The Corn Ethanol Effect
Source: Mother Jones
Source: Mother Jones
Source: The Oil Drum
Posted by Prof. Goose on September 26, 2007 - 10:00am
I have intentionally paraphrased this wonderful Christmas song because it has much to say about the future after peak oil which I am now ready to say has already happened. As energy declines, we will indeed go to our grandmother's house--one without electricity and running water, sewer or septic and deep, mechanically pumped water wells. At least that was MY grandmother's house. She lived on the Kansas prairies of the 1890s. In the 1960s I asked my grandmother what the greatest invention of her life had been. She said electricity because before they had lights, everyone went to bed shortly after sun down because it was simply too dark to do to much. There was no air conditioning, so the summers were very hot. In the winter, trips to the outhouse were cold (and brutally awakening if during the middle of the night). While she had wood where she lived, about 100 miles west of her home, people had to burn dung as is done in Tibet today. See the picture below of the dung plastered against the house. When one wants to cook, one retrieves a patty.
Without cheap energy, we go back to my grandmother's house or one quite like it...
Yes, folks, peak oil is here, that thing that politicians don't speak of; that event which cornucopians (those who believe that we will not run out of energy) believe is a fraud or misunderstanding is here. The cornucopians believe we are wrong because many have predicted that we would run out of energy before and have been wrong. What they lacked was the 20-20 that hindsight gives one. Today, we can see the peak behind us.
First, how do we recognize when peak oil is about to happen or has happened? The first thing is that it always comes with a gradual decline in production. Steep changes in production curves are due to political or economic decisions. Let's look at Saudi production from 2001 to the present. (NB: Click all graphics throughout this post to expand them to full size.)
The first thing we notice is that it is declining from January 2001 to January 2002. That is the recession resulting from the collapse of the tech stock bubble, causing a worldwide reduction in oil demand. The world then began to recover. In January, 2003 political events in Venezuela shut in that country's oil. We find this
"January 12, 2003: OPEC held its 123rd meeting to review oil markets in Vienna, Austria. OPEC decided to raise its production quotas from 23 million barrels per day to 24.5 million barrels per day, effective February 1, 2003, in order to ensure adequate supplies of crude in response to the oil supply shortfall in Venezuela" http://www.eia.doe.gov/cabs/opec.html
This was a short-lived, very steep increase in production, followed a couple of months later by a nearly equivalent sharp drop in production. This is not a sign of peak oil; it is a sign of political manipulation of production. The next thing we notice is the sharp rise in production in April, 2004. This was due to the rise of price above $40/bbl, a level which OPEC had previously thought would cause a recession. They opened the taps to try to damp down the price. What they didn't count on was that China's and India's consumption had taken off like a rocket because of their economic growth. The price continued to rise, showing that scarcity of oil had come.
After a year and a half of all out production, we see the first signs of decline, normal natural decline in the Saudi production. The plateau of production is followed by a gradual decline in output. One might be tempted to say that the decline in production was due to declining prices, but this isn't true for the period from Oct. 2005 until July 2006. The price rose but the production declined. The gradualistic tail on Saudi production is what an oil field decline looks like.
Just as I was finishing writing this page, I saw this report.
Nicosia, Sept 8: Saudi Aramco in its Annual Review 2006 said that last year the company's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent, compared with the previous year.
Crude oil production in 2006 averaged 8.9 million barrels of oil a day (b/d) and exports 6.9 million b/d. (http://www.dailyindia.com/show/172345.php/Saudi-Aramco-reports-oil-outpu... ) To me, the interesting thing about this is that with a 3.1 decrease in exports, this means that there is a reduction of 266,000 barrels per day available to the rest of the world. Production doesn't really matter to the rest of the world. Only exports matter. If the Saudi's used all of their oil, there would be nothing left for us to use. This data confirms that their exports are decreasing faster than their production is decreasing.
Let's take another example, the United Kingdom.
From 1995 until 1999, the UK production was a plateau. But in mid-1999, the monthly production began to gradually decline. I moved to the UK in August 2001, looked at the curves and told a colleague and fine geologist, Steve Daines, that the UK had peaked production. He disagreed. We made a bet for a lunch that at the end of 2000, the UK would produce no more than 130,000 tonnes of oil. I took below that figure, he took above. Instead of a lunch, he and his wife had me and my wife over for a wonderful Malaysian dinner cooked by his beautiful Malay wife. We ate that meal with gusto along with a Turkish couple, that they knew. The sad thing was that the UK production decline has continued even into this year. When I left the UK, I told one young geologist that if she wanted to have a career in the oil business, she was going to have to leave the UK. While that day hasn't come for her yet, it will. No one will pay geologists to manage fields that aren't producing. The above curve is what peak oil looks like for a country--a plateau followed by a gradual decline that is inexorable.
Now that we know what peak oil looks like, lets look at the current global production of both black oil (crude) and Total Liquids (crude plus condensate--a liquid that comes out of natural gas wells which is usually clear).
What we see here is that following the post-911 recession, there is the ramp up of production to supply the increasing demand from China and India. By late 2004, the rate of increase in world crude production (blue curve) slowed, reaching a peak of 74.3 million barrels per day in May 2004, marked by an arrow. The trend from that time has been down, gradually I would admit, but down none the less.
So, why do I call this the peak of world crude production? Isn't it possible that new production will come on line and lift that number above the 74.3 million bbl/day? Possible, barely, probable, no. Why? All the world's biggest fields are in decline, and they produce a large percentage of the world's oil. We saw Saudi Arabia's production, and that represents 10% of world oil. So, we know that 10% of the world's oil in in decline. But the Saudi's are the second largest producer. Russia, the largest producer of oil, is, at best, flat in production now. The U.S. is the third largest producer of oil (something that surprises everyone) and we have been declining in oil production for 30 years. These three countries account for 28% of the world's production, all in decline.
Mexico has the 3rd largest oil field and that one field represents 2/3 of its crude production. It is in decline, plummeting 20% last year. The UK, Norway, Indonesia, Oman and China are all in production declines. The only places on earth that are undergoing significant increases in crude production are Angola, Kazakhstan and Brazil. Kazakhstan will always be limited to the size of the pipeline it has available. Pipelines have fixed capacity.
Given all this, it is hard to see how the future is going to bring forth vast new quantities of daily production.
Another objection: Above I said that peak oil was a plateau followed by a decline. Could we be in the plateau of world production? Yes, that is certainly possible but for the reasons I list above, the current levels of production simply can't be maintained. Annually, the world loses 5 million bbl/day of productive capacity. The curve above shows that we are not adding to world productivity rates even 5 million bbl/day per year of productive capacity since 2005, which would have keep us absolutely flat.
Now, one other thing makes me think that this is the peak of world crude production. The price response in relation to the supply. Usually if price is going to bring forth new supplies from OPEC (who supposedly has all these vast untapped oil fields just waiting to be turned on), it would happen in sharp steps. The Saudi's have not increased production since late 2004 or early 2005. Yet, because the price has gone up from that time, if they had the oil, they could have made lots and lots of money. But they don't seem to be able to take additional advantage of the oil price. In spite of high prices, indeed, increasing prices, no one on earth seems to have the excess capacity sell more oil into this rising price environment. Given the past history of cheating on the part of the OPEC members, the lack of new supplies coming to market must say something important about its availability
Another interesting feature is the total liquids curve (the red curve). This is both black oil plus the clear condensate from natural gas wells. This curve also seems to have peaked, but peaked a year later, in July 2006. Thus, we are 2 years out from peak crude oil, but only one year out from a probable peak liquids.
What are the implications?
The most important thing we need to know is the rate of decline, which of course, we don't know and won't know for a while. We can delimit it a bit. a 1 million bbl/day decline from May 2005 until May 2007 represents approximately a .75% decline per year. Hardly something to worry about right? The first year of UK decline was only about .5%. The second year of decline was 9%, but then, the UK is a much smaller place than the world, so it is unrealistic to expect the world to follow precisely the UK pattern of decline. We can expect the world crude production to decline much faster in the next few years than it is right now. How fast remains to be seen, but even a 5% decline will mean that in 10 years we will be producing only 60% of what we do today! Instead of having 85 million barrels per day of total liquids, we would only have access to 50 million barrels per day.
