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Fuel Freedom Staff

House approves Keystone XL again, Senate up next

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The U.S. House approved, for the ninth time, construction of the Keystone XL pipeline, designed to carry Canadian tar-sands oil to the Gulf of Mexico.

The bill passed Friday by a vote of 252-161, but prospects in the Senate are unclear. The Senate is due to take up the bill Tuesday, but the measure must beat the 60-vote threshold to move forward.

USA Today reports:

If it overcomes a 60-vote threshold it will head to President Obama’s desk where he will either sign it into law or veto it. The president has delayed a decision on the pipeline, deferring to an ongoing review at the State Department, but White House spokesman Josh Earnest suggested Thursday that the president could veto it.

Obama has declared previously that he would only approve the pipeline if it could be demonstrated that the project wouldn’t increase greenhouse-gas emissions.

Democratic Sen. Mary Landrieu of Louisiana has been promoting her own bill in the Senate. The bill approved Friday was sponsored by Rep. Bill Cassidy of Louisiana. He will face Landrieu in a runoff election next month for the Senate. Landrieu has an uphill battle to win a fourth term: Although she beat Cassidy by 1.2 percentage points on Election Day last week, neither candidate won at least 50 percent of the total, forcing the runoff. Observers expect much of the support of the third-party candidate in that race, Rob Maness, a Tea Party favorite who won 14 percent in the election, to swing to Cassidy.

Why is Landrieu so strongly in favor of Keystone XL? A story on Slate.com tried to figure that out, as well as why the leadership in the (for now) Democratic-controlled Senate is so willing to bring her bill to the floor for a vote:

What’s befuddling isn’t that the Democrats are playing politics with Keystone—it’s that they’re playing them so poorly. Thanks to their seven-seat-and-counting gain on Election Day, Republicans will take control of the Senate next year for the first time since George W. Bush’s second term. More importantly for the Keystone crowd, the pipeline is all but certain to have a filibuster-proof 60-plus votes in the next Senate, whether Landrieu is there or not.

Fuel Freedom Staff

Some experts say China really is serious about climate change

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The reaction to President Obama’s climate-change deal with Chinese President Xi Jinping, among congressional Republicans, was swift and negative. The prevailing sentiment is that China didn’t give up as much in the bargain as the U.S., and that China isn’t likely to live up to its end of the agreement anyway.

But Mother Jones magazine quotes some experts on U.S.-China relations, and they say China is indeed serious about cutting greenhouse-gas emissions.

MJ’s James West writes:

So I asked experts on US-China relations to explain why this deal was so attractive to the leaders of two countries that have historically locked horns over everything from human rights to lingerie imports. Here’s their explanation of why China really does want to want to act on climate change, and why the bargain makes sense for President Barack Obama, as well:

China has to act on air pollution. If it doesn’t, the country risks political instability. Top Republicans have slammed the US-China deal as ineffective and one-sided. “China won’t have to reduce anything,” complained Sen. Jim Inhofe (Okla.) in a statement, adding that China’s promises were “hollow and not believable.”

But the assumption that China won’t try to live up to its end of the bargain misses the powerful domestic and global incentives for China to take action. The first, and most pressing, is visible in China’s appalling air quality. President Xi Jinping needs to act now, says Jerome A. Cohen, a leading Chinese law expert at New York University. Why? Because “the environment—not only the climate—is the most serious domestic challenge he confronts.”

Arctic Leaf

Can a carbon tax capture oil’s emissions?

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One of the knottiest problems for people who want to reduce carbon emissions with cap-and-trade and command-and-control regulation is that it is impossible to include motor vehicles in these schemes.

The Obama administration is now concentrating on coal plants and other stationary sources. This affects coal and possibly gas plants, but the oil industry gets off scot-free. And cars and other moving sources constitute almost half the carbon we’re putting into the atmosphere.

The idea that keeps popping up, which would deal with these difficulties and perhaps make climate issues less partisan, is a flat tax on carbon products. The tax would fall on coal, gas and oil and be collected at the mine or wellhead. $20 per ton is the number most often mentioned. Coal would pay the largest share, oil second-most and natural gas the least, since they differ in carbon content. But everything else is equal across the board. It doesn’t matter what people do with the fuel once they’ve claimed it. If you conserve energy, you burn less fuel, if you switch from high-carbon coal to natural gas. And if you discover a true alternative that doesn’t rely on fossil fuels, you pay nothing.

