Biofuel Niches
This is the final installment of a three-part series that examines some of the renewable energy options that are presenting themselves as possible contenders to step up as petroleum steps down the depletion curve. The previous installments were:
Today I want to talk about Biofuel Niches. Here is how I would define a Biofuel Niche: A technology that is capable of supplying, long-term, up to 10% of our present liquid fossil fuel consumption, often by utilizing specific, localized synergies.
This definition covers a great number of possibilities, and I don’t pretend that I will even cover a large fraction of them. But I want to cover some specific fuels – like cellulosic ethanol – that I believe can work in a niche. If readers can think of others, let’s discuss them. I want to lead off with some of the options I categorized as “Pretenders”, and then discuss corn ethanol which I did not discuss in the previous installments.
To reiterate, my views are based on the following expectations: 1). That the average oil price over the next 10 years will exceed $100/bbl; 2). That biomass prices will rise in response to demand, putting a premium on efficient conversion technologies; 3). That these biofuel technologies will eventually have to compete on the basis of oil price and not government handouts. This latter point is key, because it favors those technologies that can decouple from fossil fuel inputs.
Algal Biofuel
I classified this as a pretender based on the fact that technological improvements are needed in order to make algal biofuel economical – yet the hype over algae is mind-boggling. We don’t even know if it will work at scale, and yet it is going to be the solution to all our problems? Following my previous essay, I had a discussion with someone involved in testing fuels for the U.S. military. They are optimistic about the future of fuel from algae, but admitted that they were only able to secure algal fuel for testing at the cost of $100/gal! How likely is it that there will be a more than 20-fold decrease in production costs?
Having said that, there are three situations in which I think algae can work. Two of these are niches. The first is a situation in which the oil is produced as a by-product. Algae has a great number of uses in consumer products, and oil can be produced as a by-product of those consumer products. As a hypothetical, assume that algae can be engineered to produce a valuable pharmaceutical. This is certainly not science fiction; the first commercial usage of genetic engineering was to design bacteria to produce human insulin. Imagine instead algae, and oil that is removed during processing. The costs are largely born by the more valuable primary product. The problem of course is that this approach isn’t scalable. Imagine again that something like insulin production is the primary role of the algae. If you tried to scale that up to a significant fraction of our fuel usage, you will have thoroughly saturated the market for the insulin. But perhaps if we can pair up a number of primary products with algal oil production, algae can make a contribution to our fuel supply.
The second situation is similar. If algae production is one step in an integrated energy complex, it could work. For instance, I was recently asked to comment on just such an approach by Desert Biofuels, a company in Arizona. Without endorsing their specific approach, this sort of approach may work. (Actually their approach is quite complex and has unique technical risks). But algae can be effective at cleaning up waste water. Imagine algal-cleanup as one step of an integrated complex, and the costs go down substantially.
The only scalable approach I can see is for algae to be engineered to excrete their oil in situ. What drives the cost of algae up so much are the difficulties of collecting the algae, separating from water, and then separating the oil from the algae. (Often overlooked is that the oil must be further processed to biodiesel or green diesel). Now imagine a pond of algae in which the oil “leaks” out while the algae grow. The process of collecting the oil would be dramatically simplified. A caveat of course is that engineered algae tend to get out-competed by native strains. The bigger caveat is that this technology doesn’t exist, but companies are working on it.
The wild card out there is the Solazyme approach. Think sugarcane ethanol, except instead of yeast producing ethanol you have algae producing oil. The approach is interesting – which is why I mention it – and gets away from many of the problems inherent in trying to produce fuel from algae. Is it more efficient than sugarcane ethanol? I think it’s too early to tell. But one poster at The Oil Drum indicated that during a Q&A with a Solazyme representative, he couldn’t come close to a believable answer regarding scale-up costs. So while I think this one bears watching, it is far too early to suggest that this will pan out.
For a balanced overview of fuel from algae, see Biotech’s green gold?
Cellulosic Ethanol
I see two major problems with the scalability of cellulosic ethanol. First, the logistical challenges of getting a lot of biomass into the plant is going to limit the size of the plant. As I pointed out in an essay on Coskata, to run their proposed plants would take the equivalent of over a million trees per year. In terms of rail cars, this is over 1 per hour, 24 hours a day, 365 days a year in and out of the plant to dump the biomass. And bear in mind that this is really a gasification to ethanol plant, with higher forecast yields than a conventional cellullosic process (i.e., a real cellulosic plant of this size would require even more biomass).
But beyond that, the ethanol that is produced from the cellulosic process is at a far lower concentration than that of corn ethanol. That means big energy inputs in order to make pure ethanol.
A good niche application for cellulosic ethanol could be a situation in which there is a lot of waste heat available near a point source of biomass. Generally, there isn’t a lot of high quality waste heat that would contribute a lot to the steam needs of a cellulosic ethanol plant. But picture something like a cogeneration unit near a collection point for woody waste. The waste is being collected and is coming in anyway for disposal, and the heat output from the cogen unit may improve the economics.
Another alternative could be if there is another very cheap source of steam around that can’t be better utilized. If you had a lot of coal in the same location as a lot of biomass, again a cellulosic process might work (but I would argue that depending on the source of biomass, gasification might be a more efficient solution here).
Hydrogen
While not generally considered a biofuel, I discussed hydrogen in my “Pretenders” piece so I will address it here as well. In my opinion, the most interesting realistic option for hydrogen is as energy storage for excess power. For instance, let’s say you have a neighborhood in which most houses have enough solar panels to produce excess electricity at mid-day. Once the batteries are charged, what else can you do with that excess electricity? If it can’t be diverted to someplace that has a need, then it may make sense to electrolyze water to produce hydrogen. This is not a very efficient process, and not something you would do under normal circumstances, but in this case it could be the best storage option.
Once the hydrogen is produced, it could either be used to fuel stationary fuel cells for the neighborhood when the solar panels aren’t producing, or it could be compressed and used to fuel hydrogen combustion engines.
Corn Ethanol
A niche, you say? Aren’t we producing 10 billion gallons of corn ethanol already? True, but I am talking about something that could actually stand on its own in the long run – unsubsidized – and still make a decent net contribution to our energy supplies. In that case, producers might still be able to sell 10-15 billion gallons of ethanol a year and make a profit, but the distribution pattern would be different. In a state with ample rainfall and rich soil, corn ethanol may be able to stand unsubsidized by making and consuming the ethanol locally. Corn ethanol may be a fine solution for Iowa (although E85 is not even cornering the market in Iowa, where it should be in its optimal market). Stretching it beyond a local solution is where the economics start to break down and the scheme only works with subsidies.
Here are some examples of what I am talking about. When corn ethanol is produced far from corn supplies – like in California – the economics became difficult due to the cost of shipping the corn to the plant. I talked about that in 2006, when I warned of the potential problems of Pacific Ethanol’s plans to do just that. They filed for bankruptcy earlier this year.
Another example is when ethanol is produced from a state in which ethanol’s energy balance is poor (e.g., parts of Nebraska, due to corn’s irrigation requirements) and then shipped to California. If you look at the USDA’s most recent paper on corn ethanol’s energy balance (the one in which they used creative accounting), you can see from Table 2 that Nebraska’s energy inputs for growing corn are about 20,000 BTU/bushel above the Midwest average. (By comparison, Iowa’s are 11,000 BTU/bushel under the Midwest average). This has the overall impact of actually causing Nebraska’s net energy from producing ethanol to be negative unless one adds a BTU credit for co-products. With such a marginal energy balance (and I haven’t even mentioned the Ogallala Aquifer) it hardly makes sense to produce ethanol in the drier regions of Nebraska. It makes even less sense to then spend more energy shipping that ethanol far from the point of origin.
Conclusion
Those are some of the major niche applications I see, but there are certainly others. What corn ethanol could be for Iowa, sugar beet ethanol may be to the EU and palm oil may be to Malaysia. The key to success for any of these is not to try to scale something that should operate in a niche. When we attempt to do this, we open up a can of perpetual subsidies in order to force something that doesn’t fit, and often get unintended consequences in the process.
Biofuel Pretenders
Note
This article was initially titled “Pretenders, Contenders, and Niches.” However, the section on pretenders grew to the point that I have decided to split the essay up into three parts. The first part, Biofuel Pretenders, will cover many of the current media and political darlings. The second part, Biofuel Contenders, will discuss some options that have received less attention, but in the long term are more likely to have staying power. The final part, Biofuel Niches, will discuss situations in which some of the pretenders might actually work.
Reality Begins to Sink In
There was an interesting article in the Wall Street Journal this past week:
U.S. Biofuel Boom Running on Empty
A few pertinent excerpts:
The biofuels revolution that promised to reduce America’s dependence on foreign oil is fizzling out.
Two-thirds of U.S. biodiesel production capacity now sits unused, reports the National Biodiesel Board.