Clearly that kind of restriction in oil supply means that either mass transit must come to America as it is in China, or we must only go to work 3 days per week. In 10 years, having only 60% of the oil we have today means 40% less driving for everyone. Going to work only 3 days per week, would mean the destruction of the economy. Most jobs can't be handled across the internet. How does one do the job of grocery store stocker by telecommuting? Even today though, the relatively mild oil prices we have experienced have altered the driving habits of the American public. I sent this chart to a friend last summer. The chart shows the change in mileage driven on US highways from last year. If we drive more this year than last year, the number will be positive; if we drive less, then the number is negative. As you can see, the response to the rise in the price of oil (green curve) has been that for the first time in 27 years Americans are driving less than the previous year. The last time this happened was during the Iranian hostage crisis!
Expect more of this in the future.
Another implication is that automakers shouldn't make gas guzzlers. Those old enough to remember the Iranian hostage crisis, when everyone had to take turns getting gasoline on alternate days, knows a bit of what it will feel like. Back then, people stopped buying big cars. The V8 went out of style in the 1970s; it was too expensive. I expect the Hummer will meet a similar fate.
Suburban sprawl won't work
American cities will need to restructure to be more like European cities, where one can walk to the stores. In Aberdeen, Scotland, most Aberdonians shopped daily because they had tiny refrigerators. But that didn't matter, if they forgot something, they could walk to the store in about the same time it takes me to drive to the store here.
Flying will become like it was when I was a child--the province of the rich. I did not get on a commercial jet until I was 25 years old. My children grew up with flying and have seen far more of the world than I have at an equivalent age. But, as oil prices rise, fuel costs will bury many airlines. As far as I know, I own no airline stocks either directly or indirectly through mutual funds. They are not going to have a growing clientele as energy costs go up. We have already seen one of the impacts of the energy costs to this sector. Years ago, I was speaking with my wife's brother-in-law who used to work with Boeing. Boeing had made the choice to go energy efficient with their planes, while Airbus had decided to go BIG. I told my wife's brother-in-law that Boeing had made the correct choice. This is from a Business Week web site:
"Instead, the show could highlight a growing list of woes at the company, based in Toulouse, France. On June 1, Airbus acknowledged that the first deliveries of the A380 will be delayed up to six months, from mid-2006 until early 2007, due to unspecified production difficulties. Then Emirates airlines, which had been expected to announce a big order for the A350 at the air show, said it was not ready to make a decision. Airbus sales chief John J. Leahy, who said earlier that he might announce more than 100 orders for the A350 in Paris, now says big orders could come "a week or two after."
Has Airbus lost its mojo? The past few months have been rough. Boeing, after trailing Airbus on orders for the past three years, has racked up 255 orders as of the end of May, compared with only 196 for Airbus. Even more worrisome, Boeing's new 787, which boasts better fuel efficiency thanks to lightweight composite materials and next-generation engine design, is proving a hit with airlines. They have placed orders and commitments for 266 of the jets, while Airbus has yet to announce a major deal for the competing A350. Meanwhile, the A380's order book has been stuck at 154 since last year." Why Airbus is Losing Altitude," June 20, 2005, http://www.businessweek.com/magazine/content/05_25/b3938069_mz054.htm
And a more recent news source notes that Boeing has won 706 orders for its Dreamliner while Airbuss has only 154 for the A350. Energy is king in the airline industry, even if a government run airplane manufacturer thinks they can change the laws, both of the land and of physics.
One percent of world energy use goes to fertilizers. High energy prices will affect fertilizer use. Indeed, we can see that now. This is a plot of inflation adjusted oil price divided by 100 (so it will fit on the same chart) with the barrels of oil equivalent energy of fertilizer applied per acre of wheat. One can see that when oil prices are high, fertilizer use is low; and vice versa.
Few city people know that an acre of wheat has 1.3 million wheat plants--a density hard to achieve if one is throwing seed by hand. Corn is sown at 30,000 plants per acre. Such densities require mechanical sowers. To sow corn at these densities by hand would require 42 hours (5 seconds per seed). This kind of puts into perspective the utility of energy for our tractors. If the price of oil goes up, there will be fewer bushels per acre because of the combined effects of less mechanization and less fertilizer. Now clearly for a while efficiencies will help. People will figure out how to apply fertilizer more effectively; but eventually not having fertilizer will come into play.
I am fond of citing a little known fact I got from a Walter Youngquist article. Mechanization allows a farmer to spend 4 hours per acre and produce 160 bushels of corn per acre. Back in the 19th century, it was 500 hours per acre an 30 bushels of corn per acre. This of course brings an interesting conundrum to those expecting corn-based ethanol to fuel the world. Without petroleum-based fertilizers, there won't be enough corn to feed us much less fuel the world. A five fold drop in corn yields would leave many in the world starving.
It is unlikely that we will be able to have air-shipped strawberries from Argentina in the winter, so food will once again become seasonal, like it was in my childhood before globalization.
Water and food are entirely linked. Without water, many crops won't grow, but we also need water to drink. A few weeks back the Wall Street Journal gave a couple of interesting facts about farming in India.
"Since the 1990s, India has been a major net exporter of rice, shipping nearly 4.5 million tons last year.
"But annual yield increases began to slow over the past decade. Farmers cranked up fertilizer and water use, draining the water table. Many began planting two crops a year, taxing the soil. Punjabi area officials discouraged farmers from planting two crops and in some places outlawed it, but many farmers ignored them."
"I'm doing mischief against the government,' concedes Kanwar Singh, a second rice crop recently on a stretch of flooded land near the northern India city of Karnal. He says he now has to pump water from 300 feet below the surface, compared with 70 feet 10 years ago." 'In a year or two, maybe it will be finished,' he says." Patrick Barta, "Feeding Billions, A Grain at a Time," Wall Street Journal, Saturday/Sunday July 28-29, 2007, p. A10
"Lakhbir Singh, 35, this year planted aerobic rice for the first time. He says his costs have tripled over the past decade. His well was about 60 feet deep 10 years ago; now, it's down to 450 feet, and he has to use a special submersible engine to help haul the water to surface. The health of his soil has deteriorated, so he's using more fertilizer." Patrick Barta, "Feeding Billions, A Grain at a Time," Wall Street Journal, Saturday/Sunday July 28-29, 2007, p.A10
One simply MUST have energy to pull that water up from depths of 300 to 450 feet. Without it, there will be no water. Which raises the question, what will these poor guys do when the electricity isn't there to run their pumps?
But this isn't a problem for poor Indian farmers. When the electricity is off, the water pumps, which pump water out of deep wells will not be running. That means that agricultural irrigation will be interrupted. That means that city water supplies won't flow either. Both wells and surface water systems require electricity to move the water from source to your favorite drinking fountain.
Another implication is that coal will have to play a larger role in the US energy budget over the near term. We can use coal to make diesel, electricity and thus mitigate, for a while, the coming problems. Coal can be used to manufacture fertilizer and avoid the problems (for a while) cited immediately above. We will use coal or our economy will not function. We will simply have to lose our aversion to coal and the CO2 it produces. I have asked many greens this question: If it comes to a choice between your child freezing in the dark or burning coal, which would you choose. I have yet find one so pure to their principles that they tell me they would let their kid freeze in the dark of a winter night. They all will burn coal to keep warm. Having lived in a society (China) where coal is the major source of energy, the smog is almost unbearable. There were days I could taste the sulfur in my mouth as I walked to work in Beijing. But we are no different than they. Their choice is also one of burn oil or have no heat in the winter or cooked food. The only alternative would be to chop down all the trees (which has almost been done in wide areas of China).
Yesterday there was an article in the Wall Street Journal talking about the coming electricity problems for Texas. Due to the success of the Greens at stopping TXU from building coal-fired power plants, in 3-4 years, Texas will probably start having similar problems to those California is having. California, and now Texas, stupidly decided that we would rather freeze in the dark rather than burn coal. We get 60% of our electricity from fossil fuels, coal, oil and natural gas! The decisions we make today will have immense impacts on your ability to go to work (how is your computer going to function without electricity? Do you really want to be able to drink water from the fountain on your 27th story office? Won't you just love walking those 27 stories each morning to get to work, which will put you in great shape if you don't have a heart attack during that first month of climbing). I suppose deodorant sales will increase in such a situation.
