R-Squared Energy Blog

Pure Energy

Son of Xethanol Goes Bankrupt

I have written several essays on Xethanol over the past few years. If you recall, they were a poster child for the theme of “overpromise, boost your stock price, and get rich quick” on biofuels.

For me, this story dates back to 2006, when an investigative journalist working for Dallas Mavericks’ owner Mark Cuban e-mailed me and asked about the company’s claims. They had announced that thy would “be the first to commercialize cellulosic ethanol” (if I had a nickel for every time I have heard that), and they issued press releases at every opportunity. It worked for a while – at one point their market cap was something like half a billion dollars – despite the fact that there was very little of real value within the company.

Anyway, the investigative journalist published his story (which seems to be offline at the moment), Mark Cuban shorted the stock just before the story was released, and I wrote up something on the company, which I considered to be essentially a scam:

Xethanol Story

Anyway, if you looked into their financials, they were spending money on everything but R&D, while claiming they would be the first to commercialize cellulosic ethanol – which would require a lot of R&D. I continued to follow the story, and predicted in February 2007 that they would eventually go bankrupt:

Xethanol Can’t Deliver on its Promises

Well, about this time last year they went bankrupt – more or less:

Xethanol Now Defunct

I say more or less, because what they did was stop operations as Xethanol, changed their direction, and relaunched as Global Energy Holdings Group Inc. At that point I said I wouldn’t write about Xethanol any more, but there is a final chapter to this saga:

Global Energy Holdings Group Files Chapter 11

Global Energy, formerly known as Xethanol Corp., warned in a recent securities filing that it needed substantial additional capital, but that the credit crunch has made it difficult to sell assets or obtain financing.

Global has had no operating revenue this year and said its sole source of revenue last year was an Iowa ethanol plant that ceased production because of high corn and natural gas prices. The company sold the Iowa plant last week and is also looking for a buyer or partner for a landfill gas project in Georgia.

I do want to make it clear, though, that when Global Energy Holdings Group Inc. was created from the ashes of Xethanol, they did so under new management. Therefore, I don’t attribute the same shenanigans to them as I did Xethanol. As far as I know they were making a legitimate attempt to make a go of it, whereas it appeared to me that Xethanol was just trying to make a fast buck off of very gullible investors. But they were handicapped by previous Xethanol decisions, and the current credit crisis was enough to push them over the edge.

I think that officially closes the book on the Xethanol saga – unless a grandson of Xethanol is born. But with the baggage that comes along with it, I wouldn’t bother reorganizing. If you still want to do business, get a fresh start.

November 27, 2009 Posted by | cellulose, cellulosic ethanol, fraud, Global Energy Holdings Group, scams, Xethanol | 59 Comments

My Point Exactly

I missed this story when it came out last week:

Hydrocarbon biofuels’ promise tops that of ethanol, gasoline

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

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

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

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

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

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

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

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

Chemistry: The Future of Cellulose

I am not a big believer in a commercial future for the biochemical conversion of cellulose into fuels. There are many big hurdles in place that are going to have to be overcome before cellulose is commercially converted to ethanol. In a nutshell, one is the logistical problem, which I have covered before. Beyond the logistical problem is the issue that biochemistry often starts to malfunction as the conditions in a reactor change, and with cellulosic ethanol that means that if you get a 4% solution of ethanol in water, you are doing well. But from an energy return point of view, a 4% solution is about like the trillions barrels of oil shale reserves we have. If it takes over a trillion barrels of energy to extract and process them, that largely defeats their usability.

Chemistry is a different matter, which is why I favor gasification processes over fermentation processes. But even beyond gasification, I have wondered about chemically processing cellulose in a refinery. I used to have a guy who e-mailed me all the time and told me he had invented a chemical process for reacting cellulose to hexane, which can then be turned into gasoline. If you look at cellulose (there is a graphic of a segment of cellulose at the previous link), you can envision that it could be done. (Whether he had actually done it is a different story).

But the chemistry pathway isn’t limited to fuels. With that preface, I want to thank a reader for bringing this story to my attention. In a recently published story in Applied Catalysis A: General (available online at Science Direct), scientists at Pacific Northwest National Laboratory have reported on a new process for converting cellulose directly into an important chemical building block (e.g., for plastics and fuel):

Single-step conversion of cellulose to 5-hydroxymethylfurfural (HMF), a versatile platform chemical

Now we all know that you can do lots of neat things in the lab that can’t really be done on a larger scale. But this particular process does not appear to be overly complicated. The abstract from the paper explains what they are doing:

