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Arctic Leaf

Making the case for sustainable energy

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Bloomberg and the Business Council for Sustainable Energy are not at all discouraged by the big drop in oil prices. In fact, they say that the move toward non-carbon-based energy is so strong now that it’s taking on an air of inevitability.

That was the conclusion of the third annual Sustainable Energy in America Factbook, released by the council last week and researched and published by Bloomberg New Energy Finance (BNEF). The press conference, held in conjunction with the report’s release, featured an all-star lineup of industry experts, including David McCurdy, head of the American Gas Association; Tom Kiernan, CEO of the American Wind Energy Association; and Mark Wagner, vice president for government relations at Johnson Controls.

“America is in the midst of a sweeping energy transformation,” the report began. “New technologies and concerns about energy security and the future of the world’s climate are together driving rapid change in the U.S. energy economy. … Traditional energy sources are declining while natural gas, renewable energy and energy conservation are playing a larger role.”

On the possibilities of replacing gasoline — despite its cheaper price — the council was particularly optimistic about the future of electric cars. “Here’s why cheap oil won’t stop electric vehicles:”

“1. Since 2010 there’s been no relationship between gasoline price and electric vehicle sales, according to BNEF analyst Alejandro Zamorano Cadavid. Electric cars are still in the early-adopter phase, and someone paying $100,000 for a Tesla doesn’t care that gasoline costs a buck less per gallon.

“2. In Europe, gas taxes are so high that it makes the price of crude less important. If you’re in Norway, and gas drops from $10 a gallon to $9 a gallon, electric cars are still a deal.

“3. In China, the government is stepping up support for electric vehicles. Pollution has become a serious problem, and the Chinese are getting serious about fixing it. Plug-in sales are soaring.”

Of course, the council is taking a world perspective. The report mentions, for instance, that fossil-fuel subsidies outpace renewable-energy subsidies by 6 to 1. Most of those subsidies, however, are government edicts in developing nations that reduce the price of gasoline to consumers. In Venezuela, for example, gasoline is being sold at 2 cents per gallon. But this is left over from Hugo Chavez’s policies of using the country’s oil production to provide almost free gasoline to the people under the principle of “sharing the wealth.” This policy has proved disastrous, and the low price of world oil has practically bankrupted the country.

The same pattern has occurred in other countries, but low oil prices are proving to be a boon to governments. “First, a number of countries, including India and Indonesia, have used the price drop as cover to cut gasoline subsidies that were weighing town their budgets,” says the report. “Second, countries that include China have pocketed the savings from cheaper oil by increasing gasoline taxes to make up the difference.”

The pattern in the United States, where there is a freer market, has apparently been that cheaper gas prices are not cutting into the progress of plug-in cars and hybrids. They have risen to almost 2 percent of all car sales, after languishing well below 0.5 percent only three years ago. There may be a temporary drop now due to low gasoline prices, but the prices are not likely to stay down, and sales will probably bounce back. This is particularly true since both Tesla and GM are planning to introduce all-electrics to the mid-range market by 2017. Both companies are planning to market electrics in the $35,000 range, which will remove them from the “first-adopter” stage.

Of course, switching to electric doesn’t mean much if the electricity is producing the same old pollution, but there the Business Council says that the switch to cleaner natural gas — and particularly solar electricity — will make electric cars even more attractive. The council notes that oil plays very little role in the generation of electricity, and that electricity price are still going up, which makes solar electricity even more attractive. “Solar . . . will be the world’s biggest single source [of electricity] by 2050, according to the International Energy Agency.”

Although the report doesn’t mention it, improvements in cellulosic ethanol will revolutionize that market as well. And there is always the possibility that we may take advantage of our abundant natural-gas resources to convert gas to methanol, another cheap and clean substitute for gasoline.

Altogether, it does not appear that the temporary drop in oil prices is going to slow the effort to produce cleaner, cheaper energy that moves us away from dependence on foreign oil sources. That’s good news all around.

Arctic Leaf

Alternative and renewable fuels: There is life after cheap gas!

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usatoday_gaspricesSome environmentalists believe that if you invest in and develop alternative replacement fuels (e.g., ethanol, methanol, natural gas, etc.) innovation and investment with respect to the development of fuel from renewables will diminish significantly. They believe it will take much longer to secure a sustainable environment for America.

Some of my best friends are environmentalists. Most times, I share their views. I clearly share their views about the negative impact of gasoline on the environment and GHG emissions.

I am proud of my environmental credentials and my best friends. But fair is fair — there is historical and current evidence that environmental critics are often using hyperbole and exaggeration inimical to the public interest. At this juncture in the nation’s history, the development of a comprehensive strategy linking increased use of alternative replacement fuels to the development and increased use of renewables is feasible and of critical importance to the quality of the environment, the incomes of the consumer, the economy of the nation, and reduced dependence on imported oil.