I will finish with personal story from my life overseas. When I lived in the UK, I saw what happens when the oil is shut off. In Sept 2000, the lorry drivers blockaded the refineries. My wife and I were brand new in the UK and driving back from a play in Aberdeen one night, we saw huge lines at the petrol stations. We wondered what was going on, but we drove on home not wanting to be in such long lines anyway. Unfortunately, those people in line, knew that the refineries had been blockaded, I didn't. By the time we realized it, the petrol was gone. That led to many interesting experiences. In one week, the food on the store shelves was gone. By two weeks, police and fire and ambulance were having trouble responding. Farmers were about to have to slaughter chickens because they couldn't get feed after only 2.5 weeks. Construction sites shut down. I learned through that experience that a society has about 3 weeks after the oil is shut off. Food ceases to moveinto the cities.
How can economic growth continue if each day into the future we have less energy than we had the day before??? This is a historic moment in human history. For the first time in 10,000 years, we have less energy than we had yesterday. And that will continue into the foreseeable future.
by Eckhart Beatty
San Francisco on 11.23.06
Roger Duncan serves as the Campaign Coordinator for Plug-in Partners, a national campaign for plug-in electric vehicles (PHEVs) striving to demonstrate clearly the viability of this market by doing the following: garnering support in the form of online petitions and endorsements by city governments across the country; procuring "soft" fleet orders; and developing rebates and incentives. TreeHugger's Eckhart Beatty recently had the chance to chat with Mr. Duncan about plug-ins and the future of automotive transportation.
TreeHugger: Why was Plug-in Partners founded in Austin, Texas?
Roger Duncan: As one of the more progressive utilities in the nation, Austin Energy has long led the nation in energy conservation. I was asked to see what else we could be doing in the area of clean energy, and I told the City Council we should start a new initiative in the transportation sector since I saw an eventual convergence between the electric and transportation industries. In my capacity as a manager we might be able to take advantage of the abundance of wind and solar potential to power cars. Soon we began seeing a convergence between the electric and transportation industries.
So in August of 2005, we founded Plug-In Austin. We realized from the beginning what we really had to do was to link similar ongoing efforts taking place across the country. We started by targeting the 50 largest cities in the U.S. Now we have members from utilities, environmental groups, businesses, as well as many other federal, state, and local organizations.
I had originally heard of the efforts of Felix Kramer and CalCars, Electric Power Research Institute EPRI, and Andy Frank, a UC Davis professor at who invented the plug-in technology some 30 years ago.
TH: What's the most important thing you want the average individual to know about plug-ins?
RD: They are very energy efficient, cleaner, and cheaper to operate.
TH: What’s the most efficient way of getting the most people to understand their importance in the shortest possible time?
RD: Invite folks to visit the website Plug-In Partners and recommend they sign up for the newsletter. Consider working with the media, as well getting promotions for us.
TH: If Proposition 87 had passed in CA, what would it have meant for the future of PHEVs?
RD: I really don’t know much about it. I’m not a big fan of initiatives. This one could only stand to help, though. It could well stand to buttress the campaigns of lots of alternative energy technologies—as well as ours.
TH: What would you recommend that everyone who doesn't live in California do in this regard? For instance, would similar initiatives be feasible in other states like Texas, as well?
RD: It (an initiative like California’s 87 ballot measure) probably wouldn’t occur in TX. I’m less interested in (proposing) legislation than in demonstrating a market for PHEVs.
TH: Are all hybrid designs the same—or are some different?
RD: There are different varieties. There’s the serial, the parallel—and then the hydraulic (a protoype still). Although, principal variations in designs relate to battery design such as Nickel-Metal Hydride versus Lithium Ion, there are other differences in the size of the battery compared to the engine (with some new ones proposing smaller gas engines and larger electric motors).
Andy Frank: "Just as in the case of any emerging product or technology, there are many ways to implement PHEV technology, optimize for various factors and conditions. We’re looking forward to sorting this out when car-makers begin building PHEVs." [Mr. Frank is the inventor of the PHEV.]*
TH: What is the longevity of battery systems compared to 100% electric cars?
RD: They may be more powerful per unit mass than the batteries in non-hybrids, but less powerful than pure electric cars. Also, plug-ins require a deep discharge of their batteries, whereas fully electric cars don’t need to discharge the batteries as much.
AF: "While the price/performance ratio of pure electric cars may match or exceed that of PHEVs, it’s not likely. I'll bet on the PHEV staying as the ultimate end game for the remainder of the century," he said. "Lithium is coming up fast and will definitely take over the Metal Hydride in power, weight, life, size, and costs," he concluded.*
TH: By their nature, cars are somewhat "disposable," to be replaced by a new model on average every seven years—or less! Is “planned obsolescence” addressed better by plug-ins, in addition to their superior efficiency?
RD: Not really. Cars stay on the road an average of 16 years. It’s unlikely this figure will decline sharply any time soon.*
TH: Could factory-built plug-ins be made to be "upgradable" with respect to engine designs (for a few years going forward so they won’t become outdated like the first generation Prius did)?
AF: "Not really. As cars become more computer-oriented and more telemetric, possibilities for upgraded systems increase. Most products get better over time—no surprise there."
According to Dr. Frank, although "upgrading is always possible," with upgraded parts becoming interchangeable, "you may be flogging a dead horse for a long time." He concludes by predicting, "The technology of these systems will change very fast and may not stabilize for many years—if ever!"
TH: Bush has backed plug-ins. How helpful has all the political rhetoric been so far?
RD: He "gets it," and his support has been helpful. The Department of Energy is now conducting serious discussions, and a new initiative has been launched within its R&D arm.
TH: What are some ways the Partnership could be strengthened?
RD: It’s actually moving faster than we can keep up with.
TH: Does the association have growth plans?
RD: Yes. We’re starting to approach more corporations. Some notable examples of these and other large organizations are P.G.&E., Edison Electric Institute, the U.S. Conference of Mayors, and the National Consumer Federation of America (with over 100 million members)..
TH: What’s the minimum number of cars in a fleet needed for a "soft order"?
RD: We consider four to five as the minimum, but may consider fewer. It’s called a "soft" order to signify simply an intent to built, since they haven’t been mass-produced yet; it is not an actual purchase order--yet. Also, they can’t be built on speculation, due to the matter of expense.
TH: With all the good news that came regarding PHEVs this year, what are the biggest hurdles in our way to getting them mass-produced?
RD: Only certain kinds of cars manufactures would seriously consider it for particular models.
TH: What’s the latest word on the largest car manufacturers warming up to the idea of producing PHEVs?
RD: Ford and GM have both begun focusing on PHEV initiatives. Initially, they had expressed resistance and uncertainty. The bottom line is they are still researching them. Nissan will develop one—perhaps by 2010.
TH: What does Google really intend to do when it says it "wants to build a plug-in"? Would it support CalCars, Edrive Systems, Energy, CS etc. to do this—or exactly what?
RD: It’s true we’re engaged in discussions with Google, but I’m not at liberty to offer any details today.
TH: What are the largest companies and associations involved with the organization?
RD: P.G.&E., Edison Electric Institute, the U.S. Conference of Mayors, and the National Consumer Federation of America (with over 100 million members).
TH: Who are some of the most noteworthy spokespersons of this idea?
RD: Hillary Clinton, Lester Brown, Orin Hatch, Jr., Barack Obama, George Pataki (Gov. NY), George Schulz, R. James Woolsey (former Director of CIA). Plug-in Partners maintains a list of partners.
TH: What can we do as consumers to get them to do so?
RD: They should visit the Plug-In Partners website: sign up, spread the word, and put in a fleet order if applicable to their business.
TH: What about the notion of the PHEV plugging into a grid concept? Where is that idea today?
RD: True, it’s an interesting idea, and I believe it will happen, but it will be years before it will have significant import, since millions of cars are needed to make an impact.
TH: If you lived in remote area, could you set up your PHEV to power your home during blackouts?
RD: Yes. Toyota recently built a prototype that would allow people to generate electricity at 13kW and 120 volts. This would be especially useful for those living off the grid.
TH: What is your impression of companies’ individual commitments to grappling with the issues of PHEVs?
RD: Yes, I think they will remain committed for the long haul.
TH: If everyone who reads this interview could do just one thing a week to help promote the future of plug-ins as a proven viable alternative to fossil fuels, what should it be?
