Domestic Fuel

It appears as if two things peaked in 2007…our economy and our thirst for driving. According to an article in McClatchy Newspapers, U.S. gasoline consumption peaked in 2007 and has not only not recovered, but never will – even after the recession ends. According to Steve Everly, the author of the article, there are several reasons why.

1) Federally mandated fuel economy increases.

2) The number of vehicles on the road will hit a plateau. Get this. There are 4-5 cars on the road for each person in the U.S. including children who can’t legally drive.

3) There will be enough alternative fuels to cover increased fuel needs (which up until 2007 grew each year since we discovered our love for driving using petroleum).

“We’re on a slow but inexorable path away from petroleum,” said James Williams, an analyst with WTRG Economics, an oil and gas consultancy. “This is a big deal.”

While this is good news for consumer pocketbooks, this is not such good news for oil companies who will lose billions of dollars each year from declining gas sales. According to the article, many oil companies are looking at adjusting their refinery capabilities, including the possibility of shutting some of them down. But this doesn’t mean petroleum will disappear. The Energy Information Administration predicts that by 2035, petroleum still will provide 88 percent of the fuel for cars and light trucks.

I’ll let you decide if this is good or bad news.

Yesterday I reviewed the book Crude World and today I watched the documentary Crude directed by Joe Berlinger. Ironically, Crude follows the multi-year struggle of 30,000 indigenous and colonial rainforest dwellers of Ecuador as they struggle to hold Chevron accountable for what many environmentalists are saying is the world’s worst case of oil contamination ever. This story was told in one chapter of Crude World, but you don’t really embrace the full effect of the devastation and human struggling until you witness it yourself.

The lawsuit was filed against Texaco but when Chevron merged with Texaco in 2001 they inherited the suit. Originally filed in the United States, the suit was dropped and moved to Ecuador where against all odds, the courts proceeded with the case. The people are led by local lawyer Pablo Fajardo who is being assisted by American lawyer Steven Donzinger. The documentary covers three years of the case and follows the plaintiffs to three continents and begins with the judges orders to visit the contamination sites.

Eventually, the judge orders a third party to come in and test the various contamination sites (which Chevron has claimed to test and found no pollutants that exceed U.S. EPA regulations). When the 4,000 page report is released in 2008, it “recommends compensation for environmental remediation, excess cancer deaths, impacts on indigenous culture, and Texaco’s ‘unjust enrichment’ from its operations.” The monetary cost: $27 billion dollars. 
Read the rest of this post…

While alternative energy continues to get a boost from the Obama administration, geothermal still doesn’t seem to be garnering much of the spotlight. However, the energy sector is growing and recently the state of Idaho announced that it will increase its percentage of energy output from wind, solar and biomass and is looking to add more geothermal derived energy.

Photo Credit: U.S. Geothermal Inc.

Based its 20 year Integrated Resource Plan (IRP) filed with the state last December, the most promising form of geothermal energy for Southern Idaho is binary cycle geothermal development. In this type of plant, the hot geothermal water is passed through a heat exchanger which then heats a binary liquid. From there, the liquid is vaporized and the vapor spins the turbine-generator unit where it is then reliquefied and reused in the heat exchanger. After a portion of geothermal water is used for heat, it exits the plant and is returned back to the reservoir.

The first project, Raft River, is already producing electricity and Idaho Power is looking to develop additional projects over the next decade. To date there are only 12 binary cycle geothermal plants in operation in the US.

In the near-term, Idaho Power plans on adding 266MW of wind capacity in 2010 through long-term power purchase contracts and plans to have over 600MW of wind by the end of 2012. In addition, they have hired Black and Veatch to conduct a feasiblity study for solar techologies.

In an effort to increase geothermal funding and projects across the US, the industry is gathering in San Francisco next week for the GeoPower Americas conference where the goal is to raise more attention to this promising form of alternative energy.

Virgina-based Greenhouse Gas Services, a company that invests in and develops projects that reduce greenhouse gases, announced today that it has acquired Toronto-based StormFisher Ltd. StormFisher operates projects in North America focusing on turning food or agricultural byproducts into natural gas and electricity. As part of the deal, StormFisher investor Denham Capital is now an investor in Greenhouse Gas Services which is a GE AES venture.

Mauricio Vargas, CEO of Greenhouse Gas Services said of the transaction, “Adding the StormFisher team and its pipeline of shovel-ready biogas projects expands Greenhouse Gas Services’ business line and complements our carbon platform. As carbon and renewable energy policies continue to evolve, we see tremendous opportunity and growth for us in North America.”

