Archive for biofuels

Wood gas conversion of pickups

Biofuels Digest brings us the story of Wayne Keith and his wood-syngas conversion for pickups (I get the feeling he uses mostly pickups because you can use the truck bed as you “gas tank.”

I think this option has a lot going for it. The biggest barrier to cellulosic biofuels in my mind is the dispersed nature of the resource… it’s difficult to gather it op in one place to convert it efficiently into fuel. So if the conversion is done in the vehicle, the dispersed nature of (especially rural vehicles) is a much better match for the dispersed nature of the resource.

Gasification is not a good option for urban vehicles (since the resource is relatively scarce there, although much garbage works in these trucks), but it seems an elegant solution for utilizing the large volume of diverse biomass that would never be collected by commercial operations because it is both to dispersed and varied.

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Investing in Biomass

I’ve recently said that the best way to invest in both Advanced Biofuels and Cellulosic Ethanol, and Biochar (aka terra preta) is to invest in Biomass. Here is one way to go about it: buying Forestry ETFs or Stocks.

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Ethanol, Cellulosic Ethanol, and Advanced Biofuels

Last week, I attended the 2009 Fuel Ethanol Workshop and the Advanced Biofuels Workshop, writing two articles.  The first is a commentary on what the corn ethanol industry needs to do to rehabilitate its image, and the second looks into how the stock investor can benefit from emerging advanced biofuel, cellulosic ethanol, and
algae technologies.

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Flying too Close to the PetroSun

Algae is the most promising source to produce oil in the quantities needed to displace any significant amount of petroleum. Can is Petrosun (Pink Sheets: PSUD) the company to fulfill this promise? I doubt it; follow the link to find out why.

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Two Renewable Energy Penny Stocks

I asked my readers at Alternative Energy Stocks what companies they wanted to know more about, and the two most requested were a transmission and wind company (CPTC.OB), and a company looking to make oil for biodiesel from algae (PSUD.PK)

Click through the links to read the results of my research.

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The Evidence of my Obsession with EVs

I’ve been obsessing about the best way to replace petroleum for transit fuels. Unlike venture capitalist Vinod Khosla, I think electricity will win the day over biofuels.. the cellulosic material can be put to better use.

This has lead to a series of articles over the last few months, and I thought I’d gather them all in one place, here:

1. Why Automakers may be blindsided by updtart EV makers.

2. How much are people really willing to pay for extra range?

3. How much is range worth, updated with new poll.

4. Why Cellulosic Electricity may Beat Cellulosic Ethanol

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Transport Fuels and Solar Technologies: Bird’s Eye View

For my last couple AltEnergyStocks Columns, I’ve been taking a step back and looking at how we can get an understanding of the broad trends of energy technologies. Last week, I added to the Visual comparison of Electricity Generation Technologies I did last spring with a new Visual Comparison of Transport Fuels.

Following up, today I published a look at the varius solar technologies through the lens of their applications.

Before we go back to looking at trees, I hope you enjoy this look at the forest.

(and don’t miss the National Tour of Solar Homes next Saturday)

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What I told Bill Paul

Mea Culpa, I’ve been falling behind keeping this blog updated… but most of you probably realize that the real stuff goes on at AltEnergyStocks these days. Over the last two weeks, I wrote a series of companion pieces to a series of articles that were published on energy Tech Stocks, based on a long interview Bill Paul, the writer did with me. Here’s an index to them (and they each contain links to the interview articles.)

1. Large Scale Electricy Storage

2. Plug-In Hybrids and Battery Stocks

3. & 4. Improving Transmission and my Ambivalent stance on Biofuels

5. Light Emitting Diode (LED) Stocks

6.Cellulosic Ethanol and Sustainable Forestry.

7. Alcoa and Blue Chip Stock Picks

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Corn is For Ethanol, Grass is for Cows

Last year my wife and I read Michael Pollan’s The Omnivore’s
Dilemma
, and it changed we eat.  My wife was greatly affected by how animals are mistreated in production farming, while I was attracted by the health
benefits of eating grass fed beef
and other foods grown in the manner to which they are evolutionarily adapted, as well as by the lower degree of harm to the environment.  We haven’t become all-natural, all-organic, all-the-time at the Konrad household, but we’re now much more willing to pay more when we have the opportunity to do so for food which we consider healthier and more environmentally and morally sound.  For a world-class tightwad like myself, being willing to pay more is a considerable step.