RD: They should visit the website, sign up, and consider getting involved in our work.::
*Note: I am grateful to Felix Kramer, founder of CalCars and Dr. Andy Frank for help with some of these answers.::
Source: Seeking Alpha
September 18, 2007
There was a time, a few years back, when anyone who talked about prospects of solar energy were dismissed as cult followers. In 2005, however, Cypress Semiconductor (CY) famously spun off its solar business, Sunpower (SPWR), which has seen its stock almost triple in value since 2005. That move caused a lot of investors to look at solar energy seriously for the first time. I was one of them, having followed SunTech Power (STP) very keenly over the last year.
Suntech Power engages in the design, development, manufacture, and marketing of photovoltaic [PV] cells and modules. It also provides PV system integration services in China. The company's products are used in various residential, commercial, industrial, and public utility applications for on-grid electricity generation, as well as for off-grid use, such as stand-alone lighting for street lamps, garden lamps, telecommunications relay stations, and mobile phone networks. It sells its products to solar distributors, engineering and design firms, and other energy product distributors, as well as installers, system integrators, property developers, and value-added resellers.
At the risk of sounding like a cult follower of solar energy, let me briefly explain why I think solar energy is really the future. In an interview with Dr. Shi [CEO and founder of Suntech], renowned writer Thomas Friedman noticed that when he looked out of Dr. Shi's office in a skyscraper, he could see nothing save the smog and pollution that covered the skies. China is in a condition where it is becoming painfully obvious that alternative energy is not an option, it's a necessity.
Suntech saw the opportunity long ago, and has done a great job taking the lead in solar power. It already controls a major share of the PV cell market in China and is slowly becoming the major supplier in European countries as well. Unfortunately, the US has not been as aggressive as should be, and that when solar power does get to that point where it is a really price competitive form of power generation we may be importing our solar cells from China.
There are a couple of reasons why I prefer Suntech Power right now:
1. The 2008 Beijing Olympics: China's Xinhua news agency reported last Thursday that solar power will be widely applied during the 2008 Beijing Olympic Games. Li Zhonghai, senior official with the China Association for Standardization said about 90 percent of all the hot water used in the Olympic village will be solar heated, and 80 to 90 percent of street lights around the Olympic venues will also be solar powered. Li, who is also the member of the National Committee of the Chinese People's Political Consultative Conference [CPPCC] said about 40 million Chinese households, or 150 million Chinese people, now use solar energy in their daily lives.
2. According to the People's Daily, China is the world's biggest user of solar water heating. So we have a country with more than a billion people switching to solar energy on a large scale, not as a fad or an experiment.
There are other ways to invest in solar energy, like JA Solar (JASO), but I prefer the most stable and credible of those. JA Solar recently had its contract terminated by Sunpower, due to quality issues.
Other such solar companies, including First Solar (FSLR), Evergreen Solar (ESLR) and of course, SunPower Tech (SPWR), are also options for investment in this space, but I prefer Suntech because it actually provides PhotoVoltaic cells to many of these companies, and therefore its a much more stable play.
In addition to that, I am not entirely convinced that the US will take meaningful steps towards switching to solar energy The energy lobby is a highly powerful one in the US and it will take some time for the grim realities to hit hard and cause a major overhaul of our energy policy. So, I prefer STP which gets most of its business from China and Europe.
Source: Yahoo Biz
Innovation is the enemy of commodity investor.
OK, that might be exaggeration, but it does point to a bigger truth. Platinum and palladium markets are trading down today on news that engineers at Nissan Corp. have figured out how to design catalytic converters that use only half as much platinum, palladium and rhodium as existing models. That’s a huge breakthrough and a matter of critical important to platinum investors, because catalytic converters consume 54 percent of the platinum sold each year, according to Standard Chartered PLC (via this Bloomberg story. If Nissan’s new system bears out and everyone switches to it, platinum demand could fall precipitously.
(It may seem odd that the same metal that is coveted for wedding rings also helps scrub soot out of auto exhaust systems, but it’s true; they use diamonds in mining tools and X-ray machines, too.)
Of course, it’s not as if demand for platinum will tumble overnight. The system is as-yet unproven and there are huge legacy investments in machining plants based on the old method. But if platinum prices stay high, this and future innovations will find ways to reduce industrial demand for platinum and related metals. Higher prices increase the premium on innovation and make it economical to investigate alternative methods to achieve the same result.
We are seeing similar developments in the energy industry. Sky-high (and persistently high) oil prices have made it attractive to invest in alternative fuels and alternative sources of crude, such as oil sands, shale oil and more. It has also pushed oil engineers to look in more unusual places, including ultra-deep wells and politically challenging countries.
Similarly, folks are investigating ways to conserve energy, which is being borne out in developments like new hybrid-electric vehicles and efforts to ban the use of incandescent bulbs. (The fact that OPEC has allowed oil prices to remain so high that these efforts are profitable is one of the reasons many people believe OPEC is pumping at maximum capacity; in the past, they have periodically flooded the market with oil as a way of discouraging alternative energy research.)
Nearly all commodities are exposed to innovation/conservation risk, although some more than others. Agricultural commodities are less exposed, as it is difficult to fundamentally replace food; nonetheless, innovation can and will make crop-growing more efficient, find new uses for formerly discarded crops, etc.
Gold’s value is more immune, as gold has no real utility, and its value is tied solely to the fact that it’s gold. A narrowly focused market like palladium is the most exposed, functioning like a company with a single large customer, where things can go horribly wrong in a heartbeat if that one customer gets in trouble.
How do you play this theme as an investor? Well, for starters, it opens up an entirely new platform for commodities related investments. Instead of investing in actual agricultural commodities, you can invest in fertilizer plays or companies like Monsanto. Instead of buying oil futures, you buy deep sea rig companies and developers of photo-voltaic cells. PowerShares actually offers an exchange-traded fund (AMEX: PZD - News) that invests in companies that help other companies operate more efficiently.
Staying within pure play commodities, an alternate approach might be to look for pricing discrepancies between substitutable commodities. For instance, oil is currently much more expensive than natural gas on a per-BTU basis. The reason is that oil is more useful in today’s economy: it’s easier to turn into gas, heating oil and other useful distillates, and it’s easier to transport from one location to another. Assuming oil prices stay high, that pricing gap provides a huge incentive for companies to figure out ways to make natural gas more useful, which could help narrow the BTU spread over time.
Platinum futures were only off marginally in New York trading, but as news of the Nissan innovation spreads, they may face more downward pressure.
AUSTIN, Texas (AP) -- Millions of inventions pass quietly through the U.S. patent office each year. Patent No. 7,033,406 did, too, until energy insiders spotted six words in the filing that sounded like a death knell for the internal combustion engine.
An Austin-based startup called EEStor promised "technologies for replacement of electrochemical batteries," meaning a motorist could plug in a car for five minutes and drive 500 miles roundtrip between Dallas and Houston without gasoline.
By contrast, some plug-in hybrids on the horizon would require motorists to charge their cars in a wall outlet overnight and promise only 50 miles of gasoline-free commute. And the popular hybrids on the road today still depend heavily on fossil fuels.
"It's a paradigm shift," said Ian Clifford, chief executive of Toronto-based ZENN Motor Co., which has licensed EEStor's invention. "The Achilles' heel to the electric car industry has been energy storage. By all rights, this would make internal combustion engines unnecessary."
Clifford's company bought rights to EEStor's technology in August 2005 and expects EEStor to start shipping the battery replacement later this year for use in ZENN Motor's short-range, low-speed vehicles.
The technology also could help invigorate the renewable-energy sector by providing efficient, lightning-fast storage for solar power, or, on a small scale, a flash-charge for cell phones and laptops.
Skeptics, though, fear the claims stretch the bounds of existing technology to the point of alchemy.
"We've been trying to make this type of thing for 20 years and no one has been able to do it," said Robert Hebner, director of the University of Texas Center for Electromechanics. "Depending on who you believe, they're at or beyond the limit of what is possible."
EEStor's secret ingredient is a material sandwiched between thousands of wafer-thin metal sheets, like a series of foil-and-paper gum wrappers stacked on top of each other. Charged particles stick to the metal sheets and move quickly across EEStor's proprietary material.
The result is an ultracapacitor, a battery-like device that stores and releases energy quickly.
