Upsy-Daisy – Cellulosic Ethanol Making Progress?

I have been on record several times as a supporter of ethanol for strategic reasons, but skeptical of the economics of corn ethanol as an investment. Of late we have begun to analyze cellulosic ethanol (still not sure when it becomes competitive, but we are looking), so I thought it might be useful to chronicle some of the recent activities in that area.

From Cleantech Investing, a mention of Mascoma’s $30 mm capital raise (they are claiming a pilot plant in 2008. They are working on developing and genetic engineering of thermophilic ethanol producing bacteria that can ferment at higher temperatures.

Also a recent note on the Energy Blog about Broin Companies, the largest dry mill ethanol producer, is planning to build a 125 mm gallon/yr commercial scale to produce cellulosic ethanol from carbon fiber and stover in 2009 (though it’s noted that they are looking for DOE funding to do this).

And for those of you who haven’t seen it, we’ve mentioned before, BP has announced intentions and will shortly be awarding the location of a $500 mm Energy Biosciences Institute at a US or UK university to study these areas in large part. We mentioned it here. I have been quoted numerous times saying (find a good discussion in the Red Herring article here) if you don’t know what the major oil companies are doing in cleantech, you don’t know what’s happening in the sector. I am not backimg away from that.

We also had a previous mention of of the Energy Blog’s article on Goldman Sach’s investment in Iogen. Iogen is a fully-integrated cellulosic ethanol play that has gotten lots of attention.

But on the downside, the bar for corn ethanol production will continue to move as the technology advances. Note an interesting R&D company I had the pleasure of meeting called CeraMem whose multi-channel ceramic membrane technologies are targeted among other things at more efficient ethanol production (I’m sure they are not alone in working on these advances).

And I would be remiss without mentioning the recent column on Inside Greentech about the biomass gasification vs. cellulosic ethanol. They make the point that combustion based gasification processes are still an excellent way to make fuel compared to cellulosic fermentation, and have potential to scoop some of the cellulosic ethanol debate (and are still arguably cheaper today).

So I guess the jury is still out?

What is Energy Worth?

Everyone pays attention to — and often whines about — the price or cost of energy. I would like to pose a different question: what is the value of energy? What is energy really worth?

It turns out to be a more interesting question than it might first appear. Let me present a few illustrative calculations.

A healthy adult can exert about 100 watts of effort for a reasonably sustained period. (Have you ever worked out strenuously on an exercycle with an output display? If so, have you ever pushed it to over 200 watts for very long?) Thus, over the course of a 10-hour day, a human might produce 1000 watt-hours — or 1 kilowatt-hour. From your local utility, you probably pay about a dime for a kilowatt-hour. On the other hand, if you were to pay that adult a (low) wage of $5/hour for that degree of effort, that kilowatt-hour would cost $50.

In other words, electricity is priced about 1/500 the equivalent value of human effort.

Oil is even more of a steal. There are 3412 Btu in a kilowatt-hour, meaning that an adult can produce about 3412 Btu of energy effort in a 1o-hour day — or 341 Btus per hour. In a barrel of oil, there are 6.2 million Btus — equivalent to over 18,000 man-hours, which would cost over $90,000 at a (low) wage of $5/hour.

At $60/barrel, oil is priced about 1/1500 the equivalent value of human effort.

And we complain that energy is expensive? Try replacing our taken-for-granted energy forms with the work of humans — and paying a wage for it!

Biodiesel BINGO: Destination Maine

On an early November morning, a dense fog covers the scenic drive over the Berkshires, crossing from New York State to Massachusetts. The brae bio-bus dutifully pulls the Subaru on its car transport up steep hills and around hair-pin turns. I am no singer but belt out show tunes that chronicle each sight and sound, each gurgle from the engine, an effort to assure the cocker spaniel all is well – but mostly to quell my jitters and ease the grip on the big bus wheel. Soon the land and I calm down. Familiar road signs lead me through old stomping grounds and on to Maine where I will be managing a home performance project created by the Maine Office of Energy Independence and Security.

Before the trek, a call to the Ithaca biodiesel folks confirms that there is no biodiesel for the biobus’s drive to Maine. She’s running on petrol. The friendly gas station attendant at Huhtala Oil Company in Templeton, Massachusetts tells me, ‘you won’t find clean fuel in New England. Diesel will be cheapah in Maine, because your near a pawt. We have our own trucking fleet and get diesel off the rack. We price based on the competition.” (02 diesel: $2.579) I fill up and forgo adding the 5 gallons of on-board waste veggie-oil-based biodiesel that came from Denver, unwilling to part with the last of my stash.

This is a mistake. In Maine for less than a week, the stash is gelling in the cold. Fred Horch of F.W. Horch Sustainable Goods & Supplies on Maine Street in downtown Brunswick, Maine tells me there is biodiesel to be had in Maine. I look forward to exploring the biodiesel world in New England and learning how to overcome winter coagulation.

Other goings on this week:

“Mr. Enormous SUV Guy” My taste in beer veers toward Belgium lambics, but when it comes to advertising beer, Anheuser-Busch brews a stellar product. Keep an ear out for “Mr. Enormous SUV Guy.” It’s a hoot and a half.

The November 2006 Harper’s story, “Barack Obama, Inc.” has something to say about ethanol. “Although the senator did not elaborate, E85 is so called because it is 85 percent ethanol, a product whose profits accrue to a small group of corporate corn growers led by Illinois-headquartered Archer Daniels Midland. Not surprisingly, agribusiness is a primary advocate of E85, as are such automobile manufacturers as Ford…The automakers love E85 because it allows them to look environmentally correct (“Live Green, Go Yellow,” goes GM’s advertising pitch for the fuel) while producing vehicles, mostly highly profitable and fuel-guzzling SUV and pickup models, that can run on regular gasoline as well as on E85.(1) Obama had essentially marshaled his twenty minutes of undeniably moving oratory to plump for the classic pork-barrel cause of every Midwestern politicians.
(1) Since producing most domestic ethanol requires large amounts of fossil fuel, and regular gasoline provides about 30 percent more mileage per gallon than E85, it’s arguably preferable from a conservation standpoint to drive a standard gasoline car rather than a flex-fuel vehicle.

