So a Friend Asked: When will we have sustainable biofuels?

Sustainable biofuels depends on your definition of sustainable.

If you define sustainable as net-energy positive (more energy in than out) than we are there with even basic corn ethanol. The majority of corn ethanol plants produce more liquid ethanol btu's of energy than they cost all the way back to the farm (meaning every drop of energy from the farmers tractor on). When ethanol is considered a net energy loser is when they don't consider the other products made along side corn (brewers mash, corn oil, and other products sold after ethanol is produced). Also sometimes the cost of transporting ethanol to market by truck will make it a little bit of an energy loser.

For the most part corn ethanol is seeing a 20 to 40% increase in btu's of energy created. This is never talked about though as in the late 70's it was an energy loser and the same old expert from the 70's (a guy named Pimitel) still pimps the old out of date methodology that has been disproven. The national news always interviews this dude as the counter-opinion of the biofuels industry.

Beyond corn ethanol on net energy return you've got a whole host of other sustainable definitions. Is the corn a genetically modified organism? Is it a permaculture or monoculture farming style? How much water does the farming deplete fromt the natural aquifer below the farm? What about fertilizer and pesticide wash off of the field? These are the sticky wickets that cause a debate.

And then beyond this technical jargon filled debate is the Climate Change debate. Namely the CO2 reduction opportunity of a biofuel. If the biofuel can't substantially reduce CO2 emmission in the lifecycle of the fuel some don't consider it "sustainable" though it would be renewable and cleaner than petroleum.

Beyond corn ethanol though there are a slough of other biofuel products. Biodiesel in particular is extremely sustainable under any metric or debate. The only issue is that environmentalists hate soy bean farms (but somehow hippys love soy). But regardless if its soy, canola, or waste fryer grease biodiesel is 70% less CO2 (for its whole lifecycle) and has no real concerning emmissions issues. This metric being the goal post set by California recently in their "Low Carbon Fuels Standard" set to combat green house gases in their state.

I would go into cellulosic ethanol or some of the other advanced biofuels like "gas to liquid diesel" but it might be a little to much for you. It will make you sorry you asked.

Unless of course you want to hear more. Then my wife will thank you for distracting me enough to stop boring the crud out of her with this stuff.

Mark

(NOTE: This was an answer to a Facebook question asked in my profile)

This is a good paper. I wish I had time to read the whole thing.

Calfornia Low Carbon Fuels Standard Technical Analysis.

California Low Carbon Fuels

So I'm doing simple research on RINs and a potential financial business model. I am looking the world over for a CO2 off-set value for biodiesel and can't find a thing.

Look up the California Low Carbon Fuels Standard though I found some really interesting charts. Though worthless to my project today I felt they were worth posting for posterity.

Below is a chart showing weight and btus. A handy one stop chart.

What is Fischer-Tropsch?

I had time to browse around for white papers on Google. I came across one with a really succinct description of Fischer-Tropsch. I thought it might be worth capturing for future reference.

Thanks to a group focusing on "Improved Fischer-Tropsch Economics Enabled
by Microchannel Technology"


Fischer-Tropsch Process and Products

The FT process was first developed by Franz Fischer and Hanz Tropsch in Germany in the 1920s and 1930s. The chemistry is based on making longer chain hydrocarbons from a mixture of carbon monoxide (CO) and hydrogen (H2), referred to as “synthesis gas”, at an elevated pressure and temperature and in the presence of a catalyst.

The excess heat generated from the reaction has typically been removed by inserting boiler tubes that carry water. In theory, any source of carbon can be used to generate the synthesis gas. The majority of the products from FT synthesis are paraffinic waxes based on the following chemical equation.


nCO + (2n+1)H2 → CnH2n+2 + H2O (1)

Typical byproducts are liquefied petroleum gas (LPG) and naphtha. After the FT process, heavier hydrocarbons can be hydrocracked to produce distillate products, notably diesel and jet fuels.[

FT derived transportation fuels are typically referred to as synthetic fuels. During the 20th
century, these fuels were derived from coal in situations where petroleum was not readily available, such as Germany in WWII and South Africa during Apartheid.


The white paper of course goes on to describe why its relevant now. Regardless I love how simply this captured the subject. It is also worth note that the paper's focus on micro-channels ain't half bad neither. Oregon State University has some reasonable research going on around micro-channels and its supposed to have a huge potential. Though the promises of a micro-channel biodiesel technology never really materialized as promised five years ago (being it was five years out five years ago).

150 Years of Progress.... Now Time for the Next Paradigm

Yesterday marked the 150 birthday of the commercial petroleum industry. With Edwin Drake's discovery of oil in Pennsylvania the future of western civilization was moved forward at a speed unpredictable and mind bending. Ironically (a little trivia history) the day Drake struck oil was the day he received word from his backers to pull out and stop drilling.

Wired Magazine and Fastcompany both have tribute mentions on their website.

Usually presented as a force for evil or sinister change the benefits of petroleum have been spectacular. The immediate ability of humanity to harvest the btu's and calories of another geological dynasty has been good to those of us in the U.S.. Bending hydrogen and carbon molecules to our own needs has given us wealth and lifestyles beyond the imagination of any human alive in the 19th century. At the time of the American revolution in fact the wealth and lifestyle of today's American middle class would impress the great monarchs of Europe. From food and entertainment options the wealth cheap power provides is mind boggling when you consider it.

That brings us to what next? I would like to state simply (in honor of the 150th anniversery of petroleum) a hypothesis. That the prominence of petroleum at the center of our civilization is because of two items. One the cost of extraction is so cheap that the product is nearly free in comparison to most other products. Two, the amount of research and development reinvested by the petroleum industry have turned this nearly free btu rich product into the center piece it is to our civilization.

In short, as petroleum costs rise there is no reason other products will not take petroleum's place. In fact the harvesting of biomass and recapture of garbage can provide 100% of our energy in a closed carbon neutral loop. It only takes two things. A little market share for these new synthetic crude technologies as well as 150 years of experiments to bring them along to where petroleum is.

Look them up. Fast pyrolisis, Fischer-Tropsch, thermal depolymerization, and similar variant technologies. All simulating the Earth's geological process that created crude oil by heat, pressure and a oxygen poor environment. Reforming biological materials commonly seen around us magically into a source product for everything we take for granted in the modern world.

Business Model Conept and Thoughts

Recently with the new Renewable Fuel Standard being promulgated by the EPA and Obama administration (commonly referred to as the "RFS2") a change has taken place. Specifically the creation of carve outs for certain biofuel technologies. Next generation biofuels such as cellulosic ethanol, gas to liquids, and other type technologies are being given set aside market share.