Batteries rely on chemical reactions to store energy but can take hours to charge and release energy. The simplest capacitors found in computers and radios hold less energy but can charge or discharge instantly. Ultracapacitors take the best of both, stacking capacitors to increase capacity while maintaining the speed of simple capacitors.
Hebner said vehicles require bursts of energy to accelerate, a task better suited for capacitors than batteries.
"The idea of getting rid of the batteries and putting in capacitors is to get more power back and get it back faster," Hebner said.
But he said nothing close to EEStor's claim exists today.
For years, EEStor has tried to fly beneath the radar in the competitive industry for alternative energy, content with a phone-book listing and a handful of cryptic press releases.
Yet the speculation and skepticism have continued, fueled by the company's original assertion of making batteries obsolete -- a claim that still resonates loudly for a company that rarely speaks, including declining an interview with The Associated Press.
The deal with ZENN Motor and a $3 million investment by the venture capital group Kleiner Perkins Caufield & Byers, which made big-payoff early bets on companies like Google Inc. and Amazon.com Inc., hint that EEStor may be on the edge of a breakthrough technology, a "game changer" as Clifford put it.
ZENN Motor's public reports show that it so far has invested $3.8 million in and has promised another $1.2 million if the ultracapacitor company meets a third-party testing standard and then delivers a product.
Clifford said his company consulted experts and did a "tremendous amount of due diligence" on EEStor's innovation.
EEStor's founders have a track record. Richard D. Weir and Carl Nelson worked on disk-storage technology at IBM Corp. in the 1990s before forming EEStor in 2001. The two have acquired dozens of patents over two decades.
Neil Dikeman of Jane Capital Partners, an investor in clean technologies, said the nearly $7 million investment in EEStor pales compared with other energy storage endeavors, where investment has averaged $50 million to $100 million.
Yet curiosity is unusually high, Dikeman said, thanks to the investment by a prominent venture capital group and EEStor's secretive nature.
"The EEStor claims are around a process that would be quite revolutionary if they can make it work," Dikeman said.
Previous attempts to improve ultracapacitors have focused on improving the metal sheets by increasing the surface area where charges can attach.
EEStor is instead creating better nonconductive material for use between the metal sheets, using a chemical compound called barium titanate. The question is whether the company can mass-produce it.
ZENN Motor pays EEStor for passing milestones in the production process, and chemical researchers say the strength and functionality of this material is the only thing standing between EEStor and the holy grail of energy-storage technology.
Joseph Perry and the other researchers he oversees at Georgia Tech have used the same material to double the amount of energy a capacitor can hold. Perry says EEstor seems to be claiming an improvement of more than 400-fold, yet increasing a capacitor's retention ability often results in decreased strength of the materials.
"They're not saying a lot about how they're making these things," Perry said. "With these materials (described in the patent), that is a challenging process to carry out in a defect-free fashion."
Perry is not alone in his doubts. An ultracapacitor industry leader, Maxwell Technologies Inc., has kept a wary eye on EEStor's claims and offers a laundry list of things that could go wrong.
Among other things, the ultracapacitors described in EEStor's patent operate at extremely high voltage, 10 times greater than those Maxwell manufactures, and won't work with regular wall outlets, said Maxwell spokesman Mike Sund. He said capacitors could crack while bouncing down the road, or slowly discharge after a dayslong stint in the airport parking lot, leaving the driver stranded.
Until EEStor produces a final product, Perry said he joins energy professionals and enthusiasts alike in waiting to see if the company can own up to its six-word promise and banish the battery to recycling bins around the world.
"I am skeptical but I'd be very happy to be proved wrong," Perry said.
By ELIANE ENGELER and ALEXANDER G. HIGGINS
Associated Press Writers
Sat Aug 4, 12:30 PM ET
BASEL, Switzerland - When tremors started cracking walls and bathroom tiles in this Swiss city on the Rhine, the engineers knew they had a problem.
"The glass vases on the shelf rattled, and there was a loud bang," Catherine Wueest, a teashop owner, recalls. "I thought a truck had crashed into the building."
But the 3.4 magnitude tremor on the evening of Dec. 8 was no ordinary act of nature: It had been accidentally triggered by engineers drilling deep into the Earth's crust to tap its inner heat and thus break new ground — literally — in the world's search for new sources of energy.
Basel was wrecked by an earthquake in 1365, and no tremor, man-made or other, is to be taken lightly. After more, slightly smaller tremors followed, Basel authorities told Geopower Basel to put its project on hold.
But the power company hasn't given up. It's in a race with a firm in Australia to be the first to generate power commercially by boiling water on the rocks three miles underground.
On paper, the Basel project looks fairly straightforward: Drill down, shoot cold water into the shaft and bring it up again superheated and capable of generating enough power through a steam turbine to meet the electricity needs of 10,000 households, and heat 2,700 homes.
Scientists say this geothermal energy, clean, quiet and virtually inexhaustible, could fill the world's annual needs 250,000 times over with nearly zero impact on the climate or the environment.
A study released this year by the Massachusetts Institute of Technology said if 40 percent of the heat under the United States could be tapped, it would meet demand 56,000 times over. It said an investment of $800 million to $1 billion could produce more than 100 gigawatts of electricity by 2050, equaling the combined output of all 104 nuclear power plants in the U.S.
"The resource base for geothermal is enormous," Professor Jefferson Tester, the study's lead author, told The Associated Press.
But there are drawbacks — not just earthquakes but cost. A so-called hot rock well three miles deep in the United States would cost $7 million to $8 million, according to the MIT study. The average cost of drilling an oil well in the U.S. in 2004 was $1.44 million, according to the U.S. Energy Information Administration.
Also, rocks tapped by drilling would lose their heat after a few decades and new wells would have to be drilled elsewhere.
Bryan Mignone, an energy and climate-change specialist with the Brookings Institution in Washington, D.C., said alternative sources of energy face stiff price competition.
"Currently in the U.S. new technologies in the power sector are competing against coal, which is very cheap," he said.
Humans have used heat from the earth for thousands of years. The ancient Romans drew on hot springs for bathing and heating their homes. Geothermal energy is in use in 24 countries, including the U.S.
But those sources — geysers and hot springs — are close to the surface. Hot dry rock technology, also called "enhanced geothermal systems" or EGS, drills down to where the layers of granite are close to 400 degrees Fahrenheit. The equipment is similar to that used for oil, but needs to go much deeper, and be wider to accommodate the water cycle.
Hot dry rock technology is meant to stay well away from the 99 percent of the Earth's interior that is over 1,000 degrees.
Aeneas Wanner, a Swiss expert, says that if you imagine Earth as an egg, "a bore hole would only scratch the shell of the egg a little bit."
The United States led the way in demonstrating the concept with the Los Alamos geothermal project at Fenton Hill, N.M. The project begun in the 1970s demonstrated that drilling 15,000 feet deep was possible and that energy could then be extracted.
But the project came to a halt in 2000 when it ran out of funds. Meanwhile, the MIT report said, problems encountered in testing have been solved or can be managed — such as controlling how the water flows underground or limiting earthquakes and chemical interactions between water and rock.
Backers in the United States hope government funding will increase as oil and gas prices rise. But Steve Chalk, deputy assistant secretary for renewable energy, said the Department of Energy won't spend more money beyond the $2 million it has already allocated to hot rock technology.
However, he said the MIT study, which was funded by the Department of Energy, serves as a basis for studying the idea further.
Major energy companies, including Chevron Corp., Exxon Mobil Corp. and American Electric Power, told the AP they are following the research but not investing in it.
"This is an interesting technology for Chevron and we are currently evaluating its potential," said spokesman Alexander Yelland.
In Basel, the first shaft was bored last year by a 190-foot-tall drilling rig towering above nearby apartment buildings. Water was pumped down the injection well in the test phase in December, and as expected, it heated to above 390 F as it seeped through the layers of rock below.
But that's where the water remains for the time being; it caused the rock layers to slip, causing the tremors and rumbles that spooked the townspeople.
Geopower Basel, had forecast some rock slippage. In fact, it said the location on top of a fault line — the upper Rhine trench — was an advantage because it meant the heat was closer to the Earth's surface.
But with $51 million already spent, drilling stopped and the official launch date was moved back from 2009 to 2012.
