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Broken Promises from Range Fuels

When I first began my career, a wise old-timer gave me a piece of advice that I took to heart. He said “When you are planning and executing a project, it is important for you to do what you say you are going to do. People are going to make investment decisions on the basis of the numbers you project. So don’t over-promise and under-deliver.”

As I began to become involved in projects, the wisdom of the advice I was given became clear. I learned to be conservative with my claims, because failing to deliver can have far-reaching impacts. Plus, a pattern of over-promising and under-delivering will ultimately destroy your credibility, and thus your ability to get anything done. (On the other hand, excessive “sand-bagging” is also poor practice, as too much money gets budgeted where it needn’t be).

Now imagine the following scenario. I go to the government and ask for $5 million to build a 10 million gallon per year ethanol plant. I announce that it is cutting edge technology, and I make various far-reaching claims. I issue press releases, and Congress invites me to give testimony in D.C. The government grants me the money I ask for, because I have had success in other ventures and I seem like a credible fellow.

Later, I go back to the government, and tell them I need another $5 million, and that unfortunately the project schedule is slipping. “By the way”, I tell them, “I will now only be producing 5 million gallons.”

As construction continues, I start to realize that the energy business is a bit more difficult than I had imagined, and things that I thought were new weren’t new. It becomes clear that I can’t even deliver on my downgraded promises because I hadn’t appreciated the challenges of scale-up. The government calls me up and asks me how it is going. “Well”, I explain to them, “I am out raising $10 million more in investor money. I am also going to only produce 1 million gallons, and it is going to be methanol instead of ethanol as I have been claiming. I am not really sure when I will produce ethanol. By the way, could you give me some more money?”

So I went from claiming $5 million for a 10 million gallon ethanol plant to $20 million for a 1 million gallon methanol plant. I still have not delivered. I am asking for more money. You still trust me, don’t you?

Range Fuels: Years of Broken Promises

I have for the most part held my tongue over Range Fuels for the past 3 years, but the scenario above essentially describes what has happened. The reason I have held my tongue is that I have heard various bits about their progress that was not public, and so I have held back on commenting. But I firmly believed they were making reckless claims from Day 1.

Now the EPA has just issued a report that gives some remarkable updates on Range Fuels, and I feel I have held my tongue long enough. Let’s walk through the timeline to show the remarkable evolution of their progress that has gone largely unreported.

October 2006 – In an interview with Wired Magazine called My Big Bet on Biofuels, Vinod Khosla gushed about E3 Biofuels (now bankrupt) and wrote about them as if they were a running, proven plant. He wrote about what they were achieving, despite the fact that they hadn’t started up (and would be out of business shortly after they started up). In the article, Khosla described his investment in Kergy (which later became Range Fuels).

IN THE CORNER of an unmarked warehouse tucked away in an industrial neighborhood north of Denver, a new company called Kergy has what is, to my knowledge, the first anaerobic thermal conversion machine (which explains why Khosla Ventures is a seed investor). It’s a 6- by 4-foot contraption that stands about 8 feet high. It looks vaguely like a souped-up potbellied stove. But it runs cleanly enough to operate indoors.

With those comments, everyone in the energy business knew Khosla was operating outside of his element. People have been gasifying biomass for decades, and there are numerous “anaerobic thermal conversion machines” out there. What happened was that Khosla wasn’t aware of this, so he thought this was all new and novel, and he invested – and then began to promote. He also went to the government telling them how wonderful it was, and that he would change the world if they would only fund him.

In that article, the inventor of the gasifier, Bud Klepper, is ominously quoted “We could double the ethanol output of the Mead facility.” I hope not. The output of the Mead facility (E3 Biofuels) is zero, so double that is…

February 2007Kergy changed its name to Range Fuels. They announced that they would build their first “cellulosic ethanol” plant in Georgia. The capacity was announced at “more than 1 billion gallons of ethanol per year” (Source.)

I had a problem with this announcement on two counts. First, this is not “cellulosic ethanol”, as I explained in Cellulosic Ethanol vs. Biomass Gasification. Further, if you are going to make an alcohol from syngas (the product of the gasifier), ethanol is a strange choice to make. Methanol is more efficient to produce, and ethanol is generally just a co-product when producing mixed alcohols (which also work well as fuel; see Standard Alcohol). It is only separated out at a great expense of energy – and then you have a lot of lower-value methanol to deal with. So this was looking like a very confused project from the start.

