R-Squared Energy Blog

Pure Energy

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.

August 31, 2009 Posted by | algal biodiesel, biodiesel, cellulosic ethanol, hydrogen, john benemann | 145 Comments

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).

August 30, 2009 Posted by | algal biodiesel, solar power | 17 Comments

An E-Fuel MicroFueler Dealer Responds

After publishing the previous story, I went back and searched through my Gmail to see when I had first heard about the E-Fuel MicroFueler. It turns out that about a year ago a regular reader of my blog – and someone I had exchanged a number of e-mails with – sent me the first bit of information and asked for my opinion. He told me at that time that he had become a dealer of these systems.

At the time, the idea was to use sugar as the feedstock. I made a number of comments, including my concern that the capital costs alone were too high to make the unit economical. I said that I felt like they would need to get capital costs down by 2/3rds, and I questioned several assumptions in the economics. Further, I flagged up a concern that people who couldn’t program their VCRs would be expected to produce ethanol in their garage. On the other hand, I did favor the idea of localized production of fuel (and still do).

Following the previous essay in which I pulled no punches, we exchanged several e-mails. I told him that I felt like what was being presented about the MicroFueler’s capabilities bordered on fraud. In response, he said he wanted to clarify a number of points raised in the L.A. Times article that I addressed. Since he is not authorized to speak on behalf of E-Fuel, he will not be identified and this will be his opinion – and not the official company position. One of my core principles is to allow people to respond to my criticisms, so in the interest of fairness, I present excerpts of his response to me.

On the topic of the government picking up half the cost, he wrote:

Section 30C of the US Internal Revenue Code (as amended by the Stimulus Act) provides an income tax credit of 50% (up to $50,000) for a taxpayer to install “Alternative Fuel Vehicle Refueling Equipment” as long as the fuel is used in a “trade or business”. Individuals can qualify for a credit of up to $2,000. This credit applies to commercial E-85 pumps, natural gas refueling equipment, hydrogen, biodiesel, and yes, even MicroFuelers. The credit also applies to other “turn-key” ethanol fuel production/dispensing solutions. The same government that provides these incentives is the same one that gives incentives to the petroleum industry for exploration, infrastructure, research & development, etc. Fair is fair.

If individuals qualify for $2,000, then that puts the out of pocket cost at $8,000 – and not the $5,000 that I have seen mentioned again and again.

Regarding my comment about people being trusted to put the correct amounts of ethanol in their vehicles, he wrote:

There was a study by the University of North Dakota that looked at the ability of unmodified non-flex fuel vehicles to run on ethanol/gasoline blends. The study showed that these vehicles could run quite well on high-level blends such as E-50, E-60, etc. The study also looked at fuel economy when using these various blends and concluded that blends of E-20 or E-30 might well be the “optimal” blend in terms of overall fuel economy for non-flex fuel vehicles, but the results tended to be different for each make/model/year vehicle tested.

“Optimal” in the real world translates (and this is very important) into two things:
1. Lowest net cost per mile (including vehicle manufacture & upkeep)
2. Lowest net “well to wheel” emissions per mile (including vehicle manufacture & upkeep)

Optimal Ethanol Blend-Level Investigation

Unfortunately, it didn’t address the question of vehicle longevity, but we have many real-world data points that support our position that ethanol is unlikely to cause any problems.

We know that most vehicles built after 1989 have parts that are ethanol compatible (fuel pumps, fuel injectors, fuel lines, etc). In fact, if you compare part numbers between today’s “flex fuel” and “non-flex fuel” vehicles, you’ll find the exact same part number used in both applications. There is a lot of fear, uncertainty, and doubt about whether ethanol can be used in non-flex fuel vehicles – but the fact is that we’ve been using high-level ethanol blends (up to E100) in a number of unconverted non-flex fuel vehicles with no problems except the occasional “Check Engine” light… and the only reason the Check Engine light comes on is because the on-board ECU thinks that the fuel system is putting too much fuel into the engine so it assumes there is a problem when, in fact, there really isn’t. It’s just that the ECU was never programmed to take the possibility of using ethanol (lower energy density) into account. In these cases, the “Check Engine” light is a false indication of a non-existent problem.

I am familiar with the University of North Dakota study. It was paid for by the American Coalition for Ethanol. I think we would agree that if an anti-ethanol result was found as a result of research funded by the American Petroleum Institute, ethanol proponents wouldn’t accept that at face value.

