduction in NOx (nitrogen gases) and provide the same or better performance,” Melo said. “And with zero sulfur.”

The company’s jet fuel, which will replace kerosene-based fuels, will produce 90 percent fewer greenhouse gases than the regular stuff without denting performance or mileage, he said.

The big test for Amyris will arrive in about two years. The company has created joint ventures in Brazil to create biorefineries on sugar plantations where genetically engineered yeast will feast on freshly harvested sugar. The resulting fuel will then be loaded onto ships and brought to the U.S. By 2010, Amyris hopes to be producing 200 million gallons a year out of its first plant and erecting more plants.

Melo also pointed out that because Amyris isn’t producing ethanol (an alcohol) in Brazil but a hydrocarbon (a molecule includes hydrogen and carbons), the ethanol tariff on Brazilian ethanol doesn’t apply.

Promising stuff. To me it looks like they have a good chance of being successful.

Footnote: As is the case with LS9 and Virent, there is no Amyris stock that one can buy. It is a privately held venture.