In any case, the book also got me thinking more sympathetically about the ethanol industry, because it serves as a relatively benign outlet for the mountain of corn produced by America’s insane farm policies.   I find rising price of corn and other grains is more a cause for celebration than despair, because I see current prices more as a return to sanity rather than a likely cause for starvation.  Even in the third world, low agricultural productivity is (in part) due to a lack of incentive to compete with subsidized first world production, rather than an inability to grow enough food.  The market for corn has been massively distorted by oversupply caused by too many subsidies.  Ethanol represents a new source of practically inexhaustible demand which is restoring balance to a market too long out of kilter.

One practice which the massive flood of cheap grain begat was feeding corn to cattle.  In my AltEnergyStocks
column this week, I look at one way I think the market may be starting to find its equilibrium again.  As corn prices rise, there will be less incentive to fatten cattle in feedlots (or Concentrated Agricultural Feeding Operations, CAFOs ad Michael Pollan calls them), and more to feed them grass.  I believe that long before we can perfect the art of using energy crops such as switchgrass to make cellulosic ethanol on a commercial basis, the rising price of corn will make it economic to feed those same energy crops (i.e. grass) directly to cattle, more than doubling the amount of corn currently available to the ethanol industry.

Click here to read the entire column.

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How to avoid Stock Scams

My AltEnergyStocks column this week talks about signs to look for to help you aviod falling for stock scams. Investment scams foolw whatever trend is hot at the moment, and right now, that’s renewable energy. Here’s how to make sure your money is helping to reduce our carbon footprint, not financing some shyster’s trip to the Bahamas.

As an example, I take a look at US Sustainable Energy, a biofuel company that shows some worrying signs….

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An insider’s take on the Ethanol Industry

I have a sequel to my article on the competitive landscape of the corn ethanol industry up today on Alt Energy Stocks. In it, I discuss insights I gained from a talk by Mark Wong, President and CEO of Renwable Agricultural Energy, a private corn ethanol producer.

Here’s the link.

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A Hard Look at the Ethanol Industry

My weekly column for AltEnergyStocks again doubles as part of my study for the second CFA(R) exam.  The Equity valuation part of the curriculum contains a chapter by Michael Porter on analyzing competitive pressures in an industry.  I decided to apply it to the corn based Ethanol industry, and, as often is the case, it changed my way of thinking about the industry.  I’ve never been bullish, because I worry about a classic commodity squeeze: both ethanol and the main feedstock (corn) are commodities, and are subject to forces outside the industry which effect their prices.  For instance, if corn harvests were to be poor because of drought or pests, at the same time that oil prices fell, many ethanol producers would be forced out of business because their costs exceed their selling prices.

I also went on a little rant about the typical measures of Energy Payback and Energy Return on Energy Investment (ERoEI) often used in the industry.  These measures are often used to criticize ethanol, but it is a weak criticism, because they do not take into account the time value of energy: namely that a kWh of electricity today is a lot more useful than a kWh produced 30 years from now.  We should instead be thinking in terms not only of how much energy we have to use to get energy out, but also in terms of how soon we get that energy.

I propose a couple measures, of Energy Net Present Value (ENPV) and Energy Internal Rate of Return (EIRR) which I think would give us a clearer view of the undying energy economics (and hence the potential economic profitability) of various energy production technologies.  But that is a column for another week.

This week, here are my thoughts on competition in the corn Ethanol industry, and how it might affect your investments.

If you have a subscription, there’s also an excellent article in the NYTimes on ethanol in Hawaii.  I think it ties in well to this one, and the one I wrote last July about renewable energy in Maui.

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Blue Sun Biodiesel

Many of you know of Blue Sun Biodiesel from one of my more popular posts Why I Bought a Jeep where I talk about my decision to buy a Jeep Liberty diesel (which I run on biodiesel) as a cost effective alternative to a hybrid SUV.   That article was first published in the Colorado Renewable Energy Society blog, which led Blue Sun cofounder John Long to contact me, I ended up doing due diligence for a client for a private placement with them.  Blue Sun Biodiesel

I liked Blue Sun’s business model and management, but had reservations about the price they were asking… evidence for good management, because if they had been offering a price I liked, they probably weren’t asking enough… I’m very cautious when valuing private equity; there’s a lot that can go wrong and no exit if it does.  My client decided to make a substantial investment despite my reservations.  Events have now proven him correct. 

On January 29, Blue Sun announced that they were merging with M-Wave in a move which essentially gives them a back door to a Nasdaq stock market listingSarbanes-Oxley, by making conventional routes to going public much more difficult, has made this route much more popular in recent years.   Blue Sun shareholders will own 87.5% of the merged company and gain access to a much broader pool of equity to fuel their expansion plans.  As the quality leader in biodiesel, they are one of the few stand alone companies that have a chance against agricultural giants such as ADM and Bunge. 