The study has been widely spun as showing that an optimal ethanol blend was E20 or E30. But I looked at the report, and previously commented on it at TOD. Here were some of my comments on this paper:

I took some time to review this paper again. This is what I see from the ethanol tests. Look at Figures 10-13. Here is the reality of the tests:

Figure 10. 2007 Toyota Camry, 2.4-L engine – 6 of 7 tests show worse fuel efficiency on an ethanol blend. There is one apparent outlier, which was the basis for the claims. (And it looks like a classic outlier, with almost all of the other points falling as predicted).

Figure 11. 2007 Chevrolet Impala (non-flex fuel), 3.5-L engine – 5 of 5 tests show worse fuel efficiency on an ethanol blend.

Figure 12. 2007 Chevrolet Impala (flex fuel), 3.5-L engine – 8 tests, 2 show better fuel efficiency, 2 show the same, and 3 show worse fuel efficiency on an ethanol blend.

Figure 13. 2007 Ford Fusion, 2.3-L engine – 4 of 5 tests show worse fuel efficiency on an ethanol blend. There is one apparent outlier.

So, what can we conclude? Of 25 data points, 18 confirm that the fuel economy is worse on an ethanol blend. That is 72% of the tests, and these tests were paid for by the ethanol lobby (which is why I suspect the results were spun as they were). The outliers are interesting enough for further investigation, but you have vastly overstated the test results. In reality, if you pulled the results out of a bag, you have only a 28% chance of improving your fuel efficiency on the basis of any particular test. Further, the outlier didn’t always occur at the same percentage, which would be quite problematic even if the result is confirmed.

On the L.A. Times article itself, and my claim that the author had been duped:

“Duped” might be a bit strong, but there were certainly a few problems with the article. I’m not sure if Tom/Chris misspoke or if they were misquoted (I wasn’t there), but the inaccuracies should have been identified and cleared-up before the article went to press. Incorrect? Perhaps in some ways. Misleading? Maybe. Intentionally misleading (fraud)? No… I’m confident that there was no intent by E-Fuel or GreenHouse to be misleading. I think it’s unfair to expect any journalist to have the same level of technical knowledge and industry experience that we have, so I’m prepared to live and let live when an article doesn’t get everything exactly right. The fact is that nobody “lied” here, and there’s really no way to control what gets printed. No journalist in the world would allow us to review the article before it goes to print.

I agree that someone with more experience could have handled the interviews or at least reviewed the article before it went to press. And perhaps an “interview” isn’t the best way to present the concepts that were discussed. Maybe a “press sheet” or “whitepaper” would be more appropriate. We (the biofuels industry in general) need to be careful to properly manage customer expectations because, ultimately, failure to do so could seriously undermine our credibility.

Regarding my comment that a big ethanol refinery would be more efficient:

Energy efficiency of huge biorefineries isn’t going to be much different than in the MicroFueler. It takes a certain amount of energy to distill no matter what quantities we’re talking about. Take a look at Floyd’s 1982 design and then look at the MicroFueler design and you’ll see it’s pretty well thought out. Where “the big boys” have a definite advantage is there economies of scale with respect to capital costs. Where we have a huge advantage is the cost of feedstock, carbon balance, and the (near) elimination of the whole petroleum distribution system.

I disagree with that. A smaller purification system is going to suffer heat losses to a much greater degree. It is inevitable. You see it all the time when trying to run a laboratory column to simulate a production column. Efficiencies aren’t nearly as good because of the higher relative heat losses.

Regarding the comment that 100 billion gallons of fuel are thrown away:

Misquoted or misspoken. He probably meant to say that the US is sitting on about 100 billion gallons worth of cellulosic biomass on a sustainable, annual basis. That’s the USDA/DOE “Billion Ton” study. There’s a fine line between “thrown out” and “not utilized”. Then there’s all the stuff that we’re paying to haul away to landfills (another 6-10 billion gallons worth). Tom knows the difference, but somehow the two thoughts got combined into a single statement.

We exchanged a number of e-mails regarding the claims around adding water to ethanol to improve the engine efficiency. I have seen some references to that, but I haven’t been able to find actual results. (See this article, for instance). My comment was that the results may have been spun like the University of North Dakota study cited above. But one thing that I told him I don’t believe is credible is that a person was running out of fuel and added 3 gallons of water to their tank to get home (see the previous story for that example). It is possible that a vehicle running on ethanol – and with a pretty full tank – could “tolerate” that much water.

But this much is true. It takes a lot of energy and capital to get that last 5% of water out of ethanol that is produced. Cars can run on ethanol that contains water (hydrous ethanol), albeit at a lower efficiency (which is why the water is removed). Brazil runs some of their cars on hydrous ethanol. But the claim that this improves the efficiency is pretty far-fetched, in my opinion. One of the articles I recently read stated that the water lowered the combustion temperature, thus increasing the efficiency. But if you look at the equation for efficiency of an engine, a lower combustion temperature will normally result in a lower efficiency. Regardless, I don’t put much faith in highly counter-intuitive results until they have been well-replicated (see ‘cold fusion’). And if they are – it would be a potentially revolutionary finding.