Abstract

The ability to use cellulosic biomass as feedstock for the large-scale production of liquid fuels and chemicals depends critically on the development of effective low temperature processes. One promising biomass-derived platform chemical is 5-hydroxymethylfurfural (HMF), which is suitable for alternative polymers or for liquid biofuels. While HMF can currently be made from fructose and glucose, the ability to synthesize HMF directly from raw natural cellulose would remove a major barrier to the development of a sustainable HMF platform. Here we report a single-step catalytic process where cellulose as the feed is rapidly depolymerized and the resulting glucose is converted to HMF under mild conditions. A pair of metal chlorides (CuCl2 and CrCl2) dissolved in 1-ethyl-3-methylimidazolium chloride ([EMIM]Cl) at temperatures of 80–120 °C collectively catalyze the single-step process of converting cellulose to HMF with an unrefined 96% purity among recoverable products (at 55.4 ± 4.0% HMF yield). After extractive separation of HMF from the solvent, the catalytic performance of recovered [EMIM]Cl and the catalysts was maintained in repeated uses. Cellulose depolymerization occurs at a rate that is about one order of magnitude faster than conventional acid-catalyzed hydrolysis. In contrast, single metal chlorides at the same total loading showed considerably less activity under similar conditions.

So they take cellulose and react it with two metal chlorides at 80–120°C for a direct conversion of cellulose into HMF – which can be easily converted to fuel or plastics. I would think then the important considerations would be 1). What happens to the lignin and hemicellulose in the biomass?; and 2). How much energy does it take? The second item is particularly important if fuel is the objective.

While it is too early to tell whether there is a fatal flaw, this one certainly bears watching. It also strengthens my conviction that in the long-run, the right way to process cellulose is chemically.

May 23, 2009 Posted by | biomass gasification, cellulose, chemistry, refining | 44 Comments

Vinod Khosla at Milken Institute: Part II

This is a continuation of the previous post covering Vinod Khosla’s (VK) recent lengthy interview 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. Part II picks up at the 13:40 mark of the 75 minute interview. In this section, VK covers his strategy for cutting poor performers from his portfolio, discusses butanol, suggests that cellulosic ethanol can replace oil, says nuclear power can’t compete without subsidies, says cap and trade is inevitable, talks efficiency and smart grid, and tells us that he is often wrong.

EC (13:40): In the past 90 days we have seen something like a billion dollars being put into solar investments – whether in the form of equity or debt. Is that stupid money?

VK: The people who are putting in gobs of money, behind people chasing First Solar at billion dollar valuations – I won’t say it’s stupid but it’s not something I would do with my money. (EC: That pretty much counts as stupid). A diversity of opinion is good. I am often wrong. (EC: Sometimes you are). You only need to be correct once in a while because in our business you only lose one time your money but you can make 100 times quite easily. I don’t have to be very right.

(RR: I would like to hear that during his next congressional testimony where he is trying to drive the direction of energy policy: “I am often wrong.” But this also gets to the heart of why I often object to what he is saying. If he uses his high level of influence to help put us down the wrong path on energy policy, then what are the consequences of being wrong? They could be severe.)

EC (14:38): How many companies do you currently have in your portfolio?

VK: Our clean tech portfolio has probably about 50 companies.

EC (14:50): And how many companies – again you have been at this 5 years or so – how many companies do you cut off at this point?

VK: Interestingly the companies we have cut off…when we started, we started with a different premise. I decided, you know in most venture capital there are plenty of angels. Angels spend half a million dollars, work with a university professor, develop the idea a little further. There are very few angels in clean tech. First, the start-ups are harder, because they are very science and technology-based. If you made money in real estate, you aren’t going to put new money into a waste heat system, for example. It’s harder to understand. (RR: That’s ironic.) So we decided in 2004 that I would spend a lot of my time on what we would call science experiments. So we have cut off perhaps four or five things.

EC (15:48): Which was the biggest disappointment?

VK: Let me just finish the thought. The ones we have cut off, we cut off relatively early. So, of the 10 science experiments we did, we cut off five of them with a million dollars invested. Who cares? The problem is when you invest $50 million and cut it off. That’s the problem. We have not had any large cut-offs – I am trying to think – in our clean tech portfolio. When we have invested a lot of money, there’s one or two places – well one we wrote off; one called Altra (RR: Altra is a corn ethanol producer that is on the ropes). There’s one place we actually decided to change the plan – Cilion – and made it capital neutral, so they don’t need a lot of cash. Got rid of the debt; the company is going fine, but sort of on the slow boat.

(RR: When Cilion was formed in 2006, they announced they would have 8 plants in operation by 2008 and achieve an energy return of better than twice that of gasoline. Here in 2009 they have zero plants in operation. The formation of the company included much fanfare, such as this quote from VK: “Cilion will be able to single-handedly produce all of the ethanol that the Governor has ordered for 2010 [900 million gallons], based on current consumption.” So far, they have proven to be nothing but a money pit. So what if California had counted on that ethanol? These are the dangers of having someone unduly influencing energy policy and being “often wrong.”)

EC (16:57): How about Hawaii Bio?

VK: Hawaii Bio was a tiny investment. It was sort of like – I don’t even remember – under a million bucks. It’s actually going pretty well. They have only spent, cumulatively, a few hundred thousand dollars in their whole life. The idea there was very simple, and it’s still valid. We teamed up with the three largest landowners in Hawaii; about 640,000 acres and said when the technology comes along – and all they are doing is looking for technology; they aren’t developing any technology of their own – that land will be a strategic asset for the fuels area in Hawaii. And so we have been talking to a lot of technology providers, spending very little money. We’ll tread water until the right technology comes along.