In theory, it’s an ideal solution. Adele Morris of the Brookings Institution has calculated that a modest carbon tax of $20 per ton would allow us to lower the corporate tax to 25 percent, just below the world average, and still leave $199 billion for deficit reduction over the 10 years. Most important, though, is that a carbon tax would capture non-stationary sources, which is the Achilles’ heel of cap-and-trade. When it comes to mobile sources of carbon, regulators just throw up their hands. “You can’t measure emissions from individual vehicles,” they say. But a carbon tax captures everyone, including cars and trucks, which are impossible to monitor as individual vehicles. In the end, it is a much better system than that now being pursued by the EPA.

So what would this mean for alternative vehicles?

Corn ethanol would be a big winner. It is not derived from fossil fuels, and it’s already in 10 percent of gasoline that is dispensed at the pump. Morris estimates that a tax of $20 per ton on carbon would mean a 4-to-5 cents per gallon increase in gasoline. E85 now undersells gasoline in the Midwest by that same amount, and a carbon tax would make it even more attractive. Other parts of the country might start taking notes as well, since E85 can be sold anywhere; it just hasn’t caught on yet.

Methanol would not have the same advantages, since it is currently made from natural gas. But gas has only about two-thirds of the carbon content of oil, and a carbon tax would work in its favor. In addition, methanol can be derived from other sources: It’s the simplest alcohol and can be distilled from municipal waste, forest wastes and any number of the other sources that now go unused.

CNG and LNG do not stand up quite as well. Both would have to pay the carbon tax but would enjoy a small advantage over diesel, became the carbon content of gas is lower. Still, they would see their own price go up, because they are fossil fuels.

Electric cars, on the other hand, would be the big winner. Their cost advantage would widen, and they would have a leg up on gasoline and diesel. Of course, electricity must come from somewhere. It is now generated largely from coal and natural gas, and prices would rise. But the tax would encourage a shift from coal to gas, or non-fossil sources, and prices would eventually come down again. Morris calculates that revenues from the tax will eventually taper off from $160 billion to $60 billion by 2030 because of adjustments in the economy.

The carbon tax has a long and curious history. Conservatives often claim credit for it under Milton Friedman’s dictum, “I you want more of something, subsidize it. If you want less of something, tax it.” The Heritage Foundation actually backed a carbon tax in the early days, when the Obama administration was trying to impose cap-and-trade on the entire economy. But other factions of the conservative movement became convinced that the Democrats would just spend the money on renewable energy projects, so Heritage backed away.

Now the ball is being carried by a group of moderates who have a reputation for viewing things with a level head. The Brookings Institution has been at the forefront, arguing that a carbon tax promises to save billions. “By providing simple, transparent, but powerful market-based incentives to reduce damaging greenhouse gas (GHG) emissions, this levy could supersede the array of costly regulatory command-and-control approaches and expensive subsidies aimed at reducing dependence on fossil fuels and promoting clean energy,” writes Morris for Resources for the Future, another non-partisan group. Environmental Defense Fund, another moderate group that takes sensible positions, has said a carbon tax would bring everyone “simplicity and happiness.”

The carbon tax does have its problems. It comes down particularly heavy on the poor, who pay a much larger portion of their income for things that require oil and gas. Morris suggests putting 20 percent of the tax aside and earmarking it for the poor. This undoes some of the benefits of the tax and, in practice, is very difficult to do, and it creates a new distribution problem. It also hurts the middle class and especially Middle America.

Carbon taxes have been tried in other countries, with mixed results. Australia tried to impose a blanket tax a few years ago, but by the time it stopped awarding special exemptions and dispensations, the program was such a mess that oil refineries and others were making out better than before. The tax fell particularly heavily on farmers, whose operations, it turns out, are heavily dependent on fossil fuels. On the other hand, a tax in the United States might push more of agriculture into ethanol, since E85 is already widely available in the Midwest and would substitute nicely for gasoline.

Special pleading by individual parties is always the problem. France tried a carbon tax a few years ago, but by the time they were through, the law was so loaded down with exceptions and exemptions that it was practically meaningless. Sweden, on the other hand, has a flat $200 per ton carbon tax – four times the highest rate being suggested by the U.S – and no one seems to mind. The Swedes eliminated all special exemptions and used the revenue to lower personal income and estate taxes. True, the Swedes pay a higher price for gasoline – close to $4 per gallon – but they are happy with the simplicity of the system and accept the higher price as a fact of life. Of course, Sweden is a much more egalitarian country, with few truly poor people, but the population is happy and no one complains.