March 2007 – Range Fuels announced a $76 million grant from the U.S. Department of Energy.

Also during 2007, articles on Range Fuels began to appear everywhere. There were high profile pieces in The New York Times and in Forbes. In the Times’ article, the company refused to disclose how much had been invested to date.

An article in USA Today reported that the initial capacity would be 20 million gallons. The site was permitted for 100 million gallons of eventual capacity, and the cost of building a 100 million gallon per year plant was quoted at $150 million. Range said they thought they would be the first to win the “cellulosic ethanol” race (again, ignoring that the race was won a hundred years ago):

By next year [2008], the company intends to have a facility capable of creating 20 million gallons of ethanol per year. The site in Treutlen County, Ga., has received a permit to produce 100 million gallons per year, and Range Fuels expects to eventually reach that production amount, according to company CEO Mitch Mandich.

“A lot of people are talking about 2009, or 10 or 11—even Secretary of Energy (Samuel) Bodman will say cellulosic ethanol is five years away,” Mandich said. “We think by the time we enter production, we’ll be the first, so the race is on between us and some competitors.”

Well, it is 2010, and we still aren’t seeing any ethanol from the facility. Welcome to the real world.

November 2007 – To much fanfare, Range Fuels announced the groundbreaking of their Georgia facility. They continued to maintain that the first 20 million gallon phase would be completely finished in 2008. Those of us who have been involved in plant construction wondered when they would actually face the music and admit they couldn’t deliver.

March 2008 – Range announced that they had raised another $100 million to build the plant. By April this number was announced as $130 million in venture capital funding. They were still treated as media darlings – and nobody in the press was asking them critical questions. But their story was about to begin to unravel.

April 2008 – Range announced that they have received a $6 million grant from the state of Georgia.

October 2008 – In an incredibly ironic story, Discover Magazine published Anything Into Ethanol. It was incredibly ironic because in 2003 they had written Anything Into Oil, a gushing story about a company called Changing World Technologies (CWT) and their claim that they could make oil from biomass for $8-$12 a barrel. After a lot of wasted investor and taxpayer dollars, CWT declared bankruptcy when they couldn’t deliver on their claims. I did a post-mortem on CWT here. There were many more parallels here than just two nearly identical, uncritical stories from Discover Magazine.

November 2008 – Range Fuels CEO Mitch Manditch was replaced.

January 2009 – Although the plant in Georgia was still not complete, there was no explanation regarding the delay. But Range announced another $80 million loan from the U.S. Department of Agriculture. One story announced that the company had received a total of $158 million in VC funding in 2008. This story also announced that the first phase was still under construction, and production was now not expected until 2010! (This new production time frame was probably the result of getting in a new CEO who was actually experienced in the energy business, ex-Shell executive David Aldous).

May 2009 – While Range Fuels stopped issuing so many press releases, former CEO Mitch Mandich was quoted in the New York Times admitting that “The soup’s not quite cooked yet.” This was extraordinary given previous claims from him that they would produce cellulosic ethanol at less than the price of corn ethanol.

October 2009 In a New York Times’ story that warned that cellulosic ethanol was falling far short of expectations, it was announced that Range Fuels had applied for even more funding from the DOE! This time, the DOE said no.

For the most of 2009, Range went into silent mode. Again, I attribute this to a new CEO who came from the energy business, where you better do what you say you are going to do. One pattern that started to emerge was that they referred less to cellulosic ethanol and more to cellulosic biofuels. This was significant, because I had always maintained that it wouldn’t be cost-competitive for them to produce ethanol via gasification. I was just waiting for the other shoe to drop…

February 2010 – A rather extraordinary update was issued that the mainstream media has still not absorbed. The EPA released an update to the Renewable Fuel Standards Program (RFS2). In that update, they had the following report on Range Fuels (see this document). From Pages 175 and 178:

At the time of our assessment, we were also anticipating cellulosic biofuel production from Range Fuels’ first commercial-scale plant in Soperton, GA. The company received a $76 million grant from DOE to help build a 40 MGY wood-based ethanol plant and they broke ground in November 2007. In January 2009, Range was awarded an $80 million loan guarantee from USDA. With the addition of this latest capital, the company seemed well on its way to completing construction of its first 10 MGY phase by the end of 2009 and beginning production in 2010.