There you go again say the critics. Where’s the beef? And is it kosher?

Gasoline prices are at their lowest in years. Today’s prices convert gasoline — based on prices six months ago, a year ago, two years ago — into, in effect, what many call a new product. But is it akin to the results of a disruptive technology? Gas at $3 to near $5 a gallon is different, particularly for those who live at the margin in society. Yet, while there are anecdotes suggesting that low gas prices have muted incentives and desire for alternative fuels, the phenomena will likely be temporary. Evidence indicates that new ethanol producers (e.g., corn growers who have begun to blend their products or ethanol producers who sell directly to retailers) have entered the market, hoping to keep ethanol costs visibly below gasoline. Other blenders appear to be using a new concoction of gasoline — assumedly free of chemical supplements and cheaper than conventional gasoline — to lower the cost of ethanol blends like E85.

Perhaps as important, apparently many ethanol producers, blenders and suppliers view the decline in gas prices as temporary. Getting used to low prices at the gas pump, some surmise, will drive the popularity of alternative replacement fuels as soon as gasoline, as is likely, begins the return to higher prices. Smart investors (who have some staying power), using a version of Pascal’s religious bet, will consider sticking with replacement fuels and will push to open up local, gas-only markets. The odds seem reasonable.

Now amidst the falling price of gasoline, General Motors did something many experts would not have predicted recently. Despite gas being at under $2 in many areas of the nation and still continuing to decrease, GM, with a flourish, announced plans, according to EPIC (Energy Policy Information Agency), to “release its first mass-market battery electric vehicle. The Chevy Bolt…will have a reported 200 mile range and a purchase price that is over $10,000 below the current asking price of the Volt.It will be about $30,000 after federal EV tax incentives. Historically, although they were often startups, the recent behavior of General Motor concerning electric vehicles was reflected in the early pharmaceutical industry, in the medical device industry, and yes, even in the automobile industry etc.

GM’s Bolt is the company’s biggest bet on electric innovation to date. To get to the Bolt, GM researched Tesla and made a $240 million investment in one of its transmissions plan.

Maybe not as media visible as GM’s announcement, Blume Distillation LLC just doubled its Series B capitalization with a million-dollar capital infusion from a clean tech seed and venture capital fund. Tom Harvey, its vice president, indicated Blume’s Distillation system can be flexibly designed and sized to feedstock availability, anywhere from 250,000 gallons per year to 5 MMgy. According to Harvey, the system is focused on carbohydrate and sugar waste streams from bottling plants, food processors and organic streams from landfill operations, as well as purpose-grown crops.

The relatively rapid fall in gas prices does not mean the end of efforts to increase use of alternative replacement fuels or renewables. Price declines are not to be confused with disruptive technology. Despite perceptions, no real changes in product occurred. Gas is still basically gas. The change in prices relates to the increased production capacity generated by fracking, falling global and U.S. demand, the increasing value of the dollar, the desire of the Saudis to secure increased market share and the assumed unwillingness of U.S. producers to give up market share.

Investment and innovation will continue with respect to alcohol-based alternative replacement and renewable fuels. Increasing research in and development of both should be part of an energetic public and private sector’s response to the need for a new coordinated fuel strategy. Making them compete in a win-lose situation is unnecessary. Indeed, the recent expanded realization by environmentalists critical of alternative replacement fuels that the choices are not “either/or” but are “when/how much/by whom,” suggesting the creation of a broad coalition of environmental, business and public sector leaders concerned with improving the environment, America’s security and the economy. The new coalition would be buttressed by the fact that Americans, now getting used to low gas prices, will, when prices rise (as they will), look at cheaper alternative replacement fuels more favorably than in the past, and may provide increasing political support for an even playing field in the marketplace and within Congress. It would also be buttressed by the fact that increasing numbers of Americans understand that waiting for renewable fuels able to meet broad market appeal and an array of household incomes could be a long wait and could negatively affect national objectives concerning the health and well-being of all Americans. Even if renewable fuels significantly expand their market penetration, their impact will be marginal, in light of the numbers of older internal combustion cars now in existence. Let’s move beyond a win-lose “muddling through” set of inconsistent policies and behavior concerning alternative replacement fuels and renewables and develop an overall coordinated approach linking the two. Isaiah was not an environmentalist, a businessman nor an academic. But his admonition to us all to come and reason together stands tall today.

Arctic Leaf

Will renewables survive the oil downturn?

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The seven-month-long plunge in oil prices appeared to be enough to re-establish gasoline as the default fuel for motorists, while stunting the progress of replacement fuels.

