Biofuels: Their Future Is Now?

The title of this post (without the question mark) was the title of September’s monthly American Bar Association renewable energy teleconference. For those who are interested, I recommend listening into these inexpensive monthly sessions to remain current on renewable energy developments.

  • Of particular interest in this past week’s biofuels conference was a presentation by Reid Detchon of the Energy Future Coalition. His presentation was one of the more cogent and coherent cases I’ve seen in promoting the need for an alternative to oil for economic, environmental and geopolitical purposes, and why biomass could/should be a contributor to the solution.

  • I had never heard before of the Energy Future Coalition, so I did a little more digging. In looking at their web site — their mission, their participants — this would appear to be an organization well worth watching…and supporting.

    Can CleanTech Really Help Address Oil Challenges?

    It’s becoming increasingly clear that the biggest energy challenges now facing both industry and society at large relate to oil. About once a week, it seems that some event — Hurricane Katrina, the Iraq conflict, rattling sabers from Hugo Chavez in Venezuela, OPEC meetings — sends the oil markets into a frenzy, with oil prices bouncing around above $60/bbl for several months now. For really the first extended period since the late 1970’s, energy issues actually hold something more than a trivial sliver of the collective mindshare of the U.S. Funny how spending $50 to fill up an SUV gets people to worrying about oil.
    The CleanTech community has been quick to seize upon this increased consciousness about energy to advance their messages. In many ways, this is a good thing: more Americans need to become more knowledgeable and cognizant of their energy decisions and alternatives. However, as an advocate and follower of the CleanTech industries, I am concerned about the long-term negative impact from statements that are much more hyperbole than factual. People get downright mad when they find they have been misled. So, I wrote an article expressing my concerns.

    Basically, my point is that reducing reliance on imported oil can be accomplished by energy efficiency technologies (e.g., hybrids) and behaviors (e.g., using public transport) and by direct substitution away from conventional oil to transportation fuels that are derived from abundant resources in the U.S. (e.g., biofuels, coal, shale). CleanTech technologies and ventures that serve this function can and will help address our oil challenges. However, no matter how much the ardent supporters of renewable energy may wish to the contrary, unless and until there is a direct linkage between the electricity markets and the transportation sector, increased adoption of solar and wind energy won’t make any meaningful dent in our oil import requirements. To the extent that solar and wind advocates keep hammering their misinformed and misleading message, their credibility will be lastingly tarnished. And that will be a bad thing for the CleanTech community at large.

    Power Company Execs Thinking Business as Usual

    In this new survey report, it is striking how many of the utility execs are wishfully thinking that the world won’t pull the rug out from under them, where other industry participants see that dramatically different futures need to be considered, even if they may be somewhat lower on the probability scale.

    Note particularly the doubts expressed about IGCC. Gee, it costs a bit more, and “no-one’s built one yet”. Yikes.


    Conventional Wisdom May Steer Power and Utility Companies Toward the Wrong Future

    Significant New Challenges Could Be in Store According to a New Deloitte Research Report

    WASHINGTON, Sept. 14 /PRNewswire/ — Most of America’s leading power and utility CEOs and CFOs think business will not change much over the next five years. However, a study released today by Deloitte Research — including interviews with regulatory, financial, and policy experts — shows significant new challenges could be in store between now and 2010.

    These are the highlights of the Deloitte Research report: Which Way to Value? The U.S. Power and Utility Sector, 2005-2010.

    In the report Deloitte Research groups the contrasting views on what the next five years may hold into three broad scenarios: “Continuity,” “Tough Times,” and “Rising Expectations.” The “Continuity” scenario is based on the majority view among industry executives.

    “We believe that while minority views may represent less-likely scenarios, they should not be ignored,” says Greg Aliff, vice chairman and national managing partner, energy and resources, Deloitte & Touche USA LLP. “The report notes that when companies base their strategies on the conventional wisdom, they may leave themselves vulnerable if the contrarians turn out to be correct.”

    The study documents support for certain views that go against the industry’s prevailing assumptions.,1015,sid%253D2000%2526cid%253D89087,00.html

    “Which Way to Value? The U.S. Power and Utility Sector 2005 – 2010” (620 KB)September 2005; 56 Pages; A Deloitte Research Energy Study.

    What to do about the Oil Problem

    The Tirade: We need to achieve low oil prices, and ensure that no one country is able to control our fuel supply. We have just passed a new Energy Bill. It does not do so. What we do need to do: Drop the ANWR fight and instead break the back of OPEC, slash consumption, and work closely with China.