And the main problem is that the amount of tax will really not introduce any behavioral change. Five cents a gallon is just a tax – it will not create any real incentive to change to alternative fuels. What is blocking off alternative fuels today is not price, as they are already cheaper. It is the monopolistic structure of the car and distribution market. Even if gas prices were a dollar higher, the market first needs to be opened to competition so people could actually choose a fuel.

A carbon tax would cross political lines and maybe prove to be one of those rare instances where we can all agree. Conservatives would show that they take climate change seriously, and liberals would have to give up on their complex regulatory schemes and admit that simplest sometimes works best. Most of all, it would show the public that things can get done in Washington. However, a prerequisite for any tax or other solution is to open the market for competition by other fuels. Otherwise, the consumer will not have any option, and it will be just a new government tax.

Fuel Freedom Staff

U.S., China reach deal to cut emissions, but there are questions

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President Obama and Chinese President Xi Jinping announced a milestone climate-change agreement in Beijing today, under which both countries would reduce greenhouse-gas emissions to meet certain targets.

A major goal of the agreement, which still needs to be formalized, is to spur other nations to reduce their own carbon output.

But the deal already is coming under criticism: As The New York Times reports, at least one climate-change expert says China could do more on its end; the country is vowing to cut off peak emissions only at “around” the year 2030.

Republicans in Congress were swift to criticize the deal. As The Hill notes, House Speaker John Boehner of Ohio issued a statement denouncing the deal as potentially harmful to the cheap energy that middle-class families rely on.

“This announcement is yet another sign that the president intends to double down on his job-crushing policies no matter how devastating the impact for America’s heartland and the country as a whole,” the statement said.

Arctic Leaf

The decline of oil and gas prices, replacement fuels and Nostradamus

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“It’s a puzzlement,” said the King to Anna in “The King and I,” one of my favorite musicals, particularly when Yul Brynner was the King. It is reasonable to assume, in light of the lack of agreement among experts, that the Chief Economic Adviser to President Obama and the head of the Federal Reserve Bank could well copy the King’s frustrated words when asked by the president to interpret the impact that the fall in oil and gasoline prices has on “weaning the nation from oil” and on the U.S. economy. It certainly is a puzzlement!

What we believe now may not be what we know or think we know in even the near future. In this context, experts are sometimes those who opine about economic measurements the day after they happen. When they make predictions or guesses about the behavior and likely cause and effect relationships about the future economy, past experience suggests they risk significant errors and the loss or downgrading of their reputations. As Walter Cronkite used to say, “And that’s the way it is” and will be (my addition).

So here is the way it is and might be:

1. The GDP grew at a healthy rate of 3.5 percent in the third quarter, related in part to increased government spending (mostly military), the reduction of imports (including oil) and the growth of net exports and a modest increase in consumer spending.

2. Gasoline prices per gallon at the pump and per barrel oil prices have trended downward significantly. Gasoline now hovers just below $3 a gallon, the lowest price in four years. Oil prices average around $80 a barrel, decreasing by near 25 percent since June. The decline in prices of both gasoline and oil reflects the glut of oil worldwide, increased U.S. oil production, falling demand for gasoline and oil, and the likely desire of exporting nations (particularly in the Middle East) to protect global market share.

Okay, what do these numbers add up to? I don’t know precisely and neither do many so-called experts. Some have indicated that oil and gas prices at the pump will continue to fall to well under $80 per barrel, generating a decline in the production of new wells because of an increasingly unfavorable balance between costs of drilling and price of gasoline. They don’t see pressure on the demand side coming soon as EU nations and China’s economies either stagnate or slow down considerably and U.S. economic growth stays below 3 percent annually.

Other experts (do you get a diploma for being an expert?), indicate that gas and oil prices will increase soon. They assume increased tension in the Middle East, the continued friction between the West and Russia, the change of heart of the Saudis as well as OPEC concerning support of policies to limit production (from no support at the present time, to support) and a more robust U.S. economy combined with a relaxation of exports as well as improved consumer demand for gasoline,

Nothing, as the old adage suggests, is certain but death and taxes. Knowledge of economic trends and correlations combined with assumptions concerning cause and effect relationships rarely add up to much beyond clairvoyance with respect to predictions. Even Nostradamus had his problems.

