Sunday, May 31, 2009

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.


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, May 7, 2009

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.

Tuesday, May 5, 2009

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.



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:
--Robert Gough, OPISnet
--Rachel Gantz, OPISnet

Monday, May 4, 2009

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, May 3, 2009

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.