Producers of next-generation biofuels — those using nonfood renewable materials such as grasses, cornstalks and sugarcane stalks — are finding it tough to attract investment and ramp up production to an industrial scale.
This all boils down to something I have said on many occasions: You can’t mandate technology. Just because you mandate that 36 billion gallons of biofuel are to be produced by 2022 doesn’t mean that it has a remote chance of happening. This is not a hard concept to understand, but it seems to have eluded our government for many years. The government would probably understand that they couldn’t create colonies on the moon in 10 years via mandate. They know they can’t cure cancer via mandate. But in the area of biofuels, they seem to feel like they can just conjure up vast amounts of hydrogen, cellulosic ethanol, or algal biodiesel.
Domestically produced biofuels were supposed to be an answer to reducing America’s reliance on foreign oil. In 2007, Congress set targets for the U.S. to blend 36 billion gallons of biofuels a year into the U.S. fuel supply in 2022, from 11.1 billion gallons in 2009.
Cellulosic ethanol, derived from the inedible portions of plants, and other advanced fuels were expected to surpass corn ethanol to fill close to half of all biofuel mandates in that time.
But the industry is already falling behind the targets. The mandate to blend next-generation fuels, which kicks in next year, is unlikely to be met because of a lack of enough viable production.
Most people don’t realize that the Germans were the first to produce ethanol from cellulose. That happened in 1898. For our political leaders and many industry boosters, cellulosic ethanol is a recent discovery, and thus they expect big leaps in the technology in the next few years. These expectations completely ignore the fact that researchers have been hard at work on making cellulosic ethanol a reality for decades – with little success.
In President Bush’s 2006 State of the Union address, he broadly expanded the mandate for ethanol. He voiced his strong support for cellulosic ethanol, and included billions of gallons in the Renewable Fuel Standard – as well as billions of dollars of financial support.
How quickly our politicians seem to have forgotten the 2003 State of the Union, in which Bush set forth his vision of the hydrogen economy:
“A simple chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car producing only water, not exhaust fumes. With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom so that the first car driven by a child born today could be powered by hydrogen and pollution-free.”
We spent some two billion dollars toward that goal. Once again, this ignored many technical and economic realities, and so in May 2009 the headlines read:
Hydrogen Car Goes Down Like the Hindenburg: DoE Kills the Program
The dream of hydrogen fuel cell cars has just been put back in the garage. U.S. Energy Secretary Steven Chu announced yesterday that his department is cutting all funding for hydrogen car research, saying that it won’t be a feasible technology anytime soon. “We asked ourselves, ‘Is it likely in the next 10 or 15, 20 years that we will covert to a hydrogen car economy?’ The answer, we felt, was ‘no,’” Chu said.
My prediction is that in the not too distant future we will start to see headlines like this for cellulosic ethanol. The troublesome barriers to commercialization are quite fundamental, and aren’t likely to be resolved by government mandate. If enough money is thrown at it, cellulosic ethanol will of course be produced. But it can never be a scalable, economic reality.
Pretenders
Broadly speaking, in the world of next generation biofuels there are contenders, pretenders, and niches. Over the past decade, we have thrown a lot of money at pretenders and have little to show for it. There are many reasons for this, but fundamentally I believe it boils down to the fact that our political leaders can’t sort the wheat from the chaff. If a proponent extols the benefits of hydrogen, cellulose, or algae – the politicians just don’t know enough to ask the right critical questions. They listen – often to the very people who will benefit from more funding – and then they allocate money. Billions of dollars and little progress later, they or their successors may begin to realize that they have been misled and they start to dial the funding back.
Here is how I define a next generation Biofuel Pretender: A company or group that makes grandiose promises about the ability of a technology to displace large amounts of fossil fuel, despite facing significant (and often unrecognized) barriers to commercialization.
Here are some examples:
Hydrogen
The poster child for the pretenders. Proponents ignored practical realities in many different areas, including fuel cell vehicles that cost a million dollars, the fact that most hydrogen is produced from natural gas, the fact that the energy density of hydrogen is very low, and the fact that there are multiple issues with hydrogen storage and transport. Technical breakthroughs were being counted on to solve these challenges. After all, we put a man on the moon. Surely we could solve these challenges.
The real problem is that the potential for success falls rapidly as the number of needed breakthroughs pile up. Imagine for instance that the following – cost of production, cost effective storage, and cost effective transport – each have a 25% chance of achieving commercial viability in the next 20 years. The total chance for success of all three in that case falls to 1.5% – so this is overall probability of success. Thus, the vast majority of technologies that require multiple technical breakthroughs will fail to materialize commercially except perhaps over a much longer period of time.
Cellulosic Ethanol
As was the case with hydrogen, this one requires multiple technical breakthroughs before commercial (unsubsidized) viability can be achieved. I won’t go through them all now, as I have covered them before. The fundamental reason that cellulosic ethanol won’t scale up to displace large amounts of gasoline is that the energy efficiency of the process is so low. You have the sugars that make up cellulose locked up tightly in the biomass – which has a low energy density to start with. So you add energy to unlock the sugar and turn it into ethanol, and then you end up with ethanol in water. More energy inputs are required to get the ethanol out. Even if the energy can be supplied by the by-products of the process like lignin, the net BTUs of liquid fuel that you end up with are going to be low relative to what you started with.
For example, assume you start off with 10 BTUs of biomass. You expend energy to get it to the factory, to process it, and then to get the water out. You burn part of the biomass to fuel the process, and input some fossil fuel. You might net something like 3 BTUs of liquid fuel from the 10 BTUs of biomass you started with.
Don’t confuse this with fossil fuel energy balance, though. If the external energy inputs in this example only amounted to 1 BTU of fossil fuel, one could claim a fossil fuel energy balance of 3/1. But that doesn’t change the fact the final liquid fuel input is a small fraction of the starting BTUs in the biomass.
This is analogous to the situation with oil shale, which is why I have compared the two. There may in fact be a trillion or more barrels of oil shale locked up in Colorado, Utah, and Wyoming. But if the extraction of those barrels required a trillion barrels worth of energy inputs and lots of water – then that oil shale might as well be on the moon. That means that a trillion barrels isn’t really a trillion barrels in the case of oil shale, and a billion tons of biomass is much smaller than it seems when talking about cellulosic ethanol.
So despite the claims from the EPA that the “Renewable Fuel Standard program will increase the volume of renewable fuel required to be blended into gasoline from 9 billion gallons in 2008 to 36 billion gallons by 2022” – that is not going to happen unless the government is willing to throw massive amounts of money at an inefficient process.
Algal Biofuel
Like many, I was initially enchanted by the possibility of weaning the world away from fossil fuels by using fuel made from algae. Proponents wrote articles suggesting that we could do just that, provided the necessary investments are made.
Sadly, the story is much more complex than that. The U.S. DOE funded a study for many years into the potential of algae to produce fuel. (For an overview of where things stand from John Benemann, one of the men who co-authored the close-out report of that study, see Algal Biodiesel: Fact or Fiction?) The problem is again one of needing to surmount multiple technical hurdles, and the close-out report states that reality. Again, I won’t go into those details, as that has been covered before.
While it is a fact that you can produce fuel from algae, the challenges are such that John has written that you can’t even buy algal biofuel for $100/gallon. He said that if you want to separate the reality from the hype, just try to secure a contract with someone to supply you with algal fuel.
First Generation Biodiesel
This story is primarily about 2nd generation fuels, and as such I won’t get into corn ethanol issues. But I will say a bit about biodiesel. As indicated in the Wall Street Journal story, conventional biodiesel producers are in trouble. Briefly, a conventional biodiesel producer is someone who takes vegetable oils or animal fats and uses methanol (almost all of which is fossil-fuel derived) and converts that into an oxygenated compound (called a mono-alkyl ester). This compound has been defined as ‘biodiesel’, and can be used – subject to certain limitations – in a diesel engine.
Again, the problems are fundamental. It takes a lot of effort (energy, cost) to produce most of the oils that are used as raw materials, and then you have to react with methanol – which usually contains a lot of embodied fossil fuel energy. Up til now, the first generation biodiesel producers have benefited from a high level of protectionism (to the extent of punishing the more efficient 2nd generation producers). But even with the protectionism and the subsidies, producers are still struggling to survive.
Miscellaneous
There are a number of miscellaneous pretenders that we probably don’t need to discuss in depth, such as various free energy schemes or water as a fuel. If you think you might be dealing with a pretender, one caution flag is when their promoters are from backgrounds that have nothing to do with energy. For instance, the person who founded the dot.com that ultimately morphs into an energy company is almost certainly a pretender who is chasing investment funds.
