There ain't no such thing as carbon neutrality.
Or, at least, exceptions to that rule are few and far between.
Besides scarcity, greenhouse gas emissions are the second major concern with our current sources of energy. But one of the most frequent fallacies I encounter is the contention that if any alternative source also produces a greenhouse gas at all, or does not have a negative carbon balance, it is somehow not "green" or is just as bad as using fossil fuels.
Showing posts with label energy. Show all posts
Showing posts with label energy. Show all posts
Thursday, May 9, 2013
Convergence, or, energy is a high yielding investment until it isn't
This will be a rambling post just to help me get some thoughts down.
With the recent announcement that Chevron is essentially pulling out of all biofuels and renewables, I think it's worth noting some of the unrealistic expectations that Chevron placed on clean technology. Most notably, Chevron placed clean tech processes in direct competition for investment money with its oil exploration projects. Thanks to some of my work in graduate school from some of the best industrial practitioner educators I've ever had, I know that the IRR for a typical conventional oil exploration project is on the order of 20%.
The corresponding number for a bio-renewables project is much lower, on the order of 3-7% for the very best. This is much more typical of what you would see in agriculture. Placing investment money for bio-renewables projects in competition with oil projects, it's easy to see why bio-renewables lost out.
Besides making me profoundly disappointed in Chevron, this kind of news, to me, points to where the future of energy will go. If you accept that the world cannot indefinitely continue to power itself with petroleum-based transportation fuels, then eventually the IRRs of bio-renewable projects (or other types of renewable energy) must approach those of oil. This can happen in one of three different ways.
On the side of petroleum, either the number of opportunities for highly profitable ventures will decrease (a supply-driven slump) or there will not be enough demand to sustain these ventures at a high level of profit (a demand-driven slump).
On the other hand, a second option is for bio-renewables to decrease their costs, increase their IRRs and compete with petroleum on its own terms.
I've staked out my position on demand destruction before, and I still believe that the structural changes that might cause fuels demand to decrease in the same way the IEA and others claim will take decades longer than they predict. That environment means that high prices will continue, and supplier costs will increase as profitable opportunities for exploiting petroleum become depleted - in short, a petroleum supply driven argument. Something like a carbon tax would also help that along, by seriously affecting the economics of bitumen (somewhat less for other forms of unconventional oil, such as tight oil).
As for bio-renewables, after seven years of active work in the area, two of them professionally, realistically I can't see the IRR of any project improving much beyond that 3 to 7% level. Making a low-value product like a fuel just doesn't pay, not when there is the opportunity to avoid the cost of gathering your energy source (i.e. the sun, collected on land) by going with petroleum.
In the end, there will be convergence at some point, when a bio-rewables project and slurping up dead dinosaurs become equally attractive. However, there are too many physical limits to bio-renewable feedstocks to make them more competitive. Instead, the point at which convergence will occur will be when energy as we've known it for the past three quarters of a century is no longer a high yielding investment.
With the recent announcement that Chevron is essentially pulling out of all biofuels and renewables, I think it's worth noting some of the unrealistic expectations that Chevron placed on clean technology. Most notably, Chevron placed clean tech processes in direct competition for investment money with its oil exploration projects. Thanks to some of my work in graduate school from some of the best industrial practitioner educators I've ever had, I know that the IRR for a typical conventional oil exploration project is on the order of 20%.
The corresponding number for a bio-renewables project is much lower, on the order of 3-7% for the very best. This is much more typical of what you would see in agriculture. Placing investment money for bio-renewables projects in competition with oil projects, it's easy to see why bio-renewables lost out.
Besides making me profoundly disappointed in Chevron, this kind of news, to me, points to where the future of energy will go. If you accept that the world cannot indefinitely continue to power itself with petroleum-based transportation fuels, then eventually the IRRs of bio-renewable projects (or other types of renewable energy) must approach those of oil. This can happen in one of three different ways.
On the side of petroleum, either the number of opportunities for highly profitable ventures will decrease (a supply-driven slump) or there will not be enough demand to sustain these ventures at a high level of profit (a demand-driven slump).
On the other hand, a second option is for bio-renewables to decrease their costs, increase their IRRs and compete with petroleum on its own terms.
I've staked out my position on demand destruction before, and I still believe that the structural changes that might cause fuels demand to decrease in the same way the IEA and others claim will take decades longer than they predict. That environment means that high prices will continue, and supplier costs will increase as profitable opportunities for exploiting petroleum become depleted - in short, a petroleum supply driven argument. Something like a carbon tax would also help that along, by seriously affecting the economics of bitumen (somewhat less for other forms of unconventional oil, such as tight oil).
As for bio-renewables, after seven years of active work in the area, two of them professionally, realistically I can't see the IRR of any project improving much beyond that 3 to 7% level. Making a low-value product like a fuel just doesn't pay, not when there is the opportunity to avoid the cost of gathering your energy source (i.e. the sun, collected on land) by going with petroleum.
In the end, there will be convergence at some point, when a bio-rewables project and slurping up dead dinosaurs become equally attractive. However, there are too many physical limits to bio-renewable feedstocks to make them more competitive. Instead, the point at which convergence will occur will be when energy as we've known it for the past three quarters of a century is no longer a high yielding investment.
Sunday, February 17, 2013
Why I (mostly) drive below the speed limit
Although it's not at all obvious to most, the speed you drive has a highly significant effect on the fuel consumption of your vehicle. The key is the drag equation, which is an approximation of the drag force on an object moving at high speed (relative to the characteristics of the fluid in which it's moving - more on that later).
The drag equation is
where F represents the force, rho is the density of the fluid, v is the velocity of the fluid with respect to the object (in the case of a car, it's equivalent for us to consider the car in motion and the fluid stationary), and A is the cross-sectional area of the surface relative to the fluid - for us, the "face" of the car moving into the "wind." The C term is the drag coefficient, which is a "fudge factor" that's usually determined empirically and depends on the properties of the surface, its shape, and the properties of the fluid*.