On the cellulosic issue, he wrote:

The MicroFueler is an automated fermentation, distillation, and dispensing platform. Our fermentation process regulates agitation, temperature, and other parameters to optimize output, but fermentation is fermentation. Distillation isn’t rocket science. If you can boil water then you can distill ethanol. We happen to be able to do this very efficiently and we produce a very high quality fuel. So the question is, can we really hydrolyze cellulosic materials to liberate the sugars and then convert them into ethanol? The answer is yes. The better question is “can we do this efficiently in order to get close to the maximum theoretical yields?”

You can’t just put grass clippings in a MicroFueler and walk away from it and expect ethanol fuel. There’s more to it than that. But, it’s not a big deal to put a grinder, pump, and a 300 gallon tank next to a MicroFueler or to add a bottle of enzymes now and again. It’s like having a pool, and then having the pumps, filters, to make it work, and the chlorine to keep it all clean. Or like a washing machine for that matter. Laundry detergent is mostly enzymes, and the clothes don’t wash themselves.

There’s another issue here which is that people toss around the term “cellulosic” far too often without really knowing what it means. Food waste (starch/carbohydrates) is very easy to work with, but it’s not cellulosic. People think that anything other than corn is cellulosic. Blame that on the media.

Around the economics, he essentially said that not everyone will save money, but some will save a lot of money. I haven’t seen the assumptions that went into those financial calculations, but I am highly skeptical that the average person would save any money.

In his conclusion, he again hit upon the local production aspect, which was the one part I did find appealing:

And here’s the $64,000 controversy… Say for example I feed my MicroFueler a steady diet of corn (grain) and amylase enzymes. I grow the corn on my farm, make the fuel on my farm, and feed my chickens the WDGS that are left-over from making ethanol. No transportation. Then I collect the chicken manure and spread it back in my corn field (which I also irrigate with the wastewater). By the way I’m also paying a premium for wind power to run my MicroFueler in this scenario. Is this sustainable? Does this defeat the argument that all corn ethanol is patently unsustainable (by definition)? I guess it all depends on the price delta between a bushel of corn and a gallon of gasoline. High gas prices and low corn prices you better believe I’m making fuel.

I don’t think anyone would argue that corn ethanol is unsustainable by definition. If a farmer is growing his own corn and taking care of the soil, and using that to produce his own ethanol, then he has a shot at sustainability. We lose the plot when we try to ramp that up to be a large scale solution.

To conclude, I recognize that my original article was pretty harsh. But that is because in my opinion there had been a distinct pattern of embellishment with this device, and if there is one thing I loathe it is people making far-fetched promises around renewable energy. I found the L.A. Times article to be irresponsible, either because the journalist did a poor job or the developers were overselling their device.

The end result of articles like this is that it creates the potential for money – private equity and taxpayer funds – to flow to an undeserving source. Ultimately this will have the effect that the funds will dry up, and promising technologies won’t be funded as a result. Imagine funds for cancer research being diverted to some of the fraudulent cancer cures, and you have the sort of example that gets me worked up. That is the reason I am quick to pounce on embellishment.

August 26, 2009 Posted by | biofuels, ethanol, Media coverage, scams | 68 Comments

Another Journalist Fails Due Diligence 101

I have had a number of people ask me about the E-Fuel MicroFueler, so at one point I did a bit of investigating. It is essentially a small still, but apparently has a fermentation capability if the feedstock contains sugar. However, they stress that it works best with wastes that contain alcohols (which a still would simply clean up) and they say in their FAQ that “under most circumstances consumers will contract with their dealer to service the MicroFueler and maintain a regular delivery and supply of feedstock.” What that means to me is that they will send you spoiled beer or wine, and the person who failed Economics 101 and bought one of these can then use electricity to turn the feedstock into alcohol. They can then tell those Arabs that they don’t need their stinking oil.

The unit lists for 10 grand, but they claim the government will gladly pitch in half the cost. I can’t tell you how pleased I am at the thought that the government is making such good use of my tax dollars.

They are also setting themselves up for a lawsuit when someone puts too much ethanol in their vehicle and damages the engine. Their website highlights a study suggesting that the optimal blend for an auto may be E20 or E30.