Summary
To summarize, the biofuel pretenders fall into several broad categories. The big ones are:
• Hydrogen
• Most would-be cellulosic ethanol producers
• Most would-be algal biofuel producers
• Most first generation biodiesel producers
This isn’t to say that none of these will work in any circumstances. I will get into that when I talk about niches. But I will say that I am confident that none of these are scalable solutions to our fossil fuel dependence. The problem is that political leaders have been, or are still convinced that there is great potential for some of these and we waste billions of dollars chasing fantasies. This is a great distraction, causing a loss of precious time and public goodwill as taxpayer money is squandered chasing schemes that ultimately will not pan out.
In the next installment, I will talk about contenders – options that I think can compete with fossil fuels on a level playing field.
A Pair of Odd Energy Stories
I am working on a story inspired by last week’s Wall Street Journal article:
U.S. Biofuel Boom Running on Empty
It is taking longer than anticipated, but hopefully I will have something up tonight or early tomorrow. Until then, I thought I would share a couple of odd energy stories this Sunday. The first, courtesy of Solar Roadways’ press page:
US DEPARTMENT OF TRANSPORTATION AWARDS $100,000 RESEARCH CONTRACT TO SOLAR ROADWAYS
Funds intelligent roads and parking lots
SOLAR ROADWAYS, SAGLE, IDAHO (August 25, 2009)- Solar Roadways today announced that it has been awarded a DOT contract that will enable them to prototype the first ever Solar Road Panel.
The Solar Roadways will collect solar energy to power businesses and homes via structurally-engineered solar panels that are driven upon, to be placed in parking lots and roadways in lieu of petroleum-based asphalt surfaces.
The Solar Road Panels will contain embedded LEDs which “paint” the road lines from beneath to provide safer nighttime driving, as well as to give up to the minute instructions (via the road) to drivers (i.e. “detour ahead”). The road will be able to sense wildlife on the road and can warn drivers to “slow down”. There will also be embedded heating elements in the surface to prevent snow and ice buildup, providing for safer winter driving. This feature packed system will become an intelligent highway that will double as a secure, intelligent, decentralized, self-healing power grid which will enable a gradual weaning from fossil fuels.
Replacing asphalt roads and parking lots with Solar Roadway panels will be a major step toward halting climate change. Fully electric vehicles will be able to recharge along the roadway and in parking lots, finally making electric cars practical for long trips.
It is estimated that is will take roughly five billion (a stimulus package in itself) 12′ by 12′ Solar Road Panels to cover the asphalt surfaces in the U.S. alone, allowing us to produce three times more power than we’ve ever used as a nation – almost enough to power the entire world.
I like the idea of converting roads into energy producers, but it seems like a real long-shot. A number of questions immediately spring to mind, but their FAQ attempts to take many of them on. I call it to your attention not because I think it will work (I haven’t had time to study it), but simply because of the novelty of the idea.
The second story is about a highly integrated variation of the algal fuel concept in Arizona:
Farmer turns waste into electricity
How it works
• Farm waste (straw, wood chips, cattle manure) heated in “gasification” unit.
• Gasification produces hydrogen and carbon monoxide, and creates a charcoal-like fertilizer called “biochar.”
• Gases are burned to make electricity, producing carbon dioxide.
• Carbon dioxide is pumped into ponds to nourish algae.
• Small crustaceans called daphnia eat the algae.
• Daphnia are harvested, pressed and cooked to process oil.
• Oil is refined to biodiesel; daphnia waste can feed animals.
• The biochar, electricity, biodiesel and daphnia waste is sold.
I was asked to comment on the scheme, and did so near the end of the article – following comments from Professor Mark Edwards, whose book I reviewed here. As I said, it is pretty complicated and interconnected, which provides more technology risks. Water usage in the desert will also be high, unless they are using some kind of waste water.
On the other hand, I think algal fuel can only work as part of an integrated scheme that provides other products/benefits (unless of course there is a breakthrough in which algae can be made to excrete their oil without having to harvest them).
Disruptive Technologies Are So Overrated
It’s the end of a very long day, but I couldn’t resist commenting on the recent story from Joule Biotechnologies:
Joule Biotechnologies Introduces Revolutionary Process for Producing Renewable Transportation Fuels
CAMBRIDGE, Mass.–(BUSINESS WIRE)–Joule Biotechnologies, Inc., an innovative bioengineering startup developing game-changing alternative energy solutions, today unveiled its breakthrough Helioculture™ technology—a revolutionary process that harnesses sunlight to directly convert carbon dioxide (CO2) into SolarFuel™ liquid energy. This eco-friendly, direct-to-fuel conversion requires no agricultural land or fresh water, and leverages a highly scalable system capable of producing more than 20,000 gallons of renewable ethanol or hydrocarbons per acre annually—far eclipsing productivity levels of current alternatives while rivaling the costs of fossil fuels.
Joule SolarFuel liquid energy meets today’s vehicle fuel specifications and infrastructure, and is expected to achieve widespread production at the energy equivalent of less than $50 per barrel. The company’s first product offering, SolarEthanol™ fuel, will be ready for commercial-scale development in 2010. Joule has also demonstrated proof of concept for producing hydrocarbon fuel and expects process demonstration by 2011.
The press release is a couple of weeks old now, and I ignored it at first. It almost reads like satire. Maybe it is? But I have seen it picked up now and reported at face value by some sites. So I thought I would weigh in.
Seriously, since we starting running cars on oil 100 years ago, how many disruptive technologies have there actually been in this area? None. There have been improvements, but we are still running most of our cars on oil. A disruptive technology would be something that resulted either in us running most of our cars on something other than oil, or something that caused us to abandon our cars for something else.
Cold fusion-powered hovercraft? Now that would be disruptive. A battery with a 200-mile range for a full-sized car? Also disruptive. When we start to run short of oil? Disruptive in a different way. But the press release above? I have seen a thousand others just like it. Eventually maybe one of these disruptive pretenders will pan out. But if I was a betting man…
Tom Whipple elaborated on this story today (which is what prompted me to go ahead and write this up):
The Peak Oil Crisis: More Disruptive Technology?
Yet another potentially disruptive technology has been announced. This time a small company, Joule Biotechnologies, up in Cambridge MA says it has developed a process to produce hydrocarbon based fuels from carbon dioxide and water. As with any too-good-to-be-true announcement skeptics abound – just on general principles.
The process is centered on a “photobioreactor” (think a solar panel with liquid inside) which contains brackish water and a still secret microorganism that has been genetically engineered to absorb carbon dioxide and excrete hydrocarbons when subjected to sunlight.
Somebody with a mathematical bent calculated that if an area the size of the Texas panhandle were covered with photobioreactors, they could produce enough fuel each year that we could say goodbye to oil – drilling, depletion, OPEC, refineries, some forms of pollution, and all the rest. This is sounding much too good to be true for the company estimates the fuel could be produced for $50 a barrel.
The next step, of course, is to get this out of the laboratory and into a pilot plant so we can all see if turning CO2 and water with the help of some sunlight into fuel can really work. A pilot scale plant is planned for the southwest (where they have lots of sunlight) early next year which would be followed by a large scale demonstration plant in 2011.
These people haven’t even built a pilot plant, yet they are talking about widespread production at $50/bbl. Please. Just once I would like to see one of these far-fetched press releases end with “Product is currently for sale for $50/bbl.” If you notice, this is always what is expected. It just never materializes.
Answering Reader Questions 2009: Part 4
This marks the final installment of answers to questions recently submitted by readers. This final installment covers the impact of E10 on fuel efficiency, my general optimism (or lack thereof), algal fuel, thermodynamics and energy limitations, Accoya, and litigation. Once again, thanks to the readers who submitted questions, and thanks to those who helped answer them. Without the help I received, this might have been a 10-part series.
Here are the links to the previous installments:
Part 3 – Covered advice to engineering students and some books I recommend
Wendell Mercantile wrote: The average fuel economy in Minnesota, which mandates E10, was 11% worse than in Wisconsin where drivers are allowed to choose. Minnesota drivers actually went fewer miles, while burning more fuel to do it. Answer
Melanie wrote: Reading over your last Q&A session, you seemed pretty optimistic. Have the events over the course of the last 2 years left you with the same amount of optimism or more/less? Answer
Mike wrote: I know your stance towards algae biofuel companies, but I want to bring a company to your attention called PetroAlgae. (I couldn’t find a reference to them on your blog.) I think they’re pursing a very nice model of licensing instead of building and also combining food with fuel production. They are claiming that the proceeds from the proteins should almost cover the costs of the whole process. With your expertise (and maybe knowledge about their processes), could you say something about the feasibility of those claims? Answer
Evan asked: 1 How can a nation/person “create” more energy/matter, if they do not take it from another nation/person?
2 Will renewable energy be able to account for the fundamental law of conservation of energy/mass? Economically?
3 If the US is the least efficient user of highly demanded fossil energy, why is its currency(time) worth so much? Do Americans just work too much?
4 Will we see currency exchange rate changes, which are weighted more upon per capita (person) energy efficiency? Answer
James Clary asked: What do you think about the economist article about hardening soft wood?