If I had to place a bet I would tilt toward gas and oil prices rising again relatively soon, but it is only a tilt and I wouldn’t put a lot of money on the table. I do believe the Saudis and OPEC will move to put a cap on production and try to increase prices in the relatively near future. They plainly need the revenue. They will risk losing market share. Russia’s oil production will move downward because of lack of drilling materials and capital generated by western sanctions. The U.S. economy has shown resilience and growth…perhaps not as robust as we would like, but growth just the same. While current low gas prices may temporarily impede sales of electric cars and replacement fuels, the future for replacement fuels, such as ethanol, in general looks reasonable, if the gap between gas prices and E85 remains over 20 percent — a percentage that will lead to increased use of E85. Estimates of larger cost differentials between electric cars, natural gas and cellulosic-based ethanol based on technological innovations and gasoline suggest an extremely competitive fuel market with larger market shares allocated to gasoline alternatives. This outcome depends on the weakening or end of monopolistic oil company franchise agreements limiting the sale of replacement fuels, capital investment in blenders and infrastructure and cheaper production and distribution costs for replacement fuels. Competition, if my tilt is correct, will offer lower fuel prices to consumers, and probably lend a degree of stability to fuel markets as well as provide a cleaner environment with less greenhouse gas emissions. It will buy time until renewables provide a significant percentage of in-use automobiles and overall demand.

Fuel Freedom Staff

Opponents of Keystone XL encouraged by oil’s decline

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Bloomberg has a story on how environmentalists and other opponents of the proposed Keystone XL pipeline have new momentum because oil has now dropped to around $80 a barrel. When the Canada-to-Gulf of Mexico pipeline was first floated in 2008, oil prices were around $100 a barrel.

“At $75, a government analysis said producers may be discouraged from developing Canada’s oil sands without pipelines like Keystone.”

The pipeline remains a contentious issue, and the U.S. government has repeatedly delayed action. Opponents are hoping that if Republicans take control of the Senate in next month’s elections, the two-month window between Election Day and the swearing-in of the next Congress will allow them a final chance to kill the project.

There’s also the issue of whether the pipeline will be good, bad or indifferent for consumers.

Arctic Leaf

Winston, what would you do concerning natural gas?

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Where is Churchill when we need him? How many psychobabble articles and cable commentary about Putin and Russia could we have done without by just remembering good old Winnie’s marvelous, insightful quote in 1939? It’s as near perfection as we are going to get in trying to understand Mr. Putin and Russia. Both are “riddle[s] wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian [and Putin’s] national interest.” (The word Putin is my addition — I am sure Churchill would not have minded.) What does Putin want? Apparently not only full control of Crimea, but also instability in Eastern Ukraine.

Okay, now some of you readers are saying the same about the U.S. We seem to accept Russia’s takeover of Crimea…ah, Russia had it once anyway and it has a big naval base there. Sounds vaguely historically familiar. What about the other place, they say. What was its name? Guantanamo and Cuba! Oh, no?! Please let’s focus on Eastern Ukraine.

Forget consistency and remember Ralph Waldo Emerson. “Consistency [in foreign policy] is the hobgoblin of little minds” (Again, pardon the added-on term, foreign policy.)

Now how does oil come into all of this? None of us, not just President Obama, want to fight a war over the Ukraine, Eastern Ukraine or Crimea. If he were running again, Obama would probably borrow from Woodrow Wilson’s campaign slogan, “He kept us out of war,” at least big wars, particularly with corrupt nations some of which have a history of fascism..

Alright, let’s use tough energy sanctions — oil and natural gas. if the regulations concerning sanctions were tough, they might really hurt Russia’s economy and its ability to move out of the economic doldrums. Let’s hit them where it hurts! No, apparently, we will not, at least for now. Why? Well, Western Europe and our new ally, the Ukraine, depend on natural gas. Without it, both would be in for cold winters and probably a severe industrial recession. So what did our leaders do? They excluded natural gas from the list of recent sanctions. I suspect they, also, will allow Russia and the West to continue to trade in oil not involving new technology from the West.

Absence of natural gas in Europe and the Ukraine (and probably other Eastern Europe nations) is a plus for the U.S. We can make it up by selling natural gas. Isn’t what’s good for the U.S. bad for Russia and Mr. Putin?

Maybe, maybe not…or maybe the view that the U.S can be savior of Western Europe is a myth. Or maybe it’s just too complex for political leaders to grab hold of instantly.

Some verities to deal with:

1. Even with the current rush to permit the export of natural gas, before terminals get built and tankers are ready and environmental issues are disposed of, the first large volume of natural gas would not reach Ukraine or Western Europe until 2016 or later.

2. The U.S., despite the increase in shale development and natural gas production, still imports natural gas to meet domestic supplies — about 12.5% in total. Like big oil, exports of natural gas are to a large degree being sought to secure a higher prices overseas than in the U.S. Hurting Russia for U.S producers is a side show.