Sunday papers (The New York Times in its travel section on skiing and the Maine Sunday Telegram) ran stories about wind power purchases by ski companies. I was interviewed by the Colorado Springs Gazette about screenings of An Inconvenient Truth by Interfaith Power & Light, and was asked if climate change were only a concern to the poor in low-lying coastal areas. I blurted, “no, it will also concern people who like to ski.” Articles like these in the Sunday papers will help to raise awareness that climate change is not about “them” but about us, too, what we love and what we value.

Progress in Stopping Global Warming

Good news. Methane concentration in the atmosphere has not increased during the past 8 years. Methane is estimated to be responsible for 9 to 17% of the global warming caused by human activity. During its total life in the stratosphere, methane does 23 times the heat trapping damage of CO2 over a 100 year period.

(http://en.wikipedia.org/wiki/Greenhouse_gas) Fortunately methane released into the atmosphere largely dissipates in about 12 years. CO2 stays as part of the heat trap for about 100 years.

Back in 1860, before we became big users of fossil fuels, methane concentration was 750 ppb. By the year 1998, it was 1,750 ppb, a frightening increase. Since 1998, however, there has been no increase. This represents major progress in the battle to stop global warming. We should celebrate.

The good news was reported by Dr. Sherwood Rowland, who was awarded the Nobel Prize for co-discovering the atmospheric damage caused by another family of greenhouse gases – chlorofluorocarbons (CFC). Dr. Rowland and his team at the University of California at Irvine have been carefully monitoring greenhouse gas concentrations for many years. I had the good fortune of taking chemistry from Dr. Rowland when I was a student at UCI.

The growing atmospheric concentration of CFC was the result of using the chemicals in refrigerants, hairspray and more. A life threatening hole in the ozone was developing. The ozone layer protects us from getting zapped and fried by gamma rays, x-rays, and ultraviolet rays. This ozone shield was saved thanks to the brilliant work of Nobel Prize chemists Dr. Sherwood Rowland, Dr. Mario Molina, and Dr. Paul Crutzen. (http://today.uci.edu/Features/profile_detail.asp?key=90)

Although the news is good about reducing emissions of methane and CFC, CO2 concentration continues to increase at a rate which threatens our future. What works? What needs to be done?
Methane concentration may have stopped growing because natural gas prices have skyrocketed, and natural gas is typically 90% methane. Natural gas is often a byproduct of oil drilling. When natural gas was cheap, oil producers let it vent into the atmosphere. As more power plants have used natural gas, its price has increased. In 1946, natural gas cost only 5 cents per thousand cubic feet. By 2000, $3.68. Now it makes money to capture it and sell it, or produce energy on the spot.

Landfills are the #1 emitter of methane in the USA (http://www.epa.gov/methane/index.html). The city of Burbank formerly let landfill gas go into the atmosphere. Now it pipes the gas into 11 microturbines that generate 5500kW of electricity (http://www.burbankwaterandpower.com/microturbines.html). The city estimates that it achieves a 100% return on investment annually. As committed to in the City’s Renewable Portfolio Standard, 20% of the power used by Burbank’s residents and businesses will come from renewable sources by 2017.

Major emitters of methane include the oil and gas industry, the coal industry, and landfills. All now have the technology and market incentives to capture natural gas for power and fuel. Another major source of methane is cattle ranching. If methane emissions were priced into beef, we would be less likely to say “supersize me.” Ranchers would raise more wind towers and less cattle.

CO2 emissions must be brought under control. Because CO2 has an average atmospheric lifetime of 100 years, it is accumulating at a dangerous rate. From a preindustrial concentration of 280 ppm, it now nears 400 ppm. Business as usual, in our lifetime, could take it to 600 ppm. This growth creates the risk of runaway effects. For example, should the ice melt on large land bodies now covered with ice, there could be huge methane releases. Another runaway danger is if tropical forests and oceans stop absorbing CO2. The fastest way to reduce our CO2 emission is to reduce our use of coal and oil. With coal, it is a double bonus because reducing coal mining also reduces methane emissions. Coal is used to feed power plants. Most of the energy input from coal is lost through inefficient power plants and inefficient use of energy in homes and industry. Energy efficiency and renewable alternatives are the best ways to reduce coal usage. Oil reduction can be achieved if we spend more time riding together, riding less and riding clean.
It is most possible to reduce greenhouse gas emissions. CFC concentrations are starting to decline because on September 16, 1987, the Montreal Protocol on Substances that Deplete the Ozone Layer was signed into agreement by the major countries of the world (originally 24 countries, now 175). A process for all nations to phase-out production of dangerous CFCs and halons was established. Later, other dangerous chemicals were added to the list. Now, the phase-out is largely complete.

International treaties work. Market mechanisms work. International treaties that include market mechanisms for trading greenhouse gas emissions work great. A new treaty with binding targets and pricing mechanisms is needed. It is time for the world’s biggest emitters, the USA and China, to lead the process to a health future and away from a reckless joy ride towards climate chaos.

John Addison is the author of the upcoming book Save Gas, Save the Planet. He publishes the Clean Fleet Report (www.cleanfleetreport.com) and is a popular speaker.

When it Comes to Wind – Smaller is Better?

When it comes to relying on wind power, for most of us that means at best buying “green electrons” from our local utility, or if we happen to live in San Francisco, perhaps getting part of our electricity from the new 150 MW Rio Vista wind farm, built by PPM, which had its inauguration this week. See details in article on it at Inside Greentech.

But a few companies do actually make small “mini” or “micro” wind turbines for residential and remote markets (not that many of our local building codes and zoning restrictions would let us put one up).

Southwest Windpower makes the Skystream 3.7, which was recently awarded “2006 Best of What’s New Award from Popular Science in the Home category”, according to the company. They claim to have more than 90,000 turbines in field, and you can get one by calling up one of the dealers.