As for the Range Fuels plant, construction of phase one in Soperton, GA, is about 85% complete, with start-up planned for mid-2010. However, there have been some changes to the scope of the project that will limit the amount of cellulosic biofuel that can be produced in 2010. The initial capacity has been reduced from 10 to 4 million gallons per year. In addition, since they plan to start up the plant using a methanol catalyst they are not expected to produce qualifying renewable fuel in 2010. During phase two of their project, currently slated for mid- 2012, Range plans to expand production at the Soperton plant and transition from a methanol to a mixed alcohol catalyst. This will allow for a greater alcohol production potential as well as a greater cellulosic biofuel production potential.

Did you catch that? Initial capacity is now slated at 4 million gallons per year and will be methanol. There will still be no qualifying “cellulosic ethanol” produced in 2010. The amount of money that we know has been poured into this – beyond Khosla and company’s initial investment – is $158 million in VC money, $76 million of DOE money, $80 million from the USDA, and $6 million from the state of Georgia. Further, they asked for more DOE money and were turned down.

So we have Khosla’s initial investment of unknown amount plus $320 million for 4 million gallons of methanol. Wow. At this point, I don’t know why anyone would care about what they say they are going to do during Phase 2, I am more interested in seeing some accountability for what has happened to date.

Let’s recap the highlights:

February 2007 – Range Fuels announced that they would build their first “cellulosic ethanol” plant in Georgia. In a story at Green Car Congress, the capacity was announced at “more than 1 billion gallons of ethanol per year.”

March 2007 – Range Fuels announced a $76 million grant from the Department of Energy.

July 2007 – In a story in USA Today, the Phase 1 capacity was announced at 20 million gallons. The full scale would be 100 million gallons at a cost of $150 million.

November 2007 – Range broke ground on the plant; announced they would be finished with Phase 1 (still 20 million gallons) by the end of 2008.

April 2008 – Range announced a $6 million grant from the state of Georgia.

January 2009 – Range received another $80 million, this time from the USDA, and announced receipt of $158 million in venture capital funding for 2008.

October 2009 – Range asked for more money. This time they were told no.

February 2010 – After investments that have been publicly announced at $320 million, the EPA announced that Range would initially produce 4 million gallons, and it would be methanol. Further, there would be no ethanol produced in 2010.

February 2010 – I write an article wondering why the mainstream media has completely missed this story.

In summary, we were given numbers of $150 million to build 100 million gallons of cellulosic ethanol capacity. What we are being told now is > $320 million to build 4 million gallons of methanol capacity. Of course they intend to do so much more, but I have a very big problem giving more taxpayer money to an organization with this history.

I don’t blame current CEO David Aldous for this. I think Range’s tendency to talk to the press every chance they got ceased once  reality started to take hold and they got an experienced energy veteran in. I think Aldous inherited a ship in which people had been in the habit of promising the moon to secure ever more funding. But I do blame a number of the original promoters of the company.

I have criticized Vinod Khosla in the past for what I said were unrealistic claims. I felt like he came into the energy industry without a very good comprehension of if, but felt that he would apply his golden touch from Silicon Valley to show the dinosaurs how Silicon Valley innovates. I also felt like he was attracted to people who made grandiose claims, but didn’t have the proper historical perspective to determine when something was truly novel (and really worked).

The thing is, the energy industry is full of very smart people who went to the same schools the people in Silicon Valley attended. There isn’t much that hasn’t been tried, and most of what is being announced to great fanfare by newcomers is being worked on in silence in numerous places around the globe.

When you step out there and make the sorts of claims that were made, you have some responsibility for your words. Failure tars an entire renewable industry as being hopelessly unrealistic. This is the reason I go after claims that I believe are unrealistic. If you promise and fail repeatedly, funding will dry up for everyone as the government and the public all become cynical. So your actions impact lots of people – and can impact the energy policy of the entire country – thus you need to be accountable for the things you say.