How to toughen up softwood: A hard act to follow Answer
takchess asked: Q: Do you envision that there will be a lot of IP lawsuit once cleantech is mainstream? Do you think this will be or is a disincentive for investment in this area? Answer
This one was debated at length in the comments following the question thread, but I just wanted to add that I have posted a guest essay on this topic before: Wisconsin Tops Minnesota. It was written by Gary Dikkers.
That’s a good question. I suppose in general I am more optimistic over the short term, primarily because I saw a relatively fast response to high oil prices. People did cut back on consumption, which was encouraging. The downside is that we are still dealing with fallout from those high oil prices. Not that I have ever been someone who could entertain the thought of a multi-billion person die-off due to peak oil, but I feel better about the overall prospects for humanity. I don’t feel as optimistic about the prospects for the economy, though. I think we are approaching The Long Recession (and may have entered it). I have never seen such a poor job market before. This is going to be extremely tough for a lot of people who have gotten used to a certain standard of living.
I am seeing this first hand in the engineering ranks right now. Since I started my career, demand for engineers has always exceeded supply. Presently, that is not the case (as I am finding because I am still trying to place some engineers that we recently laid off). The Wall Street Journal just reported that 50% of this year’s college graduates do not have jobs. If the job market is to improve, we have to have a recovery. If recovery causes demand for oil to increase, prices are going to climb and the recovery may stall. Wash, rinse, repeat.
I think the way we live is going to change. That’s not necessarily pessimism, because the way we live has to change. I don’t think many people would suggest that our current consumption (and not just of oil) is sustainable. The pessimistic side of me says that the way we live will change because that change will be forced upon us in unpleasant ways (e.g., people simply no longer able to maintain their standard of living), instead of governments making wise policy moves to prepare us for a future in which cheap energy is no longer plentiful.
I have heard of PetroAlgae, and just spent a bit of time on their website. Let me first say that I think upwards of 90% of the bioalgae companies out there are being highly irresponsible with their investors. The technology isn’t close to being capable of producing cost-competitive fuel, and we have companies grossly over-promising (or even committing outright fraud).
On the other hand, I do believe that algae can be a niche solution. The problem is that it is being pedaled as a scalable solution, and therefore companies are popping up all over the place to take investors money. Most will inevitably declare bankruptcy after a few years.
But let’s talk about the niches. In my opinion there are a couple of ways algae could work. If it is to be truly scalable so that it can be a big contributor to our fuel supplies, I only see one obvious path. Algae must be developed that can excrete oil. In this way, the algae can grow, you skim off the oil, and you avoid the materials handling nightmare of harvesting and processing the algae. But that is going to require new technology, and unfortunately the invention of new technology isn’t a given.
The second way that I think algae can work is if there is a valuable co-product that offsets the production costs. This is PetroAlgae’s claim. The problem I see with this approach is that it isn’t scalable. You are going to be limited by the ability to put co-product in the marketplace. If the co-product is sufficiently valuable (let’s say you engineer algae that can produce insulin), then you could indeed offset the expense of algae production. But as it scales, you start to flood the market with this valuable co-product, and it is no longer so valuable. Or, if the co-product is already a commodity, it isn’t going to command a high enough price to offset production costs. Thus, I think this approach will be limited to niches. The approach described in the previous paragraph is the only one I think can be scalable.
Specifically on PetroAlgae, let’s look at one of the claims made in the video hosted on their site. Executive VP Bill Haskell makes the claim that a commercial licensee of a PetroAlgae system can produce 1.5 million barrels of transportation fuel a year. Krassen Dimitrov has made a case (PDF warning) that I have yet to see seriously challenged that based on the solar insolation falling on the earth at best one might produce 1 gallon of algae-based fuel per square meter of area.
If we look at the 1.5 million barrel claim above, that ultimately translates into a land requirement of 15,560 acres for just growing the algae. That is a 24.3 square mile plot of land. To put that in perspective, this is a plot of land 4.5 times the size of the largest refinery in the U.S. (which also has a capacity of 140 times greater than that claimed for the algae production facility that occupies 4.5 times the amount of land). And we haven’t even begun to consider processing all that algae.
Bottom line? I think their claims are exaggerated. I suspect that if you asked them to produce data justifying that 1.5 million barrel claim, one would find that they are making projections from small experiments and don’t actually have data to back that up.
Let me try to answer these questions all together, because they are driving at the same theme. This isn’t really about creation of energy. Both fossil fuels and biofuels are about harnessing solar energy. In the case of fossil fuels, that is solar energy that was gathered over millions of years and cooked at high pressures and temperatures by the earth. Discovery of this ancient solar energy provided a windfall of energy that most of us take for granted.
We know this windfall is going to run out some day, and we already don’t like the fact that we have to rely on other countries to sell us part of their windfall. So we try to come up with schemes for capturing that solar energy and processing it immediately. This can of course be done in many ways, from direct solar capture, through the growing and conversion of biomass into energy. Generally the attempts to use solar power in real time suffer from various shortcomings (as do fossil fuels). However, some of those shortcomings are masked by the fact that the solar power that is being capture in real time is supplemented to a large extent by that same fossil energy we are seeking to replace.
The core of the problem is that many people – and I would say that most of our political leaders – don’t really appreciate the huge differences in the net energy from fossil fuels and the net energy from most renewable fuels. I have seen schemes floated in which our fossil fuels are displaced by cellulosic ethanol. You know what’s missing from those scenarios? The energy to produce the cellulosic ethanol. When that is taken into account, the primary energy production required to run a world on renewable energy is far greater than the primary energy production required to run a world on fossil fuel. So we have to do one of two things. We have to get used to the idea of eventually using a lot less energy, or we have to find better schemes for converting sunlight. (Or we will have to devote huge amounts of manpower to energy production – diverting productivity from the rest of the economy). In the short term, we will continue to draw heavily upon our fossil fuel reserves, but that can’t last forever.
In closing, let me offer up an example of how primary energy would need to increase if we switched from the high energy returns offered by fossil fuels to the much lower energy returns of most fossil fuels. Here are some numbers I have put together in the past. In a fossil fuel-based society, the energy return is currently somewhere around 10/1. Of 85 million barrels per day, 8.5 million of those barrel equivalents were used to produce the oil. For the sake of this exercise, let’s assume that oil was used to make oil. That leaves us with a net of 76.5 million barrels with which to power the world.
[Note: Thanks to Engineer-Poet for pointing out a math error here.] Now, drop the energy return of that same society to a biofuel range of 1.3 to 1. We have to solve two equations here: Net Energy = Energy out – Energy in, and Energy return = Energy out/Energy in. Solving these two equations for a net of 76.5 million barrels of oil means we have to produce a total of 255 million barrels of oil equivalent. In the fossil fuel society, it takes 85 million barrels of total production to sustain it. In the low energy return society that approximates today’s biofuels, it takes 255 million barrels per day to sustain it. That means that if we tried to run the world on low energy return biofuels, we would need to triple the overall energy output over what we produce today.
People who say energy return doesn’t matter fail to grasp this point. Unless biofuels are able to substantially improve their energy return – or we have a huge reduction in consumption – a lot more resources are going to have to be devoted to the energy sector.
Of course caveats abound when using an energy return to evaluate a biofuel. As I pointed out in one of my essays on Coskata, it is also possible to have a very good energy return and not net out much energy. Consider an example in which you start with 100 BTUs of biomass, consume 99 BTUs of the biomass to convert it to 1 BTU of liquid fuel, and input 0.1 BTUs of fossil fuel in the process. You could argue that your fossil fuel energy return was 10/1, but your conversion efficiency was terrible. You started with 100 BTUs of biomass and ended up with 1 BTU of liquid fuel.
These are some of the considerations we have to undertake as we try to ramp up biofuels to displace fossil fuels.
You probably knew this – which is why I imagine you asked the question – but I was interviewed for that article. The interview took place way back in January, and I had forgotten about it until someone sent me the link.
I thought the article captured the gist of the interview in a concise manner. The key points I make to people about Accoya are generally around the modification of the hydroxyl groups in the wood, and how that impacts the properties of the wood.
I do want to reiterate that despite the career change I am in the process of making, I still feel like Accoya is a fantastic product with a bright future. I will maintain an advisory relationship to Accsys/Titan Wood after I leave, so you will probably see me writing about it on occasion in the future.
There are several lawyers who read this blog, and almost every time I make a negative comment about their profession, one or more of them sends me a note. And I will probably get one after this.
In my opinion, litigation is attracted to big piles of money. Even if 99% of lawyers only go after cases with strong merit, there are always going to be some lawyers ready to file a suit at the slightest whiff of cash. My feeling is that we have too many lawyers, and the marginal lawyer has to find a way to make a living. So we get more lawsuits than we should have.