But today, a journalist who has absolutely no business writing about something like this wrote a very misleading story on the unit. And the reason the story is so misleading is that the journalist was completely out of her element and couldn’t tell how badly she was being duped. Yet it ended up in the Business Section of the L.A. Times:

Making fuel at home: Waste wine primes the pump

The subtitle states: “The MicroFueler makes ethanol out of organic waste in minutes. It can be installed at individual homes, and companies are eager to supply owners with garbage.”

There is so much wrong in this story, but I am going to focus on some choice excerpts:

It sounds too good to be true:

She could have stopped right there and applied the first rule of Due Diligence 101. It is easy to fool people when they are outside of their area of expertise. If she is not qualified to ask the right questions, then if it sounds too good to be true she probably should have dropped the story or pulled in an expert for an opinion. But alas, she continued:

The problem with ethanol, [inventor and CEO Tom] Quinn said, was energy inefficiency — not only in the carbon cost of growing, harvesting and transporting the corn that was used to make it, but also in the distillation process that turned it into usable fuel.

Yet ironically this system works best with waste ethanol that was produced using corn, and will be cleaned up with a distillation process that will be less energy efficient than the ones in full-scale ethanol plants.

“In the U.S. alone, more than 100 billion gallons of organic fuel is thrown out,” said Quinn, who reached out to ethanol scientist Floyd Butterfield to see if they could collaborate on a system that could make ethanol in a manner that was cost effective and better for the environment.

I would like to see a source for that. I do not believe it. Our gasoline demand is around 140 billion gallons per year right now, and I am to believe that we throw away an amount equivalent to over 70% of what we actually use? And I guess that would be this Floyd Butterfield? At the link Floyd tells the tale of having converted a truck to run off of pure ethanol. Once when he was running out of ethanol and wasn’t going to be able to make it home, he stopped and put 3 gallons of water in and drove the rest of the way home. This is great news, because the MicroFueler produces ethanol with 5% water.

As they say on their technology page, “E-Fuel scientists have experimented with multiple blends of ethanol and water and have determined, contrary to conventional wisdom, small amounts of water improve the efficiency of burning ethanol.” It occurs to me that they should sell this research to the government and the ethanol industry, which is currently spending lots of money to get that last 5% of water out.

Here is where the ignorance of the journalist starts to show badly:

The idea was to use organic waste rather than corn to make a product known as cellulosic ethanol. Although Quinn’s MicroFueler is most effective with wastes that are high in alcohol, ethanol “can be made out of any waste — lawn clippings, dairy products, old chemicals, cardboard, paper, bruised and discarded apples from the grocery store. It can be fermented and turned into fuel in minutes,” Quinn said.

First of all, this unit does not make cellulosic ethanol. To suggest or imply that it does is simply false. In fact, here is what they have on their website:

To further simplify the E-Fuel100 ethanol production for consumers, the MicroFueler supports a variety of organic waste as fuel (among them are discarded liquids rich in sugar, waste sugar, liquids with residual alcohol, cellulosic materials** and even algae**).

At the bottom of the page, we see this: **Additional processing outside of the MicroFueler may be required. May be? So you are telling me that I might be able to throw cellulosic materials or algae into this thing and get ethanol from those feedstocks? Well, all I can say is prepare to be sued for fraud.

So far, only one MicroFueler is up and running. It was installed in late June at the Pacific Palisades home of Chris Ursitti, CEO of GreenHouse International Inc., the San Diego firm that is distributing the units and supplying feedstock to those who install MicroFuelers at their homes.

Once you get a few more units out there, you better line up some good lawyers. You are certainly going to be sued for false advertising.

GreenHouse has contracts with Karl Strauss Brewing Co., Gordon Biersch Brewing Co. and Sunny Delight Beverages Co. to convert 29,000 tons of their liquid waste using MicroFuelers.

Though Ursitti is the only one now using the system, the plan is for a tanker truck to pick up the companies’ waste and deliver it to home-based MicroFuelers, which convert it to ethanol on site. MicroFueler owners are charged $2 a gallon once they pump out the fuel.

So, let’s get this straight. A brewing company has a bunch of liquid waste that contains alcohol. They aren’t going to clean up this waste themselves and recover the alcohol. Instead, they are going to put it in a tanker truck and haul that waste to people’s houses and dump it in their MicroFuelers. The owner of the MicroFueler, having paid $10K to buy one of these things, is now going to pay for the electricity and then pay another $2 a gallon for the finished product. They are then going to put it into their vehicle, hopefully in proportions that don’t ruin their cars. Wow.

Again, the journalist makes a patently false statement:

Converting expired beer and other liquid wastes into cellulosic ethanol takes minutes and uses three kilowatt-hours of electricity to produce one gallon of fuel.