EC (18:03): Last fall you said project finance was not an area you want to be headed into. Talk a little bit about where you see cellulosic ethanol going, and isn’t that an area where you have been involved with project finance?

VK: It depends on what you call project finance. Cellulosic technology is something I am very interested in; I actually think it’s the only thing that can replace the oil; I am fairly confident that within the next 5 years it will be cheaper unsubsidized than oil at $50, $60 a barrel.

(RR: I would like to see the math on this. It’s amazing that someone can believe this, despite there not being a single commercial-sized cellulosic ethanol plant in existence.)

EC (18:48): Let’s look at some of the numbers. You don’t like plain ethanol, right; the kind that comes from corn and soy?

VK: Right. To be fair to the corn guys, they served their purpose. I have said for years that they are a good stepping stone. This is important. I will tell you a funny story that really makes a lot of sense. About two years ago, we said that corn ethanol would be a good stepping stone; they have raised a lot of visibility; there’s a lot of pumps; cars are flex-fuel capable. It helped set up the infrastructure. The economics of corn will not work long-term relative to cellulosic. We had a company called Gevo that were not doing corn ethanol, they were doing butanol. (RR: Butanol is something that was produced commercially via the biological route before the petroleum route displaced it; I have explained the issues with bio-butanol here).

They decided to change – not their science; they have bugs that produce butanol and on to some other things – but they changed their strategy for developing the process; the plants they use – to use corn ethanol plants. They have been doing this for two years now; planning on corn ethanol plants being available at 20 cents on the dollar. (RR: And as we saw recently with the Valero purchase of Verasun’s assets, others are also interested in picking up ethanol plants for pennies on the dollar). And developing a process technology that can use them. And in fact the largest maker of corn ethanol plants in the country – or one of the largest, ICM – about three months ago signed an exclusive agreement with them to convert corn ethanol plants into higher value products. So that’s a great example of how every problem is an opportunity.

(RR: While they may be able to reuse portions of a corn ethanol plant, the distillation of the butanol is going to be much different. Distillation capacity will need to be added during any conversion of ethanol plants to butanol plants. I have looked into this already at someone’s request, and I did spend years working in a butanol plant.)

EC (20:38): From your point of view, it’s the 2nd generation ethanol (VK: Absolutely) that’s going to make the most sense. What’s had to go into that is a lot of biotech engineering, finding microorganisms that can efficiently convert. (VK: Sometimes, not always) Finding fuel stocks that will be cheap enough, whether you get them from trees or other brush or winter crops and so forth. Take us through the numbers. Where do the prices have to be in order to make that work, and what happens if oil declines in price? What happens if it gets down to $30/bbl?

VK: What I would say is that unless there’s a competitor to oil, I don’t think oil is going to $30/bbl. (EC: Even though John Doerr was in the Middle East, and people told him, “John, it’s going to $30/bbl?) I won’t speak for John. When we plan for unsubsidized market competitiveness, we plan on $50 oil. I suspect the price will be much higher, especially when economic growth resumes. And whether it’s higher in a year or five years doesn’t matter as much. Not only that, the problem isn’t oil anymore, it’s a carbon constrained world. And we are going to have legislation on that. It doesn’t matter whether the science of climate change is right or wrong. Assume for a moment that we discover over the next 10 years that climate change science is wrong, and we don’t have a climate change problem – not something I believe. We will still end up with legislation in the next five years. So, at this point it is fait accompli; it’s going to happen.

EC (22:50): Doesn’t that amount to government subsidies?

VK: No it doesn’t. If you dump your wastewater into the river, is it a government subsidy if they require you to clean it up? In fact the nuclear industry is the one that’s subsidized. They say we’ll take your toxic waste, the government takes responsibility and subsidizes them. There is not a chance that you [nuclear] can compete in the market unsubsidized. Even if it had the toxic waste subsidy where they took waste off, you still couldn’t compete at market interest rates. There’s not a viable nuclear plant at 15% IRR or 15% debt, which is what the solar guys contend with. It’s only because of 5% loan guarantees from the federal government that keeps nuclear in business.

EC (24:30): Come back to the tax on carbon, though, because there will be a tax. Right? (VK: Yeah). What do you predict that legislation is going to be?

VK: I suspect…look it’s hard to predict politics…I suspect it won’t happen this year it will happen next year. Many people are pushing to have it before Copenhagen this year. I hope we do. There is a 50/50 chance the House can pass a bill by summer. The Senate will take longer, and it will get stuck in the Senate. Anyway, my expectation is that next year we will have a carbon cap and trade.

EC (25:30): Do we know enough about how to make cap and trade work? Isn’t that market just an opportunity for fraudsters to come in?