This has played out exactly like I thought it would. Claims that most industry insiders laughed at in private have now come to naught at great cost to taxpayers. Methanol from syngas? Oh, that technology has only been with us since 1923. Congratulations on reinventing the wheel and burning through taxpayer money in the process.

In summary, I will point out that the two primary sources of cellulosic production being counted on by the EPA for 2010 were Range Fuels and Cello Energy. Both are Vinod Khosla ventures, and neither has come remotely close to delivering despite lots of funding and taxpayer assistance. I don’t think these are isolated cases. I think they are a symptom of things to come. We have gotten a lot of overpromises, because face it, that has worked to secure funding. But what this leads to are completely unrealistic expectations regarding our energy policy, and numerous bad decisions regarding where tax dollars should be spent.

Finally, I want to make one thing crystal clear. I am not criticizing failure here. That is normal and expected. Failure is a part of what it takes to learn and move forward. What I am criticizing is the nature of the failure; that it was primarily because inexperienced people were making claims they shouldn’t have made, and taxpayers are going to get stuck with the bills. Personally, I have a problem with my tax dollars being squandered away by smooth-talking salesmen.

February 23, 2010 Posted by | Cello, energy policy, EPA, politics, range fuels, Vinod Khosla | 1 Comment

Technology is Magic

I am freshly arrived back on the U.S. mainland, with a couple of stops before I head back to Hawaii. I have been reading about energy developments during my travels, and finally wrote something on the flight from Europe yesterday. What has prompted me to write was a report that was recently issued by The President’s Biofuels Interagency Working Group:

Growing America’s Fuel

As I read through this report on the status of advanced biofuels, I couldn’t help but think that this appeared to have been written by an optimistic cheerleader rather than by someone conducting a sober assessment of the situation. It contains very little of “Here is why we have fallen more than 90% short of our targets.”

Bear in mind that the advanced biofuel mandate for 2010 was 100 million gallons. The report admits that the shortfall will almost certain exceed 90% (as I have been saying it would for at least a couple of years).

Where the report does get into specifics, it makes excuses, suggesting that the technologies themselves aren’t the problem, lack of funding is. To that I say that I can make all sorts of things work “commercially” if I am willing to throw enough money at them. But they will only continue to remain “commercial” so long as I am supplementing them with outside funding.

This report would seem to have been written by people who believe that technological progress is inevitable. All barriers can be broken down by throwing enough money at them. While I am definitely a technology buff, I have a different view on technology. Generally, technological successes are built upon a great many resolved technical problems. Yet it may require only a single unresolved problem to lead to technological stagnation, or failure.

For example, consider the scale-up of a process from the laboratory. I have run laboratory reactors and distillation columns – and scaled those up – so I am familiar with some of the things that can go wrong. The scale of a laboratory process may be on the order of a few pounds a day. At that scale, things behave differently for a number of reasons. When scaling up a lab process to something like demonstration scale – say a factor of 100 times greater than the lab process – many things can go wrong. In fact, I think it is safe to say that most good ideas die in the lab when practical realities intrude upon theoretical considerations.

One of the most important aspects to manage is the heat inputs and outputs. In the laboratory, the size of the equipment is such that the heat losses from surface areas is a much greater percentage of the total than when the equipment is scaled up. What does this mean? It can mean that it is difficult to replicate the temperatures achieved in the lab. It can mean that the temperatures at scale are much hotter than desired, or it can mean that there are undesirable temperature variations within the process. In my experience, this is a frequent cause of failure when scaling up from the lab.

Each successive scale-up filters out more seemingly good ideas, and in a world in which commercial success hinges on actually being able to earn money from a project, this filter works well. In a world in which technological failures are met by optimistically throwing more money at the problem, then end result will be a massive amount of spending, and later congressional inquiries into why we wasted so much taxpayer money with so little to show for it.

So success for these projects is far from assured. Even success at one level of scale-up doesn’t assure success at full commercial scale. I can rattle off a dozen things that have gone wrong and been apparent only as projects progressed to full commercial scale. Trace contaminants that can easily be disposed of in the lab can become big headaches at scale. Corrosion is often a killer once some of these projects begin to operate at bigger volumes.