But attendees at last month’s North American International Auto Show in Detroit would have thought differently. Prominently displayed were various alternative vehicles that have been making headway and are just building momentum in the auto market, so they may be able to shrug off the precipitous fall in oil prices.

Also exhibited in Detroit was the first generation of hydrogen vehicles from Japan, which are challenging both the gasoline monopoly and the electric car, which is much more popular in America and Europe. The Honda FCV concept car boasts a driving range of about 300 miles and a refueling time of just three minutes, marking another step forward for the hydrogen fuel industry. California, where the cars are to be introduced later this year, is already preparing its “hydrogen highway,” which will make the cars feasible for drivers. Toyota’s fuel-cell offering, the Mirai — which also runs on hydrogen — is also scheduled to hit showrooms this year.

Chevrolet has had middling success with its electric-gasoline hybrid the Volt, but the maker has another generation planned with its concept car, the Bolt. The car will be made of extremely lightweight material and will have an all-glass roof and aluminum wheels for further weight reduction. Its lithium-ion battery will give the car a range of 200 miles and a recharging time of 40 minutes for an 80 percent charge. The price of $30,000 is likely to expand the market for electric cars.

Analysts note that oil is not used much for electricity anymore. The 1980s are the benchmark and generally remembered as the “Valley of Death” for renewables. Wind and solar were undercut by falling oil prices and lost their place in the generation of electricity. At the time, oil was providing 17 percent of our electricity. Now it provides barely 5 percent, and wind and solar energy have not felt any effect from oil prices.

Of course, natural gas has largely replaced oil, and a drop in gas prices could cut into the advance of renewables. Gas prices have traditionally been between one-sixth and one-twelfth of oil prices but have uncoupled themselves in recent years. This could work both ways, since gas prices have not fallen by the same degree that oil prices have.

Gas still holds its edge, however, and this means the attempt to use natural gas as an oil substitute may not slow. T. Boone Pickens has had some success in switching long-haul trucks to compressed natural gas, and this effort may be slowed only a little by gasoline’s new low price. However, if natural gas prices fall as well, then it may be able to keep pace with lower oil prices. The possibility that cheaper natural gas might encourage the conversion to methanol as a gasoline substitute would also be encouraged by falling natural gas prices.

That leaves the big question of whether ethanol can survive in the face of falling gasoline prices. In the first place, low gas prices are not likely to last forever. Some analysts are predicting crude oil prices will probably bounce back to $75 a barrel in the near future. Second, ethanol is protected by the federal mandate that says each gallon must contain 10 percent ethanol. If falling gas prices encourage the purchase of more gasoline – which it already has – then ethanol consumption must climb as well.

Ethanol has been under fire recently from studies that say it competes with food resources. The latest is a report from the World Resources Institute in Washington, which argues that “There are other, more effective routes to get to a low-carbon world.” But the rapid development of cellulosic ethanol severely reduces the possibility that ethanol will compete with food crops. And the possibility that natural-gas-based methanol might begin substituting for ethanol makes the threat of competing with food crops even less.

Altogether, it appears that renewable energy and alternate vehicles are going to survive the dramatic fall in oil prices. Alternative vehicles and other related technologies are now too far along to be crushed by falling oil prices the way they were in the 1980s.

(Photo: The Toyota Mirai at the Los Angeles Auto Show in November. Credit: Vision Automotriz, Flickr)

Fuel Freedom Staff

Officials work to clean up ethanol spill in Iowa

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UPDATED 2:21 p.m. PST Friday. Officials say it’s unclear how much ethanol has spilled into the Mississippi River following a train derailment about 10 miles north of Dubuque, Iowa. The 81-car train derailed on Wednesday morning, and 15 cars left the tracks in a remote, wooded area inaccessible by road. Crews had to build a temporary road to reach the site. Eight of the 14 cars that were carrying ethanol appeared to be leaking, and crews were working to minimize the impact on the river, and to wildlife, Canadian Pacific said. Fox Business reports:

“We have verified some ethanol has reached the water but we do not have an estimate of how much,” said CP spokesman Andy Cummings, who was at the scene Thursday. Ethanol mixes with water and, in high concentrations, can deplete the oxygen in water and kill fish, said Iowa Department of Natural Resources spokesman Kevin Baskins. He noted the impacted segment of the river was within the Upper Mississippi National Fish and Wildlife Refuge. Baskins said the primary concern is the threat to fish and other aquatic life, such as mussels, which can’t easily move away when oxygen levels dip. The DNR plans to sample fish collected from fishermen and monitor open-water areas in the largely iced-over river for signs of dead fish.