Still to be drilled are the two wells that would suck the pressurized, superheated water out of the cracks and up to the surface to create steam for driving a turbine and generating electricity. The water, having cooled to around 340 degrees, would heat hospitals, public buildings and homes before being pumped back into the ground for another waste-free, gas-free cycle.
The rival project near the southern Australian town of Innamincka faces more benign geological conditions and less population. Its target date for operations is now two years ahead of Basel's, aiming to produce 40 megawatts of electricity by the end of 2010, enough to supply over 30,000 households.
Experts say hot rock geothermal energy can operate 24 hours a day and doesn't depend on sun or wind. But it's decades away from serious rivalry with existing energy sources.
Susan Petty, one of the 18 co-authors of the MIT study, works for Black Mountain Technology, a company promoting hot rock energy. She predicts that 10 percent of the world's power could come from geothermal sources in the next 50 years, from the current 0.3 percent, rising to half in around 100 years.
Promoters of the technology say that while geothermal drilling is costly, it's cheaper to run once it's in place. The MIT study said it could provide electricity at competitive prices. Price comparisons indicate it could be cheaper than other forms of renewable energy, including biomass and solar power. "The outlook is very good that we can do it," said Karl Gawell, executive director of the Washington D.C.-based Geothermal Energy Association.
But others are waiting for proof that it's worth the expenditure.
"This technology sounds very promising," said Nick Nuttall, chief-spokesman of the U.N. Environment Program, "but let's wait and see."
AP researcher Judith Ausuebel contributed to this report.
by Jeremy Elton Jacquot
Los Angeles on 08. 1.07
Narrowly edging out the previous record set by Spectrolab late last year, two scientists at the University of Delaware have just created a new device that can convert 42.8% of the light striking it into electricity. The solar cell, built by Christina Honsberg and Allan Barnett, splits light into three components — high, medium and low energy light — and directs it to several different materials which can then extract electrons out of its photons.
One of the device's key elements is an optical concentrator — a lens-type component that increases the cell's efficiency by directing more sunlight to it than would happen naturally (a boost that contributed in great measure to its record-setting performance). It measures in at just below 1 cm thick, a major improvement over the Spectrolab model which featured a concentrating lens about 1 foot thick. Unlike most concentrators that use a two-axis tracking system to follow the sun, this optical concentrator is also stationary — a major feat.
The Defense Advanced Research Projects Agency (DARPA) — which has been funding this and similar efforts through its Very High Efficiency Solar Cell (VHESC) program — hopes to eventually incorporate this technology into portable solar cell battery chargers for American troops. It will now fund a newly formed DuPont-University of Delaware VHESC Consortium to shift production from a lab-scale model to a full-on manufacturing prototype model.
UPDATE: A reader wanted us to clarify an important point — namely the fact that the concentrator itself doesn't increase the efficiency (it actually increases the power output by intensifying the beam of sunlight), the spectrum splitting optics and solar cells accomplish that.
by Will Wade
11.15.05 | 2:00 AM
The barren deserts of Southern California are known for relentless sunshine and miles of empty space -- the perfect combination for the world's most ambitious solar-energy projects.
Two Southern California utility companies are planning to develop a pair of sun-powered power plants that they claim will dwarf existing solar facilities and could rival fossil-fuel-driven power plants.
Southern California Edison and San Diego Gas & Electric are working with Stirling Energy Systems, a Phoenix startup that has paired a large and efficient solar dish with a 200-year-old Stirling engine design.
Stirling Energy Systems is planning to build two separate solar farms, one with the capacity to generate 500 megawatts of electricity in the Mojave Desert near Victorville, California, for SoCal Edison, and a 300-megawatt plant in the Imperial Valley, near Calexico, California, for SDG&E. The utilities have signed 20-year deals to buy all the juice the farms can turn out, and have options to expand the plants if they are successful.
"Without question, this will be the largest solar project in the world," said Gil Alexander, a spokesman for SoCal Edison. "It will be bigger than all U.S. solar-energy projects combined."
Alexander said traditional coal or gas plants typically generate 500 to 1,000 megawatts, and that current solar farms are much smaller -- generally in the 35- to 80-megawatt range. At the end of 2004, the United States had only 397 megawatts of solar-energy capacity, according to the U.S. Department of Energy's Energy Information Administration.
"There is a possibility with this project that solar energy could go commercial in a big way for the first time," said Alexander. "It's playing in the big leagues."
Instead of using panels of photovoltaic cells -- solar power's mainstay technology for decades -- Stirling Energy Systems uses 40-foot-tall curved dishes that focus the sun's energy onto Stirling engines.
Also called an external heat engine, the Stirling engine is a completely sealed system filled with hydrogen. Its design dates to 1816, and it's named for its inventor, a Scottish minister named Robert Stirling. The focused solar energy, which can reach 1,350 degrees Fahrenheit, heats the hydrogen, making it expand and drive the engine's four pistons.
Though Stirling engines have been around for almost two centuries, there have been few efforts in the past to harness the sun to run them, said Stirling Energy Systems CEO Bruce Osborn.
Osborn said the Stirling dishes are 30 percent efficient -- 30 percent of the sun's energy is converted into electricity -- which is two to three times as efficient as conventional photovoltaic cells.
"Solar panels are more common, and they have gotten more efficient, but they still have a long way to go," he said.
Osborn said his company's dishes are easy to maintain because the engine is a closed system that never needs to be refilled -- an important factor for a large-scale facility in the middle of the desert. In fact, the only resource it consumes is "a little bit of water to wash the mirrors off every few weeks," he said.
The company is currently operating a six-dish test site at Sandia National Laboratories to showcase the concept, but the SoCal Edison and SDG&E plants are Stirling Energy Systems' first commercial contracts.
The first phase of the SoCal Edison project will be to build a 1-megawatt test site using 40 dishes, which should be complete by spring 2007. Construction on the full, 500-megawatt facility is expected to begin in mid-2008, and should take three to four years. Each dish can produce up to 25 kilowatts, and the site will eventually have 20,000 dishes stretching across 4,500 acres of desert.
Stirling plans to begin construction on SDG&E's 300-megawatt project in late 2008, and it should take about two years to install the 12,000 dishes covering about 2,000 acres.
None of the companies would give a price for building the solar sites or disclose the rates the utilities will pay for power, but both said the cost would be similar to traditional coal or gas.
But as oil prices go up, so could the cost of electricity from fossil fuels.
"Soon, solar may be less expensive," Osborn said.
Joel Makower, co-founder of market-research firm Clean Edge, said Stirling Energy Systems' solar-thermal power systems are impressive but unproven. One promising sign is the utility companies' level of commitment to the new technology.
"This is all on paper so far," he said. "They haven't delivered anything yet. And until they do, we can't say what it will cost."
Still, Makower said he was optimistic.
"Photovoltaic was the first-generation, utility-scale solar technology," he said. "The Stirling engine looks like it will be the second generation."
Source: Rolling Stone
From Issue 1032
Posted Jul 24, 2007 1:36 PM
The great danger of confronting peak oil and global warming isn't that we will sit on our collective asses and do nothing while civilization collapses, but that we will plunge after "solutions" that will make our problems even worse. Like believing we can replace gasoline with ethanol, the much-hyped biofuel that we make from corn.
Ethanol, of course, is nothing new. American refiners will produce nearly 6 billion gallons of corn ethanol this year, mostly for use as a gasoline additive to make engines burn cleaner. But in June, the Senate all but announced that America's future is going to be powered by biofuels, mandating the production of 36 billion gallons of ethanol by 2022. According to ethanol boosters, this is the beginning of a much larger revolution that could entirely replace our 21-million-barrel-a-day oil addiction. Midwest farmers will get rich, the air will be cleaner, the planet will be cooler, and, best of all, we can tell those greedy sheiks to fuck off. As the king of ethanol hype, Sen. Chuck Grassley of Iowa, put it recently, "Everything about ethanol is good, good, good."
This is not just hype -- it's dangerous, delusional bullshit. Ethanol doesn't burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption -- yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World. And the increasing acreage devoted to corn for ethanol means less land for other staple crops, giving farmers in South America an incentive to carve fields out of tropical forests that help to cool the planet and stave off global warming.
So why bother? Because the whole point of corn ethanol is not to solve America's energy crisis, but to generate one of the great political boondoggles of our time. Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 -- twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon -- about half of ethanol's wholesale market price.