There is a lot of money flowing into the clean tech sector, and there are many people jumping in who may not have a clear picture of who owns various IP. That is a prescription for lawsuits. So, yes, I do expect more lawsuits as clean tech goes mainstream. That is the society we live in. Will it be a disincentive to invest? I don’t know. I do know that the money that flows out of the sector and into lawyers pockets won’t necessarily be invested back into the sector. So there will be a drain in my opinion. It could be that it is a tiny fraction in relation to the overall investments. Let’s hope so.
OK, as far as I know I got the ones that hadn’t been addressed already (either in previous essays or by someone else in the comments). If someone feels like they didn’t get a question answered, ask in the comments following this essay and I will try to address it.
Answering Reader Questions 2009: Part 2
In this installment, I continue to work my way through the list of questions recently submitted by readers. This post picks up where Part 1 left off, and covers coal-to-liquids, technology hype, green gasoline, refining improvements, allocation of money toward renewables, electricity consumption, the Automotive X Prize, Big Oil, cellulosic ethanol, and Exxon’s recent algae announcement.
Benny wrote: Arlington researchers’ work could lead to $35-a-barrel oil. Any chance of making oil from lignite? At these prices? Or are they just some guys who want research money? Answer
takchess wrote (and Doug also asked about): Thought this was interesting. If cost and technically feasible this would be cool.
Rive Technology Working to Increase Oil Refining Efficiency 7-9% by 2011 Answer
DDHv wrote: The new ionic liquid technique allows easier extraction of cellulose. Do you know if we have enough information yet to do energy and/or economic balances? If so, what are the present results? Improvements are likely, given the novelty of the technique. Answer
John asked: What do you think of pyloric conversion to make “green gasoline”? What are it’s peak lite and environmental ramifications? Specifically referring to an article in the Boston Globe RE: Anellotech and UMAss on July 13th: The greening of gasoline Answer
PeteS asked: How likely is money spent today on renewables to be wasted in retrospect because of “grey swans”? Obviously nobody can predict the future, but I’m thinking more in terms of, say, a plan to completely power a country from wind turbines, versus low-to-medium-probability dramatic improvements in wind-power within a decade or two. Answer
SamG wrote: I hear many theories about electricity consumption and the utility business model (sell more make more). Do you see any mechanism that puts suppliers in the loop for the reduction of consumption (not just demand reduction via passing through higher prices)? Answer
takchess asked: Any comments on this Urea fueled entry into the XPrize auto race?
Alternative Fuel Sciences Answer
John wrote: Americans are being “taxed” at a rate of 200 billion bucks a year to fund the U.S. Military to “baby-sit” the Strait of Hormuz and other oil company interests in the mid-east, etc.
Factor that in and the bio-fuels look good, as do CNG, electric vehicles or bio-fuel-electric hybrids. Imagine that…. a bio-fuel-electric hybrid. That completely shuts out the oil companies and their little “gasoline forever” game. The fact that bio-fuels, CNG and electricity are already cheaper than gasoline must be giving the traditional oil companies nightmares already. Answer
LovesoiL wrote: 1) What is a reasonable pace towards commercialization of ‘1st generation’ alternative fuels, e.g., cellulosic. Many ethanol advocates (DoE, USDA, EPA, US Congress) assume that while only 1 commercial scale facility is currently in construction (Range), somehow 1 billon gallons of annual capacity will get built during the next 3-5 years, and then we’ll build that much (30-40 plants) every year for the next decade?
2) How long is needed to operate a 1st gen facility to optimize its processing and demonstrate profitability before investors will agree to pay another ~$300 million build the 2nd facility?
3) Both Choren and Range fuels have gasification of woody biomass as the first step for their transformation process. Choren finished construction a year ago and has been in the commissioning process ever since. Range says they will finish construction 1Q 2010, and begin ethanol production in 2Q 2010. Can Range really begin production that soon?
4) Ask POET what they think of cellulosic from corn stover. They seem to say that stover has too many collection and handling problems (dirty, low density, etc), and that is one reason they are concentrating on cobs only. Many others assume corn stover will be the primary source of cellulosic feedstock. Answer
Anonymous wrote: While you’re in Alberta, ask about Iogen and when they’ll finally get their cellulosic plant started in Sask. Also, Enerkem has been making news lately, both with a 10 mgy MSW plant and their just-released plans to construct a $100 million R&D facility in Edmonton. EnerkemR&D EnerkemMSWPlant Answer
bts asked: Comments on this partnership between Venter and Exxon?
Exxon to Invest Millions to Make Fuel From Algae Answer
You always have to read between the lines. Sometimes people talk about where costs might be “in a few years” or “with technical breakthroughs” – as is often the case with algal biodiesel (and has been the case with oil shale for 100 years). Not that this is necessarily the case here, but those are the kinds of things I look for as I read these press releases. Is it possible to make oil from coal? Sure, it just traditionally takes a lot of energy. Coal into oil is essentially what you are doing with CTL, and there are several variations of the process (including non-gasification options). South Africa has been doing it for a while now.
So what the UTA researchers are describing is a chemical process for turning coal into oil. Such processes do exist, so the question is whether this is novel, cheaper, more efficient, etc. That will require peeling a few more layers of the onion than what one finds in a press release – where the best you may get is caveats. Generally speaking, press releases tend to over-simplify things a lot. If even a tenth of the press releases on “the next big thing” had turned out to be true, we would be living in a very different world. My favorite pasttime might be loading the family up in my cold fusion-powered hovercraft for a family outing. Or knocking out essays on my DNA-based computer (I remember in 1995 or so when this was going to put Intel out of business).
People have all sorts of motives for these press releases. Some are to announce something truly revolutionary. Those are a tiny fraction. More often, it is as you say; someone is trying to catch the eye of someone who might fund them. I have been in a position many times to issue just such a press release, and sometimes I think about that when I see one of these.
For instance, in 1994 at Texas A&M I had an idea to create a cellulose reactor based on the contents of termites’ stomachs. To my knowledge, I was the first person to attempt such a thing. The experiment didn’t turn out very well. My analysis detected only a small amount of butanol in the product. Had my imagination been big enough, here was the press release: “A&M Researcher Turns Trash into Fuel.” For the story, I could project increases in yields, renewable butanol bringing Arab sheiks to their knees, and an actual use for those pesky termites. Of course as my yield projections go up, my cost projections go down, and I could predict that this “may soon lead to sub-$1/gal fuel.” In reality, I considered it a failed experiment, stopped work, and wrote up my dissertation. But that is the sort of experience that always has me looking at these press releases in a pretty skeptical light.
Jim, this is along the lines of my last answer. People are working on these catalysts all the time. I have spent time in the lab working on gasification catalysts, and sometimes you come across something that looks pretty interesting. Then you try to scale it up and find that it isn’t stable in a larger reactor because the temperatures are hotter than they were in the lab.
Again, without peeling the onion and having a look at what everyone else is doing, it is impossible to tell whether this really amounts to something special. It could be that their competitors have already achieved these milestones and just didn’t issue press releases. Most organizations don’t. I was awarded several patents from my days at ConocoPhillips, but we never issued a press release even though the potential implications of some of them were pretty interesting.
One thing I will say is that from my time in a refinery, there wasn’t 7-9% efficiency gain to be had. We were already pushing the maximum possible conversion efficiency of oil into liquid products, and while you might have squeezed out another 2-3%, no way could you get up into the 8% range. There may be some really inefficient refineries out there that could benefit from this, but we will have to wait a couple of years and see if they actually start penetrating the market. Then you will know that they indeed invented something with a distinct advantage over the competitors.
There are a couple of developments in cellulose chemistry that I have been watching pretty closely: The ionic liquid techniques that you mentioned, and supercritical cellulose chemistry with either CO2 or ethanol.
Both of these techniques are energy intensive, so a lot of work needs to be done around the economics of these processes relative to competing technologies. A number of questions arise, such as “What other components are extracted along with the cellulose?” Or “What does it take to separate the cellulose from the component used to extract it?” That isn’t to say that these technologies aren’t well-worth further exploration. From an academic standpoint, they are very interesting. In the end, I think they will be hard pressed to compete with gasification if the intent is production of fuels. However, specialty chemicals might turn out to be a good niche application for these techniques.
Building on the previous answer, I think the more interesting developments in lignocellulosic chemistry are in chemical processing, as opposed to biochemical processing. I discussed this in an essay a couple of years ago, which was about Vinod Khosla’s investment into KiOR. This is their approach as well; to use catalytic processes to produce fuel.
The challenge is that biomass isn’t very energy dense, and these processes require elevated temperatures and pressures. So a key question is how much energy (and in what form) it takes to transport one BTU of biomass and process it into one BTU of fuel. Presently I think the processing energy is a pretty high fraction of the contained energy. Those energy inputs are going to have to come down before these sorts of technologies make much of an impact. The research is certainly promising, and I favor continued government funding. Would I invest in a company based on this concept? Not at this stage of development.