Ethanol is an alcohol fuel made primarily from corn, but it can also be processed from any other plant high in sugar content. It’s fermented in a distillery, and in the past it was commonly known as “moonshine.” The ethanol being transported was denatured, meaning it contained toxic additives to discourage human consumption. Such spills involving crude oil have tended to have more environmental impact. The Renewable Fuels Association points out in a report on the dangers and cleanup protocols for ethanol spills:

Ethanol is less toxic than gasoline. Carcinogenic compounds are not present in ethanol. … The biggest difference between ethanol and hydrocarbon fuels is the water solubility. This property changes how ethanol will react in the environment, including surface and ground water, and soils. The complete solubility of ethanol in water means that if a release reaches surface water, the ethanol will rapidly disperse and can no longer be recovered as a product. … Ethanol in surface water will rapidly biodegrade. The concentration of ethanol can create a toxic effect on aquatic organisms, though frequently the depletion of dissolved oxygen caused by biodegradation has a greater impact to fish and aquatic organisms.

As production of U.S. oil skyrocketed the past few years, much of it from large shale-rock formations in North Dakota and Texas, more oil needed to be transported through America’s rail system. There has been a series of derailments and fires, most notably the inferno in Quebec that killed 47 people 2013. Much of the spotlight has shone on the aging DOT-111 fuel-tanker rail car that’s been in use for decades. That was the model of car used on the Iowa train that derailed. Reuters reported:

The incident is likely to add to a debate about transporting flammable goods by train after a series of fiery accidents involving crude oil cargoes in recent years. The U.S. Department of Transportation has proposed new safety features for new tank cars transporting fuel and called for the phasing out of older cars considered unsafe. The U.S. ethanol industry has pushed back on the new rules, saying regulators should distinguish between corn-based biofuel and crude oil. Ethanol is less volatile than crude oil, is biodegradable and has a 99.997 percent rail safety record, according to the national Renewable Fuels Association.

 

Fuel Freedom Staff

Why are the Koch brothers buying up ethanol plants?

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Flint Hills Resources, a biofuels company owned by the corporation controlled by brothers Charles and David Koch, has purchased its seventh ethanol plant.

This week Flint Hills completed its acquisition of the plant near Camilla, Ga., from Southwest Georgia Ethanol. According to Flint Hills’ press release, the plant produces about 120 million gallons of ethanol a year and employs about 60 people.

As the Wichita Eagle notes, Flint Hills is now one of the largest ethanol producers in the country. Its biofuels business …

… has a combined annual capacity of 820 million gallons of ethanol, a biodiesel plant and investments in biofuels technology and feedstock development.

Considering that the entire ethanol industry produced 13.3 billions of fuel in 2013, Flint Hills now controls 6.2 percent of the U.S. market. Pretty substantial for an enterprise owned by Koch Industries, which  made the bulk of its vast fortune on oil.

The Kochs are hardly greenies. According to a Rolling Stone story from last September:

Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation’s waterways than General Electric and International Paper combined. The company ranks 13th in the nation for toxic air pollution. Koch’s climate pollution, meanwhile, outpaces oil giants including Valero, Chevron and Shell. Across its businesses, Koch generates 24 million metric tons of greenhouse gases a year.

A 2011 story by the Center for Public Integrity contends that while oil is the “core of the Koch business empire,” its influence extends much further.

Koch companies trade carbon emission credits in Europe and derivatives in the U.S. They make jet fuel in Alaska from North Slope oil, and gasoline in Minnesota from the oil sands of Canada. They raise cattle in Montana and manufacture spandex in China, ethanol in Iowa, fertilizer in Trinidad, nylon in Holland, napkins in France and toilet paper in Wisconsin.

Since federal guidelines call for a certain amount of ethanol to be blended into the nation’s gasoline supply, investing in ethanol might be a simple hedge, the story says.

“New or emerging markets, such as renewable fuels, are an opportunity for us to create value within the rules the government sets,” Flint Hills Resources President Brad Razook told his employees …

Arctic Leaf

U. of Minnesota’s ethanol study falls flat

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Every so often, a new “study” is published that shows why many of oil’s competitors are “bad” in one form or another. Such “studies” are usually widely circulated in the media without much fact-checking. When other experts start looking into the “study,” they usually find that it is anything but scientific (remember all those “studies” that said that smoking is good for you.)

The question each American should ask is, Why are they trying to tell us which fuel we should use? All these studies basically don’t want Americans to be exposed to other fuels (in order to maintain the oil monopoly). Americans are smart enough to decide which fuel is best for them, but that’s what scares the oil monopoly. They don’t want competition at the pump. Take a look at the most recent “study.”