The key to take away from the drag equation is that the drag force depends on the square of velocity. However, if we want to talk about fuel consumption (call it gasoline in gal/min), we're going to need to move beyond just the drag force. We can compare gasoline consumption at different speeds by using the energy requirement of your car, in, say, horsepower. Horsepower is a power term (in case the name didn't make it obvious), meaning it expresses some amount of energy expended over some period of time**.
We can relate the force to the power required to overcome it by using the definition of work (a force exerted over a distance) and diving by the total time. Since the distance over which you travel divided by the time over which you travel is your average velocity, this gives the power equation above***. Note now that the power is proportional to the cube of velocity. So now, onto why I drive below the speed limit. One fine day I was driving from Ithaca, NY to Syracuse, NY, on the I-81N out of Cortland. The road is pretty boring except for the occasional deer, so I did some mental math. Because the fuel consumption (power) required from my car to overcome drag is proportional to the cube of velocity, the ratio of fuel consumption at, say, 75 mph vs at 65 mph is simply (75^3)/(65^3).
The ratio turns out to be about 1.54. This means that to a first approximation, at 75 mph I was consuming fifty percent more fuel than I was at 65 mph! Ouch. I knew that on country roads, my Subaru got about 23 mpg at 65 mph, which means that over a 60 mile drive at around 65 mph it'd consume roughly 3 gallons. At 75, it'd be consuming 1.5 more gallons. But wait - I was saving time by driving faster. Was my time worth it?
This calculation was easier - between 75 and 65, over the course of an hour it'd take (60/75) hours (0.8 hours, or 48 minutes) to go at 75 mph versus 60/65 hours (0.92 hours, or 55 minutes and about 20 seconds) to go at 65 mph. How much was 7 minutes of my time worth? At the wages I was working at that point (about $15 an hour), $1.75. How much was 1.5 gallons of gas worth? At that time, roughly $6.
I decided to drive slower. However, on the way back, I had my girlfriend, which meant I, ahem, valued the time saved from driving faster more. I drove faster on the way back.
To this day I've yet to make enough money in hourly terms to justify regularly driving 75 mph over driving 65 mph on the highway. At the current average gasoline price in New York state ($3.92/gal), I'd have to be making $50.40 an hour to justify it, which for a standard 8-hour work week is $104,832 per year.
------
This analysis is relatively simple. There are a couple of (to my mind, anyway) interesting little wrinkles to this calculation, the magnitude of which I can't calculate off the top of my head but I think on balance points to even more fuel consumption at higher speed.
The first wrinkle occurs when we relax the assumption that the drag coefficient is the same at different velocities. Earlier, we assumed that the drag coefficient is the same at 75 mph and 65 mph - at least, I didn't call attention to the variation, which means I assumed the drag coefficient was the same. If we relax that assumption, it turns out that there's an additional velocity dependence in the drag equation. The drag coefficient is proportional to some power of the Reynolds number, which for an object moving through fluid is proportional to velocity. Usually the expression is something along the lines of C_d = k*Re^a, where k is some constant that's empirically determined and a is some number below 1, also empirically fit. So the power equation is actually proportional to velocity to the (3+a) power. So power required to overcome drag force is actually somewhat higher because of this effect.
The second wrinkle occurs when you consider that an engine doesn't linearly deliver horsepower with increasing fuel consumption. Engines have power curves that describe their performance given the acceleration they must deliver and the rpm they are already moving at. A power curve for the motor on a Kia Alto (a small car) is shown below:
Fuel consumption is the bottom curve (PS is a German abbreviation, common in the car industry, for metric horsepower). Most cars will operate in the downward sloping part of the curve (we usually change gear if we're not), which means that if we increase speed and don't change gears, fuel consumption per amount of energy delivered actually goes down. However, we're still delivering a much higher amount of energy, and the ratio varies (in the region we're likely to see) from about 4.5 to maybe 3.25. In reality the difference in engine RPM is likely to just be the ratio of the velocities, 75/65 or about 1.15, while the fuel consumption ratio occurs over a much larger range (about 3.5). Still, it means that the fuel consumption at higher velocities, all things being equal, is lower than we might expect because fuel consumption increases less than linearly.
Finally, we have to consider that engine work is also used to overcome rolling resistance in addition to drag. Rolling resistance is a subject that I don't have any experience in, but I know that for a car it generally increases at a much higher than one-to-one rate with applied torque. This has much more to do with the way the wheels interact with the pavement then the way bearings behave; at high speeds there's some slippage and the like that cause inefficiencies. If it were the bearings alone, we'd actually expect less resistance as speed increases because bearing lubricants tend to be shear thinning. But all in all, this causes required power and hence, fuel consumption to increase at higher velocity more than we would expect from drag alone.
edit: Thanks to a lively discussion with my friend Tom, here's some more interesting stuff:
Tom calculated that the optimal speed at my then wage of $15 by minimizing the total cost of a 60 mile journey:
Cost(v) = Gas cost + Time Cost
C(v) = (60/23) gal*$4/gal*(v^3/(65mph)^3) + $15/hr* 60 miles/v
C(v) = $10.43 * v^3/(65 mph)^3 + $900 mi/hr / v
The local minimum for this can be calculated with some basic calculus, but we were lazy and used Wolfram Alpha:
This means that my optimal speed at that wage, assuming that the drag force dominated my costs, was 53 mph. It turns out that's a pretty darn good assumption.
Thanks to some quick googling, I found the following diagram (which is given for a parcel truck):
All in all, a fun physics problem.