The RFS2 proposes to that the existing Renewable Industry Numbers ("RINs") system and set aside requirements for petroleum refiners and importers to buy a specific amount of cellulosic ethanol and waste to ethanol in their biofuel requirements. With this there is new value attached to cellulosic ethanol. This is coupled with a renewed funding effort by the US DOE, USDA and others to get cellulosic ethanol plants off the ground.

Close to home Trillium Fiber Fuels just pulled a $750,000 grant to build a cellulosic ethanol plant (this after a sizable grant to experiment with various feedstocks about a year ago). But as I look at it I'm seeing some serious bring to market issues with smaller cellulosic plants. Namely that it doesn't make sense to build a host of small commercial scale ethanol plants in regions where there are already idle corn ethanol plants.

The issue I see is the cost of capital, the need to return an investment to this capital, and the fact that if the cellulosic technology is proven it will likely be licensed and integrated right back into the already existing corn ethanol plant. These corn ethanol plants also already have two really important things for a cellulosic ethanol plant. Namely expertise making ethanol to ASTM specification and the ability to place this product in the stream of commerce (no small feat for a sub-5 million gallon plant with no experience).

So here is my thought (and a regulatory question as well). Being on the west coast we need to import our corn and will continue to do so for the foreseeable future. Why not focus on making cellulosic carbohydrate instead of ethanol, Then run the carbohydrate through the already existing corn based ethanol process. Qualify this product as a next generation fuel by carbohydrate volume placed in the process with the corn.

It makes logical sense. This being the method preferred for counting electron when generating green power from solar or wind projects. The real issue is does the EPA trust ethanol producers enough to do so given that there might be a full $1 a gallon additional value in a cellulosic gallon of ethanol.

This raises two questions to be feasible. One is the cost of freight and creation of the cellulosic sugar something that I believe can be managed. Second, will the RFS2 allow a measurement of this product placed in a batch with corn ethanol. Essentially we would create the same debate that exists with ConocoPhillips and their Renewable Diesel process where they add fats into the crude oil pre-distillation at the refinery.

Just some thoughts.

Quote of the day

"You know a problem has not been solved when there are ten different ways to deal with it."
Chris of
Trillium Fiber Fuels
(speaking on the subject of pretreating feedstocks in cellulosic ethanol production)

Clean Coal Is Back on the Drawing Board

I suspected coal fired power would be a dead-end over the next four years. According to Wired.com not so much. In fact the Bush Administration's start towards "clean coal" via Carbon Sequestration is being continued with a future-gen CO2 capture project.

Just to get my enviro-street-cred 'I told you so' in as early as possible. How much you want to bet there is a major MTBE type problem with Carbon Sequestration that the brilliant engineers, chemists, and policy wonks failed to see? I just see deep well injection of anything and expect either sci-fi style earth quakes or Green Peace fundraising aquifers being effected.

I don't have any scientific basis for this. Just experience and a gut feeling. Critics please remember that I'm usually on the other side of this tech debate. Regardless, something about CO2 Sequestration just doesn't fit right.

Scientific America has a good article which does a great job of explaining the subject simply and in depth. What separates this deep injection method is the capture and mineralization (note: I don't know if that's even a real word) of the CO2 with surrounding geology.

A snippet from the article that gets right to the point:

The storage seems to be long term as well; the sequestered gas doesn’t just sit in the rock waiting for a chance to escape. Over decades it dissolves into the brine that shares the pore space or, over longer time spans, forms carbonate minerals with the surrounding rock, Hovorka notes. In fact, when she tried to pump CO₂ out of her test site using natural gas extraction techniques, the attempts failed completely.

It's is an interesting science. But I see the more promising technologies being an approach to use the CO2 productively as a resource. I don't see dumping CO2 underground ever surviving as a long term strategy.

The activists and policy people I've met would fight this approach as hard and long as any other industry approach to simplify a reduction in pollution. Capture or dilution rarely are acceptable to true environmentalists. The only solution they accept (and the only one usually settled upon) is ultimately less pollution period.

This is a short term approach that no-doubt will work for petroleum and natural gas producers. Beyond those with capital experience in drilling deep holes though I don't see this as anything close to an acceptable solution for CO2 reduction by 2050 (the target year I hear policy wonks pointing to).

Trolling bout Biodiesel

I saw a new press event for Propel Biofuels on the Biobased News site.

It seems like its been years since I've heard about Propel. I remember a few years ago they were poised to move forward boldly. Infused with V.C. cash and processing something more than that (a company chalked full of people filled with ability). They also had an awesome grasp of where to take the biofuel market to and therefore a compelling pitch to go with their business.

But after spending several hundred's of thousands of dollars building the best biodiesel infrastructure around Seattle their expectations didn't materialize. Of course nobody's expectations in the field did either. Now they are back pulling earned media and I like what I see.

Why do I like it? One self indulgent reason. Its the same argument and effort that I am making in Portland. I think they are correct except they are failing to see the real value in their business and intellectual property (which I will keep to myself). Its good to see your own logic and marketing packaging elsewhere.

Sunday thoughts about Automakers BK

As GM crawls towards what others describe as unavoidable bankruptcy I am drawn to the historic figures of US auto industry founders. How would Henry Ford or Billy Durant have handled this crisis.

The more I speculate the more sure I become of the answer. Their actions would be like that of the tech Mavens of today.  They boldly would stand up and demand more of every member of their team, their supply chain, and ultimately move the entire industry forward surfing the wake of crisis. They would have stepped forward welcoming competition, harsh medicine of the downturn, and would have cast their lot with the American consumers needs.  Their solution would be simple: Progress!

Progress in my definition is simple.  More for less.  Less cost, less impact, and in turn the creation of more value.  

What is the need of the American auto consumer. It is a simple three prong test: Stylish function, bottom of the market cost, and reliable utility.  

That is the secret formula used first by the Oldsmobile as it built market share at the dawn of the automobile.  Again it was the secret strategy of Henry Ford in his quest to displace the horse with his ever less expensive Model-T.  As well it was the come to market strategy of all other car makers gobbling up GM's lunch since Billy Durant launched his own come to market coup with the Chevrolet.  Again, ironically the comeback of Chrysler was marked by this same strategy in the 90's and is why Kia is still a safe bet for dealers who picked up the brand as they pursue it today.

Unbelievably the pundits blame it on fuel economy and the lack of demand for their cars. Though it isn't demand that's dried up in the world. Its credit, income, and of course crude oil's availability.   Who doesn't want a H2?  Only the social sensibilities and excess pull back this shinny toy of the wasteful urbanite.

I can't help but notice that Toyota, Honda, and Nissan manufacture huge SUV's and full size toy-hauling pick-ups.  The difference is their market share make up not their Environmental credentials.  Again we come back to affordable, stylish, and reliable.  

Look at the markets.  When you buy American and inexpensive your purchase reminds you of your income. Your options smack of cost cutting.  The upgrade also is substantially different as well.  Japanese designers on the other hand provide a consistency with value.  