VK: Any market will have fraudsters to begin with. (RR: He went into an explanation of events that have led to stock market regulations). Will it take 10 years to get a system in place where there is not too much fraud? Yes. (RR: And during those 10 years another administration can come in and dismantle the whole thing).

EC (27:20): So you are willing to put up with an ill-defined, highly-regulated system to have cap and trade?

VK: We have to have cap and trade. We don’t have a choice. (RR: VK compares the need for homeowner’s insurance to the risk that climate change is catastrophic). If we buy home insurance, why shouldn’t we buy planet insurance? (RR: VK discusses the risks that climate change will lead to 100 million deaths; also suggests that the growth rate in China is exaggerated by neglecting “off the books” environmental damage).

EC (29:48): What is a cap and trade system going to do in the United States if we enact it without China?

VK: I suspect China will be part of it in some way. (RR: Discusses targets for developing countries, but doesn’t really answer the question of how China will be compelled to participate. He then referred people to this paper on his website that further explains his ideas.).

EC (33:50): Talk about efficiency. We are hearing a lot about the smart grid; a lot of smart grid technology involving more efficient use of power; we are hearing a lot about Silver Spring which is a company that I think you passed on. Why not? That seems like it would fit your strategy; great, low-cost investment; big bang for the buck.

VK: Silver Spring is a good company. (EC: Why did you pass?) I wouldn’t say I passed, what I would say is that what Silver Spring is doing is not what we are investing in. By that I mean we don’t invest at the valuations at which Silver Spring was raising money. It’s a different domain. (RR: EC explains that Silver Spring is doing smart metering). Efficiency is absolutely in our sweet spot. We are reinventing lighting. We are reinventing motors. We are reinventing air conditioners that haven’t been reinvented for 75 years. Every air conditioner still has a compressor; we are trying to do one without a compressor. We are reinventing batteries, pumps; anything that consumes energy, we are interested in improving.

A smart grid is a good thing to do. I would say that it’s very fashionable among environmentalists. (RR: VK says to remind him to rant later about environmentalists, whom he said cause half the damage). But efficiency is important, smart grid is important, but if I was asked, the money that was allocated to the smart grid in the stimulus package – is that the best use of that money? Absolutely not. (RR: VK says he would rather have a smart grid so wind energy in North Dakota can get to New York; then goes into the differences between a smart grid and a transmission grid.) An area of less than 100 miles by 100 miles in Nevada – and there are plenty of those – could replace 100% of U.S. electricity with solar. (RR: I have done calculations consistent with that sort of estimate, but there are some big caveats like intermittency). Why don’t we have it? Because we don’t have a grid.

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

(RR: This takes us just past the halfway mark of the interview. I will pick up the second half and conclude it in Part III).

May 1, 2009 Posted by | Altra, butanol, cellulose, cellulosic ethanol, Cilion, climate change, global warming, Hawaii, nuclear energy, Vinod Khosla | 75 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

Beyond Fossil Fuels

Through at least this week, my posting will continue to be sporadic. I have been traveling a lot the past couple of weeks, and this week (Thursday April 23rd) I head to Kansas City to give a talk that will be partially about biofuels and partially about acetylated wood:

Economic Forum – Biofuels, Biobuildings, and Beyond

After that, I think things will settle down for a little while. I am back in Europe next week, and I usually have more time for writing then (since my family isn’t there, I write in the evenings).

For now, there is an interesting series of articles that will be published this week at Scientific American:

Beyond Fossil Fuels: Energy Leaders Weigh In

Here is the line-up:

Monday, April 20:
Eric McAfee, chairman and CEO, AE Biofuels
Gerald Grandey, president and CEO, Cameco Corporation (uranium production)

Tuesday, April 21:
Barry Cinnamon, CEO, Akeena Solar
Aris Candris, president and CEO, Westinghouse Electric Company (nuclear)

Wednesday, April 22:
Alan Hanson, executive vice president, AREVA (nuclear)
Harrison Dillon, president and chief technology officer, Solazyme (microbial fuel production)

Thursday, April 23:
David Crane, president and CEO, NRG Energy (nuclear)
Leon Steinberg, CEO, National Wind

Friday, April 24:
John Melo, CEO, Amyris (renewable fuels)
Daniel Kunz, president and CEO, U.S. Geothermal

Monday, April 27:
John McDonald, CEO, ExRo (wind)
Sanjay Pingle, president, Terasol Energy (biofuels)

Tuesday, April 28:
William Johnson, president, chairman and CEO, Progress Energy (nuclear)
David Mills, founder and chief scientific officer, Ausra (solar thermal)

Wednesday, April 29:
Bob Gates, senior vice president for commercial operations, Clipper Windpower
David Ratcliffe, president, chairman and CEO, Southern Company (nuclear)
Lucien Bronicki, chairman and chief technology officer, Ormat Technologies (geothermal)

The first question and answer from McAfee’s interview:

What technical obstacles currently most curtail the growth of biofuels? What are the prospects for overcoming them in the near future and the longer-term?