And a new company, Mariah Power, is looking to move on the scene, with a vertical axis “Savonius” style turbine they call the “cyclo”, a design for which they claim they have solved the efficiency challenges. While not on the market yet, you can pre-order if you’d like. Just in case you missed the allusion, it’s named after the Broadway song from Paint Your Wagon, “They Call the Wind Maria[h]”, also done by the Kingston Trio, lyrics here in case you are interested.

Other mini wind turbine providers include a Finnish company, Windside, which builds your turbines just 400 km south of the Arctic circle, and Windsave, and Renewable Devices with their “Swfit” turbine, both in the U.K.

Not yet setting the world on fire like rooftop PV solar products, but I’d certainly like one on my roof.

This article was first printed in Green-thinkers.org by Neal Dikeman, Partner, Jane Capital Partners LLC, and Founding Contributor, Cleantechblog.com, and Contributing Editor, AltEnergyStocks.com.

Powerlight Acquired by SunPower for $330 MM! – Consolidation in Solar Begins

SunPower Corporation (Nasdaq: SPWR) today announced its acquisition of Powerlight, one of the largest solar integrators and installers in the world. Here’s a link to their presentation.

This specific acquisition has been rumored for some time, and we alluded to it in our earlier blog after Solar Power 2006 Conference:

“Possibly as a reaction to the supply chain dynamics, I heard the first widespread discussions to come to my attention regarding potential M&A activity in the PV integrator sector. The rumour mill was rife with whispers that integrators of varying sizes are on the block, including a number of brand names. The question previously had been, when are we going to see consolidation in the PV integrator sector. The new question that was put to me at the conference was this, if so many integrators are interested in selling out now, do they know something that we don’t about near term market prospects?”

Strategically this vertical integration in the solar sector make sense for SunPower – Powerlight represents nearly 20% of their revenues, and it will provide a captive outlet for the increased production they are bringing on line, as well as create a brutally strong vertically integrated powerhouse in the California market. This at a time when the silicon supply shortage is loosening as competitors are ramping up production – SunPower was going to need that distribution to defend margin.

For Powerlight, we have been saying for sometime that PV solar integrators were getting squeezed by the silicon shortage, rising commodity and labor prices, and increased competitive pressure, and as a result would need to innovate product, gain scale fast, or sell. And all three approaches are risky. Powerlight is no exception. The company launched some extremely innovative rooftop products in the last few years that helped create the grid-linked commercial scale photovoltaic market in California. However, in recent years their newest product innovations, while progressive, have not provided as much differentiation. And growth in solar installations in Germany outstripping California has probably eroded their historical procurement pricing power. So for Powerlight it wasn’t whether to the deal, it was who to do it with, and what price can you command.

In short, both players probably came out winners.

Whether it hamstrings either SunPower or Powerlight’s market approach (historically Powerlight has been a large enough consumer of panels to command premium pricing by playing suppliers off against each other) remains to be seen. SunPower has been known as a high efficiency solar cell provider, not a low cost provider, which may not play perfectly into this equation. And SunPower has been providing panels to providers of new, innovative rooftop product manufacturers like Open Energy, which compete with Powerlight.

Also, as usual, the Energy Blog has an excellent overview of the SunPower product and business here.

As to the purchase price, the detailed financials on Powerlight have not been announced yet, but it would seem to me to be a rich price to pay for a solar integrator, even one of the major ones like Powerlight. But with SunPower trading at an eye-popping 14x revenues, Powerlight will add a lot of much needed heft, so they can afford it (At $330 mm the purchase price is some cash plus < 10% of their SunPower's market cap, with 60% of the price in stock and a 25% earnout of sorts – and it drives them to a targeted $600 MM in revenue in 2007). It still leaves SunPower with lots of cash on the balance sheet and an earnings positive business. It's a fitting follow-on at the one year anniversary of SunPower's IPO.

So bottom line, if I were trading at 14x revenues and looking at a loosening silicon supply situation headed my way – I’d give up c. 1/3rd of my cash and c. 5% of my company to get Powerlight’s distribution in a heartbeat, too.

Excellent job, SunPower and Mr. Werner. Hope it works out. And trust me, this is only the first deal to be done in this market – but maybe the best.

Cleantech Investing Updates

I had a chance to talk briefly with Rob Day, the author of Cleantech Investing, and a cleantech venture capitalist at Expansion Capital Partners at last week’s Energy Venture Fair last week.

Cleantech Investing has a great overview on Energy Venture Fair in his Sunday blog, following on our article on the winners of most promising presenter. Cleantech Invetging gives a number of really good quotes on advice to entrepreneurs from the investor panel which featured Stephane Dupont, NVCA; Philip Deutch, NGP Energy Technology Partners; Scott MacDonald, SAM Private Equity; Pete Higgins, Second Avenue Partners; and Erik Straser of Mohr Davidow.

Rob did a second article that day on recent deal news that was extremely informative, and worth repeating, outlining recent deals by Khosla Ventures in cellulosic ethanol, VantagePoint in a central solar plant technology startup, Norsk Hydro in a PV wafer business, TXU and Capricorn Cleantech Fund’s recent fund launches, as well as relating a story from Venture Beat on how Kleiner Perkins got into cleantech.

We are also looking forward to publishing an upcoming interview with Expansion Capital on its investment activities, following their recent fund raise, so stay tuned.

Are Ethanol Stocks Risky Investments?

This is a reprint of an article I wrote for AltEnergyStocks.com. The original, along with a wealth of other information on alternative energy issues, can be found on their site, AltEnergyStocks.com. I am excited to say this article is the first part of a running series, as they have kindly invited me to be a contributing editor to AltEnergyStocks on sector focused topics.

“Are ethanol stocks risky long-term investments? We think they are. Don’t get me wrong, I’m a big fan of ethanol blended fuels for a whole host of reasons, I just don’t like ethanol as an investment. Here are six solid reasons to be very, very cautious.