The Japanese hold their consistent come-to-market units true to their roots.  They offer a middle ground to their consumers.  

EV Car Event in Portland

If you are a friend or customer let me know if you want to attend. I've bought a table for this event.

Mark

Please mark your calendar. 

 

The Future is Electric

The Electric Vehicles Revolution. 

The Potential and Possibility of the Emerging Electric Vehicle Technology.

YPOP Breakfast of Champions

7:30 AM

June 16th, 2009

University of Oregon in Portland

70 NW Couch Portland, OR 97209

 

 

Look at your cell phone.  If we could scale the amount of power and efficiency possessed by your phone’s battery into a Prius it would triple the fuel economy of this existing car technology immediately.  That is the potential of Electric Vehicles and why they are the talk of policy wonks and politicians everywhere.

Profound moves and big personalities are at work to establish Oregon as an international leader in the emerging industry of Electric Vehicles.  Though Oregon has been hit hard by the recession, it is still an exciting time to do business in Oregon and this industry is one of the brighter spots in the economic outlook.  Find out why.

This event will showcase the potential and possibility Electric Vehicles hold in the near future.  From new technology companies emerging in Oregon, to those innovators who plan to manufacture the parts and pieces the industry will need, and of course Oregon State’s effort to build a network of rapid vehicle charging stations throughout our state in the next two years.   

Our speaker Chris Bakken is a leader in the field of electric vehicle recharging stations and battery technology development.  As the President and Chief Strategy Officer for SynkroMotive he will share with us the profound potential of electric vehicle technologies from his perspective within the industry.

Space is limited so please RSVP through YPOP.  If you want to guarantee a seat, table sponsorships are available for $100 and come with seven reservations at your table.  A continental breakfast will be provided thanks to our generous sponsors.

Thursday Morning Thoughts

I have worked hundreds of trade shows, events, and other public outreach efforts. I've also spoken at dozens of conference and before trade associations as well. All pushing forward the largest obstacle to biofuels. A lack of awareness that an alternative to petroleum existed.

The common first question from some one actually driving a truck for a living was always the same. "Is it cheaper?"

To which I always answered "No, it's worth to much to sell cheaper than diesel."

The low price falacy.

Price. This being the common question and qualifier of the opportunity for any fuel. Whether it was always, everyday, consistently cheaper than petroleum. Other than on a small scale, this will never happen though. Because as we add biofuels into the on-road gas and diesel market a wonderous thing happens. It applies a further downward pressure on petroleum prices (MORE ON THIS LATER).

In fact I've had hundreds of conversations around this subject. The consistent critics who claim there is no market for anything if it is more expensive. That premise of course conflicts with everything around us. Most of all energy.

Every time you pull into your neighborhood gas station there is almost always someplace cheaper within a reasonable distance. Every time you pull into a gas station you are presented with regular, midgrade, and premium gasoline. If cheaper is a requirement to exist in the market how does premium gasoline exist? This argument always throws the "experts" and academics for a loop.

I realized the above argument off the cuff once when having lunch with a college professor who was supposedly an expert on algea and therefore biodiesel. Right from the begining he started pontificating about the fact that there was no future for biodiesel or ethanol unless it was substantially cheaper than petroleum. That without algea production we never could be cheaper than petroleum. And given that algea technology was "five years out" our market development efforts were a waste of time until algea came on line.

You should have seen the look on his face (and the smirks on the rest of the table) when I pointed out the fuel market already respected premium products.

But this price argument is made often and everywhere. Its an odd argument you see most forcefully in technology circles. That the next great paradigm shift is only "five years out" and all efforts today are a waste of time. But of course most of these technologies have been five years out since the Carter Administration.

Probably the biggest place the energy curmundgeons get away with false price examples is utility scale electrical power. In the beautiful land of the Pacific Northwest hydro electric power delivers the cheapest high quality, low carbon, power to the entire west coast. In Portland a retail consumer is paying under $.10 a kw with all taxes.

This price tag is often cited as why diversifying to "clean-tech" options is doomed to fail. Given the fact that the depreciated cost of solar and wind power cost as much as $.30 a kw. But this is false math failing to see the reality of this market.

Hydro power is a battery. We can spill water through a turbine at any time and realize that power at will. Hydropower in essence is the long establish, paid for, holy-grail of energy. Readily available, when we want it, no additional impact, and low CO2. Every drop of this cheap power is worth a thousand times the price tag.

The true price of power floats on a market. In the summer when Los Angeles and San Diego are sucking power for air conditioning this hydro electric power is worth much more on the open market than $.10 a kw. In fact its worth more than $.30 a kw. Therefore the water saved by wind and solar power is a cheap buy as it allows low carbon hydro electric on demand for no additional cost to the system. No sudden opportunity cost.

The same argument holds for areas reliant on natural gas or coal fired power plants. Every additional kilowatt flowing through the system, if operated efficiently, is that much less capacity for the power plant. That much bargaining and gaming opportunity for them to manage their cost of fuel. To save it for when the market truely recognizes its highest and best use.

Also worth mention again is the compound flaw in the low price falacy. The fact that biofuels are more expensive than the dirtier mainstays of our economy does not mean they don't make sense on a price basis.

By diversifying beyond just coal and petroleum we do something very critical. We push a downward pressure on these CO2 intensive fuels. We in turn lower their price when they are their most expensive. The few stretches of time a year that natural gas or coal fired electricity is stretched to its limits these renewables maintain a cheap addition to the power mix.

There is a word for this behavior. A commonly accepted strategy in all things but the energy debate. Diversification. The balancing of a portfolio in order to reduce volitility and therefore maintain stable, predictable and therefore a better result.

OPIS Newsflash on Land Use Impacts of Biofuels

Well its a better argument than the one's we faced with Food vs. Fuel. Its logical and seems to be more results oriented. Hopefully this is a fair debate that moves us beyond the bullet-statement and bumper sticker arguments around ethanol.


From OPISnet.com

BIOFUEL GROUPS CONTINUE TO OPPOSE INDIRECT LAND USE INCLUSION IN RFS

Industry sources continued this afternoon to sift through the voluminous 1,004-page notice of proposed rulemaking for the expanded renewable fuels standard (RFS) that U.S. EPA issued this morning, but it appears as though while biofuel advocates appreciate the establishment of the Biofuels Interagency Working Group, they still oppose EPA's inclusion of indirect land use (ILUC) in the agency's establishment of lifecycle greenhouse gas emissions.

As passed under the 2007 energy bill, the 36-billion gal/yr RFS is broken into four segments: a capped corn-based ethanol requirement of 15 billion gallons by 2015; 21 billion gallons of the overall mandate contains "advanced biofuels" by 2022, with 16 billion gallons of that amount, under the same timeframe, from cellulosic biofuel. For the fourth carve-out, up to 1 billion gallons by 2012 is required to be from biomass-based diesel.