But for the technological cornucopians, these are not real problems: They just require more money and they will be solved. But then why do cancer and heart disease still kill so many people each year, or why does my laptop battery only lasts a few hours instead of a week? Why don’t we commercially fly people from London to New York in an hour? The reason is that not all problems are solved by throwing more money at them, and many solutions are only advanced an incremental step at a time.

As I have pointed out, cellulosic ethanol technology is more than 100 years old. You heard it here, and you can hold me to it: There will be no breakthrough that suddenly makes it cost-competitive to produce. On the other hand, press releases that announce big breakthroughs for small incremental steps? No end to those I am afraid, nor any retraction when they can’t replicate this outside the lab.  The impression this leaves is a steady upward march in the commercialization of cellulosic ethanol – and no setbacks that weren’t simply related to lack of funding.

Cellulosic ethanol will never be produced in large volumes for less money than corn ethanol can be produced for – and keep in mind that we are still subsidizing that after 30 years. What may happen is that it eventually can be mildly successful in certain very specific instances. But to think that a billion tons of U.S. biomass will contribute a major portion of the U.S. fuel supply via cellulosic ethanol? Hogwash from many people who have never scaled up anything. The reasons are not from lack of funding, they are fundamental based on physics, chemistry, and the nature of biomass.

Had I written the report, you can bet that I would have written it differently. It would have been a sober technical assessment, and while the conclusion would have probably been to continue funding, there would also have been a lot of planning for scenarios in which things didn’t pan out as expected. I like to have a Plan B that wasn’t cobbled together only after Plan A fell apart.

February 8, 2010 Posted by | cellulosic ethanol, energy policy, EPA, politics | Comments Off on Technology is Magic

How to Break Through the Blend Wall

By now you have probably heard that the EPA has postponed issuing guidelines on whether to allow ethanol blends of higher than 10% into the gasoline pool. Going up to 15% ethanol blends would allow ethanol producers to put a lot more of their product into the market, which is currently bumping up against the limits of the current 10% ethanol blend allowance.

Ethanol producers and proponents have assured us that the higher blends will not damage engines. Small engine makers and boaters are very worried that the higher blends will damage their engines. In fact oil companies, having been mandated to use ethanol, are now facing a class action lawsuit over ethanol blends damaging boat motors. Even the auto industry has voiced concerns that they could be liable if the higher ethanol blends damage engines.

So how to break this impasse? A reader forwarded a link to a letter that appeared in the Financial Times that I think proposes a reasonable solution. The ethanol industry will be the main beneficiary of raising the amount of ethanol that can be blended. Since they are also the industry who has requested this increase, have them assume the liability if anything does happen. If they are correct and there are no problems, then they have nothing to worry about. If they are incorrect, then they can pay for the fallout instead of having it fall to the oil companies, car companies, and small engine makers.

How to do this? I think you have to get an ethanol trade organization like the Renewable Fuels Association to step forward and say “We are prepared to accept the liability risk for the potential reward.” Because the potential liability could be enormous, that would probably also need to be backed up by the U.S. government.

I think it is a reasonable suggestion that those who are proposing this change and who stand to benefit should accept any potential liability. But my guess is that the EPA will ultimately rule in favor of increasing the ethanol blends anyway, and the ones who reap the reward aren’t going to be the ones stuck with the bills if there are unforeseen problems.

December 8, 2009 Posted by | blend wall, EPA, ethanol, litigation | 61 Comments

EPA Delays Ethanol Ruling

In a move that wasn’t really a surprise, today the EPA announced that they are not yet ready to approve ethanol blends above E10 for automobiles:

EPA Notifies Industry Group on Status of Ethanol Waiver Request

WASHINGTON – The U.S. Environmental Protection Agency (EPA) today announced that it expects to make a final determination in mid-2010 regarding whether to increase the allowable ethanol content in fuel.

In a letter sent today to Growth Energy – a bio fuels industry association that had asked EPA to grant a waiver that would allow for the use of up to 15 percent of ethanol in gasoline – the agency said that while not all tests have been completed, the results of two tests indicate that engines in newer cars likely can handle an ethanol blend higher than the current 10-percent limit. The agency will decide whether to raise the blending limit when more testing data is available. EPA also announced that it has begun the process to craft the labeling requirements that will be necessary if the blending limit is raised.

