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Wood Versus Fuel

I know it has been a week since I put up something new. Some readers have also noticed that I haven’t been commenting much lately, and my e-mails are piling up. Things have just been really busy. I have a few guest posts that should be ready to go within a week or so, but I saw a topical story this morning that was worth commenting on:

The unintended ripples from the biomass subsidy program

The issue of incentives for biofuels increasing the demand for grains and thus helping drive up food prices is often called “Food versus Fuel.” There is also an incentive program (Biomass Crop Assistance Program) designed to encourage the use of biomass for heat, power, or biofuels. As is almost always the case, there were unintended consequences:

While it remains unclear whether Congress or the Obama administration will push to revamp the program, even some businesses that should benefit from the subsidy are beginning to question its value.

“It’s not right. It’s not serving any purpose,” said Bob Jordan, president of Jordan Lumber & Supply in North Carolina, even while noting that he might be able to get twice as much money for his mill’s sawdust and shavings under the program.

“The best thing they could do is forget about it. All it’s doing is driving the price of wood up.”

Sounds like “Food versus Fuel” except in this case it is the cost of wood – not food – that is being driven higher. The thing is that there are always trade-offs and always unintended consequences. We have to be wise enough to change policies in cases where the unintended consequences outweigh the benefits. But you have to look at the big picture as well. Were there also unintended benefits? Things like that must be considered.

In this case, I don’t know whether the unintended consequences outweigh the benefits. I think it is too early to know for sure. But in any case, higher cost biomass is something I expect in the future. I made this point in my presentation at the Pacific Rim Summit. If your business model is based on either tipping fees, or just free or very cheap biomass – then I doubt that model is sustainable. I think as more companies attempt to turn biomass into fuel, competition will heat up and free or negative-valued biomass will be a thing of the past.

Therefore, I think the safe bet is to plan for 1). Escalating biomass prices; 2). No government assistance. I have no objections to getting started with government assistance, but if you don’t have a clear plan for operating in a subsidy-free environment, then you may just be wasting taxpayer money up until the point that your business fails because conditions changed (in a way that you should have anticipated).

January 11, 2010 Posted by | biomass, energy policy, farm policy, politics, USDA | Comments Off on Wood Versus Fuel

Let the Data Do the Talking

Although not always successful, my goal is to let data drive my conclusions. Still, we all sometimes find ourselves in debates that are based more on passion and conviction than on data. But if the data are ignored because the conviction is strong, it may be dogma driving the conclusions.

Passionate debates are fine, but passionate debates that ignore data have no business in a scientific discussion. Further, such arguments frequently degenerate because one or both sides is not listening to the other.

During such emotional debates, I have been accused of being a shill for oil and gas, or of being a shill for biomass. In fact, in the debate I will discuss here, I was called both in the same thread! I am pro-biomass. I am anti-biomass. I love the environment. I want to destroy the environment. I am a Conservative. I am a Liberal.

The thing is, my world is not a black and white place. In the right hands, a screwdriver is a handy tool. In the hands of an enraged person, it can be a weapon. Same tool, vastly different outcomes, depending on how it is used.

Biomass is also a tool in which the outcome depends on lots of different factors. And even then the answers to the questions don’t always lead to the same conclusions for everyone.

Here is what I mean by that. People die in car crashes every year. So one reaction to that is “If you don’t want to die in a car crash, then don’t ride in a car.” That is true. That is one response.

But one must then consider the impact of that response:

  • “How would this impact your mobility?”
  • “Would you still travel places, and if so, how?”
  • “Is there a bike path that you could utilize, or would you give up your automobile only to risk your life cycling next to a busy highway?”
  • In other words, what secondary conclusions result based on the response to the initial question? But another approach is to reexamine the initial question:

  • “Why do people die in car crashes?”
  • The answer may be that most people die in car crashes due to very specific issues that can be mitigated. That is not to say that this will eliminate your risk of dieing in a car crash. But if I determine that 63% of the people who die in car crashes were not wearing seat belts, then I can always wear a seat belt and improve my odds of surviving a car crash.

    This is the approach I try to take with science issues. Frequently the answers to questions are not definitive, and instead depend on any number of conditions. And in the end there will still be disagreement. Some people may feel that a 1% risk is acceptable, but that may be 100 times too high for the next person on the very same issue.

    When someone is letting their emotions drive the argument, I try to get them to confront the data. If the answer is “It won’t fit”, then I either want to see that it doesn’t fit, or I want to measure it. This was the approach that I attempted to take with Joshua Frank, the author of – Burn a Tree to Save the Planet? The Crazy Logic Behind Biomass.

    Following my recent critique – Biomass is Not Crazy Logic – Frank dropped by and left a number of comments. Not everyone wades through the comments, and the comments are really not designed for prolonged exchanges. Further, these essays are often picked up and reposted without the comments. So I thought it might be worthwhile to extract some of the comments here. (The complete responses can be found following my initial essay).

    Frank’s argument can be distilled down to this: Citing Professor Tim Searchinger, Frank argues that burning biomass creates a net addition of carbon to the atmosphere. Burning biomass creates the danger that we will cut our forests down and inefficiently turn them into energy. Burning biomass creates emissions. Therefore, the burning of biomass is crazy, and it must be stopped.

    My response can be distilled down pretty easily. I actually agree with Searchinger that there are lots of factors that have to be evaluated in the biomass/bioenergy equation. Searchinger’s point is to show that the improperly used screwdriver can be a weapon. Frank then extrapolates that position to: A screwdriver is a weapon, and therefore we must stop the spread of screwdrivers.

    Frank cites Searchinger, but Frank’s extrapolations are subjective and qualitative. Numbers are missing from Frank’s analysis. Conclusions are sweeping and rigid. He argues that there is only one way to do biomass: The wrong way.

    In the real world, the burning of biomass can present the risks Mr. Frank cites. But where Mr. Frank goes wrong is that he believes that it must present those risks. That logic does not follow. Responsible management of biomass resources can have the opposite impact of what Mr. Frank suggests.

    In the back and forth that ensued, Frank seems to be unaware that the issues he raises are known issues; that while he is bemoaning them as a reason to surrender, some are out there working on solving them.

    A perfect example of this was his frequent argument that “burning biomass creates particulate emissions.”

    JF: “Burning woody biomass produces PM25, the most deadly form of particulate matter. This is a serious public health threat. Even if you believe that biomass is carbon neutral, you cannot skate around this important, well-documented fact.”

    Regarding this issue that Frank kept trying to educate me on, here are some excerpts from a book chapter that I recently completed on Bioenergy and Biofuels from Woody Biomass:

    RR: The majority of the wood used for cooking is done over an open stove. This is an inefficient process, leading to excessive consumption of wood. Open cook stoves also result in particulate emissions. Excessive pollution from wood cooking has been identified as a risk factor in acute lower respiratory infection, the chief cause of death in children in developing countries (Smith 2000).

    So I am well aware of the particulate emission issue with biomass burning. But here was the next paragraph, in which I discussed mitigation of the particulates problem:

    RR: Modern biomass stoves have been developed that are much more efficient with respect to wood utilization. These stoves can mitigate some of the problems associated with cooking over an open fire. By operating more efficiently, the money spent for fuel, and/or the time spent collecting fuel is diminished, as less fuel is required. Because combustion is more efficient, the air pollution associated with open fires is also diminished. Due to the multiple advantages of moving to modern biomass stoves, a number of programs have emerged with the intent of disseminating these stoves to the developing world (Barnes 1994).

    In another section, I wrote:

    RR: As with wood for cooking, one disadvantage from using wood for heating is the high level of particulate emissions. Open fireplaces also suffer efficiency losses from heat exiting the chimney. The development of community advanced combustion systems (AWC) has the potential for allowing increased usage of wood for heating, because of increased efficiency and lower particulate emissions.

    So Frank is aware of a problem, but is unaware that this sort of problem can be mitigated if the framework is in effect to mitigate it. This problem has a solution, albeit many have not adopted the solutions. Frank only sees a problem.

    The biggest hang-up, though, was probably around energy balances. There was quite a bit of “it takes a lot of energy to cut trees down and haul them out of the forest.” Again, there were never any numbers associated with these kinds of comments (except for the ones I provided). I guess if you use phrases like “diesel-powered” a lot, you can infer that the energy balance is bad without ever having to crunch the numbers.

    As I told Mr. Franks, the various energy inputs in the logistical chain of taking a tree from the forest and getting it to a processing facility – or the energy inputs in the conversion process itself – are available and are used in life cycle assessments regularly. “A lot of energy” for me has numbers associated with the claim. So instead of arguing about “a lot of energy used to harvest and transport” and that no biomass process can overcome that, why not attempt to quantify that?

    Back to the chapter I just completed, I wrote a section called “Net Energy Considerations.” Here is an excerpt from that section:

    RR: When calculating the energy that one could extract from a resource, it is important to consider the energy inputs into the process, as well as the types of energy inputs.