How about some voodoo economics?

Factoring in the $5,000 federal tax credit, an annual household fuel consumption of 2,080 gallons and a $2 charge a gallon, GreenHouse estimates the average consumer payback time is about two years.

First off, they have just about doubled the annual household fuel consumption. There are an estimated 112 million households in the U.S., and our total gasoline consumption is about 140 billion gallons. That is 1,250 gallons of gasoline per household. But because of the lower energy density, I will have to replace that gasoline with around 1,800 gallons of ethanol (actually about 1,900 since it contains 5% water).

I am going to spend $5,000 on the unit since they assure me that I will get a $5,000 tax credit (hey, they haven’t steered me wrong yet, have they?) and I am going to pay $2/gallon plus electricity. So over the course of 2 years the average household would pay $5,000 (plus another $5,000 from the taxpayer) plus $3,800 (1,900 gallons at $2/gal) plus another $1710 of electricity (again, taking their word that it is only 3 kWh of electricity per gallon, and using $0.15/kWh) for 3,800 gallons of ethanol to replace 2,500 gallons of gasoline.

Today’s average retail price of gasoline is $2.64. So in two years an average household would pay $6,600 for gasoline. The total price over two years via this ethanol route (and I am assuming free feedstock and value for your labor) is $15,510. But if they are correct and we taxpayers get to kick in $5,000 (and why wouldn’t we for such a revolutionary invention?) then the cost is only $10,510. So much for a two-year payback. As I said, this is for those who failed Economics 101, and is being helped by a journalist who failed Due Diligence 101.

I will say that things have certainly changed a lot since Quinn and Butterfield were featured in the New York Times a year ago. At that time the unit was going to be fed sugar (which they were going to import from Mexico because of the cost), was going to cost only $1/gal, and when the alcohol was burned it was only going to produce 1/8th as much carbon as you would get from burning gasoline. Quinn was also certain that it would strike fear in the heart of the oil industry. Now a year later the unit prefers to be fed alcohol so it can produce alcohol, will cost $2/gal, and will produce almost as much carbon as one would produce from burning gasoline.

What a racket.

August 23, 2009 Posted by | due diligence, ethanol, scams | 71 Comments

My Point Exactly

I missed this story when it came out last week:

Hydrocarbon biofuels’ promise tops that of ethanol, gasoline

John Regalbuto, a chemical engineer at the University of Illinois, Chicago, and director of the NSF catalysis and biocatalysis program, wrote in Science that biomass-derived fuels are not far from being part of the energy mix as a replacement for gasoline, diesel and jet fuel.

Hydrocarbon fuels can be directly produced from the sugars of woody biomass — forest waste, cornstalks or switchgrass — through microbial fermentation or liquid-phase catalysis, he wrote. They can be produced by pyrolysis or gasification directly from the woody biomass. And they can be produced by converting the lipids of nonfood crops and algae.

“The drawback to using ethanol as a complete replacement for gasoline … is not only the high cost of its production from cellulose but also its lower energy density,” Regalbuto wrote. “Ethanol has two-thirds the energy density of gasoline, and cars running on E85 (85 percent ethanol and 15 percent gasoline) get about 30 percent lower gas mileage.”

I am not so concerned about the energy density as I am the prospects for ever being able to produce ethanol from cellulose at a reasonable energy efficiency. By that, I mean this: If I start with biomass with the energy content of a million BTUs, how much ends up as usable energy?

And the money quote, which has been my argument all along:

“I’m not a lobbyist but a scientist, but if I were, I would argue for a subsidy for all biofuels and not just ethanol,” he said in an e-mail. “It’s too early to tell which route — pyrolysis, aqueous phase processing, gasification or synthetic biology — will win out; we may well have versions of all four contributing to the mix. I would simply say that lignocellulosic hydrocarbons appear to give far more promise than cellulosic ethanol.”

Without any subsidies at all, fossil fuels would kill pretty much all biofuels except for sugarcane ethanol from the tropics. If you subsidize all biofuels equally, corn ethanol can compete as a 1st generation fuel, but gasification or pyrolysis will win out over cellulosic ethanol. The energy efficiency of cellulosic ethanol relative to gasification is far too low for it to compete in the long run. I am not naive enough to think that corn ethanol is going away – it has too much support in Congress. But the 2nd generation will only see cellulosic in niche applications. Gasification is where I am placing my bet.

August 21, 2009 Posted by | biomass gasification, btl, cellulose, cellulosic ethanol | 37 Comments

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.