In March 2009, Growth Energy requested a waiver to allow for the use of up to 15 percent ethanol in gasoline, an increase of five percent points. Under the Clean Air Act, EPA was required to respond to the waiver request by December 1, 2009. EPA has been evaluating the group’s request and has received a broad range of public comments as part of the administrative rulemaking process. EPA and the Department of Energy also undertook a number of studies to determine whether cars could handle higher ethanol blends. Testing has been proceeding as quickly as possible given the available testing facilities.

In a letter to Growth Energy, a pro-ethanol organization headed up by POET CEO Jeff Broin and General Wesley Clark, the EPA indicated that testing had only been completed on two vehicles, but testing on an additional 12 vehicles was expected to be completed by May 2010. On the basis of the two completed tests, the EPA said they would “be in a position to approve E15 for 2001 and newer vehicles in the mid-year timeframe.”

That begs the question of whether there is expected to be a potential problem in vehicles older than 2001 models. If so, and E15 is approved for 2001 and newer models, I can imagine a logistical nightmare and a class action lawsuit waiting to happen. Instead of having three grades of gasoline, there would likely need to be five or six grades depending on the age of your car. For gasoline blenders and for station owners, it will be a bit of a headache. For lawyers, a potential windfall as pre-2001 car owners have their engines ruined because they put the wrong fuel in, or someone else messed up in the supply chain.

Instead of going down this path, why don’t we do more to incentivize E85? We aren’t close to saturating the market for E85; the problem is just that the E85 price isn’t low enough relative to gasoline. There are supposedly several million E85 vehicles on the roads today, with automakers ramping up production even more in future years.

Consider for a moment the potential E85 market in the Midwest, where most of the corn is grown and most of the ethanol is produced. Per the EIA, the demand for gasoline in the Midwest in 2008 was 2.5 million barrels per day. Imagine for a moment that this demand was for E85. In that case, because of the lower energy content, demand would rise to around 3.3 million barrels per day. Of that, 85%, or 2.8 million barrels per day, would come from ethanol.

How much is 2.8 million barrels per day? It would be 43 billion gallons per year of ethanol, far greater than the 10 billion or so gallons of ethanol produced in the U.S. in 2010. In fact, even if you could convince only half the people in the Midwest to use E85, there would be absolutely no need to even think about increasing the amount of ethanol in the general gasoline pool. And that’s just in the Midwest!

So why isn’t this strategy being heavily pursued? Primarily I think it comes down to cost. If you can get 15% ethanol into the gasoline pool, any cost penalty is spread out over many consumers and it is further masked because the bulk of the fuel is gasoline. With E85, ethanol is carry the brunt of the costs and the penalty is far more obvious.

As I write this, per this site that promotes E85 fuel, right now the savings from burning E85 instead of regular gasoline is only 11.88% (a national average price of $2.53 for gasoline versus $2.23 for E85). The problem is that the mileage penalty is going to be over 20% in most cases (the energy content of E85 is almost 30% less than gasoline on a per gallon basis), and therefore people are not going to voluntarily buy it.

How to get around that? Well, if you could instead make everyone buy E15, you don’t really have to worry about that cost problem. Consumers will be forced to take the hit, but it will be spread out across all consumers. But if they could make the cost of ethanol more competitive such that the savings from E85 is consistently around 25-30% relative to gasoline, E85 demand would be great enough to consume all of the ethanol we will make for the foreseeable future.

December 2, 2009 Posted by | energy policy, EPA, ethanol mandate, ethanol prices, politics | 131 Comments

Cellulosic Ethanol Politics

Last year when the Renewable Fuel Standard was established, the ethanol mandate was increased to 36 billion gallons per year. A big portion of that was to be cellulosic ethanol, but there had to be a demonstrated greenhouse gas reduction in order for cellulosic ethanol to qualify for the subsidy. The EPA was tasked with putting together rules to quantify the greenhouse gas reduction.

If you are like me, you see an immediate problem. The EPA is a governmental agency, and the executive branch of the government is pushing the mandate. There are a lot of people with a vested interest in seeing the EPA adopt generous accounting rules. In fact, in February of 2008 I wrote:

Who is going to evalaute the greenhouse gas reduction? You can’t even get scientists to agree on the parameters [boundaries of the analyses], how is anyone going to stack hands on this? It will become a hot political issue. When you can’t even get agreement on the energy balance, how on earth will you get agreement on the GHG reduction?