The conversion and commercialization of cellulose inputs into fuel ethanol is a significant technology obstacle to the growth of the ethanol industry as a mainstream fuel. A number of companies are currently working on cellulosic technologies, and great strides have been made, but a gap remains between technology advances and full commercial deployment. Much of this challenge exists around two factors—scalability and cost. Science is no longer the primary gating issue—it’s now a matter of investment and resource allocation.

While I agree with the first part on the technological obstacles for commercialization of cellulose into ethanol (I simply don’t believe it will ever happen), I think the last sentence can be misleading. When one says that science is “no longer the primary gating issue”, that implies that recent scientific advancements have enabled the technology. However, the science has not been the issue for almost 100 years. As Robert Bryce points out in The Cellulosic Ethanol Delusion, conversion of “straw, corn-stalks, corn cobs and all similar sorts of material we throw away” was known technology in 1921.

The issue is simply the same as it was back in 1921: Biomass has a low energy density, and the cellulose is not easily converted. These factors worsen the energy balance, and there isn’t an easy way around this fact. (Gasification, as I have argued, is a way around some of the issues, but we are talking about a different animal from hydrolysis.)

Coming Up

As soon as I get some breathing room, I am going to do a book review for Oil 101– which I finally finished reading, and then to write an essay on the implications of being wrong.

April 20, 2009 Posted by | biomass gasification, cellulose, cellulosic ethanol | 29 Comments

Beyond Fossil Fuels

Through at least this week, my posting will continue to be sporadic. I have been traveling a lot the past couple of weeks, and this week (Thursday April 23rd) I head to Kansas City to give a talk that will be partially about biofuels and partially about acetylated wood:

Economic Forum – Biofuels, Biobuildings, and Beyond

After that, I think things will settle down for a little while. I am back in Europe next week, and I usually have more time for writing then (since my family isn’t there, I write in the evenings).

For now, there is an interesting series of articles that will be published this week at Scientific American:

Beyond Fossil Fuels: Energy Leaders Weigh In

Here is the line-up:

Monday, April 20:
Eric McAfee, chairman and CEO, AE Biofuels
Gerald Grandey, president and CEO, Cameco Corporation (uranium production)

Tuesday, April 21:
Barry Cinnamon, CEO, Akeena Solar
Aris Candris, president and CEO, Westinghouse Electric Company (nuclear)

Wednesday, April 22:
Alan Hanson, executive vice president, AREVA (nuclear)
Harrison Dillon, president and chief technology officer, Solazyme (microbial fuel production)

Thursday, April 23:
David Crane, president and CEO, NRG Energy (nuclear)
Leon Steinberg, CEO, National Wind

Friday, April 24:
John Melo, CEO, Amyris (renewable fuels)
Daniel Kunz, president and CEO, U.S. Geothermal

Monday, April 27:
John McDonald, CEO, ExRo (wind)
Sanjay Pingle, president, Terasol Energy (biofuels)

Tuesday, April 28:
William Johnson, president, chairman and CEO, Progress Energy (nuclear)
David Mills, founder and chief scientific officer, Ausra (solar thermal)

Wednesday, April 29:
Bob Gates, senior vice president for commercial operations, Clipper Windpower
David Ratcliffe, president, chairman and CEO, Southern Company (nuclear)
Lucien Bronicki, chairman and chief technology officer, Ormat Technologies (geothermal)

The first question and answer from McAfee’s interview:

What technical obstacles currently most curtail the growth of biofuels? What are the prospects for overcoming them in the near future and the longer-term?

The conversion and commercialization of cellulose inputs into fuel ethanol is a significant technology obstacle to the growth of the ethanol industry as a mainstream fuel. A number of companies are currently working on cellulosic technologies, and great strides have been made, but a gap remains between technology advances and full commercial deployment. Much of this challenge exists around two factors—scalability and cost. Science is no longer the primary gating issue—it’s now a matter of investment and resource allocation.

While I agree with the first part on the technological obstacles for commercialization of cellulose into ethanol (I simply don’t believe it will ever happen), I think the last sentence can be misleading. When one says that science is “no longer the primary gating issue”, that implies that recent scientific advancements have enabled the technology. However, the science has not been the issue for almost 100 years. As Robert Bryce points out in The Cellulosic Ethanol Delusion, conversion of “straw, corn-stalks, corn cobs and all similar sorts of material we throw away” was known technology in 1921.

The issue is simply the same as it was back in 1921: Biomass has a low energy density, and the cellulose is not easily converted. These factors worsen the energy balance, and there isn’t an easy way around this fact. (Gasification, as I have argued, is a way around some of the issues, but we are talking about a different animal from hydrolysis.)

Coming Up

As soon as I get some breathing room, I am going to do a book review for Oil 101– which I finally finished reading, and then to write an essay on the implications of being wrong.

April 20, 2009 Posted by | biomass gasification, cellulose, cellulosic ethanol | 50 Comments

Cellulosic Ethanol is Dead

Cellulosic Ethanol is Dead! Long Live Biomass Gasification!