Generally speaking, I think we are going to look back and see that we wasted tremendous money, time, and resources chasing dead ends. As you say, nobody knows what developments are in front of us. But many are betting that there are revolutionary developments that will transform the energy sector. As a result, they are throwing a lot of money in a lot of different directions. I don’t have a big problem with this if the proper due diligence is done, especially if private money is being used to fund these various ventures. I do agree with Vinod Khosla’s philosophy of spreading his bets across many different technologies. What I find annoying is that often the proper due diligence is not done, and often taxpayer money ends up funding these dead ends. That is money that is truly wasted.
However, one thing to keep in mind with respect to your “grey swans” is that they also have entrenched lobbies to contend with. It may turn out that the grey swan finds itself in a difficult fight to penetrate the market. One particular example I am thinking of is the decision of Congress to kill support for more efficient 2nd generation green diesel production because the inefficient 1st generation producers argued that it would put them out of business. Add in the fact that it was an oil company involved in the 2nd generation technology, and we find that grey swan struggling to survive.
Sam, I don’t see an easy answer to that. Utilities are in the business of making money. When people reduce consumption it costs them money. Is there a way that they can benefit from that? I suppose in a world in which we are taxing carbon emissions, the savings from lower emissions would partially offset the loss of the sale of the electricity. But truthfully, that will be a small fraction at best. I always had the same issue when I was in the oil business. I wanted to see lower consumption, and I couldn’t see any way the oil companies could benefit directly from that. I think an effective mechanism for enabling suppliers to benefit from lower consumption would really be a game changer. If you think of something, let me know.
When I first saw this, I thought “That’s one of the strangest energy-related stories I have ever seen.” It reminded me of my reaction to a recent story: Greenland shark may become new source of biofuel. I like the wild and wacky, and both of these fall into that category. But can it make an impact? The problem with the urea idea is that the fuel is actually ammonia and hydrogen. Where do those come from? Mostly from natural gas. If you look at the efficiencies of the processes involved, you would be far better off just to burn the natural gas. So I don’t see it going far in its current form, but I applaud the creativity. Who knows, maybe this will evolve into something more promising.
John, while I agree that we are spending dollars in the Middle East because of oil, I disagree with several of your points. First, we aren’t spending that money to guard oil company interests. It is being done with the intent to keep cheap oil flowing to the American consumer. So the key interest here is that of the U.S. government, so the voting public is kept happy. Not that there is no benefit to the oil companies, but the government views a military presence there as an important issue of national security – not one of oil company security. If the oil did get cut off, the average person is going to bear the consequences.
I also disagree with your comment that biofuels are cheaper than gasoline. There are some exceptions – like sugarcane ethanol from Brazil – but for the most part gasoline is cheaper based on energy content. For instance, at today’s close ethanol on the CBOT for September delivery was trading for $1.65 a gallon. Gasoline on the NYMEX today was trading for $2.07/gal. However, because of the difference in energy content, the cost of this ethanol was $21.71/MMBTU and the gasoline was $18/MMBTU. With rare exceptions over the years, this has always been the case – and at times the differences have been quite large.
Further, you are kidding yourself if you think the oil companies are running scared. As I have pointed out before, it is a matter of scale. If corn ethanol started to look like a viable, long-term business model for them, the oil companies would just buy their way in as Valero recently did. Oil companies won’t sit around and go extinct because some fancy new biofuel put them out of business. They have big R&D budgets, and their efforts likely cover every biofuel you ever heard of (and many options you probably haven’t).
1. Put me down as someone who believes that the one currently under construction – Range Fuels – is going to see their schedule continue to slip, and I believe they are going to have a difficult time meeting production goals. Multiple sources are telling me that they have some issues.
Further, the national projected ramp-up in cellulosic ethanol – if it happens at all – will be a fraction of what has been projected. Right now there isn’t even a clear pathway. It’s like marking out the road map for curing various cancers over the next few years. It is great to have such a road map, but you are assuming technological breakthroughs that may not happen. Right now cellulosic ethanol still looks to me like a niche, and not a scalable, mainstream fuel.
2. That’s a good question, because I am aware of just such a situation now. Investors are dragging their feet on Plant #2 because Plant #1 is still not producing per the plan. In general, I think if a 1st gen facility comes online and starts to deliver per expectations, money will start to flow pretty quickly. I would think within 6 months of delivering, investors will be ready to jump in. But it is going to take more than 6 months to optimize production to optimize one of these next generation plants once it starts up. There isn’t a blueprint for success, and novel problems are going to be encountered and have to be solved.
3. No, the schedule for Range will slip because they still have kinks to work out. Write it down and hold me to it.
4. Here is what POET said about stover: “The yield of cobs is 0.65 tons/acre, and we can collect them commingled with grain with a modified combine. Or we can collect them with stover coming out of the back of the combine. The bulk density for cobs is higher than for stover, and that makes them easier to separate. We make sure sufficient stover is left on the field for erosion control and nutrition. We are focused on cobs because the bulk density for cobs is better than for stover, and cobs have 16% more carbohydrates than the stover. We don’t have to leave all stover in the field necessarily over soil depletion issues; we have just chosen to focus on cobs. How much one can remove depends on soil type, location, and tillage practice. Cobs take those variables away.”
I did ask about both Iogen and Enerkem while I was in Alberta. My hosts were quite skeptical that Iogen will ever build a commercial plant. I will say that they have enough demonstration level experience that it is suspicious that they don’t have plants sprouting up everywhere. After all, they have been producing cellulosic ethanol at small scale for 5 years. There are people that have been producing it for 0 years who are in the process of building plants. Given that governments are throwing money at anything looking like cellulosic ethanol, I think this puts a big question mark over their true commercial viability (at least at the present state of their technology).
There was less talk about Enerkem, and frankly before the trip I didn’t know much about them. The talk I did hear was that Enerkem is really only focused on the front end of a GTL plant (the gasification step). Enerkem’s view is that their post-gasification steps are flexible, and they can produce a variety of chemicals. They have announced that one site will produce ethanol (this is not the most efficient usage of syngas, by the way). Enerkem’s Press Release page certainly implies that they are busy with projects.
I think there are two approaches to algal fuel that might work. One is if algae can be made to naturally excrete oil. If so, then it may be possible to let the oil layer build up and then skim it. This avoids the materials handling nightmare of separating the algae from the water, and then the oil from the algae. This is apparently the focus of the research. Still, it is a long shot. Exxon’s VP for R&D was quoted as saying “I am not going to sugarcoat this — this is not going to be easy. Any large-scale commercial plants to produce algae-based fuels are at least 5 to 10 years away.” I think that is a realistic assessment. If the breakthrough came tomorrow then you are still looking at piloting and finally commercialization. I don’t think that is likely to happen in 5 years. So first you have to have some technical breakthroughs – and those aren’t a given – and if you pass through that gate then you won’t see this on the market for 10 years. I believe that is a realistic assessment.
The second approach that might work is if a valuable product – such as a pharmaceutical – is being produced as the primary product, and oil is being produced as a co-product. The expense of collecting and processing algae is just too great for oil to be the primary purpose of the operation.
The Gold in the Oceans
There was an announcement this past week that Solix Biofuels has started oil production at a facility in Colorado:
Solix Biofuels begins production of oil made from algae
Solix Biofuels Inc. said Thursday it has started the production of oil made from algae at its Coyote Gulch Demonstration Facility, with full-scale commercial operation set for late summer.
“We are ready to prove to the world the viability of algae as an alternative to petroleum-based fuels,” Solix COO Rich Schoonover said in a statement.
Coyote Gulch is located on a two-acre site in the Durango area on land provided by the Southern Ute tribe.
Algal oil production began July 16, Solix said. It said Coyote Gulch is expected to produce the equivalent of 3,000 gallons per acre per year of algal oil by late 2009.
Yes, this is the same Solix whose co-founder admitted earlier this year that the costs of producing fuel from algae were $33/gal. And there’s the rub.
Never mind that “full-scale commercial” output refers to less than 0.4 barrels per day. (Sometimes I wonder if the people who write these stories ever bother to pick up a calculator). Never mind that they are going to require 20 full-time employees at the site to (hopefully) produce 6,000 gallons on the 2 acre site. OK, let’s do the math on that one just for fun. That works out to 300 gallons per year per employee. Let’s be conservative and say that the average salary is $30,000/yr. That is then $100 of salary for each gallon of algal oil that is expected to be produced (it’s actually more, because the site is supported by more employees off-site). And that’s just salaries. You quickly to start to see why John Benemann claims that you can’t even buy algal fuel for $100/gal.
People struggle with these sorts of concepts. They read a story like the one above, and they incorrectly assume that some alternative fuel technologies are at a stage of development that they most certainly are not. This sort of thinking – especially when it infects our political leaders – is dangerous because it creates unrealistic expectations and distorts energy policy.