* The drag coefficient for most objects is close to 1. It's a measure of how close the object is to representing an ideal object for modeling, usually something like a cylinder of infinite height or some such. Most objects don't deviate much from that - hence, the coefficient doesn't modify the ideal equation much. For cars, though, a considerable amount of R&D goes into making that drag coefficient lower. In terms of fluid properties, however, it's also related to the Reynolds number, a dimensionless quantity that is related to the inertia of a fluid (usually involving the velocity) and the viscosity.
** It's easy to get confused about what quantity to look for when talking about fuel consumption, but we can review the units to double check: fuel burned releases energy (in joules) over time (min), while force (Newtons) must be multiplied by distance (Newton*meter = Joule) and divided by time (min) to produce an equivalent quantity.
*** Strictly speaking, if we wanted to be precise then the power equation should be given by d/dt(F_d \dot x), where F_d and x (the distance) are both vector quantities and d/dt is the differential operator with respect to time. This gives the instantaneous power consumption, which given the data for a whole trip can be averaged out taking into account all acceleration and deceleration and the like. However, for a rough comparison of fuel consumption at constant speeds it's not necessary.
Monday, November 12, 2012
Price Controls Have Consequences
Two recent events have brought the topic of energy price controls to my mind. The first is in Brazil, where government pressure on Petrobras, the state-owned energy producer, has caused it to continue to hold down prices on gasoline in Brazil for the foreseeable future. Thanks to governmental pressure, Petrobras has subsidized its gasoline, selling below fair market value, since 2005. Brazil's government has a strong interest in cooling down inflation and part of that is attempts to hold down the value of the currency, which is already overvalued. But trying to push against a gas price rise has led to some unintended consequences (gated, unfortunately).
Essentially, cane sugar mills that might otherwise be producing high-value ethanol to sell into the fuels market are now facing a situation where rising fundamental input prices are pushing them out of the market. The price levels of their fundamentals - labor, raw material inputs, and the like - are continuing to rise with inflation, because there is no universe in which government price controls can change the underlying market forces.
In order to remain competitive, ethanol must be sold at a significant discount by volume to gasoline, which has a higher energy content. Price controls on gasoline have historically cut the profitability of ethanol, and it is now reaching the point where cane ethanol producers cannot sell into their own domestic market because of the artificially low price of the competing product, gasoline. Perversely, this has caused the Brazilian ethanol market to preferentially export ethanol to the US once again (aided and abetted by the US's renewable fuels standard, and reversing the trend of the last few years) and to overproduce sugar, the price of which isn't being held down by the Brazilian government.
The second bit of news was brought to my attention by the always-informative Geoffrey Styles at his blog Energy Outlook. Mr. Styles' discussion is more detailed than my own, so I would definitely recommend reading his post.
After the recent election Senator Ron Wyden (D-OR) is now likely to chair the Senate Committee on Energy and Natural Resources. His views on shale gas exports show a dangerous tendency to protectionism. Essentially, Senator Wyden is worried that raising the natural gas price in the US by selling LNG onto the world market will harm America more than it will help it.
Senator Wyden's protectionist reasoning is dependent on two assumptions: first, that shale gas production in the US will continue to provide energy at the same cheap price levels we see today, and second, that a low gas price is unambiguously good for America now and in the future.
The first assumption is unambiguously wrong. The shale gas price level is so low that drilling activity has drastically decreased and continuing production is depending on co-production of natural gas liquids - so-called "wet" gas wells. "Dry" gas fields with little-to-no natural gas liquids have largely remained unexploited this year. Additionally, Mr. Styles points out one reason that the pricing mechanisms that govern gas production might currently be difficult to discern: that much of the continuing production is due to contractual obligations that require the exploitation of reserves at a set pace independent of market signals.
However, this lack of a price incentive to drill is keenly felt in industry. There is a virtual consensus that price levels must go up to encourage more drilling. If exports are blocked and contribute significantly to the price remaining low (there is some controversy as to whether exports will play a big part of this), then Senator Wyden will see his policies causing the shale gas revolution to peter out.
Senator Wyden is also wrong to think that low gas pricing is unambiguously good for America in both the short and long term. In the short term, it is worth remembering that high energy prices are good for the (US-based) producers as well as for consumers. At minimum, keeping the shale gas price artificially low by minimizing exports will amount to a redistribution from resource extraction companies to consumers of those resources, with the results unclear.
In the long term, Senator Wyden may also find that keeping the gas price low hurts some of the very sectors he may be inclined to support. Renewable energy hopefuls for both electricity and vehicular fuel must now compete against a very cheap, high quality and clean burning substitute that was literally not in contention three years ago. Senator Wyden will undoubtedly find that holding down the price of natural gas will sound the death knell for a whole host of renewable electricity and renewable fuels projects - maybe even including some in his home state. We may venture that holding down gas prices now might well lead to a very uphill battle when the gas begins to run out and we have no renewable infrastructure to fall back on.
Price controls create perverse unintended consequences, in the energy world and out.
Essentially, cane sugar mills that might otherwise be producing high-value ethanol to sell into the fuels market are now facing a situation where rising fundamental input prices are pushing them out of the market. The price levels of their fundamentals - labor, raw material inputs, and the like - are continuing to rise with inflation, because there is no universe in which government price controls can change the underlying market forces.
In order to remain competitive, ethanol must be sold at a significant discount by volume to gasoline, which has a higher energy content. Price controls on gasoline have historically cut the profitability of ethanol, and it is now reaching the point where cane ethanol producers cannot sell into their own domestic market because of the artificially low price of the competing product, gasoline. Perversely, this has caused the Brazilian ethanol market to preferentially export ethanol to the US once again (aided and abetted by the US's renewable fuels standard, and reversing the trend of the last few years) and to overproduce sugar, the price of which isn't being held down by the Brazilian government.