    In that section, I spent a bit of time explaining that the net energy of a process can easily be negative, and those processes are not sustainable. I concluded that section with:

    RR: Consideration of energy inputs also highlights one of the shortcomings of biomass relative to petroleum: The energy density for biomass is much lower; less than half the energy density of oil. This is due to the fibrous nature of biomass, and the fact that the moisture content tends to be high. This has implications for recoverability of wood resources. In general, the lower the energy density of the feedstock, the closer it needs to be to the processing facility due to the energy required for transport. Economical technologies that can efficiently increase the energy density of biomass in the field are needed. Some are currently under development and will be discussed in this chapter.

    So yes, I am aware of the relationship that energy inputs have on the sustainability of the system.

    At one point Frank did actually use some numbers to show that it takes longer to grow a tree than it does to burn a tree:

    JF: “A large tree that took 20 years to go (GE trees would be less) may burn in 17 seconds (after chopped to fine pieces).”

    This must be a key concept for him, because he actually pointed it out three different times. At one point he referred to this as a fundamental fact. This leads him to the conclusion:

    JF: “Trees will be burned at a far quicker rate than it takes to replace them.”

    As a rebuttal to his “fundamental fact,” I point out that the tomato it took 60 days to grow is eaten in 5 minutes. Therefore, tomatoes are eaten at a far quicker rate than it takes to replace them and the eating of tomatoes must be stopped before they are wiped out?

    Frank made a number of other unsupported arguments such as:

  • JF: “Biomass in the US means deforestation in our national forests. Period.”
  • JF: “Almost 99% of biomass to electricity plants in the US are also burning coal or trash. That’s a huge problem.”
  • JF: “If we are going to promote biomass as a renewable, we are looking at large scale deforestation.”
  • JF: “Trees simply do NOT make for good sources of biomass for electricity. Woody debris is not a dense energy source like coal (I’m not suggesting coal is the alternative). That’s why, as you know, power plants are using other fuels with biomass to produce energy.”
  • JF: “There is no such thing as good forest management when profit is involved.”
  • It’s like arguing that red is the best color. Put some numbers to it and let’s measure it. Are 99% of biomass to electricity plants really burning coal or trash? What is the source of that claim? Or is that simply hyperbole over coal plants that have started to supplement with biomass?

    I kept wondering if he ever gave any thought to what would happen if we abandoned the use of biomass for fuel. I can tell you what would happen: In the U.S., the future would be coal until we run out of coal. (To be perfectly honest, that’s probably the case anyway). That is reality. Sure, there’s nuclear, but something tells me that this wouldn’t be his preferred outcome. In developing countries, it would eliminate the particulate emissions problem because huge numbers of people wouldn’t have any fuel for cooking.

    At one point Frank brought up the threat of genetically modified organisms (GMO). I pointed out that while my company doesn’t use genetically modified trees, I am not personally opposed to genetic engineering in principle. Nature has been genetically modifying organisms since the beginning of time, and everything we eat has been genetically modified. Every mutation (even those that aren’t expressed) is a naturally-occurring experiment in genetic engineering. This was his response:

    JF: If you are not opposed to GE (and no, cross-breeding and hybridized plants are not genetically engineered, stick to engineering because your biology stinks) then I can’t help you. GE is new to the cycle of evolution.

    That line of argumentation is certainly a tangent, but countless people are alive today as a result of genetic engineering. Incidentally, I appreciate his concern, but it isn’t my biology that stinks. I wrote that nature has been doing genetic modifications forever. That is a fact. Frank was the one who translated that as “cross-breeding and hybridized plants.” He may want to look into genetic mutations, because cross-breeding and hybridization aren’t the only things that have changed the genetics of our food.

    Ultimately when I continued to challenge his replies, it went the way emotional-arguments often go. Because I failed to yield to his subjective arguments, he concluded that I couldn’t be motivated by the science. So he threw out a couple of ad homs

    JF: You get paid to do it. Makes much more sense why you will not address the real dangers of biomass production.; You are motivated by factors other than hard science. Biomass = paycheck. I get it.

    – and then left. In light of what he actually wrote, I found the phrase “hard science” especially ironic. Maybe I misunderstood and he was simply complaining that the science is hard?

    For the record, I don’t get paid to promote biomass. I don’t get paid to write at all. I write because I like to, and I am focused on biomass because I think it is going to have to play an important role in our energy future. It can’t be the sole solution – and I have argued the point many times that it can only replace a small fraction of our fossil fuel usage – but every analysis I have ever done suggests that it must be a part of the solution.

    At the end of the day, I try to be practical. I frequently hear people suggest that what really needs to happen is to reduce the global population by 95%. My eyes just glaze over. Those are the sorts of things that are not going to happen by politics or decree. It is navel-gazing to sit around and argue about “solutions” like this. Better to focus on solutions in the context of what is likely to actually take place once the politics have been factored in.

    This is how I view biomass. Frank can spend his time dogmatically arguing that it must necessarily be a disaster. But what is likely? It is more likely (in fact, it is certain) that we are going to continue down this path. Therefore, I think a much more productive use of time is to ask “How do we do it right?”

    References

    Barnes DF, Openshaw K, Smith KR, van der Plas R. (1994). What Makes People Cook with Improved Biomass Stoves? A Comparative International Review of Stove Programs. Washington, DC. The World Bank.

    Smith, K., Samet, J., Romieu, I., and Bruce, N. (2000). Indoor air pollution in developing countries and acute lower respiratory infections in children In: Thorax. June; 55(6): 518–532.

    December 21, 2009 Posted by | biomass, biomass gasification, climate change, global warming | 99 Comments

    Biomass Is Not Crazy Logic

    I saw a story about a week ago that I flagged to comment on when I got caught up. I suppose I am caught up enough now to do so. The story is:

    Burn a Tree to Save the Planet? The Crazy Logic Behind Biomass

    The author is listed as Joshua Frank, described as an environmental journalist and the author of Left Out!: How Liberals Helped Reelect George W. Bush. Frank has previously written an article critical of Oregon’s usage of electricity derived from coal, and in the current essay he turns his attention to biomass.

    The article is confusing from the start:

    It might seem crazy that anyone would even consider the incineration of wood and its byproducts to be a green substitute for toxic fuels such as coal. Yet that’s exactly what is happening all over the country, and it has many environmentalists scratching their heads in disbelief.

    I find those comments baffling. Why would it seem crazy to believe that burning biomass – which utilizes CO2 when it is growing and helps sequester carbon in the soil through the root systems, leaves, and slash – would be greener than burning a fossil fuel like coal that has a long list of potentially undesirable environmental impacts? Do you know what happens to waste biomass that isn’t utilized? It decomposes and ends up as the same CO2 it would end up as if you burned it.

    While it is true that emissions controls on coal-fired power plants are much improved in recent years, it is also true that burning coal has resulted in acid rain and increased levels of mercury in our waterways. Burning coal also increases the concentration of CO2 in the atmosphere. To suggest that burning trees isn’t greener than burning coal is one of the most ludicrous things I have ever heard. From the tone of the article, it sounds as if the author believes that forestry and the harvesting of trees is by definition bad.

    Now it is true that if you cut down an old growth forest and inefficiently turn it into a liquid fuel, that isn’t environmentally responsible. I could certainly envision any number of schemes to make the burning of biomass come out with a higher environmental impact than from burning coal. If I cut down a chunk of the Amazon, displace the people and the wildlife living there, ship the wood halfway around the world, and combust it in an old, inefficient boiler – then yes, the environmental impact of that would be higher than from burning Powder River coal. But such exceptions aren’t the norm. This article, however, paints with a very broad, one-sided brush and acts as if all usage of biomass is by definition bad:

    NASA’s James Hansen says that the burning of coal is the single largest contributor to anthropogenic global warming, so any alternative fuel source must decrease the amount of carbon dioxide (CO2) released into the atmosphere if we are to put the breaks on climate change. Biomass, despite its label as a renewable energy source, does not solve the problem because burning trees actually emits a large amount of CO2.

    That is another very odd comment. Burning coal releases ancient CO2 that was sequestered away. Burning biomass releases recently recycled CO2. That’s why it is renewable. If the author is concerned about CO2 emissions – and he clearly is – then coal and biomass are night and day. And while they acknowledge in their next paragraph that this is what “proponents counter with”, Frank quickly tries to shoot that one down:

    An article in Science released last October attempted to debunk the myth that biomass is a good alternative to traditional coal and oil burning. The study, authored by climate scientists, claimed that when an existing forest is chopped and cleared to produce fuel, the ability of those harvested trees to absorb CO2 is eliminated entirely while the amount of greenhouse gases in the atmosphere actually increases.