Blue Suns’s other advantage over the giants is thier emphasis on quality.  As Texas producers know, it’s very important to have biodiesel of consistent quality, and Blue Sun sets the gold standard.  Unlike most biodiesels, Blue Sun’s actually reduces NOx emissions (along with particulates, VOCs, etc., and increased lubricity, which reduces maintenance costs like other biodiesels), as well as having a lower cloud point, due to their proprietary additives and use of higher quality oil as feedstock.

As a side note, there was a rumor going around the Colorado Cleantech Initiative last Tuesday night that this was the biggest private equity deal in Colorado history.   Jeff Probst, Blue Sun president was there, but he didn’t know for sure how the deal stacked up to previous deals.

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Holistic Approaches to Energy Problems

H. L. Mencken said, “For every human problem, there is a neat, simple solution; and it is always wrong.”  When it comes to solving the problems of peak oil and global warming, I also think that the loudest barking is up the wrong tree.  We look for the quick fix, trying to find a substitute energy source that allows us to change the way we do things little as possible, when the real problem is actually what we’re doing, not how we’re doing it.   We need holistic solutions, not quick fixes.

Too abstract?  Here are some concrete examples:

 Problem: Peak Oil

Quick fixes: Ethanol and slight increases in vehicle efficiency standards.

Holistic solutions: Change our driving culture and infrastructure, by changing the way car use is priced from fixed charges to a per mile basis (“Pay as you drive”).   Removing subsidies to use cars when other forms of transport are available, and redesigning our cities to make them easier to get around on foot, bike, and public transport.  Like other holistic solution, all these steps increase safety and reduce congestion, reduce obesity and associated health problems, as well as reducing the use of gasoline.

Problem: Wind and Solar are intermittent resources, but coal produces too much CO2 and natural gas prices are rising rapidly.

Quick Fixes: Nuclear power and “Clean” Coal.

Holistic Solutions: Shift our demand for electricity to times when it is available, by using time of use pricing, energy storage and demand alignment, and distributed energy storage such as plug in hybrid vehicles.

Investing opportunities:On thing that’s striking about these examples is it’s much easier to find investment opportunities in the quick fixes than in the holitistic solutions.  To invest in ethanol, you can just buy ADM or one of the multitude of ethanol stocks that have been going public recently, but I have yet to come up with a satisfactory way to invest in better urban planning (except buy a house in a walkable community, which is something I’m planning on doing this summer.   Stapleton is the community.  I currently live there, but I’ve been renting and waiting for the end of the housing bubble.  I actually don’t think that housing is going to go up again any time soon, but I’m tired of waiting.) 

The investment landscape is a little better when it comes to energy management.  Itron and Siemens both have divisions that help utilities manage their grids better, and there are many battery and other energy storage companies to choose from.  Still, it’s a lot harder to pick through battery companies than to just buy a nuclear powered utility or uranium miner.

Holistic solutions, by their nature, have weak boundaries… the benefits tend to be diffuse, and spread over society as a whole, so it is difficult to charge fairly for them.  This, I think, is why there are so few companies pursuing them when they can pursue a quick fix that they can charge for up front.  

Companies have an obligation to their shareholders to make money.  It’s our job, as human beings, to work towards regulations that make it easier for companies to make money with holistic solutions that actually solve the problem than it is to make money with quick fixes that just cover the problem up.

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Board position: Promote clean energy and get paid.

If you know anyone who lives in or around Castle Rock and is willing to do a little paid work for clean energy, read on.

 I’ve written before about IREA Voices, (here and here.)   They are a group of dedicated volunteers who are trying to change the way their electric co-ops, Intermountain Rural Electric Association is run. 

In Colorado, Rural Electric Co-ops (RECs) are exempt from the requirements of Amendment 37, which mandates that our public utilities get a certain percentage of their power from renewables.  Ostensibly, this is because they are owned and controlled by their members (the people served by the utility.)   In reality, very few members vote in the elections (often as little as 10%) and so the boards can often end up being very unrepresentative. 

 In the case of IREA, this manifested itself with IREA’s general manager, Stan Lewandowski, contributing $100,000 of ratepayer’s money to a prominent global warming skeptic, and soliciting other RECs to do the same.

While the low turnout in REC board elections can be a big problem, it is also an opportunity.  While IREA is out funding global warming skeptics, perhaps the most progressive electric utility in Colorado is Delta-Montrose Electric Association (DMEA), and it’s all due to who is on the board. 