My thunder has been stolen. I have been kicking around a post in my head for the past couple of weeks. I just haven’t had time to get around to it, with the move and all. But this has been nagging away at me for a long time. My thinking goes something like this.

Cellulosic ethanol, and by that I mean cellulosic ethanol in the traditional mold of what Iogen has been working on for years – will never be commercially viable. How can I be so sure? For one, I have covered the logistical challenges here and here. These are not going away, and are serious barriers to commercialization. In brief, the cellulose content of biomass is accompanied by a lot of lignin, inorganics, etc. that won’t get converted in a standard fermentation process. But you still have to haul all of this biomass to the plant, convert the cellulose (and get a low concentration of ethanol for your efforts), and then get rid of a sopping wet mess of waste biomass. Sure, it can be burned – if you spend a lot of energy drying it first. Because of the very nature of the process, I don’t believe this challenge will be solved. (I know, I know. I just have to BELIEVE….)

A recent report – brought to my attention by this story in Gristmill (and e-mailed to me by 4 different readers) – says the same thing (and stole my thunder!):

Crop-Based Biofuel Production under Acreage Constraints and Uncertainty

Here are some excerpts of comments by Tom Philpott at Gristmill:

A quiet consensus seems to be forming among people you’d think would know the facts on the ground: cellulosic ethanol, touted as five years away from viability for decades now, may never be viable.

Now we get a new study (PDF) from a trio of ag economists at Iowa State University. For the record, the authors are conventional ag scholars firmly entrenched within the corporate-dominated research world described so well by Nancy Scola in her recent “Monsanto U.” post.

So it’s surprising to see these mainstream economists deliver such a dismal forecast for cellulosic ethanol.

They start by calculating that without the latest round of goodies — i.e., the fat “Renewable Fuel Standard” of the 2007 Energy Act — cellulosic ethanol (and biodiesel, too) would have withered away. In that scenario, corn ethanol would keep ramping up from the current level of about 7 billion gallons, pushed by high oil prices and the $0.51/gallon tax credit that’s existed for years.

The authors seriously doubt the cellulosic target can even come close to being met. They reckon that the mandate can inspire “rational” farmers and investors to churn out 4.5 billion gallons of cellulosic ethanol by 2022 — but there’s a catch. In order to reach even that level, the government will have to significantly jack up the tax credit awarded to mixers — from the current 51 cents to $1.55.

Also some excerpts directly from the report:

Competition for land ensures that providing an incentive to just one crop will increase equilibrium prices of all. Also, at pre-EISA subsidy levels, neither biodiesel nor switchgrass ethanol is commercially viable in the long run. In order for switchgrass ethanol to be commercially viable, it must receive a differential subsidy over that awarded to corn-based ethanol.

Since switchgrass competes for the same acres as corn, and corn-based ethanol is less expensive to produce, corn-based ethanol will always have a comparative advantage over switchgrass ethanol in the absence of a differential subsidy.

Corn and soybeans compete for the same acreage, so when energy prices are such that corn-based ethanol is stimulated, then the price of soybeans must also increase if the farmer is to continue to allocate some land to soybeans.

We calculate the subsidies required to stimulate biofuel production to the levels required by the EISA RFS. We find that subsidy levels are needed in the range of $0.22 to $0.78 per gallon for corn ethanol, $1.97 to $2.90 per gallon for biodiesel, and $1.55 to $2.11 for cellulosic ethanol.

I can hear the ethanol and corn lobbyists scrambling for a response that involves a character assassination.

What Will Work

However, there are a couple of variations on this that I think will be viable. One is a gasification process. A number of people have taken to calling this process cellulosic ethanol, which to me is unfortunate and confusing. I have explained the differences in Cellulosic Ethanol versus Biomass Gasification. Long story short, cellulosic ethanol processes convert cellulose in a wet process. Biomass gasification converts all organic components in a thermal process. The yield for biomass gasification will be much higher, and the waste products much lower.

The other variation that I think will work is this project I have been working on for a while, but still haven’t been given the green light to talk about. Hopefully soon.

March 7, 2008 Posted by | biomass gasification, cellulose, cellulosic ethanol, ethanol subsidies, subsidies | 243 Comments

Holiday Travel Plans and a Letter from a Reader

I will be traveling from December 16th until January 13th with intermittent Internet access. During this time, I hope to put up some posts covering the year in energy, my $1,000 bet on oil prices (which I think I will win by the skin of my teeth), finalize my ethanol FAQ, and take a look back at my resolutions for 2007. I probably won’t cover This Week in Petroleum during this time, as I am unlikely to be around a computer when the report comes out. I may also pull up some interesting mail from readers that I have gotten from time to time and post the exchange from a few of those.

In fact, I will go ahead and start off with one of those. I won’t post last names or e-mail addresses. This was an e-mail I received on 11-29-07.

Dear Mr. Rapier,

As one who is interested in “renewable” fuels, I came across your blog regarding “Ethanol: From Panacea to Pariah” on the WSJ. While my arguments differ from yours, I agree that ethanol from grain is not a long term solution.