    This entire article seems bent on the notion that the biomass we utilize will come from old growth forest that is slashed, burned, and left fallow. The people interviewed for the article must envision a scenario like turning the Amazon into biofuels – and this is the future they must foresee for biomass to come up with these sorts of conclusions. Such a notion isn’t remotely indicative of the future of biomass. Biomass will be grown for purpose (as I explained in Don’t Weep for the Trees), and it can definitely be grown responsibly and sustainably.

    “The game is up,” stated biomass skeptic Ellen Moyer, a principal of green engineering firm Greenvironment, after the release of the report. “The problem has been identified, and the clarion call for course correction has rung out around the world. The days of biomass burning … are numbered and pending legislation needs to be corrected before perverse incentives to burn our forests are enshrined in law.”

    You will have to show me the laws that incentivize the burning of our forests. If you mean laws that incentivize the usage of biomass for energy – well that isn’t the same as burning our forests. You first grow the forest, and while that is taking place everything you are complaining about when you burn it is running in reverse. Oh, there can be particulate emissions from improper burning, but it is also true that proper forest management can result in improved soil and increased carbon sequestration in the soil.

    Another problem with biomass is that it is typically mixed with substances like coal to produce energy. In Nevada, for example, NV Energy is set to use a mix of coal and wood at its Reid Gardner coal-fired power plant. As a result, the company hopes to qualify for the state’s renewable energy credits.

    The first problem is that this isn’t true. That is not how biomass is typically used. It can only be blended with coal in small amounts due to differences in chemical and physical properties, and it requires a substantial investment in the coal plant to allow such mixing. There is a technology called torrefaction that has the potential to allow much greater mixing, as it converts biomass into something like bio-coal. But torrefaction is still mostly at a pre-commercialization stage.

    If a coal-fired power plant receiving energy credits isn’t mind boggling enough,…

    Why is that mind-boggling? You just wrote that they were going to use wood to displace coal. Why wouldn’t they qualify for the same energy credit anyone else gets for using biomass? Or do you prefer that they simply continue to use 100% coal?

    “They are burning more than trees because wood is simply not a good energy source,” said Jeff Gibbs, who resides in Michigan and is fighting the state’s six operating biomass plants. “Look, wood produces 50 percent more CO2 than coal, for the same amount of energy output. We have to stop this before more plants begin to pop up.”

    I am sorry, but that’s another ludicrous statement. I would really love to see the analysis that provided that figure.

    Not only is biomass not a good source of power, claims a 2007 paper presented at the European Aerosol Conference, it’s also not a healthy alternative to coal. The paper claimed that particulate matter (particles, such as dust, dirt, soot or smoke) was actually higher for a 7 megawatt wood gasification plant than it was for a large coal-fired power station.

    There’s that broad brush again. While it is true that wood gasification plants can have lots of particulate emissions, that is not an inherent quality. You can put the same pollution controls on them that you can on coal plants. So once again a bad starting assumption leads to a sweeping, but false conclusion.

    In summary, this was a very one-sided view that presented the worst extremes as more or less the status quo for biomass utilization. It is true that you can do things a right way or a wrong way. Water is healthy and I need it to live, but if I drink too much it can kill me. Taking a page from this article, I suppose I should avoid water from now on, as it has the potential to kill me.

    For those quoted in the article, I hope they don’t freeze to death in the dark as the biomass they are so opposed to rots and releases its CO2 anyway. As I tell people sometimes, if you are opposed to everything, then prepare to be happy with the status quo.

    December 15, 2009 Posted by | biomass, biomass gasification, climate change, global warming | 133 Comments

    An Extended Conversation with POET

    Today (July 17th) I spent some time on the phone with POET‘s VP of Science and Technology Dr. Mark Stowers. (I was invited up for a visit, but I couldn’t swing that just now). Dr. Stowers is in charge of company R&D, which includes corn and cellulose to ethanol, as well as the investigation of novel processes for utilizing waste to power their facilities.

    Joining us on the call was Matt Merritt, POET’s Media Relations Specialist. We covered a lot of ground on the call. Along with the environmental impact, key interests of mine in assessing fuels of any kind are the energy inputs – what kind, how much – and the related topic of logistics. I probed the energy inputs in some depth, as I consider that critical when considering long-term commercial feasibility.

    First a bit of background on POET. They are the largest ethanol producer in the world, producing more than 1.5 billion gallons of ethanol each year from 26 production facilities across the country (each with its own nuances, I was told). They recently started up a 20,000 gal/yr pilot-scale cellulosic ethanol plant, which uses corn cobs as feedstock. Plans are to commercialize the process in 2011. They have named this effort Project Liberty.

    My questions and Mark’s answers below are paraphrased, but as I told them if they spot anything that I got wrong they can notify me and I will correct it. The format below includes questions, answers, and comments from me. Where the comment was part of the interview, it will appear as a prelude to a question or a comment in the follow-up as “RR: Comment…. Mark’s answers will appear as “MS: Comments…” To distinguish from additional comments I might interject, I will indicate those with [RR: Comment…]

    I first voiced my skepticism that cellulosic could ever make a huge impact, due to logistical issues and energy requirements. That was going to be a major thrust of the interview, but I started off with a related comment/question.

    RR: Conditions in Texas have been really dry. [RR: See this story on the current drought in Texas.] We have had over a week with temperatures exceeding 100 degrees each day. There are a number of corn fields near my house, and the fields appear to be dead. How are conditions up north?

    MS: Actually this will probably be one of the best years ever. We got rain when we needed it. Corn grew 6 inches overnight recently. In Sioux Falls right now the temperature is 70 degrees.

    RR: OK, let’s move on to your process. Can you start by walking me through your cellulosic ethanol process?

    MS: Our cellulosic process is based on corn cobs. We have harvested 25,000 acres over the past couple of years. We are currently still trying to work out harvesting and storage. 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 store at the farm field edge currently and can collect over the following 6-9 months. 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 believe that there is a nationwide potential for 5 billion gallons of ethanol if all cobs are collected and converted.

    RR: OK, I am going to walk through some numbers here. As you may know, I have been skeptical about the potential of cellulosic ethanol to scale very well. I feel that there are niches in which it will work, but I don’t think it works well as a large scale solution.

    As you mentioned, average cob yields are 0.65 bone dry tons (1300 pounds) per acre. I have a reference that says the heating value of cobs is about 7900 BTU/lb [RR: Mark agreed that this was correct]. So the total BTU value of the cobs on an acre is about 10 million BTUs/acre, which is also the energy content of 135 gallons of ethanol (ethanol has a heating value of 76,000 BTU/gal). That would seem to be an upper limit on a hypothetical perfect conversion process that could capture 100% of the BTUs. But of course enzymatic processes are not going to convert lignin, and there will be some inefficiencies. My guess is that you probably need 20 pounds or more of cobs to produce a gallon of ethanol (as opposed to 10 pounds for a perfect conversion process), putting the actual yield at around 65 gallons per acre. I saw someone (not POET) who recently claimed cellulosic from corn cobs would increase per acre yields by about 110 gallons per acre, but based on the BTU value I don’t think that’s possible.

    MS: Yes, I think that 110 gal/acre number looks too high. The 20 pound number you came up with looks approximately correct. We can get 85 to 100 gallons per ton with our process but operate mostly in the high eighties and low nineties at present. We are drying and burning the lignin for fuel, but in addition to the cellulose we are also converting the hemicellulose to ethanol.

    [RR: OK, so 85 gallons per ton is equal to 55 gal/acre, and 100 is 65 gal/acre – which is the number I had worked out. Incidentally, I think the difference between a skeptic and a cornucopian is that the skeptic will look at that range and say “OK, realistically speaking they probably get 85 gallons/ton on a good day, and they think they can push it to 100 gallons if they continue to push the envelope.” The latter will claim matter-of-factly that yields are at least 100 gallons/ton.]

    RR: OK, I did not know you were converting the hemicellulose. What is the percentage of cellulose and lignin in the cobs?

    MS: The cellulose plus hemicellulose is upwards of 60%. Lignin is about 15%.

    RR: One of the keys to success for a cellulosic ethanol process is to increase the concentration of ethanol in the crude product. Historically this has been in the 3-4% range for cellulosic ethanol, and I don’t believe that will be commercially practical. The energy required to purify a solution in that range would be comparable to the energy contained in the ethanol. [RR: Of course with waste heat or very cheap BTUs, you might be OK to do it anyway]. So can you discuss the sorts of ethanol concentrations you are getting?

    MS: First of all, I agree with your comments on ethanol in the 3-4% range. While we have not released information on our cellulosic ethanol titers, they are lower than those for corn ethanol. On the other hand we have some of the highest corn ethanol titers in the business; we can achieve greater than a 20% ethanol solution from corn. But we are better than the 4-5% range for our cellulosic process. Also, there is sufficient energy in the solid waste stream and the liquid stream to provide more than enough energy to power our cellulosic process.

    RR: Don’t you have problems with the enzyme activity diminishing at higher ethanol concentrations?