Sometimes when I am trying to illustrate this point, I use the following example. There are an estimated 25 billion ounces of gold dissolved in the ocean, which is about 10 times the total amount of gold that has been mined throughout history. At current prices, that gold is worth many trillions of dollars. The fact that the oceans are full of gold has been known for over 100 years. That gold is there for the taking. And while people have been running scams related to the ocean’s dissolved gold for over 100 years, nobody has invented a commercial process for extracting it.
I could certainly start a company based on the idea of extracting gold from the oceans. I might even convince some people to invest in the company, if I am very aggressive with my cost projections, can convincingly exaggerate the status of the technology (actually I have the worst ever poker face, so that is unlikely), and I assure investors that technical breakthroughs are inevitable. After all, there is a multi-trillion dollar payoff. What’s a few million from each investor when we are all going to make trillions? (The funny thing is that I used this example with a businessman once, and he was ready to start a company – missing the entire point of the story).
The gold in the oceans and the gold in algal biofuel have much in common. You can develop a production process in each case, but the capital and operating costs for producing each are far too high for them to be commercially viable.
I don’t begrudge anyone trying in either case to improve upon the processes. But can we please do it with a minimum of fanfare and press releases? At some point the public and the politicians are going to become completely jaded at the repeated examples of over-promising and under-delivering (the ‘hype’), and the evaporation of taxpayer money that went into these schemes (the ‘fleecing’). When that happens the money is going to dry up for the hypesters and the promising technologies alike.
Note: Last week was tumultous and I was highly distracted, but I am about to get back on track and start answering the questions that readers recently submitted.
The Dominant Fuel in 2030
I just spent a fruitful week in Canada, learning about some of the biomass resources in Alberta. There are some interesting opportunities there for the right technology, and I expect that I will be making future trips up there.
One of the questions I was asked this week by one of my new Canadian friends was “Do you believe fossil fuels will still be the dominant power source in 20 years?” Without hesitation, I said “Absolutely.” Others around the table nodded their heads in agreement, and the questioner said “So do I.” It isn’t that this is what we want, but this is how we see it. Government agencies like the EIA see it the same way. While they show renewable energy growing, there is a very long hill to climb before they begin to challenge fossil fuels for supremacy.
I think the question was meant to gauge whether I am realistic about the potential contribution of biofuels in the years ahead. I believe that I am. While I believe that biofuels – or more appropriately renewable energy in general – will eventually become our predominant source of energy, that is going to take a long time. I also believe that it is going to happen by necessity – because of the depletion of fossil fuels – rather than a breakthrough that makes something like algal biofuel as cheap to produce as petroleum. Regardless, we need to pave the path to that potential future today, so when the need is pressing we aren’t scrambling to come up with solutions.
Speaking of algae, you may have seen the story on ExxonMobil plunking down $600 million for algal biofuel development. When I was in Canada, someone referred to this as “Dead Money Walking”:
Exxon, the west’s biggest oil company, has launched a new research programme into producing biofuels from algae, in a break from its general antipathy towards alternative energy.
At first sight, this looks a pretty bizarre thing for the company to be doing. Rex Tillerson, Exxon’s CEO, has been consistently sceptical about biofuels, even the advanced “second generation” variety. (Or, as Steven Chu, US energy secretary, described them to the FT, “fourth generation” biofuels.)
Incidentally, I did an interview in the airport yesterday on “4th generation biofuels.” I told the interviewer that I hate that term “4th generation biofuels.” Can we at least wait until we see what the 2nd generation really looks like?
But back to the ExxonMobil story. I am highly skeptical of the conventional paths to produce biodiesel from algae. In fact, John Benemann recently commented here that if you really want to know where algal biofuels stand, offer to buy some for $100/gal. He said you can’t get it. On the other hand ExxonMobil is certainly not stupid, so you have to wonder about their angle. The reporter I spoke with asked about algal biofuel, and I did say that I could see one circumstance in which it might work. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae. That would potentially be a much lower cost fuel, provided the production rates were decent.
Finally, it looks like I have 100 responses to the previous open thread, and I presume at least some of those are questions for me. I will try to work my way through those over the next few days. First, as indicated before I will speak with POET tomorrow about their ethanol work, and I will report on that conversation here in the next couple of days. If you have anything that you would like to ask them, let me know in the comments and I will try to get your questions answered.
John Benemann Responds to Green Algae Strategy Review
I recently published a review of Mark Edward’s book Green Algae Strategy: End Oil Imports And Engineer Sustainable Food And Fuel.
Skeptics abound in the algae space and the leading skeptic, Dr. John Benemann, speaks at all the algae conferences and stands in stark contrast to many other equally experienced scientists who do not share his natural pessimism. John revels in his reputation for pessimism. Other scientists engaged in the Aquatic Species Report have a completely opposite view. Several are working for companies that are producing algae for fuel. Professor Milton Sommerfeld at ASU and a co-author on the Report, has been producing algal oil for jet fuel in the laboratory and a field setting for several years.
Dr. Benemann had been following the exchange, and has e-mailed me a response to Professor Edward’s response, which I post in full below.
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I had only glanced at Prof. Edwards book last year, but not read it as it has little or no technical content, and thus not of great interest to me. From what I recall, what Robert Rapier wrote in his review, seems quite reasonable, actually rather mild.
In his response, Prof. Edward wastes no time to bring up my name, for which I am honored, calling me the “leading skeptic” who “speaks at all the algae conferences” and “revels in his reputation for pessimism”. Well, I admit that I talk at way too many conferences (“all algae conferences” would be impossible), which I should give up as it seems to do little or no good. But I must correct Prof. Edwards, I am neither a skeptic nor a pessimist. I am an incurable optimist and promoter of algae technology R&D, even for biofuels. I must be, to work in this difficult, if not dismal, field. I am, however, also a realist, about such little matters as, for two examples only, engineering head loss calculations and the limits of photosynthetic efficiencies, which are of no concern to Prof. Edwards, whose avocation is marketing. And, I am afraid, are of no concern either to many, even most, practitioners in this field, who should know better but blithely ignore such realities. It is easier to be an optimist if you only need to market the idea, or do research, but creating reality is somewhat more difficult. I work hard for my optimism, trying to find ways to overcome the technical roadblock and economic limitations.
Prof. Edwards, attempting to rebut my alleged ‘pessimism” points to scientists working for “companies that are producing algae for fuel” and that one professor has been “producing algal oil for jet fuel in the laboratory and a field setting for several years”. Sorry, there are no companies producing algae for fuel, just try to buy some, even at $100/gallon (at $1000/gallon you may be able to get a few). Some are claiming to be producing, but there is not a shred of evidence that they have succeeded in any meaningful way. (Solazyme may have, but the economics still are far from proven, and using corn starch or sugar is not a good idea, and using sugars from lignocellulosic biomass, well let us not go there either).
The only company I know that is producing algae oil is Martek Corp., and that is for human food and sells for a hundred-fold that of petrol. Neither are laboratory and academic “field” pursuits a guide to reality or technology.
Prof. Edwards claims that he has “seen” one or more order of magnitude “cost reductions” of algal oil production, extraction and mixing, in the last year or two. With all due respect to his discipline, seeing is not believing, data would be, but it must be based on actual measurements and methods that can be independently verified. Nothing of the sort can be pointed to.
Prof. Edwards is, I am sure, a most qualified expert in business and marketing, but I see little here that is real business and even less than is marketing. Algae for feed and fuel still need a great deal of R&D, of uncertain outcome, like all R&D. I recommend to Prof. Edwards that he redirect his obvious talents to help the real algae industry, the nutritional supplements business. That would be most useful – it is hard to convince people that they should ingest algae (pond scum) on a daily basis. Some do, but not nearly enough. There is the real marketing challenge! And it would lead the way to increased production, to larger scales, lower costs, more R&D, and, who knows, maybe eventually get us to a price point where we can sell algae for food and feed competing with commodity crops. Maybe even fuels at that point, perhaps. I am just an incorrigible optimist.
John Benemann
Response to Green Algae Strategy Review
I have received a response from Mark Edwards, auther of Green Algae Strategy: End Oil Imports And Engineer Sustainable Food And Fuel.
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Response to Green Algae Strategy Review
Thank you for the review and the opportunity to respond to your thoughtful comments. Your observations are right on target for someone focused on algal oil as a liquid transportation fuel.
Remember that food energy is actually more important to humans that liquid transportation fuels. We can survive without transportation assistance but we starve quickly without food energy. I see no way to produce algae economically purely for liquid transportation fuels. The only way production makes sense will be to grow massive amounts of algae biomass, harvest the lipids for transportation energy and use the protein and carbohydrates to produce additional forms of energy, including especially food and feed.
RR quote: “Either Mark Edwards is dead wrong, or I am dead wrong.”
On the future of any topic, especially science, the truth is probably somewhere in the middle.