August 21, 2009 Posted by | algal biodiesel, technology | 29 Comments

Rentech Making Waves

The following story posed a bit of a dilemma for me. In my new role, there will be potential conflicts of interest in some of the stories I may post, and until I elaborate on what I am doing, I am trying to avoid posting anything that might fall into that category.

When I first saw this story earlier today – and in fact received the press release from Rentech (RTK) – my first thought was that this sort of fell into that category. Why? Two reasons. First, Rentech’s Senior Vice President and Chief Technology Officer Harold Wright is my former manager and a friend. Second, in my new role I have interests that are of the same nature as some of Rentech’s. That means that we could be allies or we could be competitors, but I can’t say I am a disinterested party. So I finally decided that I should simply declare this, and post the story, which is really a culmination of several Rentech developments.

Having said that, Rentech has really been generating a lot of buzz lately. They are currently operating the only fully-integrated synthetic transportation fuels production facility in the U.S., and in partnership with ClearFuels Technology Inc., they are building a “20 ton-per-day biomass gasifier designed to produce syngas from bagasse, virgin wood waste and other cellulosic feedstocks at Rentech’s Product Demonstration Unit (PDU) in Colorado. The gasifier will be integrated with Rentech’s Fischer-Tropsch Process and UOP’s upgrading technology to produce renewable drop-in synthetic jet and diesel fuel at demonstration scale.”

Rentech also recently announced their Rialto Project, designed to “produce approximately 600 barrels per day of pure renewable synthetic fuels and export approximately 35 megawatts of renewable electric power.” They will use Rentech-SilvaGas biomass gasification technology, and green waste as the feedstock.

Today’s press release announced an off-take agreement with several airlines. You can read the press release below. Rentech stock was up 86% today on the news. They also announced a profit last week of $0.22 a share (triple analysts’ expectations), and were up 56% on that news.

I have strongly voiced my views that I believe the future belongs to gasification. Keep an eye on Rentech’s developments in this area.

——————————–

Rentech to Supply Renewable Synthetic Fuels to Eight Airlines for Ground Service Equipment Operations at Los Angeles International Airport

Initial Purchasers Include Alaska Airlines, American Airlines, Continental Airlines, Delta Air Lines, Southwest Airlines, United Airlines, UPS Airlines and US Airways, with Potential for Additional Purchasers

LOS ANGELES (August 18, 2009) – Rentech, Inc. (NYSE AMEX: RTK) announced today that it has signed an unprecedented multi-year agreement to supply eight airlines with up to 1.5 million gallons per year of renewable synthetic diesel (RenDiesel®) for ground service equipment operations at Los Angeles International Airport (LAX) beginning in late 2012, when the plant that will produce the fuel is scheduled to go into service.

The initial purchasers under the agreement with Aircraft Service International Group (ASIG), the entity that provides fueling services to many airlines that operate at LAX, are Alaska Airlines, American Airlines, Continental Airlines, Delta Air Lines, Southwest Airlines, United Airlines, UPS Airlines and US Airways. Additional airline purchasers of RenDiesel® can be added under the agreement with ASIG.

The agreement is the first of its kind to supply renewable synthetic fuels to multiple domestic airlines. The renewable RenDiesel® fuel to be supplied to the airlines would be produced from green waste at Rentech’s proposed Rialto Renewable Energy Center (Rialto Project). The renewable diesel fuel will have a carbon footprint of near zero. RenDiesel® exceeds all applicable fuels standards, is biodegradable and is virtually free of particulates, sulfur and aromatics. RenDiesel® is compatible with existing engines and pipelines, providing an immediate solution to the transportation sector’s requirements to meet targets established by California’s Low Carbon Fuel Standard.

D. Hunt Ramsbottom, President and Chief Executive Officer of Rentech said, “This commercial purchase contract among Rentech, ASIG and the airlines validates the growing demand for synthetic fuels produced by the Rentech Process. The low-emissions profile and near-zero carbon footprint of our renewable RenDiesel will guarantee that the LAX ground service vehicles using this fuel will be among the cleanest and greenest of their kind.” Mr. Ramsbottom continued, “We expect this agreement to serve as a model for future supply relationships at other airports and for other fuels, including Rentech’s synthetic jet fuel, which was recently approved for commercial airline use.”

Glenn F. Tilton, Air Transport Association of America (ATA) Board Chairman and UAL Corporation Chairman, President and Chief Executive Officer, said, “We are proud to take part in this innovative, collective endeavor that, over time, will further reduce greenhouse gas emissions and improve local air quality through the use of greener fuels.” Mr. Tilton continued, “This transaction promises to be the first of many such green fuel purchase agreements by the commercial aviation industry. It exemplifies the ongoing commitment of airlines and energy suppliers to diversify our fuel sources while contributing to a cleaner environment and adding new jobs to the economy.”

