Archive for Biodiesel

Biodiesel vacation

What do Willie Nelson, An evangelical with poor grammar in Wichita, a sustainable-everything store in Austin, and a pump and drilling supply company in Golden CO have in common? Read the rest of this entry »

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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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Penny stock “tips”

I just got a comment from “goldguru” at the Gold Stock Bull Blog. My first thought was that he was pushing a particular penny stock as part of a “Pump and Dump” scheme… Reading his post, that seems not to be the case, but caution is warranted.  He says: As always, you should do your own due diligence, especially with bulletin board stocks that carry a higher risk profile.

  That’s good advice.  While he says he does not own any Nova, there are many others out there pushing stock they do own, and caution is always warranted. 

  It was recently shown that spammers are actually able to move the price of the penny stocks they push when they send out email about how this or that penny stock is about to “explode.”  The strategy is generally to load up on some ignored penny stock, send out a bunch of spams, and then sell as all the suckers buy.  This leaves the spammers with a tidy profit, and the suckers with stock that is more likely to implode.sc.png

Check out this chart of Petrosun Drilling.  On Aug 18 I received 3 spams from people pushing this stock, saying it was about to “explode” that same day.  If I had bought on that tip, I probably would have gotten in around $1.70.  The stock is currently trading at $.91, and never got that high in the meantime.  I think I also got a spam around Aug 30, where you see that secondary little peak, but I admit I wasn’t paying close attention.

This is why I seldom recommend stocks in my blog, and when I do it’s because I like the company, but currently think it’s overpriced (e.g. Wal-Mart.)  What I’m saying is “This one’s worth watching, but don’t buy it at current prices.”  I also try to stick to stocks with high liquidity, so whatever I say won’t have much of an effect on the stock price.  If I find a stock I like in my research, I buy it for my clients and myself. 

The goal of this blog is to give you the tools to invest profitably for yourselves.  To do that well, you need to do your own research (if you’re going to use any active investing approach.)  Passive indexers can get slightly-below-average returns for very little effort, and, as unappealing as “slightly below average” sounds, it’s a lot better than the typical retail investor does.  For those of you who do not have the time or inclination to invest for yourselves, I hope to give you some insight into my methods and character, in case you or someone you know is looking for a professional to manage their money.

So don’t come here looking for stock tips, and be very wary of any stock tip you come across in a public forum.  The more people who see a tip, the less it is worth.  That’s why you’ll probably lose money following Jim Cramer’s picks, despite the fact that he seems to be (in my opinion) highly intelligent, if highly annoying.  There are just too many people following his advice.

The only useful information in the stock market is private information: things that the market is not yet aware of, or is currently ignoring.  Do your own research, pay someone who only sells his advice to a few people, or use passive index investing.

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Paul Notari on confronting the Oil crisis

If you’re wondering about how the US should deal with the looming oil crisis, Paul Notari wrote an excellent overview on RE Insider this week.   His prescription for the US is exactly what we need.

High oil prices are starting to move us in the right direction, but not nearly fast enough.  We need to take action before Adam Smith’s invisible hand forces action on us, through demand destruction.  Demand destruction is a nice way of saying that when gas hits $20 a gallon, people will start taking their bikes to work because they can’t afford to do otherwise. 

Economists who pooh-pooh peak oil becase “demand destruction will take care of the problem” are forgetting the human element: demand destruction is incredibly painful.  We need to take proactive steps to solve the problem, such as those outlined in Paul’s article, or the problem will be solved for us… and it will hurt.  A lot.

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Over the limit on ethanol?

What are the limits on ethanol production? 

According to NREL’s John Sheehan, at this months Energy Analysis Brown Bag, ethanol production from corn is set to reach 4 billion gallons this year, and 7.4 billion gallons per year by 2011, based on current and planned production capacity.  (As an aside, on August 10, the Douglas County News-Press published a very pointed editorial from him on the travesty of IREA funding disinformation about global warming.)   Given that a bushel of corn will produce 2.8 gallons of ethanol, that will make ethanol demand for corn in the
US 1.4 billion bushels in 2006, and 2.6 billion bushels in 2011.  Since the annual corn production in the
US is around
11 billion bushels, ethanol production is already having a significant impact on the price of corn for food.