The second bit of news was brought to my attention by the always-informative Geoffrey Styles at his blog Energy Outlook. Mr. Styles' discussion is more detailed than my own, so I would definitely recommend reading his post.
After the recent election Senator Ron Wyden (D-OR) is now likely to chair the Senate Committee on Energy and Natural Resources. His views on shale gas exports show a dangerous tendency to protectionism. Essentially, Senator Wyden is worried that raising the natural gas price in the US by selling LNG onto the world market will harm America more than it will help it.
Senator Wyden's protectionist reasoning is dependent on two assumptions: first, that shale gas production in the US will continue to provide energy at the same cheap price levels we see today, and second, that a low gas price is unambiguously good for America now and in the future.
The first assumption is unambiguously wrong. The shale gas price level is so low that drilling activity has drastically decreased and continuing production is depending on co-production of natural gas liquids - so-called "wet" gas wells. "Dry" gas fields with little-to-no natural gas liquids have largely remained unexploited this year. Additionally, Mr. Styles points out one reason that the pricing mechanisms that govern gas production might currently be difficult to discern: that much of the continuing production is due to contractual obligations that require the exploitation of reserves at a set pace independent of market signals.
However, this lack of a price incentive to drill is keenly felt in industry. There is a virtual consensus that price levels must go up to encourage more drilling. If exports are blocked and contribute significantly to the price remaining low (there is some controversy as to whether exports will play a big part of this), then Senator Wyden will see his policies causing the shale gas revolution to peter out.
Senator Wyden is also wrong to think that low gas pricing is unambiguously good for America in both the short and long term. In the short term, it is worth remembering that high energy prices are good for the (US-based) producers as well as for consumers. At minimum, keeping the shale gas price artificially low by minimizing exports will amount to a redistribution from resource extraction companies to consumers of those resources, with the results unclear.
In the long term, Senator Wyden may also find that keeping the gas price low hurts some of the very sectors he may be inclined to support. Renewable energy hopefuls for both electricity and vehicular fuel must now compete against a very cheap, high quality and clean burning substitute that was literally not in contention three years ago. Senator Wyden will undoubtedly find that holding down the price of natural gas will sound the death knell for a whole host of renewable electricity and renewable fuels projects - maybe even including some in his home state. We may venture that holding down gas prices now might well lead to a very uphill battle when the gas begins to run out and we have no renewable infrastructure to fall back on.
Price controls create perverse unintended consequences, in the energy world and out.
Friday, February 3, 2012
Reality Check on Joule
Companies entering commercialization tend to make some pretty bombastic claims. Among them is a company called Joule Unlimited, which was recently reported by Biofuels Digest to claim a yield of up to 25,000 gallons of ethanol per acre from the sugar produced by their product, comparing it to a yield of roughly 800 gallons per acre planted in sugarcane.
Numbers like that don't tend to inspire confidence in me. Over thirty times the yield? Time for a reality check.
Wednesday, January 25, 2012
The Problem With Biodiesel
I have mentioned before on this blog that for the largest American culprit of the biofuels-oriented "food-fuel substitution" argument, corn ethanol, I don't think the argument is as watertight as I once did. However, one point I feel that I did not emphasize enough is that in many cases - most outside of the United States - there is a clear and observable food-fuel substitution going on. One of the most obvious culprits is biodiesel.
Over the weekend, Michael Pollan (of The Omivore's Dilemma fame) posted "The problem with ethanol." on his twitter account. I don't use twitter and don't know if anyone's replied to him, but regardless I feel I must point out the colossal error that Pollan commits: the SciAm pictures concern palm plantations and land expropriation for biofuels, but not for ethanol. Palm plantations produce palm oil, and palm oil for biofuels is, one way or another, turned into biodiesel, for which virtually the only export market is Europe. It's only one negative aspect of the knock-on effects of biodiesel standards in the EU - and digging deeper, there are many others as well.
Over the weekend, Michael Pollan (of The Omivore's Dilemma fame) posted "The problem with ethanol." on his twitter account. I don't use twitter and don't know if anyone's replied to him, but regardless I feel I must point out the colossal error that Pollan commits: the SciAm pictures concern palm plantations and land expropriation for biofuels, but not for ethanol. Palm plantations produce palm oil, and palm oil for biofuels is, one way or another, turned into biodiesel, for which virtually the only export market is Europe. It's only one negative aspect of the knock-on effects of biodiesel standards in the EU - and digging deeper, there are many others as well.
Tuesday, December 13, 2011
Why won't you die?
I had a discussion with a coworker the other day on the dynamics of oil price and demand response. One of the arguments that she brought up highlighted a critical point in the debate over peak oil. A common argument against the idea that the world will someday simply run out of oil, or that efforts to find alternatives now are counterproductive, is that price signals will soon do their part to "crush" demand such that existing supplies will last longer and more alternatives will be found before there is a catastrophic drop in production.
This is a possible outcome under the law of demand, which states that as the price for a good rises, the quantity demanded will drop (i.e. demand curves have a negative slope). However, it depends heavily on just how much the quantity demanded responds to changes in price. This property, measured by the price elasticity of demand, is the key to understanding the magnitude of these effects. It turns out that the price elasticity of demand for gasoline is remarkably well-studied in the empirical literature. However, even most people with a reasonable understanding of the subject may have missed out on recent work that suggests that the American predicament is more dire than in previous years.
This is a possible outcome under the law of demand, which states that as the price for a good rises, the quantity demanded will drop (i.e. demand curves have a negative slope). However, it depends heavily on just how much the quantity demanded responds to changes in price. This property, measured by the price elasticity of demand, is the key to understanding the magnitude of these effects. It turns out that the price elasticity of demand for gasoline is remarkably well-studied in the empirical literature. However, even most people with a reasonable understanding of the subject may have missed out on recent work that suggests that the American predicament is more dire than in previous years.