Researchers at the University of Minnesota have stirred up a hornet’s nest by supposedly proving that ethanol is no better than gasoline for air emissions, and electric cars don’t fare much better either, especially if they get their electricity from coal. The study compared the air pollution level of gasoline with 10 alternative fuels and came up with a winner – what they called “renewed methane” — methane captured from landfills, which have no link to fossil fuels.

Air-pollution groups and the ethanol industry pointed out that the study was deeply flawed and based on outdated assumptions.

“On a full lifecycle basis, the study’s results are contradictory to the results from the Department of Energy’s latest GREET model,” the Renewable Fuels Association wrote in a response published the next day. (GREET stands for “Greenhouse gases, Regulated Emissions, and Energy use in Transportation,” a recent standard set by the Department of Energy that attempts to measure all energy use for the different fuels through the entire life cycle. GREET shows ethanol doing fairly well, while the Minnesota study used an older model that is not as favorable to ethanol.)

“There is a substantial body of evidence proving that ethanol reduces both exhaust hydrocarbons and CO emissions, and thus can help reduce the formation of ground-level ozone,” the RFA said. The study “… excludes NOx and SOx emissions associated with crude oil extraction, a decision that grossly under-represents the actual lifecycle emissions impacts of gasoline. Omitting key emissions sources from the lifecycle assessment of EVs and crude oil inappropriately skews the paper’s results for the overall emissions impacts of these fuels and vehicles.”

The study included the entire lifecycle components of ethanol but excluded the lifecycle components of gasoline (like tar sands extraction). This is not a minor omission. It essentially means that the entire report is materially incorrect.

The Urban Air Initiative was also highly critical of the Minnesota report. “The study utterly failed to consider a vast body of research by auto industry and health experts that conclusively show gasoline aromatic hydrocarbons are the primary source of the most dangerous urban pollutants,” said David VanderGriend, president of the Initiative. “The aromatics — which comprise 25–30 percent of U.S. gasoline — are responsible for a wide range of serious health effects, including autism, cancer and heart disease.”

“Urban air pollution, and specifically summertime smog or ozone, is a mix of volatile organic compounds, carbon monoxide, particulates, NOx, and countless other factors. Gasoline itself is a toxic soup of chemicals, but as we add ethanol we clean up that gasoline and protect public health,” added VanderGriend, whose group keeps track of pollutants in cities.

VanderGriend pointed out that ethanol is a source of clean, low carbon octane that is used in federal reformulated gasoline in major U.S. cities. Although it is not required, refiners choose ethanol for its clean-burning properties and its ability to help them meet emission standards. “Excess carbon monoxide has essentially been eliminated in the U.S. due to the presence of ethanol, and ozone violations are at the lowest levels in the history of the automobile,” said the RFA response. According to the EPA, the amount of ozone in the air has decreased 18 percent from 2000 to 2013.

What the Minnesota study completely misses is the role that ethanol is playing in reducing our dependence on foreign oil. People have jumped to the conclusion that because our imports have fallen and because the price of oil has nosedived, we don’t have to rely on oil from countries that oppose our policies at all. Nothing could be further from the truth. We still import about 40 percent of our oil and spend $300 billion in the process. This figure is likely to remain high as oil bounces back from its recent lows. The major chunk of our trade deficit is made up of imported oil.

We still have a lot way to go in freeing ourselves from these responsibilities. All these strategies – ethanol, methanol, compressed natural gas, electric vehicles and others – can play a part. The important thing is to give consumers a choice – as Fuel Freedom Foundation has long recommended. The last thing we want to do is be influenced by studies that are heavily biased against ethanol or any of the other alternatives that threaten the monopoly of gasoline.

Arctic Leaf

Puncturing the myth of 14X improvement in biofuels

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Jim Lane was demonstrating some of his usual skepticism when he took on the story of a 14X improvement in the production of biofuels last week.

The story began with an item in Renewable Energy World, Green Car Congress and several other publications. The National Renewable Energy Laboratory published a report on its website stating that a bacterium had been discovered that processed biofuel from cellulose material at 14 times the rate of previously used bacteria.

Lane starts with an apology as to why Biofuels Digest didn’t get too excited about this announcement.

You may have wondered why the discovery was not also hailed in The Digest this week, and on the topic there’s good and bad news, friends.

The good news is that such an enzyme exists, though it doesn’t quite perform at the 14X level and isn’t out of the lab yet. The bad news is that the research that inspired the article actually was published in Science in 2013. Sorry, folks, not a new breakthrough.

First, Lane takes these publications to school for a little elementary arithmetic. The articles said that the new microbe “revealed twice the total sugar conversion in two days” that the present microbe “usually produced in seven.” But as Lane points out, that means it’s 7X as effective, not 14X. But “What does it matter,” he says. “Two of the stubborn problems in converting cellulose to fuels have been the cost of enzymes and the capex [capital expenditures] associated with the technology.” Neither problem is really addressed by the new enzyme.