Meanwhile, conventional biofuels would be required to emit 20% fewer lifecycle greenhouse gas emissions (GHG) compared to gasoline, while "advanced biofuels" would be required to emit 50% fewer lifecycle greenhouse gas emissions and cellulosic biofuel would be required to emit 60% fewer emissions.

In this morning's notice of proposed rulemaking, EPA included emissions from ILUC in its lifecycle requirements, much to the chagrin of the biofuels industry. Biofuel groups, agricultural academics and some lawmakers had asked EPA to delay the ILUC requirements until there was a generally accepted method for determining the regulation.

"If you look at the direct impact of ethanol, from the production of the grain to transportation to the facility to the process of making the ethanol to transporting that to market, there are significant benefits to ethanol over petroleum," about 61% lower than petroleum fuels on average, said Renewable Fuels Association President Bob Dinneen, speaking on a conference call with reporters earlier today. However, "there is so much uncertainty" when trying to factor indirect effects, he said.

Additionally, the proposed ILUC requirements are not being uniformly applied, since there is no similar provision for petroleum production, Dinneen noted. "You'll see no international indirect effect of petroleum applied. EPA should've looked at this when they were creating the baseline. They are willing to count the number of angels on the head of pin for biofuels, [and] they ought to give more than just a cursory look at petroleum production," he said.

But Dinneen said he was pleased EPA would specifically be soliciting scientific feedback and peer review on the ILUC proposal.

Similar comment came from other biofuel groups, including Growth Energy, POET, the American Coalition for Ethanol (ACE), Biotechnology Industry Association and Brazilian sugarcane trade association UNICA.

"As evidenced by the recent debate over the low carbon fuel standard in California, biofuels are greatly penalized by these preliminary calculations,"
said UNICA Chief Representative in North America Joel Velasco. "We know sugarcane ethanol has the lowest carbon emissions of any liquid biofuel produced today. California recognized as much in its low carbon fuel standard.

We are certain that when the EPA considers the best available data and research, these indirect land use effects from sugarcane cultivation in Brazil will be marginal at best," he added.

Meanwhile, the National Biodiesel Board said that a final EPA rule on indirect land use changes "that is based on questionable science and is structured in a manner that restricts the role of sustainable vegetable oils in the program will make it nearly impossible to meet the Advanced Biofuels goals established by statute," according to NBB Vice President of Federal Affairs Manning Feraci. "Hopefully, common sense will prevail in this process and the EPA will issue a workable final rule that is based on sound science and allows the U.S. biodiesel industry to make a positive contribution to the RFS2 program," he added.

Brian Jennings, executive vice president of ACE, said he was pleased that USDA Secretary Tom Vilsack will be co-chairing the Biofuels Interagency Working Group along with the heads of DOE and EPA. "I think this means ethanol remains at the table for the president's energy policies moving forward, despite the political desire of some to box ethanol out. I think the working group will ensure that fossil fuels are finally examined along with biofuels in these LCA [land use change] assessments," he added.

The Natural Resources Defense Council (NRDC), meanwhile, is pleased with the inclusion of the indirect land use provision. "We must develop biofuels the smart way, and we are encouraged that EPA Administrator Jackson has offered a science-based proposal to get this done," said NRDC's Nathanael Greene. "The opportunity to review EPA's proposal will help ensure that developing biofuels won't mean using our most fragile forests for fuel and that biofuels provide real benefits. We plan to submit comments on what EPA has gotten right and what must be improved to make sure the outcome serves our environmental and energy needs," he added.

While both the American Petroleum Institute and the National Petrochemical & Refiners Association were still reviewing the proposal, they are concerned with the availability of biofuels that will be needed under the RFS. "While NPRA looks forward to commenting more specifically on the proposed guidelines, the questions of commercial viability, product liability and the lack of adequate scientific review with regard to mandated increased quantities of ethanol remain unresolved," said NPRA President Charles Drevna. The association said it trusts "that EPA will seriously and transparently consider the concerns raised by fuel, public health, environmental, and engine manufacturing interests as it proceeds toward finalizing guidelines for RFS implementation."

Similarly, API spokesman Karen Matusic said it is "surprised and disappointed" that EPA, in relying on industry information, believes there are sufficient plans underway to build plants capable of producing 100 million gal of cellulosic ethanol in 2010 and are therefore not proposing to waive the requirement for next year. "The waiver criteria is not 'plans to build,' but is 'projected volumes of cellulosic biofuels production," she noted. "Information readily available to the government clearly shows that very little cellulosic biofuels will be produced in 2010," she added.

Meanwhile, anticipating that ILUC would, in fact, be included in EPA's proposed rule, U.S. Sen. John Thune (R-S.D.) introduced legislation last week that would direct EPA to only focus on the direct lifecycle greenhouse gas emissions in its regulation. Speaking on the conference call this morning, Dinneen said these and other congressional efforts are separate from EPA's peer review efforts and aren't likely to be withdrawn.

Once EPA's proposal is published in the Federal Register, the agency will begin to accept public comments for 60 days. Meanwhile, EPA plans to hold a workshop on June 10-11 at the Dupont Hotel in Washington, D.C., to present details of the lifecycle GHG analysis included in the proposal.

For more information on the proposal, visit:

http://www.epa.gov/otaq/renewablefuels/index.htm#regulations.
--Robert Gough, OPISnet
--Rachel Gantz, OPISnet

Monday Morning Thoughts

Power; what is it?

Whether its political, physical, or electrical. Power is the ability to drive some result. It is a stored ability to take nature into the logical hands of humanity.

It is also the ability to bring the inanimate to life. To turn hot into cold, cold into hot, and move water up hill. Power is magic. It is the march of civilization forward. Power is energy.

Push your car down the freeway at 75 mph for 15 miles and tell me its not worth $2.50 gallon. The wealth of our world, your standard of living, the hope for a brighter future are all tied to petroleum. And therefore all power be it financial, political, or industrial is founded on the btu's of energy contained in a barrel of crude. The power of the future will be whatever source the next btu we burn is harvested from.

The power represented by petroleum though is by default. Its for lack of a competing option. This lack of a discernible 'silver-bullet' substitute gives rise to a real conundrum of those looking ahead.

Enter the logic of Peak Oil. The well quantifiable reality that there may not be any more oil to tap. That we have peaked (or will soon peak) the world's oil reserves and though demand will continue to grow the resource to extract will become further and further from our ability to harvest it.

This shouldn't be scary. It shouldn't be something to worry. We have developed, built, and invented our way out of scarcity before. Why is it now that it seems like there is no route to more?