3. Russia, ostensibly, can produce natural gas and ship it by pipeline, rail or boat cheaper than we can. According to experts, the cost of U.S.-produced, transported and sold natural gas in Europe and the Ukraine is and will be much higher than Russian-produced and transported natural gas sold globally. Note in this context that Russia just cemented a $4 billion deal for Russia to sell oil to China. Will the Europeans and Ukrainians want higher-priced natural gas from the U.S.?

4. Oh, I almost forgot. Just last winter, U.S. residents in many states, particularly eastern states, nearly froze because of shortages of natural gas resulting from lack of adequate pipeline capacity and pipeline congestion. Consequently, the gas they secured came at very high prices. If ports can be built, pipeline amendments for the east coast cannot be far behind and probably should come first, if money is tight. Can we afford both, given uncertainties concerning price of natural gas and cost of drilling in tight areas? Sure. But the tradeoffs need to be carefully balanced by policymakers and the long term for investors must look bright.

It’s a puzzlement. Our policy seen by many nonpartisan observers as a “riddle wrapped in a mystery…” I will know sanctions are real when gas is included. What I won’t know is whether it will make a difference to Russia, given the fungibility of import-needy nations like China. Sanctions may bring both China and Russia something that communism has failed to do — build back a broken alliance. What I also don’t know is whether the growth of exports will significantly raise natural gas prices over time in the U.S. and lower the price differential with oil, and its derivative gasoline. If it does, producers and distributors may get rich, but opportunities for something I do care about — the development and widespread use of natural gas-based ethanol as a replacement fuel — may be impeded significantly. If this occurs, the environment, our economy and low- and moderate-income Americans may be worse off for it. Policymaking in today’s world is difficult and is something you often cannot fully learn in school.

Arctic Leaf

Can algae become the new biodiesel?

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Supporters call it “clean diesel” to differentiate it from “biodiesel,” and indeed, there is a difference. Soybeans, the main feedstock for biodiesel, have only a 2-3 percent oil content. Some species of algae can have up to 60 percent oil content. This reduces the land requirements for growing a crop by a factor of 30.

So is algae biodiesel one of those great ideas that is always just over the horizon? Or has it germinated long enough that it may finally about to become a reality? The outcome still appears to be up for grabs.

The term “algae” actually cover a whole spectrum of organisms, from the 20-foot ribbon-like “seaweed” that grows in ponds and along littoral shores to the mid-ocean, microscopic “plankton” that is the diet of whales. All have one thing in common – they use carbon and sunlight to photosynthesize organic material. And they are good at it. Some species can double their mass within 24 hours. Thousands of species thrive in varying environments. Last summer, a red algae “tide” that feeds on farm runoff at the mouth of the Mississippi River “bloomed” to cover 5,000 square miles of the Gulf of Mexico, killing all manner of birds, fish and marine life, including hundreds of manatees. “If we can figure out how to make energy out of that,” President Obama told an audience at the University of Miami, “we’ll be doing alright.”

The idea of harvesting algae for energy was first suggested by Richard Harder and Hans von Witsch, two European scientists at the outbreak of World War II. Nothing much developed, however, and interest didn’t revive until the Energy Crisis of the 1970s, when the Department of Energy set up an Aquatic Species Program to pursue research.

Funded with $25 million over the next 18 years, the Aquatic Program investigated thousands of species, finding the Chlorella genus the most promising. It also made an important discovery. When Chlorella is deprived of nitrogen, it can increase its lipid (fat and oil) content to a remarkable 70 percent of mass! Remember, soybeans are only 2-3 percent lipids. But this created a conundrum. While depriving algae of nitrogen might may increase lipid content, it also severely inhibited growth. The Aquatic Program had not yet resolved this dilemma when it was disbanded in 1996.

Private companies picked up the research, however, and have tried to overcome it with genetic engineering. While pursuing this, they have developed two methods of cultivation. The easiest is to grow algae in open pools or “raceways” that devour large areas of land, since sunlight can only penetrate a few centimeters into the algal mat. The problem here is that most species are highly sensitive to variations in acidify, temperature and humidity. Their high lipid content also means they synthesize fewer proteins, which makes them extremely vulnerable to invasive species. This makes it very difficult to bring them up to commercial scale.

The more advanced technology is “photobioreactors,” conducted in large networks of glass or plastic tubes. The system overcomes environmental difficulties but is very expensive. In 2009 Exxon combined with J. Craig Venter, the decoder of the human genome, to try to develop a commercial method for developing algae-based fuels. After investing $600 million, however, Exxon pulled out of the enterprise in 2013, saying commercialization was 25 years away.