IREA Voices is working to change the IREA board, and they have a real chance of doing so.  Due to low turnout, board elections of RECs often hinge on only a handful of votes.  IREA Voices is fielding candidates in three of the four districts up for election, but they are still looking for someone to run in district 4, around Castle Rock. 

Being a board member is a paid position ($300 a day), so if you know anyone who might be willing to run for the IREA board in Castle Rock, please send me an email  and I’ll hook them up with the right people.

(Or they can do it themselves on the IREA Voices website.)

 An email from the IREA Voices follows the break… Read the rest of this entry »

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Diversification: Nature Knows Best

A study  in Science (see article in Renewable Energy Access) from David Tilman, an ecologist at the University of Minnesota shows what we should have known all along:  When energy crops are grown sustainably in poor soil (i.e. most of our available land) without fertiliser, a diverse mix of native prairie plants yeilds more than twice (238%) as much harvestable energy than any monoculture (including the much-hyped switchgrass) grown on the same land.

At some point, humans are going to have to realize that our production-line mentality, which seems so efficient to us, is not really the best way to do things.  We like farming just one species in neat rows because it’s easier for us to comprehend.  But easier to comprehend is not the same as more effective.  In money management, we know that there is no one perfect security for an investor: diversification allows higher returns with lower risk.  Farmers have yet to (re)learn that lesson: growing just one crop puts strains on the particular resources that crop needs most, and allows specialized pests an environment of limitless growth.

Monocultures are sub-optimal, both in your fields and your portfolio.   Enron employees with their retirement fund in 100% Enron stock learned that the hard way.  As we transition to a new energy economy, I hope that David Tillman, and researchers like him will help us realize that the places we grow out energy crops don’t have to be like an Enron employee’s 401(k).

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Vision of a sustainable energy future

I’ve been meaning to write an article outlining a vision of a sustainable energy future, where biomass is converted into fuel and electricity through pyrolysis and the waste product, carbon is used as a fertilizer a-la terra preta to produce more biomass.  The good news is I don’t have to.  The Engineer Poet did, and it’s just part of a much broader vision you’ll find here.   He also goes into a great discussion of transportation technologies and efficiency which would never have made it into the article I’d write.  I like it when other people crunch numbers, so I don’t have to.

Give yourself a half hour to read the whole article.  It’s worth it.

( Terra Preta: I got a comment from Erich J Knight on terra preta here that went into a lot of depth, but I deleted it by mistake.  Forturnately, he says pretty much the same thing in his blog.  I first heard about terra preta from Ron Larson, chair of the American Solar Energy Society, who is very active in the local (Denver) renewable energy scene.  If you haven’t heard about terra preta, and are concerned about globabl warming or soil fertility without fertilizers from fossil fuels, it’s worth looking into.)

Read the rest of this entry »

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Good Ethanol

I wrote a blog a couple months back talking about how environmentalists should avoid lumping all ethanol together as “bad” renewable energy because the Energy Return on Energy Investment (EROEI) is very low.  First of all, new ethanol plants being built today do have a net energy gain on a well-to-wheels basis (the critics are using decade old data), and so long as the energy inputs come from renewable sources, ethanol looks like a decent way to turn other forms of renewable heat energy into something we can put into our tank and drive around with.

E3 Biofuels is doing just that with a 25 million gallon “closed loop” ethanol plant in Mead Nebraska.  The distiller’s grain byproduct of the ethanol production is fed to cattle at an adjacent feedlot.  This saves energy by avoiding having to dry the grain and transport it to where the cattle are.  The manure from the feedlot is passed into an anaerobic digester which not only produces 100% of the energy necessary for the ethanol distillation process in the form of methane, but it also helps solve the nasty environmental problems caused by the massive supply of manure feedlots produce.  It was runoff from cattle manure that caused the problems with our spinach supply recently.

Other benefits are that by running the manure through the digester, odor is reduced, and methane from the manure decomposition does not escape into the atmosphere.  Methane is a much more potent greenhouse gas than is CO2.

If you believe the promoters that “This plant will make ethanol more than twice as energy-efficient as any other method of producing ethanol or gasoline,” I estimate that the well-to-wheels EROEI is between 2 and 4 (probably closer to 2.)  It’s not the great EROEI’s we get from Wind and geothermal, but it’s a liquid fuel we can use in our existing vehicle fleet (either as E85 in Flex-Fuel vehicles, or as E10 or E20 in standard gasoline engines.)