Part of my motivation to write this is in response to the Peak Oil arguments of doom. The fact that the future is a dynamic opportunity for human improvement. The reality that in the past the only time that the most talented among us couldn't move beyond an obstacle was when institutions conspired to maintain the obstacle. Usually not on purpose, but none the less well meaning assumptions influenced rules, laws, and direction away from innovation..

For those of you who are familiar with Peak Oil I place before you an unfamiliar argument. That its not a big deal as it relates to our standard of living. That with cheap oil gone our standard of living will not be effected and though petroleum costs will rise I am confident that the American standard of living will not be substantially eroded in the short term. The rapid need for communal gardens, composting toilets, and the 'End of Suburbia' will not drop suddenly on the world's doorstep.

Instead I offer a competing view. That we will sacrifice quality of life and needlessly develop petroleum resources that in the future will be worth far more than the btu's they represent today. That western agriculture, industry and lifestyles will hit these higher prices like a speed bump. Unless we embrace a more dynamic and wider reason for diversifying beyond petroleum instead of a bleak future it will just be less bright than it needs to be.

If Peak Oil is a reality it will not be the end of western civilization. The full weight and creativity of the western Capitalist system will move rapidly to maintain the value and market position of its invested capital. Not to mention the well established standards for fuel, energy, and infrastructure regulated by government with petroleum products in mind.

Sunday morning thoughts

Why is petroleum in everything? What caused this?

Crude oil and petro-chemical refining having become the ancient-buffalo of our modern existence. The critical sustainer of our people. Its often mentioned but rarely considered. How has it grown to dominate as the most important touchstone of every bit of Earth's technology?

A barrel of crude petroleum has 42 gallons. In this barrel more than 42 gallons of useful products is fabricated as they crack, reform and construct the most useful components of 21st century life. The petro-chemicals that make us modern. Like magic, more is made with less every year.

Why is there such a drive to push every petroleum molecule further in its use to our civilization? Or better yet - How! How is it that from acrylic fabrics, to the plastics everywhere, and the power that drives the creation of everything around you is derived from a barrel of crude?

Little is considered about how. How this creative expansion of the hydrocarbon successfully moved us thousands of years into the future in a matter of decades. That in one generation many families that actually relied on horses progress forward, defining a show of wealth by horse power under the hood.

Why did it rise to prominence as a source of heat, transport and power? How did it become the touchstone of what separates the iron age with that of modern history. Petroleum is the critical difference between a coven of scientist debating the moon and an actually cadre of scientists flying forward to touch the moon's surface. All propelled upward by the brilliance the hydrocarbon allows us to harness.

The answer of course is easy. There was money to invest. That with each additional barrel came a complex issue of what to do with it. As money was made an obvious opportunity existed to make more with every unused molecule that came through a petroleum refinery.

First there was kerosene, the whale-oil replacement. Then there was gasoline, six grades of diesel, and then the chemicals beyond that. As the most brilliant and well funded researchers in the history of the private sector went to work so rose the prominence of oil.

But in easy answers there is a complexity. How to recreate it. How do we move beyond petroleum?

That is the question of our age. Just as the Dark Ages saw a quest for the Holy Grail where empires and nations gambled generational fortunes. We now face a new Holy Grail, a quest to replace the oil we burned yesterday before tomorow arrives.

Most look at oil's rise as a motor fuel. Its was cheap, readily available, and in such large quantities no one could ever fathom. The density of its energy content was superior to any solid or gas fuel of it's time. And then there is the reality that a liquid is easy to engineer systems to handle with ease.

There is also how clean it was at the dawn of modernity. Compared to wood or coal it significantly reduced the effort to handle and maintain.

As an example we can look at one simple example. That of heating oil.

Look at the evolution of heating systems. In the early part of the 20th century it was wood and coal that heated the boilers, furnaces and stoves in the US. A system that required regular stoking to maintain inefficient and unequal heat. Regular cleaning to keep the system from wearing itself out as the coke and ash unevenly wore on them.

Enter oil heat. A liquid fuel, delivered into a tank, moved to the furnace by a pump, capable of being fed in a controlled manner enabling the addition of a thermostat. Better yet, on a cold winter morning you didn't have to start the furnace's fire by hand. You just turned the system on. Talk about modern improvement.

Now look at the business model that drove oil heats rapid adoption in the US. It wasn't just the superiority of the technology but one other ingredient. Superior technology rarely alone moves an industry forward. It is another factor thrown into the market place that does so. The need for partners with a wider stake in a technology's success. Distribution.

Those who sold coal, wood and sawdust to residential heating customers had to deliver the products. The delivery of a solid like coal or wood took a man with a strong back. Hard work all day every day. It was these small vendors of heat that revolutionized the market.

If they could convert their customers furnaces from a solid fuel to oil heat they would just pump a product into their tank. This is where technology progresses. As the sawdust and coal delivery companies swapped out the burner on the existing furnace upgrading them to oil.

Shortly after developing oil heat markets these same companies expanded offering other oil products as well. From gas stations to motor oil supply. They were partners with oil refiners in serving, building, and expanding the use of their products. A long expanded chain of small businesses that grew with America and established the standards that now define the petroleum business today.

And this is where the difference exists. The difference between petroleum's dominance as a required element of all products and other potential substitutes. Petroleum is the easy substitute of what came before. It also provided growth to these partners in supply.

Petroleum's history is one of research and development driven by cash flow. It also has developed deep penetrated niches around its products. I question the logic of a paradigm shifting technology. Petroleum didn't build its dominance by shifting paradigms. They did so by building a small niche that made sense. Rapidly building market share within that niche. Then leveraging that success to further research and develop its next value added product.

Petroleum has not been an industry of energy, heat or transportation. It has been one of inventors and marketers who provide solutions to other industries they serve. If you take this perspective and look around you see plenty of next-generation technologies already being used.

Understand that the future is all around - its the politicians, academics, and drive-by-policy that now stand in the way.

Oregon Startup makes Biobased News

Diesel Brewing hits the biz wire.

I've never heard of this start up before but I'm intrigued. In particular butanol has a real promise to be used in biodiesel production as well as a gasoline blend stock. As it relates to biodiesel the butanol can be used as the alcohol in the transesterfication process.

Primarily methanol is the alcohol used. When butanol is used supposedly the gel point of the biodiesel drops significantly below 0 degrees.

Their formal website is http://www.dieselbrewing.com/

I neither endorse or am familiar with anyone associated with Diesel Brewing. I just saw the news and thought it interesting.

VW Golf - World Car of the Year

The 2010 Golf is named "World Car of the Year" by a panel of journalist and auto industry folks.