ASIG is thrilled to have been instrumental in reaching this landmark deal with the airlines and Rentech, reinforcing our strong commitment to our airline customers and environmental stewardship,” said ASIG President Keith P. Ryan. “We are proud to be on the forefront of this innovative effort to advance aviation environmental progress.”

Gina Marie Lindsey, Executive Director of Los Angeles World Airports (LAWA), commented, “This collaborative effort is yet another environmentally friendly initiative that we and the airlines are pursuing at Los Angeles-area airports. It shows what we can accomplish by working together toward a common and necessary goal.”

Rentech is developing a commercial-scale facility in Rialto, California, to produce renewable electric power and the cleanest diesel in California, each with a carbon footprint near zero. The project is currently designed to produce approximately 600 barrels per day of renewable, ultra-clean synthetic fuels and 35 megawatts of renewable electricity (enough to power approximately. 30,000 homes), primarily from urban woody green waste, such as yard clippings. The facility is expected to come online in 2012.

August 19, 2009 Posted by | biomass gasification, btl, investing, Rentech | 57 Comments

Notes on Energy Efficiency

I arrived in one piece in Hawaii a few days ago, and have been settling in. It is still hard to believe I am here, and I plan to elaborate a bit on why I am here in the near future.

In the interim – and because I haven’t posted anything new in a few days – I thought I would call attention to a story in the New York Times from a couple of days ago:

Energy Efficiency: Fact or Fiction?

You have to be registered to read it (although the Tehran Times has reprinted the first page of the article) but I will paraphrase/excerpt it. The article covers a number of facts and myths around energy efficiency:

COMPUTERS AND ELECTRONICS

1. Screen savers save energy

FICTION — With screen savers, electricity is still pumping to keep your computer and monitor running. In fact, screen savers may even use more energy than a basic blank screen.

2. Your computer stops using energy when in sleep mode

FICTION — Computers still use energy when in sleep mode, but about 70% less.

3. You waste more energy restarting a computer repeatedly than letting it run all day

FICTION — Even though a small surge of energy is required to start up a computer, this amount is less than the energy consumed when a computer runs for long periods of time.

MAJOR APPLIANCES

4. No energy is used after you turn appliances and electronics off

FICTION — Many appliances still draw a small amount of electricity when turned off. Solve this by plugging into a power strip that you can turn off.

5. It’s more efficient to keep your refrigerator full than half full

FACT — The larger the mass of cold items in a refrigerator or freezer, the less work is required to maintain the appliance’s chilly temperature. (Of course the more work it then takes to get the appliance to its chilly temperature).

6. Hand-washing dishes is more energy efficient than a dishwasher

FICTION — Dish washing by hand actually consumes more water and energy. People typically leave the hot water running, using up to 14 gallons of water on average. GE Appliances’ Paul Riley says to get the most out of an energy-efficient dishwasher, make sure it is fully loaded with food scraped off the plates.

7. Wash clothing with hot water for a truly effective wash.

FICTION — Heating the water for laundry makes up about 90 percent of the energy used in a conventional top-load washer. Using warm and cold water can be just as effective and can slash your energy use in half or more.

CARS AND FUEL

8. It’s better to fill your gas tank halfway because a full tank adds weight and is therefore less fuel efficient

FACT — The lighter your car, the better the fuel economy.

9. If you live in a warm climate, buy a light-colored car.

FACT — The lighter colors reflect the heat, whereas dark vehicles absorb heat and require more air conditioning to cool down.

AROUND THE HOUSE

10. If you live in a warm climate, paint your house a light color

FICTION — A light-colored roof helps dial back the temperature in a home’s attic by reflecting sunlight, but insulation is the key factor when it comes to energy savings. To really cool down your house, focus on proper insulation and plant foliage to block the sun’s rays.

11. Shut the door and vents in unused rooms

FACT — This works only if you close the doors and vents in multiple rooms.

12. Leave the heating or cooling system on all day. If you shut it down when you’re away, the system needs a surge of energy to reach the desired temperature.

FICTION — Switching the thermostat off when you go to sleep or leave for the day will boost energy savings. It will take more energy to bring your house back to the set temperature, but less energy is used during the down times. You can also realize substantial savings by changing the temperature settings. It is estimated that you will realize a 2 percent savings on your energy bill for every degree you cut back.

August 18, 2009 Posted by | electricity, electricity usage, fuel efficiency | 19 Comments

A Better Alternative to Cash for Clunkers

Today is my last day of work as Engineering Director for Accsys Technologies/Titan Wood. After today, I will continue to maintain an advisory relationship with the company, as I still thoroughly believe in the company and the technology, and I want to help them succeed.