1. Demand vs. supply – As with most regulatory driven markets, the demand has come on very fast behind the advent of renewable fuel standards, fuel subsidies, and the phasing out of MTBE resulting in ethanol’s rise as an oxygenate of choice. As a result the demand has far outstripped the historically available supply, and while supply plays catch up the industry has done well. However, as any student of refinery cycles knows, the moment supply catches up with demand at point “n” (and it will), the “n+1” ethanol production will put tremendous price pressure on the market and drive the industry into its first down cycle. (Keep in mind, all those announcements about new ethanol plants are driving growth – but at the same time driving the industry straight for its own readymade cliff).

2. Massive commodity price risk – Ethanol companies, like refineries, typically find themselves at the mercy of massive commodity price cycles. Unfortunately for ethanol producers, they stand at the mercy of several price cycles – corn (which ethanol producers are driving up the cost of), natural gas (the primary fuel), gasoline and crude. When the confluence of cycles is in their favor – life is very good, but when it is bad, it will be very, very bad. Now, for grins, just imagine a bad cycle confluence at the same time supply outstrips demand.

3. Market size pressure – Also, the current volumes of ethanol are a few percentage points of total refining volumes, barely worth fighting over if you are an oil company (a typical ethanol plant is about 5% of the size of a typical refinery) – but if ethanol ever comes near the DOE’s 30% by 2030 goals, do you really expect the oil companies to give up market share easily – especially when they already own most of the blending and distribution? Trust me, it’s not going to be Exxon, BP, Shell, and ChevronTexaco that get crushed in the stampede (and probably not Ag giants like ADM). Just because ethanol succeeds does NOT mean ethanol companies will.

4. Technology change – As the industry matures, and each of these cycles and concerns comes into play, the emphasis on survival will move more and more to low cost and high efficiency – early players with older less efficient (and often smaller) plants may actually be at a disadvantage. On the technology side, I have recently seen technology programs working in everything from more efficient distillation columns to less energy intensive better water removal, to advanced catalysts. And as mature players take notice (oil giant BP is establishing a $500 million Environmental Bioscience Institute for R&D in part in this area), even the winners of the current land grab phase may not actually make money long-term.

5. Ethanol is fundamentally a high cost fuel – As a fuel, ethanol is a fundamentally higher cost feedstock and processing cost than gasoline – just because the oil industry sells gasoline for higher than the ethanol industry can produce it, does NOT mean ethanol is cheaper (an analysis which is so apples to oranges as to be difficult even to begin to dissect)!. I know a number of well known analysts and investors have come out stating the opposite, but the numbers don’t lie. From Is Ethanol Controversial? Should it Be?, by Vinod Khosla – “Ethanol production costs in the US today are about $1.00 per gallon before any subsidies or taxes, substantially cheaper than the production cost of gasoline, even if oil was to decline to the mid-40’s.” They of course are forgetting that when looked at on a comparable cost basis – the full cycle actual cost to make gasoline from crude is on average up to half the comparable cost of ethanol from corn. Just because oil prices are high does NOT mean gasoline is expensive to produce, in large part it means oil companies that own reserves are making lots of profits. It is correct to say that when crude is at $60/barrel, it is economic to produce ethanol (and along with subsidies sell it for a tidy profit), but ethanol will be for now, our highest cost fuel. [Note: Look for our upcoming article on Cleantech Blog detailing the cost comparison]

6. Valuations – Bottom line, these are cyclical refineries producing a commodity product, not technology companies, and refineries typically trade at a TEV/EBITDA of the mid single digits, and a PE in the high single digits to low teens. Currently the ethanol market trades at hefty premiums to the pureplay oil refiners – a recent check had the average of VeraSun (VSE) & Aventine (AVR) trading at 80% higher PE and 110% higher Enterprise Value/EBITDA than the average of Sunoco (SUN), Tesoro (TSO) , and Valero (VLO) .

Are these all possibly reasons pure plays like VeraSun and Aventine are trading at one-third and one-half off their 52 week highs respectively (See our earlier Cleantech Blog article on VeraSun’s IPO)?

Conclusion – In the short run ethanol stocks are in a land grab phase ramping to meet demand, and some of these stocks may do well while demand still outstrips supply and the industry is still small, but when this dynamic changes – watch out as the margin pressure will be brutal, and could turn already aggressively valued stocks into a dot bomb style free fall as per gallon profits get crushed. So, make your profits while you can!”

Fuel Cells in a Hydrocarbon Economy

It seems like there’s a lot less hype these days about the inevitability and even the imminence of the so-called “hydrogen economy”. More people apparently are coming to recognize the daunting challenges associated with producing, delivering and storing hydrogen in a manner that is both economically reasonable and environmentally beneficial. True, an energy infrastructure based on hydrogen separated from water by renewably-generated electricity is theoretically possible, but before such a vision will actually be implemented — involving incalculable billions of dollars of new hydrogen-compatible infrastructure — many performance and cost breakthroughs on many fronts across many steps of the value chain must be demonstrated convincingly to investors and customers alike. To say the least, this is not very likely, at least not anytime soon.

So, with the diminishing appeal of hydrogen, one might think that interest in fuel cells might be waning. Not so fast, my friend. A recent report from Fuel Cell Today shows that, at least in stationary application (if not for transportation purposes), the fuel cell market continues to show improving vital signs.

Fuel cell technologies that don’t require hydrogen as a fuel are especially attracting attention. In the U.K., Ceres Power‘s approach enables the use of natural gas in fuel cells, which has piqued the interest of the major gas utility British Gas. Just here in Ohio alone, Ohio University is actively investigating fuel cells that operate on coal, and Technology Management Inc. has developed solid oxide fuel cell technology that has operated on biofuels. Other examples are far too numerous to list here, but you get the idea: fuel cells meshing with the current hydrocarbon infrastructure.

Admittedly, fuel cells that operate on hydrocarbons do produce some CO2 emissions. It’s not the utopian world offered by the promise of the hydrogen economy. But, if fuel cells can operate cost-effectively on plentiful and reasonably-priced fuels, they can at least reduce (if not eliminate) greenhouse gas emissions relative to conventional utilization of those fuels, and (if used in applications to replace internal combustion engines) can reduce demand for petroleum of increasingly vulnerable and uncertain supply. Half a loaf is better than none.