As Lester Brown, President of the Earth Policy Institute pointed out in the Aug 21 issue of Fortune(the particular article I’m referring to does not seem to be available online), the market is already setting the price of agricultural commodities at their oil equivalent value.

Unlike Lester Brown and John Sheehan, I think this will be a good thing for the world’s poor.  Yes, food prices will go up, but the poor are not only consumers of food; they are also producers and potential producers.  In the
US, the percentage of poor rural residents has been
consistently higher than the percentage of poor urban residents throughout the last 50 years.   In
Africa, the world’s poorest continent, farmers can often not make a living because they
cannot compete with subsidized first-world farmers.

If world food prices rise because of demand for biofuels, this may at last reverse a great injustice, where subsidies for first world farmers have prevented third world development.  Allowing myself to get wildly optimistic for a moment, if fuel demand permanently boosts agricultural commodity prices (which seems very likely), that might even open the way to removing subsidies for European and North American farmers.  The Doha round of world trade talks failed in large part because of rich world unwillingness to cut agricultural subsidies, which is a great shame, because cutting subsidies would be a great boon to first world taxpayers, as well as third world farmers.

I think the best way to play the biofuels boom as an investor is by betting on the trend of rising agricultural prices.  While large agricultural companies like ADM have already seen the benefits of this trend, the currencies of third world agricultural based economies should benefit, as well as the price of agricultural land in the US.  Much US farmland may benefit twice from renewable energy, since land in windy areas also has the opportunity to gain income from wind leases.  This was a large part of the theme of the Intermontain Harvesting Energy Summit I attended this spring.

On the downside, stimulating agricultural production can lead to deforestation.  Greenpeace can push for all the moratoriums it wants on soy from deforested areas, but that won’t keep soy oil or ethanol from deforested areas going into our tree-hugging gas tanks.  Global commodities, such as soy, corn, soy oil, and ethanol will just go to countries and companies who don’t participate in the boycott, removing their demand from the world market, and lowering the world price for everyone else.  This is the same principle we use in our favor when we buy Green Power: the actual electrons running my laptop are probably from a coal fired plant, no matter if I pay for green power or not.  What I’m actually purchasing with green power (in theory… may green power markets still have kinks that need to be worked out) is the fact that I’m stimulating green power production as much as I would if all my power actually did come from green sources.

Another worry about the rapidly rising biofuels capacity is distribution.  John Sheehan’s estimate of 7.4 billion gallons of ethanol in 2011, and 700 million gallons per year of biodiesel would amount to a around 5% of gasoline consumption and less than 2% of diesel consumption.  Since the current fleet of engines can run with no problem on 10% ethanol (in
Brazil “gas” typically contains
25% ethanol.), we would not need to use any E85 to use all the planned ethanol production.  Similarly, B20 can be used in all but the coldest parts of the country year round, so converting just 2% of diesel consumption to biodiesel could also be accomplished through existing distribution.

I find it likely that the constraints on biofuel production will come in the form of the price of the feedstock, which will be driven by oil prices.

While ethanol and biodiesel will be necessary parts of weaning us off our dependence on oil, current technologies cannot go very far to getting us there without a much greater push towards more efficient automobiles.  Raising average fuel economy by just 10% would reduce fuel use and greenhouse gas emissions over twice the amount the flat-out biofuels production we’re seeing will. 

We can easily double the fuel efficiency of our current fleet with a combination of plug in hybrids (powered by cheap wind) and more efficient engines.  Only when we’ve done that can we hope that cellulostic ethanol and biodiesel can start to supply our remaining fuel needs. 

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B5 Grand Cherokee

I just saw a news report on biodiesel.org that Jeep will be fueling their new Grand Cherokee CRD with B5 at the factory.  Has Dr. Z been reading my “Why I Bought a Jeep”  article?

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