However, tomorrow I board a plane to Hawaii to begin a new role. I have discussed that role briefly in the past, and will elaborate on it in the future. But that’s not what this post is about.

For the past year and a half, I have managed to live without a car. I was able to do that because I spent so much time overseas, and I didn’t need a car in those situations. I walked, I biked, I rode a bus, or I took the train. At times I have needed a car here in the U.S., and when I did, I rented one. But once I get to Hawaii, I think my days without a car have to come to an end. Before I go to work each morning, I have to drop kids off at two different schools, and the area I will live in gets a lot of rainfall. Therefore, I have decided to go ahead and get a car.

Previously, when I was considering getting a car, I asked readers for suggestions. In fact, it was a year ago this week that I thought I was going to have to buy one, so I put up a post asking for suggestions. Some pretty good suggestions came out of that post, but I ultimately decided to postpone my purchase. I don’t believe I can postpone it any longer, so I will start shopping for a car shortly after my arrival. (Again, suggestions are appreciated).

As I began my preliminary search on the Internet, it seemed to me like there weren’t that many good deals to be had for what I was looking for. Unfortunately for me, I don’t drive a clunker, so I am not eligible for those recent stimulus funds that were made available. And because the stimulus funds have driven demand to the highest levels in quite some time, it seems to me that dealers aren’t likely to be as amenable to offering a good deal to me, as opposed to someone who will bring in a $4,000 stimulus check. This has left me wondering, “Where’s my stimulus?”

I am certainly not opposed to incentivizing the purchase of fuel efficient vehicles. In fact, I have suggested before that the government offer rebates for vehicles that achieve certain levels of fuel efficiency. You could pay for these rebates with a penny a gallon gas tax, which would bring in upwards of $1 billion a year. If you then turned around and used that money to offer $1,000 rebates on the first million cars sold each year (out of a total of 7-8 million passenger vehicles sold in the U.S.) that meet certain fuel efficiency standards, you would incentivize fuel efficiency.

Instead, what we have done is to reach into a seemingly bottomless well of deficit spending and offer up overly generous incentives to just those who were driving old clunkers that probably weren’t going to be on the road that much longer anyway. The fact that the first $1 billion was gone in less than a week should tip the government off that they were throwing far more money at this issue than was necessary.

That was the point of my recent post criticizing the Cash for Clunkers program. It isn’t that I don’t agree with the intent, it is just that we spent far too much for what was achieved. As I pointed out in that essay, based on the projections of fuel savings, we spent $13.89 for each gal/yr of gasoline saved. And by “spent”, I mean we increased the national credit card bill that is the deficit, and which we are going to hand to our children to pay. (Incidentally, that is by no means a partisan criticism; Bush ran up enormous deficits that will haunt us for years).

So there is my alternative to Cash for Clunkers. Increase gas taxes by a cent, and offer $1,000 rebates to everyone who meets specific fuel efficiency standards with their purchases. I would put a sliding scale on it so that cars that get 30 miles per gallon (mpg) get $1,000 and cars that get 40 mpg get $2,000. And if a penny a gallon wouldn’t pay for the program, increase it to two cents a gallon.

Boosting the fuel efficiency of the fleet should reduce gas consumption anyway, which means that even the most vehement anti-tax critic out there should see that the two cents may ultimately translate into a savings on the cost of gas. But it would also mean that we are paying for the program as we go along, instead of handing the bill to our children. We simply can’t continue to burden the next generation with debt, or their quality of life is going to be lower as a result of the choices we have made.

Note: As noted earlier, I am now in transition to Hawaii. I am not certain about how quickly I will have Internet access and reestablish communications. So this will be my last post for at least a few days, and maybe a week. I will be back online as soon as possible.

August 12, 2009 Posted by | cash for clunkers, deficit spending, energy policy, fuel efficiency, national debt, politics | 70 Comments

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 1 – Covered plasma gasification, natural gas projections, free energy, promising alternative energy technologies, and GTL

Part 2 – Covered 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

Part 3 – Covered advice to engineering students and some books I recommend

The Questions

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

The Answers

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.

Return to Top

Answer

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.

Return to Top

Answer

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.

Return to Top

Answer

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.

Return to Top

Answer

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.

Return to Top

Answer

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.

Return to Top

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.

August 9, 2009 Posted by | algal biodiesel, E10, eroei, eroi, ethanol, fuel efficiency, litigation, Peak Oil, PetroAlgae, thermodynamics | 141 Comments