Nevertheless, several small companies say they are now making progress. Algenol, a Fort Myers, Fla. company, says it has developed a revolutionary “3rd generation” technology that can produce ethanol, jet and diesel fuel 8,000 gallons per acre, 18 times the output of corn-based ethanol, at $1.25 per gallon. Sapphire, a San Francisco company, has opened a 100-acre Green Crude Farm in New Mexico and hopes to be producing 100 barrels a day next year with full-scale commercialization by 2018. And Aurora Algae, a Hayward, Calif. firm which has operated a test facility in Western Australia for the last three years, has just announced an open-pond operation in Harlingen, Texas that it hopes to expand to 100 acres.

There is one great irony to all this. A full-blown algae industry already exists, providing feedstock for food additives, cattle silage and nutritional and pharmaceutical products. Some highly specialized fatty acids derived from exotic species can fetch $10,000 per gallon. In fact, the current industry sees algae-for-fuel as a rather low-grade use. “Until more federal funding is available, my members are going to continue growing for the higher-value products,” Barry Cohen, executive director of the National Algae Association, told Slate’s John Upton. “We have algae companies that are growing for the ingredients industry, the food industry and the nutraceutical industries. If they can grow the right species, those companies will buy every drop they can make.”

What makes these operations viable, of course, is their high-value end products, which cover the costs of growing algae in commercial quantities. An algae-for-fuel industry will either have to: a) develop new species that are much more efficient or b) perfect mass-production techniques that can bring prices down to an acceptable range. Only then will “clean diesel” become a competitor. For now, the industry seems headed in the right direction.

Arctic Leaf

The U.S. and China on methanol: Two roads converge

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Nobel-Prize-winning chemist George Olah recently put methanol front and center again with a powerful Wall Street Journal editorial arguing for the conversion of carbon dioxide emissions from coal plants into methanol for use as a gasoline substitute in our car engines. Co-writing with University of Southern California trustee Chris Cox, Olah noted, “Thanks to recent developments in chemistry, a new way to convert carbon dioxide into methanol — a simple alcohol now used primarily by industry but increasingly attracting attention as transportation fuel — can now make it profitable for America and the world to reduce carbon-dioxide emissions.”

The authors argued that President Obama’s recently announced policy of mandating carbon sequestration for emissions from coal plants wastes a potentially valuable resource. “At laboratories such as the University of Southern California’s Loker Hydrocarbon Research Institute [founded by Olah], researchers have discovered how to produce methanol at significantly lower cost than gasoline directly from carbon dioxide. So instead of capturing and “sequestering” carbon dioxide — the Obama administration’s current plan is to bury it — this environmental pariah can be recycled into fuel for autos, trucks and ships.”

Olah, of course, has been the principal advocates of methanol since his publication of “Beyond Oil and Gas: The Methanol Economy,” in 2006.

To date, he has been recommending our growing natural gas supplies as the principal feedstock for a methanol economy. But the emissions from the nation’s coal plants offer another possibility.

This is particularly important since indications are that the Environmental Protection’s Agency’s assumption that a regulatory initiative will “force” the development of carbon-sequestering technology may be mistaken. A recent report from Australia’s Global CCS Institute said that, despite widespread anticipation that carbon capture will play a leading role in reducing carbon emission, experimental efforts have actually been declining.

The problem is the laborious task of storing endless amounts of carbon dioxide in huge underground repositories plus the potential dangers of accidental releases, which have aroused public opposition. Olah and Cox write, “By placing the burden of expensive new carbon capture and sequestration technology on the U.S. alone, and potentially requiring steep cuts in domestic energy to conform to carbon caps, the proposal could send the U.S. economy into shock without making a significant dent in global emissions… In place of expensive mandates and wasteful subsidies, what is needed are powerful economic incentives. These incentives should operate not just in the U.S., but in other countries as well.”

All this brings into stark relief the diverging paths that China and the United States have taken in trying to find some alcohol-based fuels to substitute in gas tanks. While Olah has been advocating a transformation to a methanol economy in this country, China is actually much further down the road to developing its own methanol economy. There are now more than a million methanol cars on the road in China and estimates show the fuel substitutes for 5-8% of gasoline consumption — about the same proportion that corn ethanol provides in this country.

In this country, the proposal has been that we derive methanol from our now-abundant supplies of natural gas. California had 15,000 methanol cars on the road in 2003 but curtailed its experiment because gas supplies appeared to be too scarce and expensive! Instead, the main emphasis has been on tax incentives and mandates to promote corn ethanol.