    MS: We do not see enzyme activity as a rate limiting step with respect to ethanol tolerance.

    RR: Beyond the energy required to process the cellulosic ethanol, there is the fuel required to gather and transport the corn cobs. Along those lines, one of my readers wondered about the radius to the plant in which the logistics are still economical. His comment was that he heard that shipping costs for cobs are twice as costly as the grain because they are so bulky.

    MS: We can go out to a 25-35 mile radius; about the same as corn.

    [RR: I suspect if you did the analysis for cobs by themselves, collecting cobs and transporting them from 35 miles away might not be worth the fuel value of the subsequent ethanol produced.]

    RR: Do you have a feel for how many BTUs is required to produce a BTU of cellulosic ethanol?

    MS: We have some idea of those numbers, but haven’t released them. [RR: I think he said they are waiting for more results from their pilot plant, and they are working on getting better numbers.]

    RR: Another question from a reader: “Will they contract with producers and what will the terms be?” I think I know the answer to this, because I read an article yesterday in which Poet spokesman Nathan Schock said that this hasn’t been fully determined. [RR: Here is the article: Iowa plants to offer farmers cash for corn cobs.]

    MS: Nathan was correct; we have contracted with some farmers for fall harvest but we don’t know where the economic sweet spot for everyone involved is going to be.

    RR: I would think you would hold those numbers close anyway, or all farmers will be holding out for the highest published price.

    MS: Yes, that is a key point.

    RR: (I asked if another reason for focusing on cobs over stover was related to concerns about soil depletion. I also incorporated another question from a reader): “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.”

    MS: 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.

    RR: Is your ethanol purification compatible with existing corn ethanol infrastructure? I would think that with a higher water concentration you could go into your corn ethanol distillation system, just at a lower feed location.

    MS: A cellulosic plant will be a bolt on to an existing corn ethanol plant. But we will have a better efficiency if we don’t intermingle the streams with corn ethanol because we don’t want to get things like lignin in our corn ethanol distillation train. So it is better to have separate distillation trains. The infrastructure will be more of what you see in common (utilities, logistics in and out, etc.).

    RR: Why not just use the cobs to produce steam for the corn ethanol process? Have you done comparative studies on that?

    MS: We are doing that today as well. We are using other renewable biomass to fuel a solid fuel boiler at Chancellor, South Dakota. This is a 100 million gal/yr facility. We are also using landfill gas in a multi-purpose boiler.

    RR: What is the quality of the methane from your digestor? Do you have to clean it up?

    MS: We have two applications for our biogas. One is for overall energy, and the other is fuel for the dryers. We are just finishing up our 3rd month of operation. The boiler that we have developed can handle the biogas that is produced.

    RR: How many engineers are working on Project Liberty?

    MS: Between the lab and pilot plant, we probably have 25 scientists and engineers.

    RR: Is your pilot unit fully integrated? Is the pilot process fully connected?

    MS: We are completely integrated from cob collection through ethanol production and recycle streams. We have a 24/7 operation with 4,000 data points collected. The pilot plant has been running since about Nov 18, 2008.

    RR: One of the things that I strongly believe is that if the corn ethanol industry is ever going to break free from endless subsidies, you have to get the fossil fuels out of the process to the greatest possible extent. The sugarcane ethanol producers are more immune to the ups and downs of fossil fuel prices because of the large role bagasse plays in providing fuel for their process. So it feels like you are headed down the right path here, even though natural gas prices aren’t exactly a pressing concern for ethanol producers right now.

    However, it might be that you have enough waste energy to fuel your process, but most of the BTUs are used up in the conversion, leaving very little ethanol. So in a case like that the question becomes, “Are you left with a small net amount of ethanol, or a very small net amount of ethanol?”

    [RR: For example, if you had one BTU of biomass, and consumed 0.9 BTUs to produce 0.1 BTU of liquid fuel, you could say that you have gotten the fossil fuel inputs out, but you have produced very little fuel and were very inefficient with the utilization of the BTUs. In that case you could ask if there might have been a better use for that BTU of biomass.]

    MS: The energy from our waste streams should be sufficient to power the 25 million gal/yr cellulosic plant and nearly power the 50 million gal/yr starch plant next door.

    [RR: To me this was the most significant statement he made during the interview. If an added benefit is that you are also powering your corn ethanol plant with the energy produced from the cellulosic process, you have a very powerful synergy. But I admit that I have a bit of a hard time with this one. I would like to really dig into the energy balance, because it doesn’t seem to me like there are enough BTUs. If I go back to my analysis of 10 million BTUs/acre available from the cobs and you back out 65 gallons of ethanol produced from the cobs, that would only leave you with about 5 million BTUs per acre to power both a cellulosic plant and a corn ethanol plant. If I make a couple of reasonable assumptions, it looks to me like they are assuming only 30,000 BTUs of energy input per gallon of ethanol production. This seems on the low side, but is perhaps reasonable when the ethanol yields from the cobs are on the low end of the range – leaving >30,0000 BTUs/gal for running the process.]

    RR: When you are out front with a technology, there are always risk factors. What are some of the risk factors that you have identified that might keep you from meeting your goals?

    MS: First is the absence of a market for cellulosic ethanol. The blend wall from E10 really limits the cellulosic market.

    RR: OK, that’s market risk. How about technical risk?

    MS: We must have farmers and equipment manufacturers engaged; we need a solution in which both sides can make money. We need programs early on to help biomass collectors overcome the risk. How many cobs can you get in a truck? The logistics become important. There is also the issue of inventory management. The annual supply of cobs for a 25 million gal/yr cellulosic plant would require a silo the size of the Empire State Building. We need to decentralize this, and we need as high a throughput into the reactor as possible.

    RR: Gentlemen, that’s about all the questions I have, although I will probably come up with 10 more when I am writing this up.

    MS: Feel free to contact us for any followups.

    RR: Thanks guys. Appreciate you taking the time.

    July 17, 2009 Posted by | biogas, biomass, cellulosic ethanol, POET | 28 Comments

    “Your Passion is Energy”

    Saying Goodbye Again

    Today is Independence Day in the U.S., but I am spending it in the Netherlands without my family. This has become an all-too-familiar situation for me. I have spent far too many birthdays, anniversaries, and holidays in remote locations away from my family. The time has come to rectify that situation.

    Most of my career has revolved around energy. But about a year and a half ago, I decided to try something slightly different. I left my job with ConocoPhillips in Aberdeen, Scotland (and I explained the details behind the decision here), said goodbye to friends and colleagues there, and boarded a plane to the Netherlands. This is where I have spent about half my time since then.

    But that chapter is coming to a close. On Monday I will leave Amsterdam for the flight back to Texas. I have made this trip around 20 times in the past 18 months, but I am making the trip for the last time in my current role as Engineering Director for Accsys Technologies. This trip was my farewell tour, and I said my goodbyes to a fine engineering team.

    The past year and a half has been both interesting and challenging. We are a small company, so I found myself doing more cross-functional work than at any other time in my career (e.g., writing HR policies). We were staffing up, so I also interviewed numerous people for all sorts of positions. Because our company was the first (and still only) to commercialize our technology, we encountered some unique engineering challenges.

    As I look back, I am proud of what my engineering team has accomplished. They have vastly improved our process in the past two years, and we climbed a steep learning curve. We managed to increase the throughput of our plant in Arnhem by a third, while at the same time cutting our energy inputs. With all sincerity, our successes came about because I have a clever and dedicated team of engineers.

    And while I believe strongly in the product that we have developed, my job involves about 50% travel. I have engineering teams based in Dallas and in the Netherlands, and I have to try to keep a presence in both locations. I knew that I could keep that up for a while, but not forever. If I continue with this schedule, I will grow old forever haunted by the lyrics to Cat’s in the Cradle.

    I have been fortunate over the years to have had a number of different job opportunities present themselves. In the past six months I began to more seriously listen to inquiries. I decided if the right one came along – and it enabled me to spend more time with my family – then I would make a change. The right opportunity has come along.

    Future Plans

    If I had to describe my ideal job, it would be to bring sustainable energy technologies to the world. I would do a lot of technology evaluation, visiting with universities, small companies, inventors, and entrepreneurs. The goal would be to identify the renewable technologies that I feel can compete in the long-term, and then work to facilitate that future.

    One of the most brilliant engineers I have ever met (who will also be a future colleague), recently introduced me to a very successful businessman who has been in the energy business for decades. Because he greatly values his privacy, I will not divulge his name nor the companies he has been involved with. Suffice to say that his vision is long-term, he is realistic, and he has a long track record of successfully building companies. When I met with him, I discussed my current job, and then we started talking about our views on the future of energy. He made a comment that I often hear when I am discussing energy: “Your passion is energy. You should follow your passion.”