Actually, the new enzyme – caldicellulosedisruptor bescii, which was discovered in a region of hot springs and land on Russia’s Kamchatka Peninsula — does hold some promise. Because they are so tolerant of heat (up to 193 degrees F), they promise to eliminate the pretreatment of cellulosic material, which would mean a huge saving in processing. Almost half the cost of reducing cellulosic material to sugars comes in pre-treatment. The trick will be getting the process that has been demonstrated in the lab to be repeated on a commercial scale. “Let’s locate all of this where it is, which is in the lab. Which is about 10 years from appearing in an at-scale process somewhere, you average out the timelines for bringing processes based on other microbes to full commercial scale.”

Which is to say, no one has shown that these results can be achieved in a 500 liter fermenter, much less a million liter monster as we see in commercial scale operations. There’s going to be, lime, zero knowledge at this stage about the behavior of these microbes in a fermenter under the incomplete mixing conditions that almost invariably are found at scale.

So, let’s keep the risks in mind, and the timelines, too – even as we hail a genuinely promising and fascinating scientific advance.

Lane has some quiet optimism about the process itself. He isn’t as entirely cynical as he would let on.

There has indeed been some research showing that the CelA bacteria can handle large quantities of cellulosic material in a commercial setting. As BioDigest reported last year, “a group of researchers led by the University of Georgia’s Mike Adams demonstrated that caldicellolusiruptor could “without pretreatment, break down biomass, including lignin, and release sugars for biofuels and chemicals production.” The group wrote in Energy & Environmental Science that “the majority (85%) of insoluble switchgrass biomass that had not been previously chemically treated was degraded at 78 °C by the anaerobic bacterium Caldicellulosiruptor bescii.)”

Digesting switchgrass and other cellulosic material into sugars — which can easily be converted to ethanol — would be a huge advance, even if it took ten years to bring into play. Even if it’s not the miracle that some have touted, it’s a huge advance. The question of which publication broke the story first will fade, and we’ll soon know if the new bacteria really can help us turn seemingly intractable vegetable material into a useful fuel.

Arctic Leaf

Does ethanol have to be hurt by falling gas prices?

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Jim Lane, editor and publisher of Biofuels Digest, is one person who thinks alternative fuels aren’t necessarily going to be hurt by the huge drop in the price of crude oil.

In a post on the Digest Jan. 6, Lane lays out the rather complicated case of why it doesn’t pay right now to be dumping your alternate-energy stocks. That’s been the reaction so far to anything related to the price of oil. But Lane says there are special aspects of alternatives like ethanol that will be affected in a different way.

In the first place, Lane notes that while crude oil prices have been falling, ethanol prices have been falling, too. Since last June, crude oil has fallen from $115 a barrel to under $50, a remarkable 60 percent drop. Yet ethanol has fallen as well, from $2.13 a gallon to $1.55 a gallon, a formidable 27 percent drop. This is due mainly to the falling price of corn, which has been at its lowest level in recent years. A bushel of corn fell over the same period from $4.19 a bushel to $3.78, a 10 percent drop. In this way, ethanol is only marginally dependent on the price of oil and can show its own price pattern.

One thing worth noting is that there is a certain amount of elasticity in American driving. People tend to increase their driving range when the price of gasoline goes down. This is particularly true when it comes to taking vacations, which tend to be a long-term planning effort. If the price of gasoline stays down through next summer, people are more likely to increase gas consumption. The fact is that gasoline demand has actually reached its highest point in the last few months since the price of oil began to fall, as the following graph indicates:

graphic

Now drivers are required to include 10 percent ethanol in each gallon of gas. Therefore, ethanol has a fixed market. Driving has been declining in recent years, which is one reason that the Renewable Fuel Standard has been under fire – because the absolute amount of ethanol required has exceeded the 10 percent requirement in relation to the amount of gasoline consumed. Refiners and oil companies must buy this amount of ethanol. This is the reason the Environmental Protection Agency has been holding back on setting an RFS for 2014 — because the original amount prescribed was going to exceed the 10 percent figure. If people start taking advantage of lower gas prices and start consuming more gasoline, the amount of ethanol required will grow. “(W)e should be seeing a 2+% increase in gasoline demand, and that will take some pressure off the ethanol blend wall,” Lane writes. It might make EPA’s decision easier, if it ever gets around to setting a number.