China has vast shale gas supplies and could benefit from America’s fracking technology. We could benefit strongly from China’s greater experience in developing methanol cars. The pieces of the puzzle are all there. Perhaps Olah’s proposal may be the catalyst that puts them all together.

Ironically, all this began with a Chinese-American collaboration in 1996. At the time, China had little knowledge or interest in methanol but was persuaded by American scientists to give it a try. Ford provided a methanol engine and China began ramping up its methanol industry and substituting it for gasoline. As a result, China is now the world’s largest producer of methanol, with about one-quarter of the market.

A year ago the Chinese national government was about to mandate a 15% percent methanol standard for gasoline when it ran into opposition from executives in its oil industry. Those leaders have since been deposed, however, and the 15% mandate may go ahead this year. In the meantime, provincial governments  have developed their own standards, with the Shanxi province west of Beijing in the lead.

Ironically, because methanol is only half the price of gasoline, many local gas stations are diluting their gasoline with methanol anyway in order to shave their costs. As a 2011 Energy Policy article by Chi-jen Yang and Robert B. Jackson of Duke University’s Nicholas School of the Environment reported, “Private gasoline stations often blend methanol in gasoline without consumers’ knowledge… In fact, its illegal status makes methanol blending more profitable than it would be with legal standards. Illegally blended methanol content is sold at the same price as gasoline. If legalized, standard methanol gasoline would be required to be properly labeled and sold at a lower price than regular gasoline because of its reduced energy content. Such unannounced blending is now common in China.”

So both countries are feeling their way toward a methanol economy. As Olah points out, the problem in the U.S. is that the various advantages given to ethanol have not been extended to methanol.“One means of addressing this inequity would be for Congress to pass the bipartisan Open Fuel Standard Act of 2013, which would put methanol, natural gas, and biodiesel on the same footing as ethanol (but without subsidies and without telling consumers which one to choose) for use in flex-fuel cars.”

In China, the concern is about coal supplies but this could be alleviated with help from America’s fracking industry or by implementing Olah’s new technology for tapping coal exhausts.

Either way, the pieces are all there. It may be time to start putting them together.

Arctic Leaf

Make love, not war — a national dialogue on alternative fuels

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Remember the passion, the commitment and vigorous national dialogue concerning the Vietnam War, the civil rights movement and the women’s movement? No matter how one viewed the issues involved or whether one was pro or con with respect to each initiative, most of the nation, even if only watching the 6 p.m. and 10 p.m. news, seemed involved, to some extent, emotionally and many intellectually.

Given the concern many Americans seem to have for the future of the environment, the nation’s security problems and the sluggish economy (not to mention shrinking pocketbooks), why haven’t we been able to replicate the intense passions and commitments of the ‘60s and early ‘70s with respect to the muted debate over alternative transitional fuels. Very few articles in the press or on cable and TV headline the wisdom of efforts to reduce America’s dependence on gasoline through providing increased consumer choices at the pump. Those that do approach headline or first-tier status suggest, generally, often without hard analysis, that increased oil and gas production (Saudization of America) will grant the U.S. oil independence, forgetting the global nature of the oil market. The media has not focused on the costs of continued reliance on imported oil and the very restricted American vehicular fuel market limiting consumers, by and large, to costly, dirty gasoline. In-depth coverage of alternative non-renewable fuels as substitutes for gasoline and as transitional fuels before renewables are ready for prime time is rare and most times, more opinion than fact. Even the venerable New York Times rarely covers alternative transitional fuels in the context of an overall assumed national commitment to “wean” the nation off of gasoline.

Why haven’t the public and the media become involved in a real dialogue concerning the benefits and costs of alternative fuels versus continued reliance on gasoline?

I think it’s a bit of a chicken-and-egg question. Recall the intense TV coverage of Bull Connor’s vicious attack using dogs and high pressure hoses on kids in Alabama and the nobility of Martin Luther King Jr.’s 1963 speech on the mall? Both gripped us and made civil rights a moral issue. Remember TV’s extensive coverage of the marches by mostly young but also many older folks opposing the Vietnam War? And who could forget the photo of the little girl walking alone on the highway with her clothes burned off from a napalm attack and the many movies portraying G.I. casualties? It was difficult to stay neutral concerning the war, particularly if our kids or the neighbor’s kids were involved. Finally, while some Americans disagreed with them, the women’s movement had visible charismatic leaders like Gloria Steinem, Bella Abzug and Betty Ford, who had a knack for getting on TV and in newspapers to champion the need for women’s equality. Over time, they reached many of us, and if we didn’t join the movement, we argued for its success.