    After much discussion, which included meetings in Houston, Hawaii, and Hamburg – it was clear that my goals and views were very much aligned with his. We saw a similar future, but were both quite realistic about the challenges of realizing that future. The primary objective for both of us wasn’t to create wealth, but instead to see our current unsustainable way of life nudged toward something more sustainable. We are both concerned that we are leaving a mess for our children to clean up, and we believe we can build something better for them.

    I have therefore decided to join forces with him, and will leave my current job on August 1st. I will continue to assist Accsys/Titan Wood with their technology on an as-needed basis, but my primary energies will be focused around the conversion of biomass into value-added products. The specific end product will depend upon the particulars of a situation. I firmly believe that biomass can work, sustainably, in specific niches. As fossil fuel prices rise, the niches will grow as long as the biomass technologies are not heavily dependent upon fossil fuel inputs. We plan to establish ourselves in some of those niches.

    I have written in this blog about some of the technologies and companies that we will be involved with. (In fact, it is a long story, but one of my articles was what led to the initial contact, which occurred almost 3 years ago). Other technologies, which I have felt had great potential, I haven’t written about. I am still not yet going to write about them, as we are busy establishing ourselves in various areas and establishing dialogue with different companies. But as one of my new colleagues likes to say “We are technology agnostic.” That simply means that we are open to different technologies and won’t base our business around a single technology.

    I will relocate to Hawaii with my family. I estimate that my travel will drop from the current 50% to around 10%, meaning I will get to spend much more time with my family. Based on our plans, when I do travel, I expect my travels will take me to Germany, which is familiar territory, but also to some areas I have not seen, like Southeast Asia.

    Why Hawaii? Hawaii offers a unique laboratory for renewable energy. Hawaii has very good renewable resources (sun, wind, geothermal, ocean thermal, biomass, etc.), and no fossil fuel resources. Hawaii should have a small bias toward renewable energy relative to the rest of the U.S., since all fossil fuels must be shipped in for power and transport. And because of the year-round growing season, I can do a lot more experimentation there both with gardening (which I love to do) and with energy crops.

    I won’t go into specific details right now about our efforts. We aren’t ready for that yet. Some parts of the business are already far along, and others are just starting. But we won’t be messing around with pie-in-the-sky technologies. That will be one of my key roles: To make sure we are focused where we need to be focused and not wasting our time working toward dead ends.

    July 4, 2009 Posted by | Accsys Technologies, biomass, Hawaii, Netherlands, Titan Wood | 54 Comments

    POET Sets the Standard

    In a recent post (but certainly not the first time I mentioned this), I wrote:

    Corn ethanol producers have to move away from fossil fuel inputs – or they need to otherwise find inputs that don’t normally track gasoline prices. This is why the sugarcane ethanol producer can compete on a level playing field with gasoline. The fertilizer inputs for sugarcane are much lower than for corn, and the distillation energy is provided by biomass. The only way the ethanol industry in the U.S. will be able to break free from the subsidies is to adopt similar practices.

    The ethanol company POET, which I recently described as setting the standard for ethanol production in the U.S., has just taken a big step in that direction. This press release was just e-mailed to me:

    Waste material to power cellulosic/grain ethanol plant

    POET installs anaerobic digester at pilot cellulosic ethanol facility

    SIOUX FALLS, S.D. (June 17, 2009) – A self-sustaining energy cycle for producing cellulosic ethanol is close to reality with the recent startup of an anaerobic digester at POET’s pilot plant in Scotland, S.D.

    Corn cobs at Project LIBERTY will not only be used to produce ethanol; the liquid waste will go to an anaerobic digester to power the cellulosic plant and offset natural gas usage at the attached grain ethanol plant as well. That’s renewable energy created at the plant, powering the plant and powering the adjacent facility.

    POET installed and fired up its anaerobic digester, which was designed and built by Biothane, on May 20. The digester uses liquid waste created in the process of converting corn cobs to ethanol. That waste is used to produce methane gas, which acts as roughly the equivalent of natural gas.

    “This technology will cut fossil fuels out of our cellulosic ethanol production process and further improve the benefits of grain-based ethanol,” POET CEO Jeff Broin said. “Over the long term, POET would like to eliminate the use of fossil fuels at all of our plants through a variety of alternative energy sources.” The alternative energy technologies employed at other POET facilities include a solid waste fuel boiler, landfill gas and cogeneration.

    The digester is in the research phase – corn cobs have never been used in this way before. The methane is currently being flared, but once the process is refined, it will be installed as part of Project LIBERTY.

    Project LIBERTY is a 25 million gallon-per-year cellulosic ethanol plant, which will be built in Emmetsburg, Iowa. Research and development work is on schedule for the plant to begin production in 2011.

    A photo of the anaerobic digester is available at http://www.poet.com/news/showRelease.asp?id=169.

    To see a documentary about POET’s pilot cellulosic ethanol plant visit http://www.poet.com/cellulosedocumentary.htm. Media outlets are welcome to link to the documentary in online coverage. Photos are also available for publication at http://www.poet.com/news/releases.asp.

    About POET

    POET, the largest ethanol producer in the world, is a leader in biorefining through its efficient, vertically integrated approach to production. The 20-year-old company produces more than 1.54 billion gallons of ethanol annually from 26 production facilities nationwide. POET recently started up a pilot-scale cellulosic ethanol plant, which uses corn cobs as feedstock, and will commercialize the process in 2011. For more information, visit http://www.poet.com.

    What POET is doing is similar in spirit to what E3 Biofuels attempted. E3 had some startup problems that ultimately put them out of business, but as I described it at the time, this is I believe a necessary step for the ethanol industry. While I don’t expect this approach to be as cheap as using natural gas or coal for power, in the long run using biomass to power their plant will dampen some of the oscillations caused by volatile fossil fuel prices.

    One other key issue – and I have seen conflicting information on this – is how much biomass can be removed in a sustainable manner. Since POET is just using cobs, they are probably OK. Start taking out large amounts of stover, and you may run into trouble. But using cobs solves many of the logistical challenges that cellulosic ethanol in general will face. The cob is already being collected with the corn (analogous to bagasse) so a portion of that logistics battle is already included in the deal. This is also why I think lignocellulose to fuel schemes need to focus on biomass already coming into central locations, such as landfills.

    The one other obvious question is just how much natural gas can be displaced by digesting the liquid waste. Since they are still in a research phase, they probably don’t even have a good answer to this yet.

    June 17, 2009 Posted by | biomass, cellulosic ethanol, ethanol, POET | 38 Comments

    Vinod Khosla at Milken Institute: Part III

    This will be the conclusion of Vinod Khosla’s (VK) recent lengthy interview at the Milken Institute 2009 Global Conference. The interview was conducted by Elizabeth Corcoran (EC) of Forbes and can be viewed here.

    In Part I, VK discussed the role of government money, capital intensity of renewable projects, and some of his solar investments. In Part II, VK discussed butanol, cellulosic ethanol, nuclear power, and cap and trade. Here in Part III, VK discusses his beef with electric cars, has lots to say about Black Swans, discusses his problems with nuclear in more detail, talks about green jobs, sugarcane ethanol, and weighs in on indirect land use issues for biofuels.

    EC (39:00): Let’s get to those electric cars. You don’t like the Prius.

    VK: Let me be clear, and I am going to sneak in my Black Swan. I do drive a hybrid, but not a Prius. I drive a Lexus hybrid. Hybrids are an uneconomic way to reduce carbon dioxide. If you go to hybrids or electric cars, your cost of carbon reduction is about $100/ton. If you have 10 ways of reducing carbon at $50/ton, why would you spend $100? My beef is not with hybrids; we are investing in hybrid batteries; there is a good market and we can make money at it. But do I believe it’s going to solve the climate change problem? No. (RR: None of the things that have been discussed are going to significantly rein in carbon emissions.) Save yourself the five grand, and instead paint your roof white. You will save more carbon that way.

    (RR: He cited this paper by Art Rosenfeld at Lawrence Berkeley Lab: “White Roofs Cool the World, Directly Offset CO2 and Delay Global Warming“).

    EC (41:10): Shai Agassi – a long time entrepreneur in Silicon Valley – has a very different approach to batteries. Are you involved in the work he is doing? Does that only work in small countries?

    VK: You know, Shai has a very intriguing start-up. (RR: EC interrupts to explain that Shai is developing stations where you can go and exchange batteries for electric cars; he owns the battery and you own the car. See more explanation here.) I mentioned earlier about diversity of opinion; I am glad he is trying it and I am cheering him on. If I can help him I will. It is important to try some of these experiments. He has a particularly clever way to do something that does have a shot at working.

    I want to add my Black Swan theory here. Most of you have probably read the Black Swan, or heard about it. The financial crisis is a negative Black Swan. I am a true believer that technology provides positive Black Swans. (RR: VK explains the concept of the Black Swan. Here is a link to the book at Amazon, which I have read and found to be very good). We will redefine energy because of the Black Swans of technology.