Wednesday, December 7, 2011
The Efficiency Fallacy
One of the most common arguments that I hear against different types of alternative energy is that the respective technologies are inefficient. Solar and wind power are two of the most common subjects to receive this treatment. The argument implies that the low efficiency of many renewable energy processes when compared with fossil fuel processes are an indication of a correspondingly low technical maturity, or still worse, of outright impracticality.
That asinine arguments like this gain traction is a result of efficiency numbers being taken out of context and used to, in effect, compare apples to oranges in more ways than one. Efficiency measures can only be used as a basis for judging technology in the narrowest of cases. Unfortunately, I have yet to find a single case where efficiency is correctly cited in a debate about renewable energy, whether for or against.
This uniform lack of understanding and the sheer ubiquity of the efficiency fallacy makes it one of the most dangerous red herrings in arguments on renewable energy.
That asinine arguments like this gain traction is a result of efficiency numbers being taken out of context and used to, in effect, compare apples to oranges in more ways than one. Efficiency measures can only be used as a basis for judging technology in the narrowest of cases. Unfortunately, I have yet to find a single case where efficiency is correctly cited in a debate about renewable energy, whether for or against.
This uniform lack of understanding and the sheer ubiquity of the efficiency fallacy makes it one of the most dangerous red herrings in arguments on renewable energy.
Saturday, November 12, 2011
Thought, and the lack thereof, in the dialogue
Immersion in the contentious world of energy policy and politics is, at times, profoundly depressing. When I first decided to specialize in energy and energy policy as my field of study, some 7 years ago, there were only a few grumblings in the English-speaking world that energy might be a problem at some point in the future. As I've studied and worked my way up into the field, I have been confronted with the reality that while the general level of knowledge of the population has gone up, the tone of the conversation has gone down.
Thursday, November 10, 2011
EROEI and Peak Oil
A Forbes blogger by the name of Tim Worstall wrote one of the most technically illiterate posts that I've ever seen about peak oil theory and its connection to EROEI. Even though his example - showing EROEI has no bearing on the price or quantity produced of a nonfuel, premium value product - is completely irrelevant and total "nonsense," as he put it, he does demonstrate one thing very clearly: the linkage between a declining EROEI and smaller quantities of dearer oil is not intuitive. I'm going to try and explain it.
Wednesday, November 9, 2011
An Update on Solar Industry Dynamics
When I wrote about what trends in the industry killed Solyndra (that is, barring outright fraud), I covered the aspects of the business that are driving lower profit margins and consolidation. In light of that, I thought I'd share two recent news items that confirm that picture of the industry.
Saturday, November 5, 2011
Playing the algae game
Note: I am teaching a one-shot class on advanced biofuels in
November. While this class is to high school kids, it will still require
a lot of organized content to throw at them, so I am gathering my
thoughts here.
Now that the epic saga of the Project From Hell XIX, Return of the Spawn of the Scope Creep is over, it seems an appropriate time to gather my thoughts about other sources of next generation biofuels. One of the ones widely acknowledged to be slightly farther off, but promising, is the use of algae as a feedstock for so-called third-generation fuels. However, I'm very, very skeptical of any of the claims being made about algae (I spent about a year trying to work with the finicky little bastards in the lab and know their peculiarities) and even more so about extremely widespread algal biofuel cultivation. Here's why.
Now that the epic saga of the Project From Hell XIX, Return of the Spawn of the Scope Creep is over, it seems an appropriate time to gather my thoughts about other sources of next generation biofuels. One of the ones widely acknowledged to be slightly farther off, but promising, is the use of algae as a feedstock for so-called third-generation fuels. However, I'm very, very skeptical of any of the claims being made about algae (I spent about a year trying to work with the finicky little bastards in the lab and know their peculiarities) and even more so about extremely widespread algal biofuel cultivation. Here's why.
Of Cracked Tar and Crack Spreads
On the days it comes out, I usually review every article on The Oil Drum's Drumbeat series, a quarter-weekly roundup on energy-related news. Most every time, something comes up that ticks me off. There are fairly regular appearances in that from extremists on the petrofuels and environmentalist camps. More infuriating, however, are the articles that attempt to remain neutral but show a frustrating lack of analysis or understanding on relevant issues of the day. The two most recent of these are the buzz around Daniel Yergin and his recent book, The Quest, which I've blogged about before, and the debate over the Keystone XL pipeline, which I've also mentioned. It's the latter which really set me off today.
The general theme of my posts on the Keystone XL Pipeline have revolved around disagreeing that the extraction of the tar sands in Alberta will at all be affected by the blocking of the pipeline's construction. That, and the meme that the sands will simply be transshipped to China (which I've also addressed) are the two most commonly cited nationally relevant arguments against the pipeline; others, such as environmental contamination, are generally local issues. In this post, however, I'm going to try and show how the Keystone XL pipeline will bring a critical benefit to the US independently of energy security concerns.
The general theme of my posts on the Keystone XL Pipeline have revolved around disagreeing that the extraction of the tar sands in Alberta will at all be affected by the blocking of the pipeline's construction. That, and the meme that the sands will simply be transshipped to China (which I've also addressed) are the two most commonly cited nationally relevant arguments against the pipeline; others, such as environmental contamination, are generally local issues. In this post, however, I'm going to try and show how the Keystone XL pipeline will bring a critical benefit to the US independently of energy security concerns.
Wednesday, November 2, 2011
Gasification as a route to biofuels
Note: I am teaching a one-shot class on advanced biofuels this November. While this class is to high school kids, it will still require a lot of organized content to throw at them, so I am gathering my thoughts here.