The real good news in the story I saw at Wired.com though.  Its coming to the US in diesel.  Now the only issue will be whether or not it can handle a blend of biodiesel higher than B20.  The latest clean diesel VW's have an oil dilution issue with higher blends of biodiesel.  It occurs where the particulate trap on the vehicles must maintain a temperature to burn out particulate.  With B99 biodiesel it doesn't fully burn all of the fuel in the particulate trap depositing this residual fuel into the oil pan of the vehicle.  This dilution should not cause issues with the actual wear on the engine if the fuel is ASTM spec (this according to a presentation I saw from a VW engineer discussing their engines).  The issue becomes engine lights go off requiring an oil change between 2,000 and 3,000 miles (as the oil pan fills up over capacity). 

I saw it first in a recent issue of Biodiesel Smarter magazine (a insiders type zine dedicated to sustainable biodiesel news).  By far the best biodiesel trade magazine you will ever find.  Dedicated to B100 and B99 market development.  

I'm curious to see how the industry deals with this.  My bet (and this is a bad thing) biodiesel enthusiasts will just disconnect their particulate trap.  This creating a conflict not just with OEM's and biodiesel users but also the EPA and local regulators.

OPEC wants cheap oil.... Hmmmm?

Saw the analysis at MSNBC online from a month ago.  Not exactly timely but something jumped out at me that will alter my perception of what the future might hold.

OPEC tried on Sunday to nudge oil prices up by urging its members to stop overproducing, but the cartel decided not to cut current output levels which could have driven prices sharply higher.  Explaining the decision, OPEC Secretary-General Abdalla el-Badri spoke of his organization's concern over "ugly" global economic times that overrode the desire to achieve a quick fix by setting a lower overall output for the 12-nation producer's club.

First off, I'm thoroughly entertained that a roughly $50 a barrel and $2+ gasoline is considered "Cheap" by today's standards.  Two years ago it was not.  

I know.  Everyone got used to a $200 barrel of crude being a realistic price.  Regardless, I remember making biodiesel and ethanol pitches back when diesel was expensive at $0.75/a gallon and being told that no one would ever buy a biofuel unless it was cheaper.  And oil would never trade wholesale above $1 a gallon.  

I remember one time on-road diesel with taxes hit $1.28 and customers called to complain wanting to know "HOW" it was possible that prices could swing so high (it was caused by a sudden shutting down of the Olympic Pipeline into Portland by regulators because of safety issues).

My how we've changed our definitions and expectations.  Me included (I get really nostalgic at times for a high price of oil being $15 a barrel back when I started at StarOilco).  

Oh how life was easier in the oil business when I was empowered with an Economics degree and so much certainty.  But enough of the simple past - the future has much more potential and a greater opportunity with those with open minds and strong backs.  

Also add to this that OPEC likely has not forgotten that this is not "cheap" but a dream-boat of oil pricing and acceptability.  If the harshest international recession of the last 80 years leaves the bottom of the market at $50 barrel of crude they will be very happy with this new economic picture for oil.  

This is the real point of my post.  Calibrate your instruments.  $50 is the new floor for the foreseeable future.  If the price of a barrel of oil starts trading below this number there is a change in the economic numbers that set prices.  

If I was a practicing economist I would try to set up an experiment to determine volumes of ethanol, biodiesel, renewable diesel, syn diesel, and other fuel volumes as they effect over all pricing of petroleum.  It would be fun to try and create an easy factor of volumes of substitutes (even if they trade at a surplus cost) and their effect on petroleum prices.  

Given the US's energy position in the world not only as a consumer but market that sets prices you would likely be able to just use EPA and DOE numbers to run such an experiment.  I would treat the measurements much like the Federal Reserve tracks the money supply.  With an E1 for only petroleum refined products sold, E2 including immediate blendable substitutes including mandated blends, and an E3 and E4 for moving to wider industrial substitutes such as hog fuel, and experimental fuels manufactured outside of the main streams of commerce.

There has been very little talk about this (other than by the ethanol industry).  To me this is the future of the debate.  If only I could simultaneously work and be an academic.  Ahh, the dream.  Being able to actual focus on the bigger picture without the requirement of betting correctly with your own money.

The Future Looks Electric

Electric Car that is.

If you ever doubted the effect of political resolve in the direction of the US energy just look at the very recent and profound changes I'm seeing with the current Obama Administration and it's current "Stimulus" monies floating around.

In the span of a month electric cars and infrastructure went from a P.R. play thing for electrical utilities to an audacious effort by Oregon's Governor. Last week I started hearing rumblings of a big effort out of Oregon Department of Energy. It seems to be moving big in this direction with the announcement of a 500 recharging station goal in the next two years. More to the point is that in Oregon the cost looks like it will be under $2,000 to field your own recharging station with the grants, tax credits and other offerings in Oregon's planning.

Wired Magazine covered Shai Agassi's vision for an electric car infrastructure. It's talked about, glowingly received, brainstormed, and then just kind of out there. Add a few billion dollars of Federal political resolve and BOOOOM! The electric car is a reality.

Now lets just see if Tesla, Chevy, and Nissan can deliver their electric cars.

I am really intrigued and interested. I have a few friends who have been betting big on electric power-trains, battery controls, and importing foreign I.P. around this sphere. Before last week I never really thought about the market potential for electric infrastructure. Specifically recharging station.

That has now changed!

My gears have really been spinning about how this market development will need to take place and I'm fascinated. In particular how do you charge for the refill of the vehicle (which current technology will likely take 2 hours). You have a capital cost to recoup, the variable electric bill to charge for, the space (which takes hours per customer), and of course how do you scale a regional, national, or international system so an electric car owning fleet can recharge simply in NYC, LA, or PDX regardless?

This moves the business model away from just electric recharging stations (on a real scale) to be a business model that fits with a traditional regional petroleum jobber. Those wadding away from one-off customers to a wide deployment are now wadding into my waters.

Its really got me thinking about the future of the markets I serve and its an exciting subject. It really reminds me of dealing with early supply issues of Biodiesel and Ethanol. Where those without any fleet supply experience were trying to build businesses without any context or understanding of their market's needs.

Its going to be fun over this summer.

EPA and RIN's Clearing House

OPISnet reports a turn of events around RINs (so did a recent RINstar webinar).

It looks like the EPA will be creating (or at least proposing) their own RIN clearing house. We don't know what this clearing house will look like but of course I'm pretty pessimistic. Guaranteed it will be brought to the industry by the same folks who invented the DMV. Hopefully I'm being a little over dramatic but that's just my gut instinct.

My initial thoughts on this was that you can tell the Obama Administration would be abandoning the market based approaches of the last eight years. Good for CPA's bad for the industry is my prediction.

Natural Gas vs. Diesel

It's happended for the first time in a while. Diesel is competitive with natural gas.

Wholesale diesel is under $1.20 a gallon which places it below retail natural gas at over $1 a therm (or $10 per million Btu). If you buy gas look at your utility bill. Its significantly cheaper to go oil for the first time in four or five year.