Just to emphasize this point, an RIN — Renewable Index Number — is required by the EPA to prove that a refinery has been adding ethanol up to the 10 percent mark. The price of RINs has actually been rising as gas prices have fallen. As Lane writes: “Part of the reason that the ethanol market is holding up relatively well in tough times is the impact of the Renewable Fuel Standard, and its traded RIN system. RIN prices have jumped as oil prices have slumped — and a $0.76 increase in the RIN value of a gallon of fuel is a striking increase in value.”

So all is not dark for the future of alternatives. Ethanol’s place is secure, despite the fall in gasoline prices. Remember, it’s not that demand for gas is falling, but people are spending less for what they get. If methanol is given a chance, it might turn out to be more invulnerable, since it’s not tied to corn prices but to natural gas, which we seem to have in even greater abundance than oil. Electric cars also don’t lose their appeal, since much of their appeal is getting off gas entirely and unbuckling from the oil companies. It may not be time to abandon your stock in alternative energies quite yet.

Fuel Freedom Staff

Obama aims to cut methane emissions 45 percent

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President Obama’s latest effort to mitigate the effects of climate change will be to crack down on methane leakage from oil and gas wells, The New York Times reported.

The EPA will announce new regulations this week aimed at reducing methane emissions by 45 percent by 2025, compared with 2012 levels. Final rules will be set by 2016, the newspaper reported, citing anonymous sources.

Obama, stymied by Republican opposition that stands to become more solidified now that the party controls the Senate as well as the House, has increasingly turned to executive action, skirting Congress, to deal with climate change. The administration says the Clean Air Act gives it the green light to issue such mandates.

Methane, the primary component of natural gas, sometimes escapes from oil and gas wells, in addition to pipelines. Although the gas accounts for only 9 percent of overall greenhouse-gas emissions, it’s 20 times more potent than carbon dioxide, another GHG that accounts for the majority of emissions.

The Natural Resources Defense Council applauded the proposed regulations, but the oil and gas industry said they’re unnecessary, since they’re already motivated to capture methane instead of allowing it to escape into the atmosphere. If it’s captured, it can be burned in power plants to generate electricity, making it a cleaner alternative to coal. Methane can also be used to fuel cars and trucks, as compressed (CNG) or liquefied (LNG) natural gas. It can also be converted into two types of inexpensive liquid alcohol fuels, ethanol or methanol.

Howard Feldman, director of regulatory affairs for the American Petroleum Institute, said:

“We don’t need regulation to capture it, because we are incentivized to do it. We want to bring it to market.”

That market would grow if the infrastructure for transportation fuels were expanded, creating more of an incentive to capture methane. The price of natural gas stood at $12.68 per million metric British Thermal Units (MmBTU) in June 2008, only to crash to $1.95 by April 2012. Last month the average was $3.43 at the Henry Hub terminal in Louisiana. Profit margins are still so low that oil drillers flare off much of it.

Landon Hall

Read before you download: What the critics said about PUMP

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PUMP hit theaters around the country in September, and now it’s about to hit the digital landscape.

You can download it on iTunes now. You can watch the trailer, and learn more about the film and the experts who made it such a success, at PumpTheMovie.com

PUMP was a hit with the public and the critics: On Rotten Tomatoes, 85 percent of viewers said they liked the film, while 73 percent of critics gave favorable reviews.

You should do yourself a favor and read some of these reviews yourself, though: The critics who saw PUMP had very nuanced, well-thought-out views, giving the important issues raised in the film the proper weight.

Below are excerpts from some of the bigger media outlets that reviewed the film. Read all about it, then watch the film and tell us what you think!

The Washington Post:

” … the movie makes compelling points. More important, the film suggests both long-term and short-term solutions.

“… if consumers hate oil so much, why aren’t there more readily available alternatives?

“That’s the question the documentary keeps circling back to, which is a smart approach because it’s aimed at appealing to both eco-conscious liberals and fiscal conservatives.”

The New York Times:
“… the arguments have an appealing logic for those concerned about the environment.

“… the movie goes beyond alarmism with solutions that on the surface would seem to find common ground between environmental advocacy and unfettered capitalism.”

The Hollywood Reporter:
“The historical overview they provide is insightful and lucid … The headline is that most cars on today’s roads could easily run on non-petroleum fuels that are cheaper, cleaner and more plentiful than gasoline. At the heart of the doc is ultra-practical information with the potential to galvanize a broad audience.

“Their thesis transcends red-state/blue-state polarities.

“The shift from quiet how-we-got-here outrage to hope, in the form of hands-on specifics, torques Pump and gives it momentum.

“… the eye-opener is that millions of American vehicles are already equipped to switch between gas and ethanol.

“Pump offers a map to true competition à la Brazil’s, and argues convincingly that there would be profound and wide-ranging benefits if American car owners were in the driver’s seat.”