Without liquid fuel, we’re in great danger of economic disruption due to peak oil, but unless we get that liquid fuel in a manner less carbon intensive than conventional corn ethanol, we’ll be up to our ears in melted icecaps.

Obviously, what we really need is much more energy-efficient cellulosic ethanol which does not compete with our food supply for feedstock, and it will be great if that process is powered by renewable heat (methane form digesters, or solar thermal) but given that we’re unlikely to stop eating beef anytime soon, this is an elegant, closed process.

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Green Diesel (and Gas) vs Biodiesel

When I wrote my post about green diesel last week, I neglected to mention one other very useful attribute of green diesel: it has a much lower pour point than biodiesel.   According to an articlein NREL’s 2005 research review,

“Green diesel consists of paraffin molecules produced by hydrogenating triglycerides by means of a conventional petroleum refining process. Green diesel has a very high cetane number, so it ignites fairly quickly after injection, and a low pour point—the lowest temperature at which a fuel will pour. Thus, it is a high-quality diesel fuel and is totally compatible with petroleum diesel.”

This is in contrast to biodiesel, which is produced by trans-esterifying triglycerides with methanol, and has a much higher pour point… which is why I can only use B20 (20% biodiesel) most of the year here in Colorado. At temperatures below about 50F, biodiesel begins to “cloud” and will clog fuel filters, preventing the fuel from getting to the engine. Since I don’t like my car stalling on me, I only use B100 during the hottest summer months.

The closest source of biodiesel to me is a truck stop without a heated storage tank, and so in the winter they only have B5 available, while they have B20 in the summer (which means I make sure to fill up with B20 whenever I’m near one of the greater Denver areas 3 other biodiesel stationsI know about.)  The availability of green diesel would mean I could use 100% all the time, not just in the summer.

I did some more searching and found this presentationon the subject from Michael J. McCall, T.L. Marker, J. Petri, and D. Mackowiak at UOP, a division of Honeywell, in collaboration with D. Elliot at PNNL, SCzernik at NREL, and David Shonnardat Michigan Tech.  According to their lifecycle analysis, Green Gasoline and Green Diesel produced from oils in refineries would actually have lower lifecycle CO2 emissions.

In short, the economics, environmental characteristics, and physical properties of green diesel/gas/jet fuel blow biodiesel out of the water (just as biodiesel is much better than ethanol from corn.)  The downside: limited feedstocks.  Avialable oil and grease from conventional sources is could only supply a tiny fraction of our liqid fuels; we will need to turn to nonconventional sources of oils to make a real dent in our liquid fuel needs (as well as invest massively in the efficiency of our transportation fleet.)

Non-traditional sources of oil to look into: algae and pyrolysisoil.  I plan to write more about pyrolosys in another blog; it is a quick way of converting all sorts of biomass into useful syngas, and has some useful byproducts as well, and pyrolysis a a relatively omnivorous process, able to process everything from old tires to corn stover to forest trimmings, there is a lot of potential pyrolysis oil out there.

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Green Diesel and Jet Fuel

On a recent tour of NREL‘s Biomass reserch lab, I learned about a new (to me) way to make biofuel.  Plant and animal oils and fats can used in conventional petroleum refineries to make diesel and jet fuel.  This idea has actually been around since the 1990s, when it was first demonstrated on a pilot scale.

Most of my readers are probably well aware of efforts to cultivate microalgae as a source of oil for biodiesel.  This is to biodiesel production what cellulosic ethanol technology is to ethanol production: an up-and-coming technology that has the potential to increase the level of production to where it can actually provide a significant volume of fuel relative to our transportation needs (corn ethanol and biodiesel from conventional crops and waste oil both fall far short on this measure.)

Green diesel and jet fuel address two major problems for biofuels:

  1. Biofuels lack an existing distribution infrastructure (they must be moved around by train, and even if it were possible to use existing pipelines, they do not lead to where most biofuel is currently produced.)  Conventional refineries, naturally, are already integrated in the existing infrastructure.
  2. Ethanol has a lower energy density than gasoline (about 30% less), and I know of no way to convert biomass into a high enough energy density fuel to power jet aircraft.  This process produces jet fuel, neatly dealing with that problem, and holding out the hope eventually reaching a 100% transport (we’d still have to massively increase efficiency to reduce consumption to a sustainable level.)

Oil refiners are interested because bio-based oils contain little or no sulfur, and removing sulfur from diesel is an increasingly expensive process as more stringent standards go into effect.  In fact, regulation for ultra-low sulfur diesel is partly behind the recent price rise in diesel vs. conventional gasoline.  It used to always be cheaper than gas, but now it is more expensive. 

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