The problem of liquid transportation fuels, in many ways, is filled with less than perfect solutions brought on by our limited development of technology. Corn ethanol is the biggest bogeyman, although these days I'm less certain that its demise is inevitable, for other reasons. The other, lesser-known equivalent is biodiesel, which is a much better fuel in terms of EROEI, GHG balance and competition with food resources. Unfortunately, the size of the resource is miniscule compared to fuel requirements of the world. While new methods of biodiesel production are out there that will make the fuel more easily and make better use of its byproducts (an area I once did research in), the fact remains that the amount of oil that can be gotten from plants and animal wastes aren't going to be making up more than 2-3% of the total liquid fuel supply, simply by virtue of the fact that there will never be enough oil to go around (and yes, I am discounting algae). Plant starch is easier to find in nature than oil, hence the scale of ethanol production from starch being much larger than biodiesel production, which can draw only from the pool of oilseed and rendered animal byproduct markets. The largest resource is, of course, lignocellulosic biomass itself, which is the feedstock of choice for all next generation biofuels that you'll see in the next few years.
So what to do with all this biomass? There has been a lot of focus on fermentation routes from the biofuels community. This is the result of a confluence of infrastructure and human capital from the ethanol industry and amazing players in enzyme engineering. Enzyme engineering is so good these days that tough cellulosic feedstocks can actually be hydrolyzed into sugars and fermented using parts of the corn ethanol fermentation train. A great example of this is POET's Project Liberty, which will derive a great deal of its cost advantage from being built "over the fence" from a corn ethanol plant.
The other route I feel is getting much less attention is gasification. In this general category of processes, fast pyrolysis of biomass quickly turns most of it into carbon monoxide, hydrogen, and ash/char residue, and the gas is swept downstream into other uses. People have been doing fast pyrolysis for a long time. Before oil products became abundant, many chemicals were made using coal tar from pyrolysis. Steam gasification (a process using steam as a heating medium) of lignite is featuring prominently in coal-to-chemicals industry in China. For example, most of the growth in PVC-making over the past few years has been from vinyl production based on acetylene, which in turn is derived from ethylene and coal-bsed sodium carbide.
I'm cautiously optimistic about gasification as a route to biofuels. It has a few things going for it over biofuels and a few things going against it.
The problem of liquid transportation fuels, in many ways, is filled with less than perfect solutions brought on by our limited development of technology. Corn ethanol is the biggest bogeyman, although these days I'm less certain that its demise is inevitable, for other reasons. The other, lesser-known equivalent is biodiesel, which is a much better fuel in terms of EROEI, GHG balance and competition with food resources. Unfortunately, the size of the resource is miniscule compared to fuel requirements of the world. While new methods of biodiesel production are out there that will make the fuel more easily and make better use of its byproducts (an area I once did research in), the fact remains that the amount of oil that can be gotten from plants and animal wastes aren't going to be making up more than 2-3% of the total liquid fuel supply, simply by virtue of the fact that there will never be enough oil to go around (and yes, I am discounting algae). Plant starch is easier to find in nature than oil, hence the scale of ethanol production from starch being much larger than biodiesel production, which can draw only from the pool of oilseed and rendered animal byproduct markets. The largest resource is, of course, lignocellulosic biomass itself, which is the feedstock of choice for all next generation biofuels that you'll see in the next few years.
So what to do with all this biomass? There has been a lot of focus on fermentation routes from the biofuels community. This is the result of a confluence of infrastructure and human capital from the ethanol industry and amazing players in enzyme engineering. Enzyme engineering is so good these days that tough cellulosic feedstocks can actually be hydrolyzed into sugars and fermented using parts of the corn ethanol fermentation train. A great example of this is POET's Project Liberty, which will derive a great deal of its cost advantage from being built "over the fence" from a corn ethanol plant.
The other route I feel is getting much less attention is gasification. In this general category of processes, fast pyrolysis of biomass quickly turns most of it into carbon monoxide, hydrogen, and ash/char residue, and the gas is swept downstream into other uses. People have been doing fast pyrolysis for a long time. Before oil products became abundant, many chemicals were made using coal tar from pyrolysis. Steam gasification (a process using steam as a heating medium) of lignite is featuring prominently in coal-to-chemicals industry in China. For example, most of the growth in PVC-making over the past few years has been from vinyl production based on acetylene, which in turn is derived from ethylene and coal-bsed sodium carbide.
I'm cautiously optimistic about gasification as a route to biofuels. It has a few things going for it over biofuels and a few things going against it.
Tuesday, November 1, 2011
A Beacon of Despair
The flywheel grid-stabilization technology company Beacon Power just filed for bankruptcy yesterday, sending another ripple through energy publications. Like Solyndra, Beacon Power had a DOE loan guarantee, though of a much smaller magnitude: $43 million rather than $535 million. Even so, its failure is another indication of the high risk nature of the DOE's loans and, increasingly, the poor management of the loan guarantee program.
From, what I've seen of the DOE's program, the conditions necessary for entry were extremely strict. But then again, that look was had only a few months ago, and applied only to biofuels companies. It is entirely possible that the standards for the program have only been mature for a short time. It is probably also the case that standards for biofuels were more strict than for other, less well-studied industrial sectors or less risky, a suspicion that is borne out by the flow of money to specific industrial sectors from the program. What I'm hearing in the news these days belies my initial impressions.
The thing I actually want to talk about, though, is a larger issue concerned with Beacon Power's technology. Truth is, Beacon Power was one of those companies that I wanted to succeed, not because of anything about the company specifically, but because flywheel grid stabilization technology is so important to the system as a whole. Flywheels can uptake and discharge power faster than any other kind of energy storage technology, and can act as rapid stabilizers for voltage fluctuations caused by renewables, among many other things. It's obvious why this is essential for a modern power grid. The problem is that deregulated power markets make the returns on investment for such an essential service extraordinarily low. Batteries that charge in the night and discharge at peak hours output power slowly but can take advantage of the maximal arbitrage opportunity - not a lot, maybe $15/MWh, but the max. On the other hand, low energy-density flywheels make their money in the minute-to-minute spot market for electricity, buying kilowatt-hours and selling them again at fractions of a cent more expensive than before. But they're also big, heavy, and expensive compared to batteries. Both of the grid stabilization technologies perform essential roles.