    The Links:

    Since the early 1970s the US has sucked up more oil than we produce, and a large share of everything the world produces. I figure that’s okay, as we also produce more goods than anyone else in the world.But now China is sucking up oil without adding a lot to the world production, and driving up prices. And worse, all the big oil reserves left in the world are in places (read Iraq, Iran, Russia), that are not exactly, ahhh, “politically friendly”. This is not tenable. It’s a politico-security problem wrapped up with an economic problem.

    Here’s the crux of the situation. OPEC currently controls enough oil output to be the swing producer and manage prices like a monopoly. OPEC is controlled by countries whose population doesn’t like us. American and Asian consumers are the main drivers of oil demand, factors we can influence. (Usually sharp changes in oil prices are caused by faster or slower economic growth in Asia or the US than was expected, not OPEC). OPEC’s main goal is to keep prices stable, and relatively high. As long as OPEC is the swing vote in world oil supply, and a handful of the Arab nations control OPEC, and we need lots of oil from OPEC, we have a problem. Because prices will not come down, and we’ll always have an oil embargo hanging over our heads. Again, we need to achieve low oil prices, and ensure that no one country is able to control our fuel supply.
    Unfortunately our energy policy for the last 30 years has been built on two premises:
    • Friendship with key OPEC members like Saudi Arabia and Kuwait, whom we have courted to keep OPEC somewhat in line and keep the oil flowing (kind of like putting the fox in charge of the hen house);
    • And a policy of supporting the domestic oil industry to increase drilling with only limited commitment to reduced consumption.

    This has been true of every administration, whether Republican or Democrat. And the Energy Bill is no exception.

    My Prescription: Supply solutions need to go hand in hand with reduced consumption. If we want to solve the Oil Problem, we have to attack both the roots of the supply and demand.

    The Details:
    Attack the Supply Problem
    • Drop that whole drilling in the Alaskan National Wildlife Refuge thing. It is not the cure-all that the Bush Administration considers it to be, and it sets off the environmental lobbies like no tomorrow so we can’t move on to real oil policies. The potential production from that field is a lot, but not big enough to make a long-term difference in our oil needs. Besides, if I had the choice I’d rather save our oil for later and burn Saudi Arabia’s.
    • Break the back of OPEC. OPEC is a monopoly cartel. If you break it, oil production goes up, oil prices fall (though they do become more volatile), and no longer can one or two Arab nations hold us over the barrel on oil. They become just one of many countries, not the swing producer.
    • This would drive oil prices down and reduce our reliance on the Middle East.
    • How do we do that? Make friends with major swing producers like Venezuela, Russia, West Africa, Mexico, Norway, Indonesia. Encourage OPEC cheating. Split them off from the herd one by one, so that it no longer speaks with one voice. Use our economic and political power to fight the Oil Cartel just like we fight the drug cartel.
    • Encourage additional domestic drilling and new technology, but be cognizant that domestic drilling is only a small part of the solution.
    • At the same time, crack down hard on countries that nationalize oil reserves and renege on contracts with the major oil companies. The major oil companies are our oil companies. We want them getting a hold of Nigerian and foreign oil. Encourage the opening of foreign drilling in new markets

    Attack the Demand Issue in Parallel

    • Reduce our oil consumption. Most of our oil goes to cars and plastics. We badly need to drive the adoption of fuel-efficient hybrid and fuel cell cars by implementing significantly higher fuel efficiency standards and consumption taxes. In practice this means eliminating the fuel economy exemptions for pickup trucks and SUVs. And this from a Texan with two F-150s and a 1970 Mustang in my family!
      As a consumer, this means buy smaller cars, or stop complaining about oil prices.
    • Encourage reduced consumption in China and India. We can sell them the technology to do this. I would love to see an “Oil Consuming Nations” cartel with China, Japan, and India to balance OPEC.
    • Increase the strategic petroleum reserve. Our reserve is only a few days of supply. Give our government some additional leverage with a mandate to fight OPEC on oil prices.
    • And of course, recycle, recycle, recycle. Any time you throw away plastics, you increase demand for oil.

    In Requiem: We have an Oil Problem, both economic and political. OPEC is our enemy, not the oil companies. OPEC must be destroyed. Consumption must be reduced, but at the same time as increased production so that the price shocks don’t hurt our economy.

    And within a few years we will find that while still an oil economy, we will be richer, we will not have an Oil Problem with Arab countries hanging over our heads, and we will be one step closer to transitioning a sustainable energy future.

    For Research:

    Is Toyota THE Clean Tech Automotive Company?