The Los Angeles Times:
“Viewers of ’60 Minutes’ will experience déjà vu during vignettes on Elon Musk’s Tesla Motors and Brazil’s exemplary national conversion to ethanol, but ‘Pump’ ventures a step further to explore the practicality of flex-fuel vehicles in this country and methanol as another fuel alternative.

“As far as documentaries go, the film is exhaustively researched, interviewed and documented. Its disclosure that General Motors declined multiple interview requests earns the film some credibility where other advocacy docs fall short. It arms advocates with plenty of well-reasoned and compelling talking points …”

Variety:
“This zippily edited docu aims less to chastise than to emphasize that solutions to our oil addiction and much-vaunted desire for energy independence are tantalizingly close at hand.

“For unabashed agitprop, ‘Pump’ is quite entertaining, drawing together colorful archival footage, interviewed experts and ordinary folk, as well as sojourns to China (in the wake of its economic boom now the world’s largest market for cars) and Brazil (whose shift to ethanol production brought prosperous energy dependence), in a lively, professional package.”

The Oregonian:

“The most convincing testimony comes from John Hofmeister, a former president of Shell Oil who has switched sides. But the real stars of ‘Pump’ are the hackers and engineers who’ve devised cheap and easy ways to convert vehicles to flex-fuel capability.

“The inability of our capitalist economy to exploit this untapped market is puzzling until the filmmakers get to the part about the massive political donations made by Big Oil. Switching from gasoline to a cheaper, more environmentally friendly, domestically available fuel won’t address the other negative consequences of car culture — urban sprawl, traffic congestion, increased obesity — and neither does the film. But by pointing out simple things that could make huge differences, it’s a solid first step.”

Bloomberg BusinessWeek:
“This is the second feature about ending America’s dependence on oil from the wife-husband team of Rebecca Harrell Tickell and Josh Tickell. They’re tub-thumpers, but not shrill. Their thrust is roughly that cars = freedom. Americans love their freedom, and they sure do love their cars. Yet strangely, car- and freedom-loving Americans lack freedom of choice when it comes to what their cars run on. What gives? Oil is far from the best fuel for an automobile—not even close, if you factor in extraction costs, energy security, and pollution.

“Determined not to dwell on the negative, Pump introduces us to hobbyists, entrepreneurs, and even indie service station owners already making the break from petroleum.”

Village Voice:
“A car’s high beams trace slow-motion lightning across the highway. An auto worker in suspenders strides the factory floor. These seductive images of the American automotive industry act as dreamy parentheses to Josh and Rebecca Tickell’s compelling and cogent documentary Pump, which examines why Americans are so lacking in options at the gas station, what that means about the future of transportation and environmental health, and why the oil-driven American Dream must die — why it is dying.

“By carefully tracing the history of the oil companies’ legislative and consumer power and influence, the directors explore America’s issue of substance dependence, and indict the companies that act as enablers. If you’re not convinced we’re addicted, ask yourself if you could quit at any time.”

Reuters’ Breakingviews:
“A narrow focus helps “Pump” make its point clearly. The filmmakers don’t take on global warming or automobiles. Their solution is simple and straightforward: introduce competition at the gas station and let the invisible hand do the rest.

“Demand for alternatives, including electric vehicles from Elon Musk’s Tesla, is … growing alongside a crude backlash. On Monday, for example, the Rockefeller Brothers Fund, an $860 million philanthropic organization that owes its existence to the Standard Oil fortune, said it would divest from fossil fuels. The collective effect of all these efforts, including the message from ‘Pump,’ may just help fuel a trend.”

The Source magazine:
” ‘Pump’ makes clear one thing: oil is used in everything, from clothing to furniture, plastics to medicine and, yes, even engines to power cars. And increased demand leads to, you guessed, higher prices. ‘Pump’ explores this in a holistic, appreciative and thoughtful way.

‘Pump’ explores a range of alternative fuels including ethanol, methanol, natural gas among others, but never suggests humanity stop driving cars altogether. It would be a major technological step backward, damaging decades of effort. Instead, ‘Pump’ offers reasonable, grassroots-style progress that enables anyone to make a sustainable change.”

Cinemacy:
http://cinemacy.com/pump/

“One thing was made clear to me, we have a right to choose how we fuel our cars and that right is not being acknowledged by the government or big oil companies, which means the responsibility for change lays solely on us.

“The unpredictable cost of fuel, coupled with the damaging effects to our environment and our dependency to over-seas oil rigs is a scary future that we find ourselves looking at today. We are forced into limited choices at the pump, which only creates a stronger foreign dependency and a wealthier fuel monopoly. The message Pump presents, once you get past the numbers game, is simple: American made replacement fuels will equal more jobs, a healthier environment, and a stimulated, growing economy.”

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