Because of that low revenue potential, Beacon Power needed more flywheel farms to get enough revenue to operate, and it needed more capital to build more. It didn't get it. Thankfully, the flywheel technology is still useful and their one current flywheel farm will most likely continue to operate once it is sold for a discount, unlike Solyndra's specialized factories. Even so, I think it highlights an important fact about investment in the electrical grid and what deregulation has done to it.
Without an overall system owner - not just an operator - the positive externalities that result from an otherwise low-return investment in the grid aren't taken into account and underinvestment prevails. Beacon Power provided an important service but it wasn't able to reap all of the benefits of its service to the network; under a regulated monopoly environment, the utility has the overall system in mind and can make those kinds of investments. In contrast, a merchant power environment places the responsibility of the grid on the transmission equipment owner itself, and often regulates the prices it can charge for transporting that power as well. Thus, a grid operator in a deregulated environment gets little revenue and has no incentive to invest in additional infrastructure in order to maximize returns from depreciated capital.
This highlights why I think the 90s-era deregulation blitz was penny-wise and pound-foolish. Sure we got lower electricity prices, but we also got Enron, and ten to fifteen years later a whole lot of crumbling infrastructure and transmission companies in need of government help just to maintain system usability, let alone large amounts of intermittent renewable capacity. It's a fundamental reflection of the "energy is a solved problem" attitude of the 90s that all people cared about was their price point, and not long-run investment.
From, what I've seen of the DOE's program, the conditions necessary for entry were extremely strict. But then again, that look was had only a few months ago, and applied only to biofuels companies. It is entirely possible that the standards for the program have only been mature for a short time. It is probably also the case that standards for biofuels were more strict than for other, less well-studied industrial sectors or less risky, a suspicion that is borne out by the flow of money to specific industrial sectors from the program. What I'm hearing in the news these days belies my initial impressions.
The thing I actually want to talk about, though, is a larger issue concerned with Beacon Power's technology. Truth is, Beacon Power was one of those companies that I wanted to succeed, not because of anything about the company specifically, but because flywheel grid stabilization technology is so important to the system as a whole. Flywheels can uptake and discharge power faster than any other kind of energy storage technology, and can act as rapid stabilizers for voltage fluctuations caused by renewables, among many other things. It's obvious why this is essential for a modern power grid. The problem is that deregulated power markets make the returns on investment for such an essential service extraordinarily low. Batteries that charge in the night and discharge at peak hours output power slowly but can take advantage of the maximal arbitrage opportunity - not a lot, maybe $15/MWh, but the max. On the other hand, low energy-density flywheels make their money in the minute-to-minute spot market for electricity, buying kilowatt-hours and selling them again at fractions of a cent more expensive than before. But they're also big, heavy, and expensive compared to batteries. Both of the grid stabilization technologies perform essential roles.
Because of that low revenue potential, Beacon Power needed more flywheel farms to get enough revenue to operate, and it needed more capital to build more. It didn't get it. Thankfully, the flywheel technology is still useful and their one current flywheel farm will most likely continue to operate once it is sold for a discount, unlike Solyndra's specialized factories. Even so, I think it highlights an important fact about investment in the electrical grid and what deregulation has done to it.
Without an overall system owner - not just an operator - the positive externalities that result from an otherwise low-return investment in the grid aren't taken into account and underinvestment prevails. Beacon Power provided an important service but it wasn't able to reap all of the benefits of its service to the network; under a regulated monopoly environment, the utility has the overall system in mind and can make those kinds of investments. In contrast, a merchant power environment places the responsibility of the grid on the transmission equipment owner itself, and often regulates the prices it can charge for transporting that power as well. Thus, a grid operator in a deregulated environment gets little revenue and has no incentive to invest in additional infrastructure in order to maximize returns from depreciated capital.
This highlights why I think the 90s-era deregulation blitz was penny-wise and pound-foolish. Sure we got lower electricity prices, but we also got Enron, and ten to fifteen years later a whole lot of crumbling infrastructure and transmission companies in need of government help just to maintain system usability, let alone large amounts of intermittent renewable capacity. It's a fundamental reflection of the "energy is a solved problem" attitude of the 90s that all people cared about was their price point, and not long-run investment.
Wednesday, October 26, 2011
Corn Ethanol: a complicated bogeyman
In terms of biofuels, the ugly kid on the street has been and continues to be corn ethanol. Critics lambast its poor lifecycle GHG balance, its low EROEI, and that it competes directly with our food supply, all compared unfavorably with sugarcane ethanol, and even moreso with cellulosic ethanol. As always, however, the picture is definitely not as simple as media make it out to be.
The more I learn about corn ethanol, the more it seems like it will be around to stay for a few generations yet. It has a lot of things going for it that make it more attractive as a source for biofuels and as a valuable product than you might expect. I'm going to try and go over to show how corn ethanol has value, what it's got going for it over sugarcane ethanol, and why it's probably going to stay around to compete with cellulosics.
The more I learn about corn ethanol, the more it seems like it will be around to stay for a few generations yet. It has a lot of things going for it that make it more attractive as a source for biofuels and as a valuable product than you might expect. I'm going to try and go over to show how corn ethanol has value, what it's got going for it over sugarcane ethanol, and why it's probably going to stay around to compete with cellulosics.