As I have argued before, current wet cellulosic ethanol technology requires copious amounts of fossil fuel. Thus, it is almost certain that there are presently no greenhouse gas savings that can legitimately be claimed on the basis of cellulosic ethanol production. Therefore, those who are wedded to the (wet) cellulosic model stand to see their dreams of generous subsdies dashed. So, it may not surprise you to hear that the jockeying has started. Gristmill has the story:

Fuel me once, shame on you

On Oct. 21, several academics and representatives from the biofuel industry sent a letter [PDF] to EPA Administrator Stephen Johnson asking the agency to exclude accounting for these emissions from their rulemaking, calling the requirement “premature.”

The authors said that it is “of particular concern” to them that “the EPA appears to be relying heavily” on the February 2008 report that found that both corn- and switch-grass ethanol actually have higher net greenhouse gas emissions that conventional fuel sources. “It would be very unfortunate if a rush to judgment by the EPA would cast unwarranted doubt on the value of these low-carbon, 2nd generation biofuels,” they wrote.

Who were the people who sent the letter? A bunch of professors like Michigan State’s Bruce Dale – whose research (and government funding) are based on cellulosic ethanol – and a couple of companies with financial interests in cellulosic ethanol. In other words, people with a vested financial interest. Here Professor Dale is in 2007, testifying before the Senate Finance Committe that 1). We will be able to make cellulosic ethanol for $1.20 within 5 years; 2). We need more government funding; 3). I said the same thing in 2001; and 4). Oh, by the way I have been working on this for 30 years.

But another letter was sent from several environmental groups, and they seemed to have a different take on the matter:

“There is nothing ‘premature’ about Congress’s insistence that federally mandated, taxpayer-subsidized biofuels are environmentally beneficial,” they wrote. “The RFS has propped up the biofuel industry for three decades, on the untested assumption that biofuels are good for consumers and the environment. During that time, its proponents — including the authors of the October 21 letter — have failed to demonstrate that biofuels provide any such benefits.”

You know where I stand on this. If there are no greenhouse gas savings, subsidizing cellulosic ethanol is just subsidizing the fossil fuels that it took to make the cellulosic ethanol. As I have argued before, I think (true) cellulosic ethanol is dead in the long run. The only question for me is how much money we are willing to throw away before conceding that fact.

November 7, 2008 Posted by | cellulosic ethanol, energy policy, EPA | 145 Comments

EPA Denies Ethanol Waiver

No big surprise here, and I have been advising people that there was very little chance that the EPA would grant the waiver, but they have officially denied the ethanol waiver request from the state of Texas:

EPA denies Texas governor’s ethanol waiver request

EPA Administrator Stephen Johnson, during a conference call with reporters, said the agency’s assessment looked at the livestock issue and found feed prices have increased because of biofuel production. “However, is that the result of the (Renewable Fuels Standard) mandate? Our conclusion is no,” Johnson said. “And second, are those price increases meeting the statutory requirement of severe harm to the economy? And our conclusion is no.”

Environmental groups, concerned about how biofuels affect climate, water quality and biodiversity, also supported the waiver. Sandra Schubert, spokeswoman for the Environmental Working Group, said the denial is shortsighted and that the country should be focused on viable clean energy solutions. “Instead, the misguided corn ethanol mandate is forcing farmers to plow up marginal land and wildlife habitat, while increasing global warming and dumping toxic fertilizers and pesticides into our precious water sources,” she said in a statement.

On Capitol Hill, the decision drew mixed reaction. Members of the Texas congressional delegation, U.S. Rep. Joe Barton and Sen. Kay Bailey Hutchison, who has filed legislation that would freeze future ethanol production at this year’s level, criticized the agency’s decision.

“I am disappointed that the EPA missed this opportunity to provide relief for American consumers who are dealing with skyrocketing food prices due to the unintended consequences of the continued escalation of the ethanol mandate,” Hutchison said in a statement.