    According to a Bloomberg article picked up by Fuel Cell Today, Toyota has announced its goal of an “all-hybrid” fleet. I think Toyota is rapidly becoming THE powerhouse in clean vehicles.

    Toyota Hybrid Article

    • Toyota is the world’s second largest auto maker.
    • It is largest producer of hybrid vehicles, and doesn’t seem like it intends to relinquish the title anytime soon.
    • It actually developed the technology that is powering Ford’s hybrid program, and sold it to Ford.
    • It’s the only major automotive company that makes a concerted effort to grow its clean vehicle business at the expense of its other business units.

    I read an article not too long ago explaining why Toyota as winning the hybrid race over Honda. The gist of it was design over technology. This guy suggested that Toyota designed it’s Prius hybrids just different enough to be easily recognizable as a hybrid (unlike the Honda Civic hybrid), but not so far out there in design that consumers were turned off like the Honda Insight.

    Then, with great technology, good marketing, and plain good auto design, Toyota had built its lead.

    Who says a $100 billion mainstream company can’t lead the way in cleantech.

    Anybody have a thought on other cleantech leaders?

    Odd Things – Alternative Fuel the SPCA will Hate

    Talk about odd. I was really not sure what to think about this one. I guess this is for all you waste to energy guys to chase down in your spare time. This German inventor (who denies it) is supposed to have told a reporter in an article picked up by Reuters that he has tested dead cats as fuel in a waste biodiesel process.

    I went to the website: He is basically claiming a lower temperature (270-350 C) catalytic synfuel reactor conversion process of waste organic materials to biodiesel. The gist of it is the development of patented catalyst as the key to process. He also implies that the system is low pressure and has been tested on a wide range of feedstocks, and the site seems to suggest that he has a pilot plant running, though I can’t find any direct mention of it.

    To be frank though, if he hadn’t told a German reporter he using dead cats as fuel, I’m not sure he would be making the US press. The English language version of website was extremely difficult to plow through. And there is not enough information on site to validate any of the claims. Just goes to show how far afield the search for new fuels gets. – A portal for clean technology commercialization is a a new web portal launching soon as a meeting and resource place for people like us who are looking to commercialize technologies relating to energy and the environment, whether in fuel cells, solar, environmental remediation, water purification, alternative energy, power, wind, renewables, green building, or anything else of similar bent.

    My company, Jane Capital, is a founding sponsor of The site is expected to go live at the end of October (until then the URL just points to this site). This is the early scoop on the site, and we are very excited to be a part of it!

    The portal is designed around the following:

    • List and application form for all of the incubators and angel investor networks that are interested in clean tech.
    • Reverse job board, a posting forum for executives, angels, advisors, scientists, engineers, and students to find cleantech ventures to join
    • A technology opportunities forum for companies looking to find partners for, sell, license, or develop a technology they own

    Other resources will include:

    • A collection of major news feeds on clean tech topics
    • Listings of conferences and events in the clean tech sector
    • A searchable data base of research notes on clean technology companies dating back over 7 years, written by Dr. Ed Beardsworth for a series of utility clients
    • An online panel of experts in everything from law to various technologies, to venture capital, to SBIRs, who are available by email to answer questions related to tech commercialization.

    I will announce the launch on and keep you updated on the progress.

    Interesting Sites for Next Generation Energy Technology

    I read a lot of sites related to energy technology. A few of them really standout, so I wanted to share them with you.
      The site for the National Renewable Energy Laboratory in Golden, CO. NREL is where huge amounts of our tax dollars get spent looking at wacky new solar technologies or the latest and greatest fuel cell design. The site is very deep, with lots of hidden gems, but not well organized.

    • is a solar information website run by a small solar consulting group, and it’s one of the few places around that actuall tracks the prices of solar cells across the industry.

      The Cleantech Venture Network is the premier membership organization for venture capitalists and investors interested in Clean Technology. The management are friends of mine, and have done more in the last few years for getting new technologies funded and pulling together investor interest in the sector than just about anyone.

      This is a site from the UK with a global focus. Of all the fuel cell sites out there it has the best news, a massive directory of people, and great links resources. It’s the only fuel cell site I read.

    Good Article on the Oil Companies and Cleantech

    Red Herring magazine did an article on the Cleantech sector titled, “Big Oil’s Clean Hedge” that I was quoted in recently.
    The article heavily quotes ChevronTexaco as it is one of the few oil companies that has a policy allowing managers to talk to the press.
    Most of the article talks about what the oil companies are doing in clean technology, where they are investing money, and how they view the sector. The oil company managers that did give quotes are heavy on the PR as you would expect, but all in all Red Herring wrote a fairly balanced view with some interesting twists.
    My contribution boiled down to pointing out that like them or not, the oil companies spend a lot of money in this sector compared to anyone else, so we really need to watch what they are up to, not treat them like pariahs.