I don't pay attention to Nymex Natural gas costs but I understand those are way down. That's good sign for commercial users buying their own gas and paying the utility for delivery. Regardless for a heating oil distributor like myself this might be a ray of sunshine in a recession as the smaller dual fuel boilers and heating oil customers see value in staying oil.

Heating Oil at $1.20 a gallon is cheaper than natural gas.

$1.20/ 131,000 btus = .000009160305344 per btu

.000009160305344 x 100,000 btu's per therm of Natural Gas = $ .916 per therm equivalent

Future Fuel TV

About a year ago a TV crew from SyndiKast came to Portland to cover the retail biodiesel market in our city. Their project was called Future Fuel TV and the finished product was really good.

They also created a video which I think is a real good time-specific look at what Portland's biodiesel market was like a few years ago. Right before Portland's B5 mandate and the optomistic growth of voluntary adopters.

SyndiKast covers the gamut of biofuels and alternative energy. They produced the segments to be good stock footage as well as a good primer on the subject.

You can see SyndiKast website on biodiesel (I don't believe they have the finished video up currently).

Some more of my thoughts on Food vs. Fuel

Please consider a few thoughts I regularly mention when presenting on biofuels and the food-versus-food debate is brought up by someone who simultaneously thinks that biofuels are a net-energy loser but somehow agriculture is more energy positive without it.

Propose the question: "Where does ethanol come from?"

Corn carbohydrate.

Or to be exact something likely to be processed into corn-syrup (a process that takes energy as well) and then sold as a cheap filler to real food. This processed food being most aptly described recently in the book In Defense of Food as being a "food-like-substance".

The only thing sustained by corn-carbohydrate in the US is diabetes. Corn protein on the other hand is highly sought by any agricultural process feeding animals. The corn mash is the real value of corn and it is preserved in the process passed along as a value added good to feed lots.

Ethanol allows a growing corn market with a safer off-take partner in our vehicles appetites versus that of the low-price-leader junk food manufacturer. It also provides more high protein for the market with a wider future market mix for this agricultural input. In short, I don't weep for Lil Debbie's price pressures at my local 7-Eleven.

The next step, sustainability, is to improve our process. Reduce the inputs of petroleum fertilizer, water, and ultimately CO2 emissions while increasing our productivity. To reduce the inputs while maintaining or growing crop yields is the definition of wealth creation. This is the crux of business sustainability and the 'Lever of Riches' presented to us by the new clean tech movement afoot. Making more with less and improving the overall quality of life for those at every step of the value chain.

In the past the focus has always been on more. More calories, more weight, more yields. Now we must focus on quality and ethanol gives us a floor to work with. A floor for the transition from MORE to BETTER.

I realize that there are many who see no value in American mainstream Agriculture. They only see mono-crops, GMO's, and a spendthrift approach to consuming inputs in the ever expanding welfare state of Corporate farming. I on the other hand tend to look at modern American agriculture similarly as to how I consider the Egyptian pyramids. A giant monument of what human ingenuity can achieve. Overlooking the issues of human bondage and destruction these monuments to Pharaoh ego represent. Between the pessimist and optimist positions there is a huge middle ground of progress that can be achieved.

Food versus Fuel is the definitive issue of this middle ground. Where today is not a position of optimum results but it is definitely worth building upon. Progress can be had and I believe that ethanol moves us further towards a total better result than a farm and energy policy that doesn't include it.

Purdue's Library of Sustainable Energy

Purdue University Extension has put together and launched a website on "Renewable Energy" which showcases a great collection of information.

I really liked was the collection of simple and easy to read information. Purdue seems to even give Wikipedia a run for its money on some subjects. I really like the platform of PDF's and whoever put this together did an awesome job.

If you are doing research on the subject it provides a great resource in one place. I would rank this collection of information up there with the Oregon Environmental Council and Northwest Biofuels Association similar efforts. One difference though. Purdue covers new ground.

I don't agree 100% with what I've read so far. Regardless, Purdue's website is worth the bookmark!

Cascade Grains Files for Chapter 11 Protection

Its been a rough few months for the ethanol industry. First with falling commodity pricing washing away the protective assumptions of a hedged position. Then a recession reduced fuel consumption further reducing not only the price of gasoline but the mandate blend usages expected in Oregon.

To compound this Cascade Grain also shipped some product with (from what I've been told second hand) ASTM spec fuel that exceeding a sulfate content that threw the ethanol out of specification use by a major refinery selling E10 gasoline to retail users. This same (less than reliable rumor) source told me that the cause was the well water used in the manufacture of the product which had sulfur in it to begin with .

(NOTE: I have no idea if the above is true this is all second hand information that sounded plausible enough to post. If incorrect I will gladly pull this down and apologize).

This being reported in far less detail as part of the Chapter 11 story in the following news papers.
See it in the Portland Business Journal, Seattle Post Intelligence, an AP mention in the Oregonian (where I first saw the story this morning) and the local community to the plant the Longview Daily News

The best reporting on the subject is the local Longview Daily News. I recomend reading that first.

Algea from city waste. A common idea actually going forward.

In biofuels there are few unique ideas. What really constitutes a breakthrough (much like artistic projects) isn't the concept but finding a patron to move a project from the drawing board to demonstration.

Reuters UK reports a Dutch experiment going forward. Dutch biotechnology firm Ingrepro is the project developer moving waste streams into biomass.

"The waste of biomethane (biogas) plants has very rich nutrients left over. At the moment they just pump it to the river or throw it away -- but we say next to these biomethane plants you need to build algal ponds to grow biomass."

What I like about this is the co-locate with an existing methane recovery program. The fact that you already have an existing successful energy project sweetens the deal. In a future where CO2 off-set projects are going to be looking for easy to utilize methane to capture I see this as a nifty model to move algae projects forward as well.

So if the capital costs of a algae project are covered by an existing methane project with experienced technical staff capable of managing an algal operation that only leaves the cash value of monetizing the algae biomass. Ingrepro claims their market will be jet fuel.

Tesla Motors is on Track

It looks like it might really happen for Tesla Motors.

Wired Magazine's blog shows a teaser photo (shown above) and quotes the CEO Elon Musk as claiming that they are on track to be delivering vehicles shortly as well as providing electric power-trains for other auto manufacturers. This delivery of real, live, operating electric powered cars in turn making them profitable before the end of the year.

Looks like its either time for doubters to double down their negativity bets or start getting as excited as the rest of us.

The Babe Ruth of Soy Beans and a Story of Competitve Corn Growing

I've been meaning to put this Wired Magazine article up for over a month.

Here is a great story talking about real industrialized commercial agriculture. Its rare that you get a lay person's article about mono-culture agriculture and what they are wrestling with. The perspective touched on here is one worth reading.