If fuel cells can make the big time in our hydrocarbon economy, it can significantly improve our energy/environmental situation while paving the way for the bigger prize that would be enabled by the longer-term emergence of a true hydrogen economy — if/as the other pieces of the hydrogen puzzle (production, distribution, storage) get solved.

5 Award Winners at Energy Venture Fair Announced

I attended the Energy Venture Fair in Santa Clara this week, and had a chance to see a number of the presenting companies. CEOs of nearly 50 startups from solar to batteries to hybrid systems were hawking their companies.

The most interesting to my eye included Wireless Seismic, a developer of a low power, high bandwidth, short distance RF mesh based wireless technology that can cut the cost of a seismic run for onshore oil & gas by up to 50%.

The winners of the 5 Most Promising Companies awards were announced this afternoon as follows:

Zolo Technologies – A Colorado based startup pitching its laser based instrumentation system for optimizing combustion in coal fired boilers for better efficiency and NOx savings.
Wilson Turbopower – Wilson, a holdover from the microturbine development, is commercializing a high efficiency ceramic recuperator (heat exchanger).
KiteShip Corp – A developer of of Very Large Free Flying Sails for ship transport, and previously the winner of the California Cleantech Open Transportation Prize.
Ice Energy – A startup with another intriguing product that has been making the rounds, this one stores thermal energy for home or business use in the form of a gigantic icemaker.
Hythane – Another Colorado based startup, this one focused on natural gas/hydrogen fueled products.

So congratulations to each!

Biodiesel BINGO (Part IV): Pennsylvania to New York

Wednesday, November 8th

I fill up the brae bio-bus fuel tank at Salem Oil near the Ohio-Pennsylvania border, and replenish one of the 5-gallon on-board containers. The price per gallon for this animal fat/soy blend is $3.50. Already the bio-bus sounds and smells better as I head along Route 14 to Route 18 in Pennsylvania.

Along the way, I buy first-harvest apples and still-sweet cream and sugar corn at a roadside farmer’s market. Across the street, a massive harvester cuts the rim of a corn field. I pass numerous road signs with the image of a horse and buggy. On this trip, I have seen an Amish horse and buggy ‘parked’ at a store near the highway. I have passed an Amish farmer muscling in his two-by draft horses, the family laundry hanging out to dry next to a farmhouse. I have heard the click-clack, clack-click of hooves on pavement and harnessed the image of a horse and buggy, in the distance, flickering through pines and maples. I see a kind of simplicity at work, and I wonder, turning back to my tons of steel, is it so much to ask of the rest of us to slow down, to pay attention to the Earth, to our health?

The next morning, departing from the Brookdale RV campsite in Meadsville, Pennsylvania, the bio-bus turns over. She goes a few feet…and she goes kaput. I hope the problem is a long-anticipated event: a clogged fuel filter due to the solvent properties of biodiesel. It’s Sunday. It’s the last day of operations for the campsite. Providence the inevitable happened in a safe place. Providence that Tim Conlin, owner of the Brookdale RV Camp, knows a lot about engines: Ford diesel engines, specifically, which are, essentially, the same as the brae bio-bus International engine. Tim is a former natural gas utility general manager who left his utility job to purchase this campsite, to be his own boss. We exchange utility management horror stories in the several hours we work on the bus.

Tim tows the bus with his John Deere tractor (which pulls the bus and the towed car while in idle). We drive to town to pick up a T444E fuel filter, replace the filter, add some PowerSave, and, upon the recommendation of a diesel mechanic, Dale, we add three gallons of kerosene, in the event the problem is gelling of the biodiesel. (The fuel is liquid at the fuel filter, so I am not convinced the problem is gelling.) When Tim removes the filter top, he finds it loose. Perhaps the problem is not a clogged filter (though it is very dirty!) but air in the filter. Perhaps it is both. When we finish, the brae bio-bus does not turn over; she clangs, loudly. My heart sinks. Tim tracks down Dale for advice. I turned the key a few more times, hearing a familiar noise. Once primed – which is Dale’s diagnosis – she turns over. The bus runs better than ever: she charges up hills. I owe Tim and Robyn Conlin many thanks for getting me through it all, on one of their busiest days of the season.

I head north into New York and stop at a Seneca-Iroquois, tribal-owned filling station. The diesel costs $2.53, and the pumps carry the signage about the newly-mandated low-sulfur diesel. The clerk can tell me nothing about the diesel. She has never heard of biodiesel.

Along the way to Ithaca, there are sheep and dairy farms, and a pitch black Angus bull grazing in a field thick with green grass. I see the small farms that I did not see in Iowa, farms that grow everything from early tomatoes to the last cruciferous vegetables, clover and grass for hay, as well as corn and soybeans. At 45mph, I pass an Amish walking from his saw mill (the name on the mailbox is, appropriately, Miller). He takes in the bio-bus, kindly, as I do him.

I land in Ithaca late in the day, choosing a back road to avoid the serrated road that is I86. The bus has no “air riding” shocks, which has made at times for a cat-squawking, dog-shaking trip. Cruising in on Route 13, I see diesel sells for $2.89. That’s $.15 more than the price of B0 in Kickapoo, Illinois. It’s also the same price as the B100 in Kickapoo where B100 sells for a .$15 premium over B0.

Ithaca…
It’s November 8th. I have been in Ithaca three weeks. Next stop, Maine. I am told Ithaca is a progressive town. It’s home to an Eco-Village, a green market, public recycling bins. It is also home to Cornell University where ecologist David Pimentel works. Pimentel and a professor at Berkeley conclude that biofuels from biomass (soybeans, corn, switchgrass) require more energy for their production than the energy they provide as a liquid fuel. As yet, I have found no biodiesel in Ithaca – not at the pumps, not through the biodiesel coop (which sells equipment and unprocessed fuel), not in the Pennysaver, not through a biodiesel outfit that I find online and asks if what I’ve been putting in my tank all these miles is actually biodiesel. Yes, I reply, it IS biodiesel.

