The Oil Drum

Thanks to TOD reader Tim R. for pointing out this piece on the food v. fuel problem in the Seattle PI yesterday. One takeaway message (but is it a valid one?) is contained in this chart from a group at The University of Washington (click to enlarge):

UNDER THE FOLD, you will find two youtube videos that are worth your time. The first is from Fast Money (CNBC) yesterday entitled "It's Supply, Stupid." After a bit of discussion on the panel, Joe Terranova provides a really nice discussion (about 4 mins) of the reasoning behind why the price oil is rising: supply and demand. Sure, it's a little bit the weak dollar, it's a little bit speculation, but Terranova makes an elegant argument as to why it's mostly the fundamentals--which is kinda what we've been saying for a while around here, eh?

The second video, is Jim Cramer of CNBC's Mad Money (1:30) discussing ethanol and its implications for food; he uses the words "Wall of Ethanol Truth," "that issue is killing Americans," "ending the ethanol mandate," and "Malthusian." Wow. Let's discuss.

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

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

Some people think I am anti-ethanol. That is an oversimplification, and a misrepresentation of my position. I have nothing against ethanol as a fuel. It isn't as good a fuel as butanol, but then again we can't make butanol as efficiently as we make ethanol.

My objection is that I think the way we make ethanol in the U.S. is a big mistake, and we will recognize this eventually. It may happen following a drought in the Midwest that causes corn crops to fail. That may be what it takes before we recognize that recycling natural gas into ethanol via food was a terribly bad and short-sighted idea.

The fun thing about conferences is that there are also sorts of individual lines that presenters say that could be pulled to the headline, and perhaps be more mischievous than helpful. I was thinking that today, when the opening speaker began with explaining why she couldn’t start her talk with a joke. Turns out that when she tried to Google “ethanol and Joke” all she got was pages of citations of “ethanol is a joke” or “ethanol is a big joke!” Conference, you say, speaker, you say, but I thought the ASPO Conference didn’t start until tomorrow?

Well yes, that’s true, but sometimes if you want to catch some of the developing stuff, or the stories that never make it to the National Meetings, you can learn a lot from smaller conferences, and so I came to Dubuque. Today is the first of two days on “The Impacts of Increased Bio-Fuel Production on the Midwest Landscape.” At a time when the current ethanol situation has been described as “the farmer’s version of the gold rush,” it was interesting to hear what is happening down at the farm level and in planning within the Midwest to look at answers to the looming problem. Some of the papers today discussed switchgrass, and algae, and biodiesel and how to effectively harvest the “crappiest wood” in the U.S. and turn it into useful energy. And in the discussions, in a town where the corn grows right up to the airport runways, there was a lot of realism in the discussions of water needs, and soil nutrition replacement and bottom line cost levels.

"Have the guts to consider the silent consequences when standing in front of the next snake-oil humanitarian." -Nassim Nicholas Taleb in The Black Swan

I believe our generation faces a sobering choice: Take serious steps to reduce our fossil fuel usage now - and this will undoubtedly entail some amount of hardship - or leave it to our children to face a great deal of hardship. I firmly believe this is our choice, and we must look to solutions that move us in that direction. I also believe that if most people understood that we are pushing a very serious problem onto our children - instead of assuming scientists and engineers will solve the problem - then we would collectively pursue a solution with far greater urgency.

Request for Info on Ethanol Incentives and Biomass Sources

I need some help gathering information. I know that some of you will be quite knowledgeable about certain aspects of what I am looking for. I was in London this weekend (found myself standing next to Jesse Jackson at one point) having a look at a promising cellulosic ethanol technology. I will not go into details, because they don’t want to release details yet, but they have asked for my assistance in developing a business plan and helping work through technical hurdles.

This is not the first time I have been asked to do something like this. It probably isn’t even the 100th. But there have only ever been 2 or 3 that I saw and thought “This could be something.” And this could in fact be something. It is a unique approach to the cellulosic ethanol problem – and I have no doubt that this technology will handily beat the economics and energy returns of the current cellulosic plants being built. And this isn't just a sketch on paper. They are deep into R&D on this thing.

If you are a layperson, it may not be clear to you just how much of the current infatuation with cellulosic ethanol is hype, and how much is based on realistic assessments. So, I thought I would take you down memory lane and revisit another technology that was going to reduce our dependence on foreign oil.

The Hype: TDP Will Save the World

In May of 2003, Discover Magazine published Anything Into Oil. It was a look at a technology called thermal depolymerization (TDP), which could take any organic material and turn it into oil. This was a high profile write-up with a lot of hype, and the technology of Brian Appel and his company Changing World Technologies (CWT) was really going to change the world.

Visiting the Renewable Energy Conference in St Louis last November, it was hard to find (apart from the chief economist from the Department of Agriculture) anyone with any doubts that ethanol would be the fuel of the future. And until very recently, apart from some well argued posts here by Robert and other contributors, it would appear that proponents of ethanol had largely convinced the Powers that Be that this was the wave of the future. However, even as the President paid homage to the promise of the fuel in his State of the Union, there has been a growing realism appearing in the writings of the Main Stream Media.

So it is today with the new story in the US News and World Report this week. Their story begins in Galva, Iowa where an ethanol operation has been in production for four years. The farmer-owned co-operative purchases 8.6 million bushels of corn to produce some 23 million gallons of ethanol a year, and, as the story notes, has returned $13 million to the community owners. (Their success is encouraging other local communities to also join the band wagon, although the Arthur plant is planned to be some 5 times larger). But the article also carries some cautions:

In the State of the Union message this past week, the President gave, as part of his solution to the increasing problems of gasoline supply, an increasing emphasis on ethanol. There has been some considerable debate about whether this will work, but I thought I would follow a couple of different thoughts today. The first relates to what the farmers might be doing in order to benefit from this coming bonanza, and the second is to see how much research is actually being done.

A question was once posed here: What is the most important question concerning ethanol production? That got me to thinking about important questions regarding not only ethanol, but all of our energy sources. There are a number of issues that we must carefully consider for any of our potential energy sources.

In my opinion, they are:

1. Is the energy source sustainable?
2. What are the potential negative externalities of producing/using this energy source?
3. What is the EROEI?
4. Is it affordable?
5. Are there better alternatives?
6. Are there other special considerations?
7. In summary, are the advantages of the source large enough to justify any negative consequences?