Wednesday, October 19, 2011
Indian Points
One of the biggest issues coming around in New York these days is the relicensure of the Indian Point Nuclear Reactor by the NRC. Indian Point is coming under attack by the environmental movement in NYC, and they haven't been afraid to raise the Specter of Fukushima over and over again. The very fact that this license renewal is coming at a low-water mark for nuclear energy makes it one of the more hotly contested fights in recent years.
As part of the opening salvos, the NYC Department of Environmental Protection commissioned a study by Charles River Associates, an economics and management consulting firm, and the NRDC and Riverkeeper Inc. fired back with another by Synapse Energy Economics, an energy economics consulting firm, both of Cambridge, MA. Not trusting the news reports, whose science and economics journalism pretty much sucks, I went ahead and read both of them.
As part of the opening salvos, the NYC Department of Environmental Protection commissioned a study by Charles River Associates, an economics and management consulting firm, and the NRDC and Riverkeeper Inc. fired back with another by Synapse Energy Economics, an energy economics consulting firm, both of Cambridge, MA. Not trusting the news reports, whose science and economics journalism pretty much sucks, I went ahead and read both of them.
Thursday, October 6, 2011
Sugarcane ethanol: o que aconteceu, brasileiro?
Although there's a significant amount of debate as to whether or not the use of food products in biofuels causes a rise in the price of food in general (the so-called "Food vs. Fuel Debate"), when we look at specific markets and feedstocks there are quite a few trends that show the trade-offs between using food sources as fuels. Nowhere is this more apparent these days than in Brazil. The country was once touted as a potential fuel ethanol exporter for the entire world. Its sugarcane fields are vast and it had the mechanization and infrastructure - built in the 1980s, no less - to make ethanol from cane juice. Unlike in corn ethanol, no enzymes are required to liquefy and saccharify (that is, break into digestible sugar monomers) the feedstock; you can almost literally dump raw cane juice into a massive industrial scale fermenter. The only way American corn ethanol got off the ground were
stupidly high tariffs on imported ethanol, ostensibly to offset the blending credit but in reality stupidly propping up fuel prices. Let me tell you, trade policy
maneuvers like that take some balls; the Bush administration apparently had some to spare.
Ethanol-rich Brazil rode through the era of high gas prices with nary a scratch and blistering economic growth. But this year, Brazil imported ethanol from the United States, and on net terms became a fuel importer. What the hell?
Ethanol-rich Brazil rode through the era of high gas prices with nary a scratch and blistering economic growth. But this year, Brazil imported ethanol from the United States, and on net terms became a fuel importer. What the hell?
Friday, September 23, 2011
Misunderstanding Peak Oil
Daniel Yergin's book claims to "debunk" the theory of peak oil, and has thousands of misled people gleefully waving it in front of green energy advocates as vindication of their skepticism. The misunderstandings extend even to the Technology Review book review there. I would have expected something that bucked the trend of stupid from an MIT publication, but apparently it'll have to serve as the latest example of people that don't actually get what peak oil means.
Monday, September 19, 2011
More on Keystone XL
I've posted before about the Keystone XL pipeline, but I wanted to emphasize one thing that hasn't been getting any coverage. While America dithers, the Chinese are heavily backing a project (Enbridge's $6.6 billion Northern Gateway) which will ship cracked bitumen to the west coast of Canada - as I mentioned before - where it will be shipped to East Asia.
Again, nothing wrong with selling oil to China, but it again goes to show that radical environmentalists who frame Keystone XL as a battle between "dirty" oil and carbon emissions vs clean energy and less oil dependence are presenting a false choice. Let me say this clearly: stopping Keystone XL will not stop the carbon emissions from bitumen extraction and cracking. It will simply send the oil to China instead of improving American energy security.
This. Debate. Is. Stupid.
I don't want to be against most of the environmental movement here. I really don't. I support their goals - most of them, anyway - and want to see a low-carbon, clean energy economy within my lifetime, even if that goal is ambitious. I want to cut our carbon emissions. I want to reduce dependence on oil in general, and foreign oil especially. And the way to do that is to encourage higher oil prices in America, and the most efficient way to do so is with a carbon tax. And that's that. Burning political capital on this will hurt the movement for years to come.
Furthermore, I'd have a lot of trouble believing that armchair environmentalists have really thought things through, particularly when what they are literally doing is an oblique method of supply disruption that will... uh... well, essentially change the flows of American money from Canada to enriching those lovely regimes in Venezuela, Gabon, Nigeria, and Saudi Arabia. Who would you rather buy from? South Park lifestyle enthusiasts aside, I think I know the answer.
Again, nothing wrong with selling oil to China, but it again goes to show that radical environmentalists who frame Keystone XL as a battle between "dirty" oil and carbon emissions vs clean energy and less oil dependence are presenting a false choice. Let me say this clearly: stopping Keystone XL will not stop the carbon emissions from bitumen extraction and cracking. It will simply send the oil to China instead of improving American energy security.
This. Debate. Is. Stupid.
I don't want to be against most of the environmental movement here. I really don't. I support their goals - most of them, anyway - and want to see a low-carbon, clean energy economy within my lifetime, even if that goal is ambitious. I want to cut our carbon emissions. I want to reduce dependence on oil in general, and foreign oil especially. And the way to do that is to encourage higher oil prices in America, and the most efficient way to do so is with a carbon tax. And that's that. Burning political capital on this will hurt the movement for years to come.
Furthermore, I'd have a lot of trouble believing that armchair environmentalists have really thought things through, particularly when what they are literally doing is an oblique method of supply disruption that will... uh... well, essentially change the flows of American money from Canada to enriching those lovely regimes in Venezuela, Gabon, Nigeria, and Saudi Arabia. Who would you rather buy from? South Park lifestyle enthusiasts aside, I think I know the answer.
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