Other goings on this week

I receive an announcement to attend a talk by Iowa Governor Tom Vilsack on “Energy Choices for the New Century.” Distributed by the Colorado University Law School and Western Resource Advocates, it says, “Iowa has become the number one state in the country for wind energy per capita; and has become the number one producer in the country for both ethanol and soy diesel. Ethanol production alone has increased in Iowa by almost 300% in the past five years. During Governor Vilsack’s two terms, energy generation capacity has increased 20% including the development of the country’s largest wind farm.” This is good news, but is hardly reflective of my search for biodiesel in Iowa.

I also receive an email from the Ed Cullen, the editor of the Storm Lake Times in Iowa, because I mention Storm Lake on this blog. Storm Lake is where my ancestors farmed. It’s also home of the country’s largest wind farm. Drats. I should have visited Storm Lake for that reason alone!

Vegetable oil or Nuclear fission

Against the backdrop of the comfortable references commonly made to how plentiful hydrogen is, I think the real challenges to producing hydrogen fuel in an efficient, industrialized manner is seriously under-estimated and under-reported.

Most of the people I talk to in the Superconductor and Energy communities assert that generating sufficient hydrogen fuel manufacturing capacity can only happen in one way. Renewable energy, for all its advances, still faces massive challenges to offering the enormous additional capacity that is project for the next 30 years. More feasible solutions such as “sustainable” energy all center on fusion (distant future) and 4th Generation fission (near-mid future) nuclear energy concepts.

A paper by France’s nuclear research center, CEA, discussing promising technologies for 4th-generation nuclear system, states: “A clean fuel hydrogen clearly has a bright future. There is one condition: the development of production processes that are less polluting than the ones used today, which consume lower amounts of hydrocarbons and generate less greenhouse gases.”

The paper continues: “Among the twenty major categories of concept being considered, six have already been chosen as deserving of public research support for their development. Among them, the two most advanced steps in the range of gas reactors being studied by the CEA are the extremely high temperature reactor for producing hydrogen and the fast neutron/complete recycling system for sustainable energy development.”

Looking to nuclear to fuel the future makes sense: it is very hard to imagine where the trillions of extra kilowatt hours are going to come from at all, let alone from very poorly understood technologies from equally poorly understood markets. However, the uncertainty is not grounds for caving in to the pro-nuclear juggernaut.

To give just one example of the hundreds of alternatives that should be evaluated, funded, and pursued, the other day I came across an interesting study: Renewable hydrogen from nonvolatile fuels by reactive flash volatilization.

Converting renewable fuels such as vegetable oils or biodiesel into hydrogen or “synthesis gas” (hydrogen mixed with carbon monoxide) without the buildup of unwanted carbon. The hydrogen could be used for fuel cells and on- board combustion in low-emission vehicles, and the synthesis gas can be used to produce larger molecules, including synthetic liquid fuels and chemicals. The low volatility of these biofuel feedstocks not only leads to soot production when they are used directly in internal combustion engines but also causes them to coat industrial catalysts with a deactivating layer of carbon, thus hindering their conversion to lighter products. James Richard Salge and colleagues show that if heavy fuels such as soy oil or biodiesel are sprayed onto hot rhodium-cerium catalysts as fine droplets in the presence of oxygen, the fuels can self-heat and fully react to form hydrogen without carbon formation and catalyst deactivation.

Mark Bitterman, Executive Editor, Superconductor Week

http://www.superconductorweek.com

A Stern Warning

The big news on the cleantech front in the last week was the release of the Stern Review Report on the Economics of Climate Change. This report was commissioned by the U.K. Treasury, and was overseen by Sir Nicholas Stern, former Chief Economist of the World Bank.

For those of you who missed the press coverage, here is some sample reportage, from MSNBC. U.K. Prime Minister Tony Blair introduced the Stern report, calling it “’the most important document on the future’ that he had read since becoming prime minister.”

At its essence, the report aimed to quantify the costs of dealing now with climate change (about 1% of global economic activity), relative to the costs of dealing only later with climate change (estimated between 5-20% of global economic activity).

In Stern’s words, climate change could cause “disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century.”

In the words of Madison Avenue, as in the old advertisements for (I think?) Fram oil filters, “you can pay me now, or pay me later.”

Blair added further strong statements surrounding the report’s unveiling, claiming that the report “demolished the last remaining argument for inaction in the face of climate change.” Of course, the Stern report and Blair’s supportive statements didn’t definitively end the debate, but just added more fuel to the fires. Myron Ebell of the Competitive Enterprise Institute — not just a skeptic but seemingly an outright enthusiast on climate change (they’ve been funded by ExxonMobil among other climate miscreants) — countered that “the report’s estimates for reducing greenhouse gas emissions are laughably rosy, while the assumptions about the impacts of global warming are ridiculously overblown.”

Actually, I suspect that Ebell may be right — at least in regards to underestimating the costs of immediate significant action to mitigate climate change. Based on my understanding of energy economics, and the costs of emission reduction options, reducing greenhouse gas emissions by any significant quantity will not come easily or cheaply.

This view is more or less corroborated by the noted Danish academic Bjorn Lomborg, who wrote an op-ed piece in the Wall Street Journal dissecting the Stern report. Lomborg is a formidable force when wielded effectively by climate change “do-nothings”, in that his arguments against dealing with climate change are not the rants of a madman, but rather a reasoned and seemingly rational analyst using sound logic underlain by good facts and grounded assertions.

Lomborg ends up concluding that, while climate change is a real concern, there are other more urgent and higher-return investments that deserve our incremental public policy dollar. That presupposes that we have a future inhabitable planet to live on.

$49 Million for New Hydrogen Buses

The Federal Transit Administration (FTA) awarded $49 million in new funding for hydrogen fuel cell buses. Congress established the National Fuel Cell Bus Technology Development Program in 2005 to facilitate development of commercially viable fuel cell bus technology.