Three factors are driving the ethanol hype. The first is panic: Many energy experts believe that the world's oil supplies have already peaked or will peak within the next decade. The second is election-year politics. With the first vote to be held in Iowa, the largest corn-producing state in the nation, former skeptics like Sens. Hillary Clinton and John McCain now pay tribute to the wonders of ethanol. Earlier this year, Sen. Barack Obama pleased his agricultural backers in Illinois by co-authoring legislation to raise production of biofuels to 60 billion gallons by 2030. A few weeks later, rival Democrat John Edwards, who is staking his campaign on a victory in the Iowa caucus, upped the ante to 65 billion gallons by 2025.
The third factor stoking the ethanol frenzy is the war in Iraq, which has made energy independence a universal political slogan. Unlike coal, another heavily subsidized energy source, ethanol has the added political benefit of elevating the American farmer to national hero. As former CIA director James Woolsey, an outspoken ethanol evangelist, puts it, "American farmers, by making the commitment to grow more corn for ethanol, are at the top of the spear on the war against terrorism." If you love America, how can you not love ethanol?
Ethanol is nothing more than 180-proof grain alcohol. To avoid the prospect of drunks sucking on gas pumps, fuel ethanol is "denatured" with chemical additives (if you drink it, you'll end up dead or, at best, in the hospital). It can be distilled from a variety of plants, including sugar cane and switch- grass. Most vehicles can't run on pure ethanol, but E85, a mix of eighty-five percent ethanol and fifteen percent gasoline, requires only slight engine modifications.
But as a gasoline substitute, ethanol has big problems: Its energy density is one-third less than gasoline, which means you have to burn more of it to get the same amount of power. It also has a nasty tendency to absorb water, so it can't be transported in existing pipelines and must be distributed by truck or rail, which is tremendously inefficient.
Nor is all ethanol created equal. In Brazil, ethanol made from sugar cane has an energy balance of 8-to-1 -- that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That's a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 - making it practically worthless as an energy source. "Corn ethanol is essentially a way of recycling natural gas," says Robert Rapier, an oil-industry engineer who runs the R-Squared Energy Blog.
The ethanol boondoggle is largely a tribute to the political muscle of a single company: agribusiness giant Archer Daniels Midland. In the 1970s, looking for new ways to profit from corn, ADM began pushing ethanol as a fuel additive. By the early 1980s, ADM was producing 175 million gallons of ethanol a year. The company's then-chairman, Dwayne Andreas, struck up a close relationship with Sen. Bob Dole of Kansas, a.k.a. "Senator Ethanol." During the 1992 election, ADM gave $1 million to Dole and his friends in the GOP (compared with $455,000 to the Democrats). In return, Dole helped the company secure billions of dollars in subsidies and tax breaks. In 1995, the conservative Cato Institute, estimating that nearly half of ADM's profits came from products either subsidized or protected by the federal government, called the company "the most prominent recipient of corporate welfare in recent U.S. history."
Today, ADM is the leading producer of ethanol, supplying more than 1 billion gallons of the fuel additive last year. Ethanol is propped up by more than 200 tax breaks and subsidies worth at least $5.5 billion a year. And ADM continues to give back: Since 2000, the company has contributed $3.7 million to state and federal politicians.
The Iraq War has also been a boon for ADM and other ethanol producers. The Energy Policy Act of 2005, which was pushed by Corn Belt politicians, mandated the consumption of 7.5 billion gallons of biofuels by 2012. After Democrats took over Congress last year, they too vowed to "do something" about America's addiction to foreign oil. By the time Sen. Jeff Bingaman, chair of the Committee on Energy and Natural Resources, proposed new energy legislation this spring, the only real question was how big the ethanol mandate would be. According to one lobbyist, 36 billion gallons became "the Goldilocks number -- not too big to be impractical, not too small to satisfy corn growers."
Under the Senate bill, only 15 billion gallons of ethanol will come from corn, in part because even corn growers admit that turning more grain into fuel would disrupt global food supplies. The remaining 21 billion gallons will have to come from advanced biofuels, most of which are currently brewed only in small-scale lab experiments. "It's like trying to solve a traffic problem by mandating hovercraft," says Dave Juday, an independent commodities consultant. "Except we don't have hovercraft."
The most seductive myth about ethanol is that it will free us from our dependence on foreign oil. But even if ethanol producers manage to hit the mandate of 36 billion gallons of ethanol by 2022, that will replace a paltry 1.5 million barrels of oil per day -- only seven percent of current oil needs. Even if the entire U.S. corn crop were used to make ethanol, the fuel would replace only twelve percent of current gasoline use.
Another misconception is that ethanol is green. In fact, corn production depends on huge amounts of fossil fuel -- not just the diesel needed to plow fields and transport crops, but also the vast quantities of natural gas used to produce fertilizers. Runoff from industrial-scale cornfields also silts up the Mississippi River and creates a vast dead zone in the Gulf of Mexico every summer. What's more, when corn ethanol is burned in vehicles, it is as dirty as conventional gasoline and does little to solve global warming: E85 reduces carbon dioxide emissions by a modest fifteen percent at best, while fueling the destruction of tropical forests.
But the biggest problem with ethanol is that it steals vast swaths of land that might be better used for growing food. In a recent article in Foreign Affairs titled "How Biofuels Could Starve the Poor," University of Minnesota economists C. Ford Runge and Benjamin Senauer point out that filling the gas tank of an SUV with pure ethanol requires more than 450 pounds of corn -- roughly enough calories to feed one person for a year.
Thanks in large part to the ethanol craze, the price of beef, poultry and pork in the United States rose more than three percent during the first five months of this year. In some parts of the country, hog farmers now find it cheaper to fatten their animals on trail mix, french fries and chocolate bars. And since America provides two-thirds of all global corn exports, the impact is being felt around the world. In Mexico, tortilla prices have jumped sixty percent, leading to food riots. In Europe, butter prices have spiked forty percent, and pork prices in China are up twenty percent. By 2025, according to Runge and Senauer, rising food prices caused by the demand for ethanol and other biofuels could cause as many as 600 million more people to go hungry worldwide.
Despite the serious drawbacks of ethanol, some technological visionaries believe that the fuel can be done right. "Corn ethanol is just a platform, the first step in a much larger transition we are undergoing from a hydrocarbon-based economy to a carbohydrate-based economy," says Vinod Khosla, a pioneering venture capitalist in Silicon Valley. Next-generation corn- ethanol plants, he argues, will be much more efficient and environmentally friendly. He points to a company called E3 BioFuels that just opened an ethanol plant in Mead, Nebraska. The facility runs largely on biogas made from cow manure, and feeds leftover grain back to the cows, making it a "closed-loop system" -- one that requires very few fossil fuels to create ethanol.
Khosla is even higher on the prospects for cellulosic ethanol, a biofuel that can be made from almost any plant matter, including wood waste and perennial grasses like miscanthus and switchgrass. Like other high-tech ethanol evangelists, Khosla imagines a future in which such so-called "energy crops" are fed into giant refineries that use genetically engineered enzymes to break down the cellulose in plants and create fuel for a fraction of the cost of today's gasoline. Among other virtues, cellulosic ethanol would not cut into the global food supply (nobody eats miscanthus or switchgrass), and it could significantly cut global-warming pollution. Even more important, it could provide a gateway to a much larger biotech revolution, including synthetic microbes that could one day be engineered to gobble up carbon dioxide or other pollutants.
Unfortunately, no commercial-scale cellulosic ethanol plants exist today. In one venture backed by Khosla, a $225 million plant in central Georgia is currently being built to make ethanol out of wood chips. Mitch Mandich, a former Apple Computer executive who is now the CEO of the operation, calls it "the beginning of a real transformation in the way we think about energy in America."
Maybe. But oil-industry engineer Robert Rapier, who has spent years studying cellulosic ethanol, says that the difference between ethanol from corn and ethanol from cellulose is "like the difference between traveling to the moon and traveling to Mars." And even if the engineering hurdles can be overcome, there's still the problem of land use: According to Rapier, replacing fifty percent of our current gasoline consumption with cellulosic ethanol would consume thirteen percent of the land in the United States - about seven times the land currently utilized for corn production.