    (RR: VK then explains his problem with electric cars, and says lithium ion batteries are too expensive, are limited by electrochemistry, and will be for a long time. I would say that while VK seems to have a clear picture in his head on the issues with batteries, he suffers from a blind spot about similar limitations of cellulosic biomass. He then cites all of his investments into different areas, and concludes that sheer numbers mean something is going to work.)

    VK: The chance that each approach will succeed is small. The chance that all of them will cumulatively fail is vanishingly small. Mark my words: Vanishingly small, and that’s why we will have unsubsidized market competitiveness with fossil fuels. And the fossil fuel guys won’t know what hit them. I don’t see how by 2030 oil can compete. That’s why I think by 2030 oil will go to $30, because it will be the alternative cost of marginal technologies.

    (RR: I think he truly believes this. Yet it shows a failure to grasp issues of scale, biomass density, logistical challenges, and much more. If it were merely a numbers game, we could solve any technology problem by just throwing enough money at it. But there are fundamental issues here regarding biomass that will never – mark my words – never allow it to be produced for $30/bbl. Sugarcane ethanol, yes, can be produced for that in Brazil. But you will never turn cellulosic biomass into a liquid fuel, at scale, for $30/bbl – for the same kinds of fundamental limitations VK mentions for batteries.)

    EC (47:40): So by 2030, what will be the primary fuel?

    VK: I have a paper on my website that postulates about a technology race between biofuels and batteries. Whichever one makes the most rapid progress will get the larger percentage of the total passenger miles driven in the world.

    EC (48:30): Does government risk factor in? There has been a cautionary tale in biodiesel, where there has been great interest, lots of money pumped in, and yet due in part to vagaries of how the environmentalists and government regulations have crashed into each other, you have got more than 100 biodiesel fuels (RR: Biodiesel plants, I presume?) around the country, none of which are producing fuel.

    VK: You know, that’s true, but you also have bankrupt financial companies. Look, failure is the natural mechanism of capitalism. But you are right. There is government risk. But we fixed a lot of that last week when the Low-Carbon Fuel Standard passed. It will force the right decisions looking back.

    EC (50:18): There have been many technologies – and Kleiner invested in many early on – where the technology, the marketplace, and the government were not in sync. And the technology dies.

    VK: I think that’s the wrong way to look at it. Any start-up has risks. It has technology risks, market risks, it has financial risks. It has other risks; it has people risks and management risks. What you are doing as an active investor is balancing those risks. What we are tending to do is increase technology risk so we can reduce market risk. We will generally take on more market risks, have a bigger jump, and a larger probability of failing at the technology such that when we enter the market we have a larger competitive advantage.

    EC (51:30): What are you hearing from the limited partners, the people who invest with you? Is there a tolerance for that sort of risk?

    VK: Absolutely. My impression is venture capital has gone too far away from real technology risk. The limited partners are thirsting for more technology risk. The limited partners tell me that the earlier stage they can get in on the technology risk, the better they like it.

    EC (53:25): I am going to open it up to questions in a minute, but one more question from me. Let’s go back to nuclear for a minute. Aren’t there Black Swans in the nuclear industry? (RR: I was thinking the same thing earlier; Black Swans only appear to have been considered by VK in very specific situations. A positive Black Swan is going to make some of his technologies successful, but he seems to discount any positive Black Swans from other sectors).

    VK: There probably are. In fact, Bill Gates is funding one. The problem with nuclear, I think, is different. Because of the NRC it takes 20 years to build one. And I have to give them $100 million to approve every step of the process. The problem with nuclear is that the innovation cycle is very long. If I am building a nuclear plant, I think of something, 20 years later I build something and see how it performs. If I am building a solar thermal plant, six months later I change my manufacturing line. I can even do it half way through building a power plant.

    EC (54:40): And if you are building an ethanol plant, two or three years later it’s ready.

    VK: Yeah, though every six months people plan on changing the bug in their plant. Every six months you change the bug. Keep evolving it, improve the efficiency. The cycle of innovation – how long it takes – is a really important metric for judging how effective a technology will be in getting to market.

    EC (55:20): OK, good. First question.

    Q1 from audience (55:30): My question is on nuclear. You said you weren’t interested in building, but how about the services component, i.e., servicing the waste and so forth?

    VK: I think it’s a limited investment opportunity. I don’t think it’s an explosive opportunity. (RR: I suppose that depends on whether critical mass is reached.)

    Q2 (56:10): What about superconductivity?

    VK: It’s an interesting area, I just haven’t seen the pace of innovation. Sometimes it’s self-fulfilling. If you are not interested, nobody funds it, then nothing happens. I would love to see a breakthrough in room temperature superconductivity. (RR: He then said Kleiner invested in a couple of companies in the late 80’s; he mentioned American Superconductor).

    Q3 (57:20): With respect to cellulosic ethanol, this question of indirect land use that has ended up in the standards; do you think that will continue?

    VK: It’s a fairly complex issue; the science is very uncertain. I think it is figured into the California Low Carbon Fuel Standard. The end result is a reasonable compromise. It’s also something that is fairly uncertain right now. I think the California Air Resources Board (CARB) came up with something that’s a reasonable answer on indirect land use impacts. The corn ethanol guys wanted to have zero. They didn’t get that, so they are now complaining in Washington. I think CARB could have phased it in more slowly because the numbers are so uncertain, so I would not agree 100% with CARB. But I would agree 90% with them.

    Q4 (59:10): That’s corn. How about cellulosic?

    VK: I think cellulosic should be measured the same way, but I think the impact will be fairly small, and over time it has the potential to be the biggest opportunity to sequester carbon in the soil. I don’t want to get into the details – there are papers on my website about this – but it is possible to change agronomy practices to raise biomass and sequester carbon at the same time. It is the annual crops, where you till up the soil ever year, that you have a problem. Perennial crops, and sugarcane is such a crop, you have a much better chance. Also, a lot of cellulosic crops can be grown without a lot of water and on marginal lands.

    EC (60:20): So the amount of land we would need, if we were to truly replace gasoline, how much land would we need?

    VK: Under optimistic scenarios we need zero land in this country to replace all of the gasoline in this country. (RR: He referred to this paper – Where Will Biomass Come From? – on his website for a detailed explanation). Look, this is really important. We can’t do linear extrapolation of the past. (RR: Because it doesn’t give the desired answer). If we do, we are sure to fail. We have to do things a new way. The best way to predict the future is to invent it, not extrapolate the past. (RR: Audience starts to applaud). And this is a fundamental difference.

    Q5 (61:22): Is the lack of seed capital – especially in Europe – a bottleneck, and how do we reengineer this so that funds are available?

    VK: Lack of seed investment in Europe may be a problem for the Europeans, but it’s an opportunity for us. Let me give you an example. I ran into a guy who was a senior director of research at Exxon, who had moved to Europe – Amsterdam – and was struggling with a new idea to make fuel from biomass. He wasn’t producing ethanol. He called me, and said “Nobody in Europe understands me. I have been looking for money for two years.” He had been begging and borrowing space at various labs and universities to do his research. He said that he thought we had it all wrong, that instead of turning biomass into ethanol you should turn it into crude oil. This is exactly the same thing nature does; all crude oil comes from biomass. He said the only problem with nature is that it takes millions of years. He said he could do it in minutes. Now that’s a seed idea. I would have guessed that there was less than a 10% chance that he was going to be able to pull this off. It didn’t take very much for me to write him a check, because if he is right it’s transformative. He moved to Houston and went to work.

    I like to joke that I am the only Indian in-sourcing jobs. We have in-sourced three technology companies: One from New Zealand, one from Amsterdam, and one from Australia. The same thing happened with the solar thermal technology in Australia. We funded it and they moved to Palo Alto. Every news channel in Australia carried that story. What was the story? “Why isn’t Australia funding this?”

    EC (64:40): Are you seeing more competition at the seed level from other venture capitalists?

    VK: It’s starting to increase, but not that much. That’s why we love the seed opportunities. They are the most promising opportunities anywhere. (RR: He then mentioned that the company in Houston is KiOR, which I mentioned previously in Vinod Khosla Scoops Me. Incidentally, VK e-mailed me after I posted that essay and we exchanged several e-mails over KiOR and some of his other ventures.) Nobody wanted to invest in the Internet until the Netscape idea. After Netscape, everybody was interested.

    EC (65:40): You have said that you like being a seed investor. Do you think there are enough investors at the 2nd and 3rd tier? These companies are going to need more than just you at that point.

    VK: You don’t know for sure, but we see increasing interest. If you see one or two successful IPOs, the amount of money will increase dramatically. Wall Street bounces between fear and greed; we are in a fear cycle.