The FTA goal is to have hydrogen fuel cell buses represent 10 percent of new U.S. transit bus purchases in the year 2015. These exciting awards include a new generation of fuel cells, hybrid electric propulsion, auxiliary power, and lighter aerodynamic bus designs.

$12 million in funding for several major advanced fuel cell bus projects was awarded to CALSTART, North America’s leading advanced transportation organization. The projects will expand upon existing fuel cell bus demonstration programs at AC Transit in Oakland and at SunLine Transit in the Coachella Valley, and introduce a new program for Muni in San Francisco.

The funding complements California’s new Zero Emission Bus regulation which will require over 1,000 hydrogen buses by 2020. Should California Proposition 87 be voted into law on November 7, there may be significant added hydrogen funding.

UTC Power will provide the fuel cells for the SunLine and AC Transit buses with ISE Corporation integrating the fuel cells into their hybrid propulsion systems. The hybrid design currently enables four hydrogen fuel cell buses at these transit operators to use only 120kW UTC fuel cells, yet outperform similar fuel cell buses with more expensive 200kW fuel cell systems.

Serving the nation’s capital is Washington Metropolitan Transit Authority (WMATA). They will be deploying two different advanced hydrogen fuel cell bus programs that will put six New Flyer 40-foot buses into service. In a $6,120,000 program, ISE will integrate a next generation Ballard 180 kW automotive fuel cell technology (HD6) with the ISE ThunderVolt® hybrid drive system into two New Flyer buses. Either ultracapacitors or batteries will be used.

A second $8.35 million WMATA project was awarded to the Northeast Advanced Vehicle Consortium (NAVC). UTC Power will provide its PureMotion(TM) 120 fuel cell power system for four zero-emission fuel cell hybrid electric buses that will be operated in the Washington, D.C., metropolitan area. UTC Power has been supplying fuel cell bus power plants since 1998 for programs in Washington, D.C., California, Spain and Italy and recently announced orders for Connecticut and Belgium.

John Addison publishes the Clean Fleet Report. His firm OPTIMARK Inc. conducts fleet outreach, market intelligence, and cleantech market development. John serves on the Board of the California Hydrogen Business Council. He can be reached at www.cah2report.com. John is the author of the upcoming book Save Gas, Save the Planet.

Complete Article

Cleantech blog

What is Australia’s ‘Natural Advantage’?

Its an interesting time here in Australia at the moment with the recent release of the Stern Report on the economic impacts of climate change this week, the government and oppositions arguments regarding what should be done and public opinion. Head to this article for a snapshot of the politics.

The PM’s position on this is that Australia’s interests to be panicked into measures that will hurt industries, that will give Australia a natural advantage. The opposition advocates portfolio of renewables – politics or response.

So what is the natural advantage of Australia? The traditional energy industries and PM highlight its reserves of coal, gas and uranium whilst the renewable sector highlight its abundant wave, wind and solar resources. One industry faced with the cost of cleaning up its act, the other faced with the challenges of market penetration and price competition. Australia’s cheap electricity from coal also provides a haven for energy intensive industries such as aluminium production – so where lies Australia’s future.

In the court of public opinion, A recent opinion poll commissioned by a coalition of green groups has found 86 per cent of voters think the Federal Government should be doing more to tackle climate change. The Newspoll has found 75 per cent of voters want the Government to sign the Kyoto protocol, while 80 per cent think big polluters should pay a tax on their emissions.

It also found 92 per cent of Australians do not believe the Government is doing enough to encourage clean technologies.

Clean Coal Technology

So, whilst all this is occurring there was the announcement of a number of Federal AP6 projects that have received funding, one in particular is a technology to clean up coal.

Here’s a few paragraphs from the story which you can chase up here

“CSIRO’s low-emission coal research program will be developing a post-combustion capture (PCC) technology as part of the Asia Pacific Partnership on Clean Development and Climate (AP6).”

“PCC is a process that captures carbon dioxide (CO²) from power station flue gasses and when coupled with Co2 sequestration the technology offers potential for near-zero emissions from power stations.”

“In a traditional power station flue gasses leaving the boiler are filtered to remove particles but still contain around 10 to 20 per cent CO²,” Dr Brockway said. “By incorporating PCC technology we will be able to capture up to 90 per cent of the CO² and permanently bury it using the technique of geosequestration.

“The research utilises a portable PCC pilot plant. The 11 metre, 20-tonne PCC test rig is transportable and made its way to today’s launch on the back of a truck. This flexible technology can be retro-fitted to existing power stations and will capture 1000 tonnes per annum of CO² during the initial stages of research.”

“PCC can be retro-fitted to existing power plants and integrated into new plants to achieve a range of greenhouse gas intensity reductions down to near-zero emissions,” he said.

“It is an incredibly flexible technology that offers a lower risk when compared with competing systems. PCC also enables the integration of renewable technologies in the process and can capture CO² from a range of stationary sources such as coal and gas-fired power stations, smelters, cement kilns and steel works.”

Ive hunted around and found a bit more about this technology

“Dr Louis Wibberley, leader of the PCC project team, says that PCC works by treating the flue gas at power stations to capture the CO2 emissions before release into the atmosphere. “The process involves cooling the flue gases (which typically contain five to 17 per cent CO2) and then capturing the CO2 by contacting the flue gas with a water-based solvent. This contacting occurs in a wash tower called an absorber. The water solution containing CO2 is pumped from the bottom of the absorber to a steam stripper.

“This device strips the CO2 from the water-based solvent, allowing it to be recycled to the absorber. The stripped CO2 is dehydrated and compressed to produce a liquid CO2 which can be pumped underground for permanent storage. We hope to be able to reduce GGEs from power stations by 95 per cent using PCC.”

Taking this into context, by achieving the separation of CO2 from flue gas its an important step. I’d still like to see some alternatives to CO2 geo-sequestration, such as solar algae technology achieving a level of commercialisation success. But the challenges of these approaches currently require facilities that can operate on a massive scale to deal with current emissions


Nick Bruse is the General Manager of Clean Technology AustralAsia Pty Ltd; the organiser of the AustralAsian Cleantech Forums, and the leading advocate of Cleantech in Australia. Clean Technology AustralAsia was established in 2004 with the mission to build and service the AustralAsian Cleantech Network of companies and investors and position them for success in local, national and international markets.