My questions to you has to do with your comments: “The difficulty in producing ethanol from cellulose is probably an order of magnitude greater than it is for producing ethanol from corn. Therefore, it is highly unlikely that the growth curve for cellulosic ethanol production (presuming it is ever commercially viable) will rival that of grain ethanol.”

While not a chemical engineer (my late father-in-law was a professor emeritus in Chemical Engineering at Berkeley and I avoided the subject like the plague), I do have a MSME from Berkeley and became interested in producing alcohol from cellulose (specifically the piles of old newspapers we were accumulating) while I was at Bell Labs almost thirty years ago. When I realized that the process required using sulfuric acid in the preliminary process before fermentation and distillation, my interest quickly waned. As attention has grown in recent years, I’ve come to realize that the key to the success of the nascent cellulosic ethanol industry will be the identification of efficient and inexpensive catalysts (enzymes). Once development, I believe the industry will take off, and ethanol from cellulose will become a viable substitution for gasoline.

You more than most understand this missing link, so I am curious why you pose the weakness of cellulosic ethanol as ramp up issue rather than a breakthrough issue.

I would greatly appreciate your thoughts on this. My immediate interest has to do with identifying companies that may develop such breakthrough technology for investment purposes.

In the mid-seventies I remember: the gasoline crisis, my father-in-law talking about greenhouse gases and the end of fossil fuel based energy, my most revered mechanical engineering professor saying that the US would have a hydrogen based energy infrastructure before the turn of the century, and my fellow research assistants at the Lawrence Berkeley Lab proclaiming that the polysilicon based solar cells they were developing would make solar competitive within five years. These, along with my personal experience attempting to commercialize CNG in southern California have left me jaundiced to the notion that there will be significant changes to the energy status quo. However, cellulosic ethanol does make sense to me, although I’m no expert.

My last question is, where do you see energy situation going?

Thanks for you input.

Sincerely,

Glen
Long Beach, California

PS While in Scotland, I highly recommend a visit to Dunvegan Castle on the Isle of Skye (rest assured I don’t receive any kickbacks)

My response:

Hi Glen,

Don’t get me wrong, I haven’t written off cellulosic ethanol. In fact, I am working on a cellulosic project right now. (And I did my graduate school research on cellulosic ethanol). I think the current efforts are doomed: Transport a lot of biomass to a central location, convert a small fraction into a highly dilute ethanol mix, and then have to transport all that wet waste back offsite. I have written a number of articles on the severe logistical issues. I once did a calculation that showed it would take 850,000 mature trees a year to support a mid-sized cellulosic ethanol plant. You quickly conclude that this is not going to supply us with a lot of fuel.

There are several technologies that I think are promising. Renewable diesel (not biodiesel) either produced from biomass gasification or from hydrotreating plant oils and animal fats should do well. Electric transport, with electricity supplied from wind, solar, tidal, geothermal – and even coal and nuclear in the beginning – is to me a home run solution. And in tropical countries like Brazil, sugarcane ethanol makes a lot of sense. But cellulosic ethanol has been over-hyped at the moment. It has some serious issues. I am hoping that my current project will address them. We are already significantly better than the technology behind the 6 pilot plants that have been announced in the U.S. [although Range Fuels is really apples to oranges].

I think in the short-term, we may see a real energy squeeze. People will have to adopt more efficient lifestyles to buy us some time. Politicians have got to quit adopting pandering solutions that don’t really address the issues. It’s a sticky situation for them. The citizens need tough love, but they tend to vote out politicians who give it to them. So the politicians promise them cake and lollipops.

Cheers, Robert

This may give you some idea of why I took my e-mail address out of the side bar. I generally feel compelled to answer every e-mail, and it got to the point that I was answering e-mails for 2 or 3 hours a day. On top of that, I was trying to work, make time for family, and write blog posts. But, if I use some of these letters as blog posts, I can kill two birds.

As far as the cellulosic project I am involved with – that will come to light in 2008. I have been chomping at the bit to break this news for 6 months now, and hopefully I won’t have to wait too much longer. It will be the best cellulosic technology in the world, via a completely different approach from all the others.

December 8, 2007 Posted by | cellulose, cellulosic ethanol, reader submission | 18 Comments

Termite Power

When I was in graduate school at Texas A&M in the early 90’s, I selected chemical engineering Professor Mark Holtzapple as my research advisor. His work was exactly in my area of interest: Biofuels from cellulose. Even then, I was very concerned about the non-sustainable lifestyle we were living, and I was hoping to save the world. For a very good overview on what we were doing, see this PowerPoint presentation or this article. In brief, what we were doing was searching for naturally occurring biological systems that convert cellulose to organic chemicals.

The primary system we studied was the bovine digestive system. Cattle are very efficient digesters of cellulose. They eat grass, and break it down via microorganisms that live in their digestive systems. So what we did was extract those microorganisms and attempt to convert cellulose in reactors that emulated the chemistry of the cow’s stomach. And while we did have success, the conversion was never as efficient as it was inside the cow.