    Q6 (66:40): What are those Ph.D. students looking into right now? In 2005, I did an informal survey at UC Berkeley. Nobody in the engineering department – graduate students or professors – were interested in energy. We did an informal survey in 2006 and suddenly more than 50% were interested in working in energy. That’s why I am very bullish with respect to the new crops of Ph.D. students coming out. It’s the number one choice. Number one used to be nanotechnology, genetics, computer science; it’s now material science, it’s chemical engineering, it’s all kinds of fundamental processes. What I have noticed is physics, chemistry, biology are becoming a lot more important, and that will drive transformation in energy over the next 20-25 years. (RR: I guess I was way ahead of my time since I studied biomass to energy in graduate school at Texas A&M in the early 90’s).

    Q7 (68:00): I agree with your urgency about climate change, but it’s interesting to think about other countries, who already realize that we have already baked in about two degrees C in terms of the thermal momentum of the earth. Is there a technology opportunity in adaptation to climate change?

    VK: I haven’t spent enough time on adaptation. It’s unfortunate that the people who have the least are the most impacted, like Bangladesh. But there is an interesting area that I have avoided, called geoengineering. I have just been asked to speak at a geoengineering conference, and I haven’t decided. It is a touchy subject; to engineer the climate of this planet. Some people think we have to do it, others think there will be too many unintended consequences. I subscribe to that view.

    EC: We will take two more questions.

    Q8 (70:22): Could you talk about job creation?

    VK: Most of the studies say that job creation per dollar invested is higher for renewable technologies; higher than dollars invested in fossil fuel technologies. I don’t know why that is, but all of the data seem to indicate that this is in fact true.

    Q9 (71:52): Do you think Brazil has a chance with sugar ethanol?

    VK: Sugarcane ethanol, under the Low Carbon Fuel Standard, comes out looking reasonably good. But, having said that, I think sugar is too valuable a commodity to use. We will get to things other than sugarcane as our source of fuel. I suspect sugarcane will be more lasting than corn ethanol, but even that will be a passing phase. In the end, non-food technologies are likely to be the source of our fuels. Partly because the politics are right; more importantly because the science is right. I evaluate biofuels on one metric: How many miles can you drive per acre? With most food crops, you can get to 10,000 miles driven per acre. Cellulosic technology offers the opportunity to go 100,000 miles on an acre, and then land becomes a non-issue. (RR: Two words: Net energy). Now we promised to take one last question.

    Q10 (73:30): A lot of these new technologies are going require someone to install all of this. Are there plans to look at human capital opportunties?

    VK: There are clearly opportunities in services. We are not funding them because, partly because I am a techie nerd; I like the technology and everyone should do something they have fun at. But there are clearly opportunities, and others are doing it. Thank you all very much.

    May 4, 2009 Posted by | batteries, biomass, Black Swan, cellulosic ethanol, electric cars, Nassim Nicholas Taleb, nuclear energy, Prius, Vinod Khosla | 48 Comments

    Vinod Khosla at Milken Institute: Part III

    This will be the conclusion of Vinod Khosla’s (VK) recent lengthy interview at the Milken Institute 2009 Global Conference. The interview was conducted by Elizabeth Corcoran (EC) of Forbes and can be viewed here.

    In Part I, VK discussed the role of government money, capital intensity of renewable projects, and some of his solar investments. In Part II, VK discussed butanol, cellulosic ethanol, nuclear power, and cap and trade. Here in Part III, VK discusses his beef with electric cars, has lots to say about Black Swans, discusses his problems with nuclear in more detail, talks about green jobs, sugarcane ethanol, and weighs in on indirect land use issues for biofuels.

    EC (39:00): Let’s get to those electric cars. You don’t like the Prius.

    VK: Let me be clear, and I am going to sneak in my Black Swan. I do drive a hybrid, but not a Prius. I drive a Lexus hybrid. Hybrids are an uneconomic way to reduce carbon dioxide. If you go to hybrids or electric cars, your cost of carbon reduction is about $100/ton. If you have 10 ways of reducing carbon at $50/ton, why would you spend $100? My beef is not with hybrids; we are investing in hybrid batteries; there is a good market and we can make money at it. But do I believe it’s going to solve the climate change problem? No. (RR: None of the things that have been discussed are going to significantly rein in carbon emissions.) Save yourself the five grand, and instead paint your roof white. You will save more carbon that way.

    (RR: He cited this paper by Art Rosenfeld at Lawrence Berkeley Lab: “White Roofs Cool the World, Directly Offset CO2 and Delay Global Warming“).

    EC (41:10): Shai Agassi – a long time entrepreneur in Silicon Valley – has a very different approach to batteries. Are you involved in the work he is doing? Does that only work in small countries?

    VK: You know, Shai has a very intriguing start-up. (RR: EC interrupts to explain that Shai is developing stations where you can go and exchange batteries for electric cars; he owns the battery and you own the car. See more explanation here.) I mentioned earlier about diversity of opinion; I am glad he is trying it and I am cheering him on. If I can help him I will. It is important to try some of these experiments. He has a particularly clever way to do something that does have a shot at working.

    I want to add my Black Swan theory here. Most of you have probably read the Black Swan, or heard about it. The financial crisis is a negative Black Swan. I am a true believer that technology provides positive Black Swans. (RR: VK explains the concept of the Black Swan. Here is a link to the book at Amazon, which I have read and found to be very good). We will redefine energy because of the Black Swans of technology.

    (RR: VK then explains his problem with electric cars, and says lithium ion batteries are too expensive, are limited by electrochemistry, and will be for a long time. I would say that while VK seems to have a clear picture in his head on the issues with batteries, he suffers from a blind spot about similar limitations of cellulosic biomass. He then cites all of his investments into different areas, and concludes that sheer numbers mean something is going to work.)

    VK: The chance that each approach will succeed is small. The chance that all of them will cumulatively fail is vanishingly small. Mark my words: Vanishingly small, and that’s why we will have unsubsidized market competitiveness with fossil fuels. And the fossil fuel guys won’t know what hit them. I don’t see how by 2030 oil can compete. That’s why I think by 2030 oil will go to $30, because it will be the alternative cost of marginal technologies.

    (RR: I think he truly believes this. Yet it shows a failure to grasp issues of scale, biomass density, logistical challenges, and much more. If it were merely a numbers game, we could solve any technology problem by just throwing enough money at it. But there are fundamental issues here regarding biomass that will never – mark my words – never allow it to be produced for $30/bbl. Sugarcane ethanol, yes, can be produced for that in Brazil. But you will never turn cellulosic biomass into a liquid fuel, at scale, for $30/bbl – for the same kinds of fundamental limitations VK mentions for batteries.)

    EC (47:40): So by 2030, what will be the primary fuel?

    VK: I have a paper on my website that postulates about a technology race between biofuels and batteries. Whichever one makes the most rapid progress will get the larger percentage of the total passenger miles driven in the world.

    EC (48:30): Does government risk factor in? There has been a cautionary tale in biodiesel, where there has been great interest, lots of money pumped in, and yet due in part to vagaries of how the environmentalists and government regulations have crashed into each other, you have got more than 100 biodiesel fuels (RR: Biodiesel plants, I presume?) around the country, none of which are producing fuel.

    VK: You know, that’s true, but you also have bankrupt financial companies. Look, failure is the natural mechanism of capitalism. But you are right. There is government risk. But we fixed a lot of that last week when the Low-Carbon Fuel Standard passed. It will force the right decisions looking back.

    EC (50:18): There have been many technologies – and Kleiner invested in many early on – where the technology, the marketplace, and the government were not in sync. And the technology dies.

    VK: I think that’s the wrong way to look at it. Any start-up has risks. It has technology risks, market risks, it has financial risks. It has other risks; it has people risks and management risks. What you are doing as an active investor is balancing those risks. What we are tending to do is increase technology risk so we can reduce market risk. We will generally take on more market risks, have a bigger jump, and a larger probability of failing at the technology such that when we enter the market we have a larger competitive advantage.

    EC (51:30): What are you hearing from the limited partners, the people who invest with you? Is there a tolerance for that sort of risk?

    VK: Absolutely. My impression is venture capital has gone too far away from real technology risk. The limited partners are thirsting for more technology risk. The limited partners tell me that the earlier stage they can get in on the technology risk, the better they like it.

    EC (53:25): I am going to open it up to questions in a minute, but one more question from me. Let’s go back to nuclear for a minute. Aren’t there Black Swans in the nuclear industry? (RR: I was thinking the same thing earlier; Black Swans only appear to have been considered by VK in very specific situations. A positive Black Swan is going to make some of his technologies successful, but he seems to discount any positive Black Swans from other sectors).

    VK: There probably are. In fact, Bill Gates is funding one. The problem with nuclear, I think, is different. Because of the NRC it takes 20 years to build one. And I have to give them $100 million to approve every step of the process. The problem with nuclear is that the innovation cycle is very long. If I am building a nuclear plant, I think of something, 20 years later I build something and see how it performs. If I am building a solar thermal plant, six months later I change my manufacturing line. I can even do it half way through building a power plant.