Increasing the production of cellulosic ethanol will also require solving huge logistical problems, including delivering vast quantities of feedstock to production plants. According to one plant manager in the Midwest, fueling an ethanol plant with switchgrass would require delivering a semi-truckload of the grass every six minutes, twenty-four hours a day. Finally, there is the challenge of wrestling the future away from Big Corn. "It's pretty clear to me that the corn guys will use all their lobbying muscle and political power to stall, thwart and sidetrack this revolution," says economist C. Ford Runge.
In the end, the ethanol boom is another manifestation of America's blind faith that technology will solve all our problems. Thirty years ago, nuclear power was the answer. Then it was hydrogen. Biofuels may work out better, especially if mandates are coupled with tough caps on greenhouse-gas emissions. Still, biofuels are, at best, a huge gamble. They may help cushion the fall when cheap oil vanishes, but if we rely on ethanol to save the day, we could soon find ourselves forced to make a choice between feeding our SUVs and feeding children in the Third World. And we all know how that decision will go.
Source: The Daily Green
If Every Field Were Planted With Corn, U.S. Would Only Offset 15% Of Fuel
In a new report released at noon today, three environmental and research organizations raise serious questions about the future of corn ethanol, a fuel that Congress has invested subsidies in already, and which is often viewed as a silver bullet solution to the nation’s energy and environmental problems.
Corn-based ethanol would, contrary to that belief, add pollution and contribute to other environmental problems — including the Gulf of Mexico dead zone that a separate report released yesterday showed could reach its largest size ever, due in part to the record acreage of corn planted in the Midwest this year, and the attendant runoff of fertilizer.
The “The Rush to Ethanol” was released by Food & Water Watch, the Network for New Energy Choices and the Vermont Law School Environmental Law Center.
The key findings from the report, as defined by the groups releasing it:
A team of Korean researchers has developed a cutting-edge solar cell that might help reduce our dependence on fossil fuels.
The discovery could make Korea a leader in the alternative energy industry as the research team plans to double the cell's efficiency and commercialize the technology by 2012.
The team's leader, Lee Kwang-hee of the Gwangju Institute of Science and Technology, said on Thursday, "Together with Prof. Alan Heeger at the University of California Santa Barbara, we have developed a plastic solar cell with 6.5 percent efficiency. That level of efficiency is sufficiently high for commercial products."
The discovery was explained in the July 13 issue of Science, one of the world's most prestigious academic journals.
Existing solar cells that use silicon semiconductors cost US$2.30 to generate one watt of electricity, which is three to 10 times higher than the production cost of thermal or hydro power. The new plastic solar cell costs just ten cents per watt.
"The efficiency of converting solar power to electricity should be at least seven percent for commercialization. Many foreign researchers even failed to develop solar cells with more than five percent efficiency," Prof. Lee said.
"We're going to improve the efficiency up to 15 percent, and we're in talks to join hands with domestic electronics companies to market the solar cell by 2012," he said.
(englishnews [a] chosun.com)
By PETER SVENSSON
AP Technology Writer
Sun May 13, 3:25 AM ET
NEW YORK - The light bulb, the symbol of bright ideas, doesn't look like such a great idea anymore, as lawmakers in the U.S. and abroad are talking about banning the century-old technology because of its contribution to global warming.
But what comes next? Compact fluorescent bulbs are the only real alternative right now, but "bulbs" that use light-emitting diodes, or LEDs, are quickly emerging as a challenger.
LEDs, which are small chips usually encased in a glass dome the size of a matchstick head, have been in use in electronics for decades to indicate, for example, whether a VCR is on or off.
Those LEDs were usually red or green, but a scientific breakthrough in the 1990s paved the way for the production of LEDs that produce white light. Because they use less power than standard incandescent bulbs, white LEDs have become common in flashlights.
Established players in the lighting industry and a host of startups are now grooming LEDs to take on the reigning champion of residential lighting, the familiar pear-shaped incandescent light bulb.
The light bulb has been running out of friends recently. California and Canada have decided to ban the sale of incandescent bulbs by 2012. Australia is banning them in 2010. The European Union is looking at banning production of the bulbs. A U.S. Senate committee is working on a proposal that would phase out the light bulb in 10 years.
And in New Jersey, where the first practical incandescent bulb emerged from Thomas Edison's laboratory in 1879, a bill has been introduced to ban their use in government buildings.
Governments are gunning for the light bulb because it's much less efficient than fluorescents, using about five times more energy to produce the same amount of light.
Lighting consumes 22 percent of electricity produced in the U.S., according to the Department of Energy, and widespread use of LED lighting could cut consumption in half. By 2027, LED lighting could cut annual energy use by the equivalent of 500 million barrels of oil, with the attendant reduction in emissions of carbon dioxide, the gas believed to be responsible for global warming.
Much of that reduction would be possible with today's technology, using compact fluorescents, or CFLs. But consumers haven't warmed to them. The light quality hasn't been satisfactory, most take time to turn on and aren't dimmable.
The LED has advantages over the CFL in most of those areas, and judging by this week's Lightfair trade show in New York, it could be a serious challenge to the CFL in a few years. What holds it back is chiefly price, but LEDs are already an economic alternative for niche uses.
In the last two years, the diodes have doubled in energy efficiency and brightness, according to Greg Merritt, director of marketing for Durham, N.C.-based LED-manufacturer Cree Inc. In particular, LEDs that produce a yellowish or "warm" light similar to incandescents have improved.
Dallas-based Lighting Science Group Corp. showed an LED "bulb" that screws into a standard medium-sized socket and produces a warm light equivalent to that of a 25-watt incandescent bulb, but consumes just 5.8 watts. It costs $50, hardly palatable to consumers who can buy a standard bulb for less than a dollar.
Polybrite International, a startup in Naperville, Ill., announced that lighting giant Osram Sylvania, a subsidiary of Germany's Siemens AG, will distribute its LED "bulbs." The intended market is mainly commercial clients, who can afford to pay $15 to $85 per unit, according to Osram Sylvania marketing manager Constance Pineault.
The energy efficiency is no doubt a draw for commercial clients like hotels, but LEDs have another big advantage: they last up to 50,000 hours, according to manufacturers. That compares to about 10,000 hours for fluorescents and 1,000 hours for incandescents. Not having to send out janitors to replace burned-out bulbs means big savings in maintenance costs.
"Right now the applications that make sense are either high maintenance or high power consumption, like parking garages, where the lights are on all the time," said Cree's Merritt.
LEDs already beat fluorescents for energy efficiency in some niche uses. For instance, Wal-Mart Stores Inc. is putting LED lighting in its in-store refrigerators, where the cold dims fluorescents and incandescents produce too much heat. LEDs also starting to replace flat fluorescent backlights in liquid-crystal displays, or LCDs, where they produce better colors.
LEDs don't contain toxic mercury, which CFLs do, though the amount is very small. (Recent stories circulating on the Web about calling a hazmat team if a CFL breaks are exaggerated. The U.S. Environmental Protection Agency recommends sweeping up, not vacuuming, the fragments, then checking out local recycling options.)
The cost of LED lighting should be coming down quickly. Polybrite founder Carl Scianna said the cost of individual white-light diodes, several of which go into an LED bulb and make up much of the cost, have come down in price from about $8 to $1.50 in a year.
"They're going to keep going down," Scianna said. "By the middle of next year, they'll be priced for consumers."
Nadarajah Narendran, director of lighting research at Rensselaer Polytechnic Institute in Troy, N.Y., cautions that there are still technical issues to work out with LEDs.
While single LEDs can demonstrate very high energy efficiency in the lab, when they're combined into fixtures, their efficiency is considerably lower. In part that's a heat issue: the diodes produce less heat than incandescents, but they keep that heat in the fixture rather than radiating it, and the hotter the diodes get, the less efficient they are.
He sees screwing LED bulbs into standard sockets "as a waste of talent" that doesn't utilize the inherent properties of LEDs, like their small size and longevity.
"You could build them in as part of the furniture, part of the cabinetry," Narendran said.
Because of their high prices, he doesn't believe LEDs will be ready to replace incandescents in all their uses for the next five to 10 years, but "LEDs, good or bad, will be growing very rapidly."
On the Net:
U.S. Department of Energy on LEDs: http://www.netl.doe.gov/ssl/
Recycling options for CFLs: http://www.lamprecycle.org
Lighting Science Group: http://www.lsgc.com/