Skeptics abound in the algae space and the leading skeptic, Dr. John Benemann, speaks at all the algae conferences and stands in stark contrast to many other equally experienced scientists who do not share his natural pessimism. John revels in his reputation for pessimism. Other scientists engaged in the Aquatic Species Report have a completely opposite view. Several are working for companies that are producing algae for fuel. Professor Milton Sommerfeld at ASU and a co-author on the Report, has been producing algal oil for jet fuel in the laboratory and a field setting for several years.
Speculation on cost per gallon of algal oil is useless until we see actual field production. The good news on this front is that I have seen the following:
• Cost reduction of algal oil production — one order of magnitude in the last two years
• Cost reduction on algal extraction — two new methods promise two orders of magnitude
• Cost reduction on energy for mixing — one order of magnitude in the last two years
These cost reductions will be reflected in various producers’ cost models. American scientists and engineers are exceptionally talented at taking costs out of production.
The real question is not the cost of algal oil per gallon but the value of the total culture. The best production models I’ve reviewed have only about 30% of the algal biomass value going to fuel. That means 70% of the biomass produces other coproducts from the protein and carbohydrates. Those many coproducts are examined in analyzed in Chapters 7 and 10 in Green Algae Strategy.
Green solar energy captured in algae creates a portable energy source and grows biomass with solar energy stored in forms that may be used for a variety of purposes:
• People – organic protein in food
• Animals – organic protein in fodder
• Fowl – natural protein for birds
• Fish – natural protein in fish feed
• Land plants – organic nitrogen fertilizer
• Fire – high energy algal oil for cooking and heating
• Cars – carbohydrates refined to gasoline for transportation
• Trucks and tractors – high energy clean, green diesel
• Trains, boats, barges and ships – high energy clean diesel
• Planes – high energy, clean aviation gas and jet fuel
Algae also offer low energy and low cost pollution solutions to clean waste, brine or salt water, sequester CO2 from coal fired power plant plumes and recover abandoned soils. This presentation will highlight the status of the algal industry with a focus on food and energy.
RR quoting a study that I cited in the review: What about the value of sequestered carbon in algae-based biofuels? In short, there isn’t any. Atmospheric carbon is only sequestered for a short time until it’s burned in an engine. Under existing biofuels mandates in most industrialized countries, there will be no opportunity to sell carbon offsets unless fuel production is additional, or beyond such mandates.
This criticism ignores the fact that algae-based biofuels recycle atmospheric carbon and every gallon displaces a gallon of fossil fuel. When algal production occurs with no fossil energy, the production is carbon neutral because the carbon dioxide is simply being recycled. In contrast, cropland-based biofuels such as ethanol emits more carbon than burning natural gas directly due to the huge amounts of fossil fuels needed to produce corn.
I recently presented a paper demonstrating our work with Desert Sweet Biofuels where we produced carbon negative algal biomass by using a gasifier and creating bio-char. The gasifier burned biomass in a oxygen starved container creating hydrogen and carbon monoxide. The hydrogen was burned for energy to create electricity while the carbon dioxide was flued into algal ponds to produce algal biomass. Our calculations showed that we sequestered only about 10% of the total carbon — the bio char that was scratched into fields. The University of Arizona is currently conducting research to see what percentage of that bio char stays in the soil and for how long. Other research suggests that much of the bio char stay sequestered for decades.
Several countries are financing gasifiers in the U.S. for algal oil production for carbon trade off-sets.
RR quote: Edwards falls prey to the Vinod Khosla fallacy on cellulosic ethanol: This is simply too important and there are too many companies working on this to fail.
Vinod Khosla gave an excellent keynote at the 2009 Algal Summit in Seattle where he outlined his reasoning for not investing in algal production. His primary points were that he needed to see actual production before making investments and that the industry needed to do a better job at conveying the value proposition for algae.
RR quote: He is sufficiently skeptical about the near term prospects for cellulosic ethanol, and is harsh in his assessment of corn ethanol (even more so than I have been).
My prior book, Biowar I: Why Battles over Food and Fuel Lead to World Hunger
• 40 million acres of prime American cropland
• 2 trillion gallons of fresh water for irrigation
• 5 billion gallons of diesel fuel for corn production
The 2009 ethanol production will create severe pollution of air, water and soils while reducing imported oil by about 3%. Algal production, when commercially viable, could produce far more ethanol or other higher energy fuels using no or minimal cropland, fresh water or fossil fuels.
BioWar I covers the research on cellulosic ethanol which, for litany of reasons including that it takes too much fresh water and energy, makes no sense for biofuel production. Cellulosic products may turn out to be an excellent source of carbon for the production of algal oil. BioWar I concludes that our best policy is to end subsidies for ecologically destructive production such as ethanol and big oil and to shift subsidies to ecologically friendly production such as algal biomass. Subsidies played a key role in the review.
RR quote: He blames the lack of progress for algae on lack of funding, which is blamed on corn ethanol. This, he argues, was the politically favorable biofuel that sucked up all the R&D funding (and subsidies). He later writes “If corn ethanol makes sense, the market will reward it without taxpayer monies or protectionist tariffs.” Can’t we say the same about algal fuel?
Making corn whiskey, ethanol, is a 200-year-old technology. Subsidies are useful for changing consumer behavior and supporting new technologies. Subsidizing corn and the many inputs for growing corn for ethanol make no sense and are ecologically destructive. Algal production does not need protectionist tariffs but does need public monies to develop the knowledge base to grow massive amounts of biomass. The two top threats I see to the algal industry are subsidy-based. Lack of government subsidies, which began in the 1990’s at the end of the Aquatic Species Program led to: (Subsidies were shifted to corn ethanol.)
a. No support for academic, institute or government algal research. As a consequence, the US has few algae labs, nearly no American algal professors and very few students trained in algal production. Lack of trained scientists and graduate students put the U.S. at severe disadvantage in algal production.
b. An algal industry constrained by vertical markets. Each algal company jealously protect its intellectual property and does not share bubble research or breakthroughs. Even the scientific meetings are full of statements that the scientist cannot share real numbers because they have signed on disclosure agreements with their employers or grantors.
The R&D necessary for successful algal production will take more money than is available from private investors. Who wants to invest $500 million on R&D. Investors want a fast return and are not willing to fund sufficient R&D. Failing government subsidies, the industry will sputter for decades. Then, when humanity desperately needs sustainable food and energy solutions, we will discover that the intellectual property for production is locked up by a very few producers who monopolize production to the detriment of all humanity.
RR paraphrase: To commercially grow them in the Midwest –pipedream.
Watch. Within 10 years, most the farms in the Midwest will use algal production to:
a. Recover and recycle energy in agricultural waste streams, especially manure
b. Recover and recycle nutrients in agricultural waste streams
c. Reduce the ecological damage and carbon footprint for agricultural production
Yes, many producers may use greenhouses and geothermal energy for algal production. However, cold tolerant algal species may flourish in the Midwest especially during the normal growing season.
RR paraphrase: Energy return not covered.
Correct. No one can credibly address energy return until production specifications and costs are determined. However, the production of algal biomass using solar, wind and geothermal energy avoid the issue of fossil fuel use. Two new extraction technologies promise significant reduction in energy requirements. One method uses simple air flocculation and another uses ultrasonic waves to break up the algal cells and separate the oil from the other biomass. The ultrasonic solution allows the oil to flow to the top where it can be skimmed off at very low cost.
RR paraphrase: Casually dismiss technical challenges
The technical challenges are treated with seriousness and focus. True, most are not solved in the book. An entire chapter examines each technical challenge and what needs to be done to successfully produce algal oil. In addition, the table in the last chapter provides a summary of the technical challenges and the R&D needed.
RR quote: Page 13: As a criticism of using food crops for fuel, he states that massive planting of corn leads to high humidity because the leaves transpire water. This leads to thunderstorms and potentially tornadoes. That large areas planted in corn can increase the risk of tornadoes is something I have never heard before.
Neither had I before doing the research for BioWar I and Green Algae Strategy.
RR quote: Page 150: When writing that algal fuel mimics fossil fuels without fossilization, he writes “Skipping the fossilization step not only saves 200 million years of pressure and heat, but lowers production costs significantly.” I can’t really comprehend this one.
Consider the true cost of production for fossil fuels. Failing government subsidies, fossil fuels would cost around $15 a gallon and that’s ignoring their ecological cost. Oil fields must be found and developed at huge cost. Extraction and transportation add significant additional costs.
Imagine growing algae locally for fuel production when the inputs are only sunshine, carbon dioxide and wastewater.
RR quote: Page 179: He cites a claim by Aurora Biofuels that their process creates biodiesel with yields 125 times higher and 50% cheaper than current methods. I am going to presume that this was supposed to read 125% higher and not 125 times higher.
You are correct.
RR quoting from the book: Page 204: “When someone invents a carbon capture filter for vehicle exhaust pipes, there will be a nearly limitless supply of low-cost CO2 for growing algae.”
I think this is a great idea. A Brit has developed the vehicle exhaust filter. This is only one of many new and some recycled ideas presented to spur algal production.
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