    Gas-to-Liquid: Its Time Has Come

    Gas-to-Liquid (GTL) technology has been around for nearly a century. Known as the Fischer-Tropsch process (FT), it converts gas into a liquid fuel in the form of a refined crude or even a final product such as (clean) diesel. Until recently, conventional wisdom has been correct: use of GTL has been limited by high capital and operating costs. [ In the FT process, synthesis gas (or syngas, H+CO) is reacted in the presence of an iron or cobalt catalyst. End products are determined by the length of the hydrocarbon chain which, in turn, is determined by catalyst selectivity and reaction conditions. Possible end products include kerosene, naphtha, methanol, dimethyl ether, alcohols, waxes, synthetic diesel and gasoline, with water or carbon dioxide produced as a byproduct. Natural gas or coal can be the raw feedstock. ]

    Several drivers, however, have combined to change that situation entirely: – Dwindling world oil reserves and high exploration costs – Impending limits worldwide on sulfur content in diesel fuel – Vast quantities of “stranded gas” identified – Technology advances, thanks to substantial programs by the oil majorsVery recently, these same oil companies have announced multibillion dollar GTL projects. Last October, Shell announced a $5 billion plant in Qatar, and estimated production costs at less than $4 per barrel. As the NY Times reported (Oct 16), Exxon Mobil is also building a plant in Qatar, at a cost of $10 billion, and the South African company Sasol is constructing a 34,000-barrel-a-day GTL plant in Qatar that is expected to come online in 2005. Together with ChevronTexaco, Sasol is negotiating with the government to build another 120,000-barrel-a-day GTL plant.

    Conocophillips announced its own $5B plant to be built in Qatar. (Seems Qatar is the place to be!) BP’s commercial pilot plant in Alaska is operational.The petroleum industry has found more than 5,000 trillion cubic feet (tcf) of natural gas in remote locations, an energy equivalent of 500 billion barrels of crude oil. Most of this resource is abandoned in place because of the prohibitive cost of transportation infrastructure.

    A new company, World GTL, Inc. was founded in 2000 by industry veterans. Their plan is to acquire ownership rights (in some cases production rights) to certain stranded gas fields at deeply discounted prices, and capitalize on opportunities that now exist to convert these “stranded” natural gas fields into synthetic petroleum products.Why don’t the majors do this themselves? They do hold on to larger fields and may eventually develop them as LNG sources (or increasingly, with GTL), but they have no interest in smaller fields, e.g. under 3 tcf. This leaves a huge opportunity for players like World GTL. In fact, majors have already said they’d license their GTL technology and help with plant financing. (There is an analogy to the independent oil company movement over the last 20 years in the US. The majors decided that shallow water drilling in the Gulf was not going to work with their overhead costs and targeted IRRs, so they left the area to small independents who have done very well indeed.)Turning Stranded Gas into Proven Oil ReservesWorld GTL has come up with an interesting strategy. Once the development is done on a project (i.e. secure gas rights, do site plan, license technology, do preliminary engineering, arrange financing, sales agreements, etc.) previously stranded gas reserves with little to no value will essentially have been converted to “in the ground” gasoline and diesel inventories which can be easily monetized in the international oil market. World oil companies are struggling to rebuild and expand their proven reserves which have dropped to dangerously low levels. Reserves can be borrowed against, and this critically important for these companies, not only to be able to invest in the development of those resources, but as a contribution to their balance sheet. The majors are spending an average of more than $5 per BOE (barrel of oil equivalent) just to find bookable reserves today (and that’s not even counting the “fully developed” cost to produce). Every dry hole drilled adds to the problem.World GTL estimates that ten cents will cover development costs needed to get a BOE to “bookability”, and there is a long list of buyers who will jump at the chance to buy these BOE’s for $1. (Actually better than BOE, because it’s zero sulfur fuel.)Thus venture returns are possible even before the plant is built. Once it is built, the fully developed cost of production is less than $5 per barrel of finished product, and refinery demand for sulfur free blending stock is already booming. New EPA regulations drastically limit sulfur content of diesel fuel beginning in 2006. Other regions are doing likewise, and refiners have very limited means to comply, especially in light of the lessening supply of lighter crude oil.The company is currently raising $40 M to take their program to the next level and build two small commercial GTL plants. A great deal of information is available, including a collection of recent articles in the business press.

    First published in a UFTO Note by Dr. Ed Beardsworth.