Especially looking at the every expanding productivity of US soil, seeds, chemicals, manpower and on the ground intellect that is our mainstream agriculture.

One excerpt that really gets to the heart of the new development of GMO crops that caught my eye is below.

Cullers never went to college, but he rises at 3:30 each morning to study plant genetics online. Right now, he's urging Pioneer to genetically weave a bit of stiffening fiber into soybean stalks. Cullers plants 300,000 soybeans per acre, double the national average. In these super-dense fields, he explains, soy plants grow taller, fighting for sunlight. "They fall down a lot," he says, "and you lose photosynthesis. The trifoliates don't pump nutrients to the beans. And you get disease, too. It's crowded and humid out there, down low."

Something about it reminds me more about the development of a race car with experience in the Pit rather than the further development of an agricultural crop. This is obviously engineering with a specificity reserved up till now for mechanical systems not organisms.


NOTE: To those who are adamant and hostile to GMO. I understand, I've seen and read both sides of this debate in depth for years. Being on the sidelines and outside of the issue I am an agricultural agnostic. I do buy certified organic and local food as a rule as well. Please don't flame me just because I gave ink to what I view as a relevant article.

Oregon a Geothermal Power Wild West

Yeah I know. The title is a little bigger than the real article linked below. Either way I like using "Wild West" any time I can.

I am not as familiar with Geothermal power as I would like. Regardless its kind of outside the main buzz and gossip circles for biofuels, wind and solar power here in Oregon. I've never met a single person developing or involved in any way with a geothermal project. Though again and again I here from other sources (such as the Oregonian the most blunt of industry reporters) that Oregon is poised to be a player in geothermal projects.

Over the weekend I cam across an interesting Oregonian article from back in April. It just kind of popped up while I was looking from an article I had just read in the print edition. Thought I would share it. The best portion is a simple description of what geothermal power really is:

Modern geothermal power plants are more efficient than past versions. They draw hot water from the ground, using it to heat another fluid -- often isopentane -- that turns to vapor at a lower temperature than water. The isopentane vapor drives a turbine, which spins a generator to produce power. Afterward, the isopentane cools and condenses back into liquid form so it can go through the heating cycle again. The water, meanwhile, is reinjected into the ground to be reheated again.

Unfortunately the article does not talk about the specifics of what makes geothermal profitable. What the scale required would be. And of course other types of harnessed uses. My old trusty Wikipedia on the other hand has a little bit more and a few promising links. But no real discussion of cost of production and the capital cost of building a plant.

Well it looks like this advertising concept won't have the staying power we expected this year.

Oregon Transmission Lines

I came across this really good statewide image of Oregon's wind resources and transmission system (thanks to the 25x25 Coallition). The transmission system being a critical item to refer back to from time to time. With all this talk of potential actually having a road to market is even more critical than if the wind blows, the tide rolls, or the sun shines.

Whole Energy in the News

My Google Alerts shot back an interesting article.  Reading it I see one thing at play.  Atul and my friends at Whole Energy have walked head first into a political hornets nest.  

"They always try to put it on consent," said Mark Stechbart, outspoken biodiesel plant critic. "They hijacked a 12-year-old environmental impact report to gloss over the issues. I don't think Whole Energy has the finances to do this. The city is buying into a real bad fiscal situation. If they believe this is a legitimate thing to do, they should have known about this months ago and had a full public hearing. It's another midnight, last-minute (Mayor Jim) Vreeland deal." 

It looks like there are powerful players in this project rooting for their failure in an effort to take political swipes an the Mayor responsible for getting their project into place.  I know talking with Atul and Kevin from Whole Energy this project is a huge opportunity and a ripe project.  They describe the facility and the community as the best opportunity they've seen.  I wish them luck.  The west coast will need more product and I know the bay area is very interested in waste stream biodiesel.

Check out the complete article here.

My Opinion of New Gas Taxes for the Sake of New Taxes

Wired Magazine (as well as many others) are advocating for a motor fuel tax increase. Or in Wired's words:

We've already shown we can live with gas at $4 a gallon (less than half what some European countries saw during the price spikes last summer) without inviting the apocalypse. That pretty much shoots down the argument that people won't stand for higher gas prices. And, as Time magazine notes, an increase in the gas tax could be offset by a cut in the payroll tax, which has a far greater impact on our pocketbooks, anyway.

This argument (because we can afford it) is a horrible way to build a consensus around energy. Often referred to as an Apollo Project like grand marshaling of effort. That is what the US and world need now. A grand wide-ranging effort.

This argument though is unconvincing to me. In fact its the height of ivory tower belligerence in my opinion. As someone who has taken the bad debts of bankrupt businesses recently unable to cover the cash flow needs of high prices I differ about how "we can live with gas at $4" compared to those disengaged with the actual customers of this product. Its hard to justify a tax simply to improve the policy goals of our government in conflict with the actual cost of operating effect of small business and the low rungs of our economy.

Seeing the impact of $4 a gallon heating oil to my elderly customers it is painful. It hurts emotionally and stuns me reconciling my own belief in the free-market with a desperate want of an affordable option for these customers impacted. When you need to talk to trucking companies and other industrial diesel users with decades of good credit history now struggling to pay for the fuel cost of operating requires a tough choice on my end is also equally as hard.

High energy prices is dangerous and hard. It is not something we can live with. Especially if its just to tax and then spend. We need an actual policy. One that doesn't solely raise prices but allocates the incentive for a diverse, domestic, and sustainable portfolio of energy.

Our energy shouldn't be that high prices are okay. Our policy should be as inexpensive as possible with an ever improving requirement for reducing impact. I have no doubt that we can have extreme-low-impact energy at a cost far below $4 a gallon. All it takes is more competition and improved technology.

To move our energy infrastructure forward is not the job of a gas tax. A Btu tax maybe. A CO2 tax probably. Those would allow the market to support long range innovation and more importantly a wider/smarter grid to allow for more players. These would work if the money was directly placed in off-setting the Federal tax deductions for utility and refiners investing in new capital and infrastructure.  Regardless of what tax though it needs to be evenly distributed on those sources of energy that come from outside North America and bolster an incentive for new locally produced energy.  

A gas tax to rebuild infrastructure for gasoline users. That I agree with if it is connected (users of roads paying for improved roads is good policy). The real catch is that legislators (be they Federal or State) don't connect a $1 or revenue with a $1 of infrastructure.  Even when mandated usually the added revenue gets sucked up by the Administration of departments long before it sees the laying of asphalt or raising of bridges.  

Don't fall for those knee-jerk taxation lovers looking for an angle for any more revenue to dole out. Ready, shoot, aim with the US tax code will not move us forward.  Likely only backward. Without a clear results oriented policy taxes rarely accomplish anything but more special interest involvement restricting further progress.