    EC (54:40): And if you are building an ethanol plant, two or three years later it’s ready.

    VK: Yeah, though every six months people plan on changing the bug in their plant. Every six months you change the bug. Keep evolving it, improve the efficiency. The cycle of innovation – how long it takes – is a really important metric for judging how effective a technology will be in getting to market.

    EC (55:20): OK, good. First question.

    Q1 from audience (55:30): My question is on nuclear. You said you weren’t interested in building, but how about the services component, i.e., servicing the waste and so forth?

    VK: I think it’s a limited investment opportunity. I don’t think it’s an explosive opportunity. (RR: I suppose that depends on whether critical mass is reached.)

    Q2 (56:10): What about superconductivity?

    VK: It’s an interesting area, I just haven’t seen the pace of innovation. Sometimes it’s self-fulfilling. If you are not interested, nobody funds it, then nothing happens. I would love to see a breakthrough in room temperature superconductivity. (RR: He then said Kleiner invested in a couple of companies in the late 80’s; he mentioned American Superconductor).

    Q3 (57:20): With respect to cellulosic ethanol, this question of indirect land use that has ended up in the standards; do you think that will continue?

    VK: It’s a fairly complex issue; the science is very uncertain. I think it is figured into the California Low Carbon Fuel Standard. The end result is a reasonable compromise. It’s also something that is fairly uncertain right now. I think the California Air Resources Board (CARB) came up with something that’s a reasonable answer on indirect land use impacts. The corn ethanol guys wanted to have zero. They didn’t get that, so they are now complaining in Washington. I think CARB could have phased it in more slowly because the numbers are so uncertain, so I would not agree 100% with CARB. But I would agree 90% with them.

    Q4 (59:10): That’s corn. How about cellulosic?

    VK: I think cellulosic should be measured the same way, but I think the impact will be fairly small, and over time it has the potential to be the biggest opportunity to sequester carbon in the soil. I don’t want to get into the details – there are papers on my website about this – but it is possible to change agronomy practices to raise biomass and sequester carbon at the same time. It is the annual crops, where you till up the soil ever year, that you have a problem. Perennial crops, and sugarcane is such a crop, you have a much better chance. Also, a lot of cellulosic crops can be grown without a lot of water and on marginal lands.

    EC (60:20): So the amount of land we would need, if we were to truly replace gasoline, how much land would we need?

    VK: Under optimistic scenarios we need zero land in this country to replace all of the gasoline in this country. (RR: He referred to this paper – Where Will Biomass Come From? – on his website for a detailed explanation). Look, this is really important. We can’t do linear extrapolation of the past. (RR: Because it doesn’t give the desired answer). If we do, we are sure to fail. We have to do things a new way. The best way to predict the future is to invent it, not extrapolate the past. (RR: Audience starts to applaud). And this is a fundamental difference.

    Q5 (61:22): Is the lack of seed capital – especially in Europe – a bottleneck, and how do we reengineer this so that funds are available?

    VK: Lack of seed investment in Europe may be a problem for the Europeans, but it’s an opportunity for us. Let me give you an example. I ran into a guy who was a senior director of research at Exxon, who had moved to Europe – Amsterdam – and was struggling with a new idea to make fuel from biomass. He wasn’t producing ethanol. He called me, and said “Nobody in Europe understands me. I have been looking for money for two years.” He had been begging and borrowing space at various labs and universities to do his research. He said that he thought we had it all wrong, that instead of turning biomass into ethanol you should turn it into crude oil. This is exactly the same thing nature does; all crude oil comes from biomass. He said the only problem with nature is that it takes millions of years. He said he could do it in minutes. Now that’s a seed idea. I would have guessed that there was less than a 10% chance that he was going to be able to pull this off. It didn’t take very much for me to write him a check, because if he is right it’s transformative. He moved to Houston and went to work.

    I like to joke that I am the only Indian in-sourcing jobs. We have in-sourced three technology companies: One from New Zealand, one from Amsterdam, and one from Australia. The same thing happened with the solar thermal technology in Australia. We funded it and they moved to Palo Alto. Every news channel in Australia carried that story. What was the story? “Why isn’t Australia funding this?”

    EC (64:40): Are you seeing more competition at the seed level from other venture capitalists?

    VK: It’s starting to increase, but not that much. That’s why we love the seed opportunities. They are the most promising opportunities anywhere. (RR: He then mentioned that the company in Houston is KiOR, which I mentioned previously in Vinod Khosla Scoops Me. Incidentally, VK e-mailed me after I posted that essay and we exchanged several e-mails over KiOR and some of his other ventures.) Nobody wanted to invest in the Internet until the Netscape idea. After Netscape, everybody was interested.

    EC (65:40): You have said that you like being a seed investor. Do you think there are enough investors at the 2nd and 3rd tier? These companies are going to need more than just you at that point.

    VK: You don’t know for sure, but we see increasing interest. If you see one or two successful IPOs, the amount of money will increase dramatically. Wall Street bounces between fear and greed; we are in a fear cycle.

    Q6 (66:40): What are those Ph.D. students looking into right now? In 2005, I did an informal survey at UC Berkeley. Nobody in the engineering department – graduate students or professors – were interested in energy. We did an informal survey in 2006 and suddenly more than 50% were interested in working in energy. That’s why I am very bullish with respect to the new crops of Ph.D. students coming out. It’s the number one choice. Number one used to be nanotechnology, genetics, computer science; it’s now material science, it’s chemical engineering, it’s all kinds of fundamental processes. What I have noticed is physics, chemistry, biology are becoming a lot more important, and that will drive transformation in energy over the next 20-25 years. (RR: I guess I was way ahead of my time since I studied biomass to energy in graduate school at Texas A&M in the early 90’s).

    Q7 (68:00): I agree with your urgency about climate change, but it’s interesting to think about other countries, who already realize that we have already baked in about two degrees C in terms of the thermal momentum of the earth. Is there a technology opportunity in adaptation to climate change?

    VK: I haven’t spent enough time on adaptation. It’s unfortunate that the people who have the least are the most impacted, like Bangladesh. But there is an interesting area that I have avoided, called geoengineering. I have just been asked to speak at a geoengineering conference, and I haven’t decided. It is a touchy subject; to engineer the climate of this planet. Some people think we have to do it, others think there will be too many unintended consequences. I subscribe to that view.

    EC: We will take two more questions.

    Q8 (70:22): Could you talk about job creation?

    VK: Most of the studies say that job creation per dollar invested is higher for renewable technologies; higher than dollars invested in fossil fuel technologies. I don’t know why that is, but all of the data seem to indicate that this is in fact true.

    Q9 (71:52): Do you think Brazil has a chance with sugar ethanol?

    VK: Sugarcane ethanol, under the Low Carbon Fuel Standard, comes out looking reasonably good. But, having said that, I think sugar is too valuable a commodity to use. We will get to things other than sugarcane as our source of fuel. I suspect sugarcane will be more lasting than corn ethanol, but even that will be a passing phase. In the end, non-food technologies are likely to be the source of our fuels. Partly because the politics are right; more importantly because the science is right. I evaluate biofuels on one metric: How many miles can you drive per acre? With most food crops, you can get to 10,000 miles driven per acre. Cellulosic technology offers the opportunity to go 100,000 miles on an acre, and then land becomes a non-issue. (RR: Two words: Net energy). Now we promised to take one last question.

    Q10 (73:30): A lot of these new technologies are going require someone to install all of this. Are there plans to look at human capital opportunties?

    VK: There are clearly opportunities in services. We are not funding them because, partly because I am a techie nerd; I like the technology and everyone should do something they have fun at. But there are clearly opportunities, and others are doing it. Thank you all very much.

    May 4, 2009 Posted by | batteries, biomass, Black Swan, cellulosic ethanol, electric cars, Nassim Nicholas Taleb, nuclear energy, Prius, Vinod Khosla | 28 Comments

    New Renewable Energy Map

    About to hop a plane for Europe, but wanted to share with you a new map from the NRDC that I think is extremely cool:

    Renewable Energy Map for the U.S.

    I like this map for two reasons. First, it shows the renewable energy possibilities across the country (solar, wind, cellulosic biomass, and biogas). But second, you can filter by planned and existing facilities for wind, advanced biofuels, and biogas. (However, I think some of the ones that they have called “existing” are not yet producing anything). There are a lot of small facilities that I have never heard of, and need to investigate when I have some time.

    Offline now for a day or so as I make the journey back across the pond.

    April 27, 2009 Posted by | biogas, biomass, cellulose, NRDC, solar power, wind power | 134 Comments

    Renewable Energy Highlights and Commentary

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

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

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

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

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

    Report Highlights

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Commentary

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

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

    The following figure was very interesting to me:

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

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

    Conclusions

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

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

    November 26, 2008 Posted by | alternative energy, biomass, iea, weo | 48 Comments