U.S. Sen. Chuck Grassley of Iowa, also a Republican, called the decision a “victory,” saying it will allow farmers to “continue to plan for and meet the fuel and food needs of the future.”

Given the Bush administration’s infatuation with ethanol, I thought the chances of the waiver being granted were very slim.

August 8, 2008 Posted by | EPA, ethanol, ethanol mandate, texas | 20 Comments

Student Sustainability Competition

Now for a public service announcement. Yesterday I received a mass-mailer from the EPA asking for help publicizing a sustainability competition. Since this is a topic that’s very important to me, I thought I would publish it here. The competition is open to graduate and undergraduate students, and the deadline to apply is December 21st (which also happens to be my birthday).

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The P3 Award: People, Prosperity and the Planet A Student Design Competition for Sustainability – Apply by December 21, 2006.

Got an innovative solution that protects the environment while growing the economy? The U.S. Environmental Protection Agency (EPA) is sponsoring an exciting environmental design contest for undergraduate and graduate students – The P3 Award. Through this national design competition, students and their faculty advisors submit cutting-edge, sustainable solutions to environmental challenges and compete for $10,000 to develop their designs. Winners from the first phase of the competition advance to the National Sustainable Design Expo in Washington, DC, in the spring of 2008 where they compete for the chance to win up to $75,000 in funding to move their designs to the marketplace or implement them in the field.

Last year, 42 teams were awarded grants, including a team from Oberlin College that designed and tested a low-cost system for observing and interpreting energy and water consumption for individual dorms and college campuses. The project led to the creation of Lucid Design Group, a small business that designs and implements data acquisition and display systems for the green building industry. You can see all the grant winners’ designs and ideas at http://es.epa.gov/ncer/p3/.

“P3” stands for People, Prosperity and the Planet. EPA and its partners launched the P3 Award in 2003 to promote innovative thinking for moving the world toward sustainability. Participating college students gain new skills and knowledge as they research, develop, design and implement scientific and technical solutions to environmental challenges.

Teams of undergraduate and/or graduate students at institutions of higher education located in the U.S. are eligible to apply. But time is running out! This year’s P3 competition closes on December 21, 2006.

Learn more by visiting http://es.epa.gov/ncer/p3/. Assemble your team and apply today!

November 18, 2006 Posted by | EPA, sustainability | 6 Comments

Student Sustainability Competition

Now for a public service announcement. Yesterday I received a mass-mailer from the EPA asking for help publicizing a sustainability competition. Since this is a topic that’s very important to me, I thought I would publish it here. The competition is open to graduate and undergraduate students, and the deadline to apply is December 21st (which also happens to be my birthday).

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The P3 Award: People, Prosperity and the Planet A Student Design Competition for Sustainability – Apply by December 21, 2006.

Got an innovative solution that protects the environment while growing the economy? The U.S. Environmental Protection Agency (EPA) is sponsoring an exciting environmental design contest for undergraduate and graduate students – The P3 Award. Through this national design competition, students and their faculty advisors submit cutting-edge, sustainable solutions to environmental challenges and compete for $10,000 to develop their designs. Winners from the first phase of the competition advance to the National Sustainable Design Expo in Washington, DC, in the spring of 2008 where they compete for the chance to win up to $75,000 in funding to move their designs to the marketplace or implement them in the field.

Last year, 42 teams were awarded grants, including a team from Oberlin College that designed and tested a low-cost system for observing and interpreting energy and water consumption for individual dorms and college campuses. The project led to the creation of Lucid Design Group, a small business that designs and implements data acquisition and display systems for the green building industry. You can see all the grant winners’ designs and ideas at http://es.epa.gov/ncer/p3/.

“P3” stands for People, Prosperity and the Planet. EPA and its partners launched the P3 Award in 2003 to promote innovative thinking for moving the world toward sustainability. Participating college students gain new skills and knowledge as they research, develop, design and implement scientific and technical solutions to environmental challenges.

Teams of undergraduate and/or graduate students at institutions of higher education located in the U.S. are eligible to apply. But time is running out! This year’s P3 competition closes on December 21, 2006.

Learn more by visiting http://es.epa.gov/ncer/p3/. Assemble your team and apply today!

November 18, 2006 Posted by | EPA, sustainability | 3 Comments