President Obama’s State of the Union speech was greeted with popular applause when he said we must get off of oil, but the line concerning the need to wean us off oil seem to have a shelf life of 24 hours…or maybe 48 hours. It clearly didn’t move the needle much in public interest and the public’s attention understandably turned to more media-friendly issues, such as Washington’s dysfunctional character, the budget, the debt ceiling and the Middle East.

Anti-Vietnam sentiments, civil rights and women’s rights were internalized by a relatively large, but still a minority, sector of the public. Participants in the effort to secure change viewed the three issues as affecting them personally and, for the most part, crossed class and caste lines, a fact that was deepened by the draft with respect to Vietnam. Although none of the three probably could have secured a majority vote,if placed on the ballot initially, they each grabbed the attention of most Americans over time.

Looking back, clearly the sustained involvement of a relatively cohesive minority of the public led by aggressive leadership created significant political and policy reforms. Issues were cast in terms Americans could easily understand — securing justice, freedom and a better America. They created a strong moral underpinning to proposed actions. Ultimately, grassroots support convinced key elected leaders that they could move positively without retribution to secure respective agendas.

Enveloping alternative fuels and the monopolistic gasoline markets in moral tableaux will not be easy. The issues involved are complex and don’t, without effort, engage people for more than short periods of time. They are tough to convert to brief TV or cable spots. Try going to a dinner party and raising moral variables around the reality of limited choices of consumers at the pump. Yawn…don’t expect a return invitation! Similarly, the fact that low-income households pay nearly 15% of their income for gasoline and are therefore limited concerning purchase of other basic goods does not easily translate into visual and visceral understandable, personal moral pictures. Similarly, despite the data showing increasing harm to the poor regarding the journey to work and constrained housing choices caused by high costs of gasoline, aggregate statistics blur individual problems. The economy’s overall sluggishness and its impact on most Americans, except the very affluent, divert focused attention. Happily, there is no Bull Connor, and your neighborhood gasoline station owner is often from the community. It’s difficult to make him or her an ogre. He or she is generally a hard-working individual and is struggling to make ends meet. Even the most vigorous advocates of alternative fuels and open fuel markets have yet to figure out how to vividly personalize the negative impact of the constraints imposed on the market by the oil industry on consumers, particularly low income consumers. Black hats and mustaches (whether painted in graphics or narratives) to describe the oil industry’s leadership, hasn’t worked well. Where is Norman Rockwell when we need him?

The phrase “we need all of the above” is used often in a bipartisan way by our political leaders to describe the nation’s energy strategy. The phrase may well be true, but it is difficult to get excited about it. Try it on your husband, wife or significant other tonight and see if it motivates a meaningful response. “Hey, honey, there is a meeting tonight of people interested in energy reform. The expansion of alternative fuel choices will be at the center of a strategy to grant priority to all our energy sources — coal, oil, natural gas, bio fuels, derivatives of each. It’s important. Do you want to go?” Probable response: “Are you serious? You were so romantic when I met you. What happened?”

The messages related to Vietnam, the civil rights movement and the women’s movement, at the time, were simplified into understandable, often emotional, terms. They were complemented by extensive media coverage and by strong moral certitude of both presenters and listeners. Parsed words and nuanced sentences were not often needed to convince folks to join the causes. The coalitions that were created put in hard work and lots of sweat equity to build and generate grassroots efforts. But the people were out there waiting to be recruited. While members might have disagreed on strategic policy options, they were generally together on broad objectives.

The effort to secure alternative transitional fuels and open up the gasoline market does not lend itself easily to the type of grassroots initiatives generated in the ‘60s and early ‘70s. The messages and data used to support them are seen as too complicated and, frankly, confusing to potential grassroots participants. In this context, the oil industry and its captive groups like the American Petroleum Institute (API) have big budgets and have seen fit to use their resources seemingly to confuse and distort information concerning gasoline and alternative fuels.

I am not sure a passionate grassroots movement can be created to support alternative fuels. At best, it will be difficult. But, democracy works in many ways. Progress is being made in forging working alliances among advocates of alternative fuels and leaders in the business, environmental, public sector and academic communities. Their ability to form sustainable, strong alliances will increase their likely ability to influence public policy concerning transitional fuels and open fuel markets. Building public understanding, combined with political acuity and a willingness to reach out to varied groups, will increase the odds of success in winning political, legislative and statutory support. Much will depend on their collective willingness to depart from traditional divisive ideological and institutional focus. Their leadership, borrowing the rhetoric from the Vietnam War, will probably have to learn how to make love, not war, in developing a collaborative agenda.