Biodiesel BINGO (Part III): Illinois to Ohio

Wednesday, November 1

As I head east from Colorado, Nebraska and Iowa disappoint in my search for biodiesel.

Route 34 in Illinois is more promising, though the prices for both biodiesel and diesel are steeper. I stop at a BP/Amoco station in Monmouth, Illinois that offers B11 – and another ethanol pamphlet, again from the National Ethanol Vehicle Coalition (“The American Fuel, Fuel from the Midwest NOT the Mideast.”) I fill up ($2.759), and pass the night at an RV spot in East Galesburg, preparing for the predicted snow that never arrives. A large male pheasant with a collar wide of deep green flutters into the grass. Thus far on this trip, it has rained or gusted prairie winds every day.

The next day, at Kickapoo, Illinois, I yell BINGO! (I really do.) A road sign pictures a gas pump with the word, BIODIESEL, below it. (Jubilee Café’s homemade pies also lure me off the road.) What a selection (of biodiesel as well as of pies)! The Shell station in Kickapoo offers B100 ($2.899), B75 ($2.849), B50 ($2.799) B25 ($2.749) and B0 ($2.749).

I have found B100 at a gas pump! The B0 button has been pressed into non-recognition. Inside, the station displays yet another pamphlet, “Soy Biodiesel, The Best Choice for the Long Haul,” published by the Soy BioDiesel organization, and co-branded by Illinois Soybean Association. Billboards in the area support Illinois soy: “From Illinois Soybean Fields to America’s Roads…”

A billboard on Route 34 declares: “Iroquois County. The buckle in the corn belt.” Very cute. I catch sight of a series of three hand-made roadside signs along Route 34: “It’s good for America.” “Use diesel made from” “SOYBEANS”. Down the road is another series. The second reads, “keep it here” and the third, “ethanol.” I miss the first sign, because I am staring off into the miles and miles of farm fields. I fear they will fail to entertain and boredom will settle in. I grow grumpy in the rain and the wind, rumbling through the endless prairie.

“Go Illinois for Soy” has an alliterative ring to it, but I can’t help but wonder, what’s going on in Illinois with soy biodiesel that’s different from Iowa and Nebraska? I read an editorial in the New York Times (“A Farm Race in Iowa”) that sheds some light:

The candidates capture a real split in the farm world – in Iowa and the nation as a whole. Mr. Northey proudly represents the industrial vision of farming that has turned Iowa into the land of the two-crop, corn-soybean rotation, a place where the chance to produce corn-based ethanol looks like diversity. Ms. O’Brien [who raises poultry, apples and strawberries…farms organically….uses a biodiesel school bus for a campaign vehicle] has been unfairly accused of belonging to “fringe” groups, and she is clearly not the Farm Bureau candidate.”

What’s the usefulness in promoting these biofuels to end-users within the farmbelt if you can’t find the darn stuff? Why not promote it to the more progressive areas of the country where markets are already primed to buy such products, or to rig owners and fleet managers (as Blue Sun Biodiesel in Colorado has done)? Can patriotism, the environment and improved engine performance trump the almighty price with truckers running rigs through the farmbelt and farmbelt residents?

And, will the new federal law mandating cleaner burning diesel (low-sulfur diesel fuel) turn truckers and rig owners on to biodiesel? The New York Times says the low-sulfur diesel law is “the biggest revolution in highway fuels since lead was removed from gasoline.” Sulfur reductions come from “changes in the refining process.” The low-sulfur law notices start to annoy me. (“Low sulfur highway diesel fuel (500ppm sulfur maximum): WARNING: federal law prohibits use in model 2007 and later highway vehicles and engines. Its use may damage these vehicles and engines.”) Where’s the less-polluting biodiesel?

I haul through the rest of Illinois stopping in Gilman to find B11 and more soy biodiesel literature: “The Best Choice for the Long Haul.” The contact is the Illinois Soybean Association. I continue through Indiana, still on Route 24, and miss a fill up with biodiesel in Logansport whose unusual hilly topography is a welcome change. By Decatur, the bus needs fuel. Decatur is an unfortunate town. A deadbeat kid opens his car door at the gas pump and dents the bus, then roars off. It’s time to open the on-board stash of B100 and get out of town…quickly.

I pick up Route 30 to cross Ohio, pass the night at Hickory Lake RV park in Ashland (a farm converted for trailers and RVs some of which look permanent, next to a soybean field). I have Internet and phone coverage – and a warm shower in 40 degrees. On the National Biodiesel Board website, only one vendor in Ohio listed carries B100.

The next day, like a hummingbird to nectar, I bump along Routes 71 to 76 to 183 to 62 to 14 to my destination, 445 Prospect Street and the Salem Oil Company. I am on the phone with owner Matt Weingart three times for directions, grateful he will stay open for me as I navigate Ohio’s back roads. Matt and his father, Craig, carry petroleum products and got into biodiesel because truckers requested it. The truckers haul soybeans.

The Weingart’s supplier for the product I purchase this day is United Oil Company out of Pittsburgh, PA. It’s a blend of soy and animal fats, but mostly animal fats. With his old supplier, says Matt, the product was mostly soy, the price of which tracks crude, not “beans,” whereas animal fat mostly tracks its own market. The “bean” was costing $.40 more per gallon than the animal fat. The old supplier, who had invested in the soy biodiesel refinery, reasoned that charging a price that tracked crude, would minimize his investment risk should the bean market fall out. I think of Kickapoo, Illinois where the price of B100 soy is $.15 higher than B0 – and the truckers choose the B0. It may be tracking “the bean” – but it’s priced at the pump at a premium over B0.

The grump returns: If you have a premium product that does not garner any meaningful market at the pump, what have you gained?

I say to Matt that on my trip, the price of biodiesel has been all over the map. He agrees; it’s all over the map.

Next week: Pennsylvania to the mid-point destination, Ithaca, New York.