So, I spent time brainstorming other efficient cellulose digesters. It occurred to me that probably the most efficient digester of cellulose in the world is the termite. After all, even cattle can’t break down wood. So I discussed it with Professor Holtzapple, and he thought it was a great idea. I searched the literature, and as far as I could determine, nobody had ever done it before. Therefore, I had no guidance at all with what I was attempting.

I arranged a meeting with a termite expert in Texas A&M’s Entomology Department. He was very keen on the idea, so he supplied the termites. The next bit was tricky. The cellulose digesters that we were looking at were anaerobic microorganisms. Oxygen would kill them. Therefore we always had to take great care to get them into the reaction system without killing them. For the cows, it was easy. We filled up a bottle with nitrogen, stuck our arm inside a portal into the stomach of a fistulated steer, extracted about a liter of stomach contents, and poured it into the nitrogen-filled bottle. We then transferred the contents to reactors that were being purged with nitrogen.

But with termites, it wasn’t going to be quite so easy. The volume of material I would be extracting would be very small, and therefore it would be tough to extract it without exposing it to air (with the equipment I had to work with). The other problem I had was that there was virtually no information available on the chemistry of the termite gut. How was I going to know what kind of vitamins, salts, etc. to put in the reactor? What should the pH be? The final concern I had was that I didn’t know exactly what the product of the reaction would be. I wanted a reaction system that would convert the cellulose to acetic acid or ethanol, and not all the way to carbon dioxide. But I really had no idea what I would get.

So, what I did was use the same reactor conditions I used for the bovine microorganisms, and I threw in a combination of live termites, termites with their hindguts opened up, and just some extracts from the hindgut. I figured that I had a pretty good chance, given this approach, to have some of those desirable microbes survive the transfer. I then let that combination ferment in the reactor for about a week.

When I tested the contents of the reactor, I was disappointed. I was after acetic acid to turn into ethanol, but what I got was butyric acid (which can be turned into butanol). But I wasn’t interested in butanol, and the amounts I got were very small. Since I was nearly at the end of my research, and I didn’t really have the facilities nor the time to figure out the termite hindgut chemistry (the real critical piece, in my mind), I abandoned my termite investigation. I still thought it was an excellent idea, and if someone had 3 or 4 years it would have made a great Ph.D. research project. But I had to move on and graduate.

Since that time, I have seen the idea come up on a few occasions. Because of my previous attempt, news of these attempts always catches my attention. Last week, I saw a new story on this:

Fuel’s gold: Termites point way to new dawn of bio-energy

Here is an extensive excerpt, describing this latest line of investigation:

PARIS (AFP) – A team of US scientists poring over the intestines of a tropical termite have a gut feeling that a breakthrough in the quest for cleaner, renewable petrol is in store.

Tucked in the termite’s nether regions, they say, is a treasure trove of enzymes that could make next-generation biofuels, replacing fossil fuels that are dirty, pricey or laden with geopolitical risk.

Termites are typically a curse, inflicting billions of dollars in damage each year by munching through household timber with silent, relentless ease. But gene researchers say the hind gut of a species of Central American termite “harbour a potential gold mine” of microbes which exude enzymes to smoothly break down woody fibres and provide the insect with its nutrition.

Next-generation biofuels would use non-food cellulose materials, such as wood chips and straw. But these novel processes, hampered by costs and complications, are struggling to reach a commercial scale.

The termite’s tummy, though, could make all the difference. Like cows, termites have a series of intestinal compartments that each nurture a distinct community of microbes.

Each compartment does a different job in the process to convert woody polymers into the kind of sugars that can then be fermented into biofuel. The US team has now sequenced and analyzed the genetic code of some of these microbes in a key step towards — hopefully — reproducing the termite’s miniature bioreactor on an industrial scale.

Their work, published on Wednesday in Nature, required scientists to venture into the rainforests of Costa Rica, where they plucked bulbous-headed worker termites from a large nest at the foot of a tree.

Using fine forceps and needles, they extracted the contents of the third paunch, or hind gut, from 165 termites, and sent this to a lab in California for sequencing.

From this, some 71 million “letters” of genetic code emerged, pointing to two major bacterial lineages called fibrobacters, which degrade cellulose, and treponemes, which convert the result to fermentable sugars. Termite guts are incredibly efficient, said Andreas Brune of the Max Planck Institute for Terrestrial Microbiology in Marburg, Germany.

“In theory, they could transform an A4-sized sheet of paper into two liters (1.8 pints) of hydrogen,” he said.

To be sure, they are well beyond what I was attempting to do. They are sequencing genes, using an entirely different species of termite, and they are attempting to produce hydrogen. But the core concept is the same: Scale up the internal bioreactor of the termite to produce a desirable end-product.

I guess I was just ahead of my time. 🙂

November 25, 2007 Posted by | cellulose, cellulosic ethanol, termites | 16 Comments