The company anticipates breaking ground this year on its first biogas project, a 2.8-megawatt facility in London, Ontario that will convert more than 100,000 tonnes of organic materials from agri-food producers into renewable energy through anaerobic digestion. The electricity produced will be sold to the Ontario Power Authority.

“This deal brings together StormFisher’s project development expertise and pipeline of new opportunities with the carbon credit specialization of Greenhouse Gas Services,” said Bas van Berkel, President of StormFisher. “It represents the combination of two very entrepreneurial firms with the backing of multi-billion dollar companies.”

In addition to the project in Ontario, the company is currently developing other biogas facilities in Wisconsin and California, which are expected to be operational by the end of 2011.

Yesterday I declared this the Week of Oil. While the Obama administration is calling for more green jobs and support of the clean tech industry, it is also calling for more research on ‘clean coal’ and more off-shore drilling. It’s these last two items that really seem to fire people up so I decided it was high time I learned more about oil’s world and I began by reading “Crude World: The Violent Twilight of Oil,” by Peter Maass.

This book takes you on a journey around the world and throws you into the violence that surrounds nations’ quest for oil. It’s not pretty. To reiterate what most people already know, the majority of oil left in the world lies in volatile areas. And not just the Middle East, but areas of Africa and South America. Too many people believe that oil leads to wealth and the revival of a country. However, too often, it leads to corruption by government officials, increased poverty and unrest – not to mention the environmental devastation that occurs.

The sad thing is that despite knowing better (America is all for human rights, right?) our own corporations support these evil regimes. A case in point that Maass discusses is Equatorial Guinea and its corrupt dictatorial President Teodoro Obiang. His reported salary is $60,000 a year (US dollars) but it was recently discovered that he has bank accounts in access of $700 million. The bank accounts reside in the U.S.

So while he’s rolling in the dough, the people of his county are uneducated, underfed and lacking in basic amenities like clean water and electricity. Eventually, the Senate released a report detailing “money laundering and foreign corruption” after being tipped off by journalist Ken Silverstein, and in the report wrote that oil companies operating in the country “may have contributed to corrupt practices in the country.” Naturally, the oil companies denied paying bribes (which is illegal), a few hands were slapped and business as usual resumed. The only true losers were the citizens of Equatorial Guinea.
Read the rest of this post…

Solar energy is not just for roofs. Petra Solar, a company that specializes in pole mounted solar systems for utilities, announced that it has raised $40 million in funding to be used for expansion initiatives. Current investors in the company participated in this round including Element Partners, Blue Run Ventures, OnPoint Technologies (U.S. Army’s Venture Fund) and Kuwait’s National Technology Enterprises Company, and were joined by two new investors Craton Equity Partners and Espírito Santo Ventures.

“The Petra Solar management team is very pleased to have Craton Equity Partners and Espírito Santo Ventures as investors, especially given their experience in cleantech growth investing and their expertise in the regulated energy sector.  We are also thankful for the continued support of our existing investors,” said Petra Solar CEO and President, Dr. Shihab Kuran. “Petra Solar has a proven model for green job creation including installation and manufacturing jobs that are local to system deployment. We are very gratified that our business interests line up directly with the public’s interest in producing reliable, clean energy and green jobs.”

The company plans to use the additional funding to add green jobs and expand its customer base. Petra Solar anticipates that it will immediately add 30 new employees and have a team of 165 people by year end. The company’s SunWaveTM system generates clean energy and increases reliability to the distribution grid. In the future, the company plans to expand its product line to address new applications and market segments that leverage its Smart Energy Module TM platform, which integrates utility grade power management, smart grid communications and grid availability features into a single system.

Last week, the Southern California Association of Governments turned down $11 million in stimulus money for Pearson Fuels to install 55 E85 stations. Huh. And this shortly after the expanded rules were announced for the Renewable Fuels Standard not to mention the Low Carbon Fuel Standard that went into effect on January 1.

What would cause the most notorious state, hailed around the world for its progressive environmental policies, to shun a lower carbon fuel? Hmmm…could it maybe, just possibly be that it is blinded by it’s Big Love for Big Oil?

Let us for a moment, take some time to reflect on California’s torrid affair with oil.

Last year California Lawyer Magazine Awarded its Clay Awards which are given to lawyers who show extraordinary achievements. Lawyers John Daum and Mary Nichols both won a Clay Award for two very different achievements. Daum won for his co-counsel regarding the worst oil spill in environmental history – the Exxon Valdez. But he didn’t win for his work to hold Exxon accountable for its actions – he won the award because he was able to lower the punitive damages that were to be paid to fisherman, landowners and others to one-tenth of the original damages. The magazine writes, “This was truly a signature punitive damages case, and it could have major implications for environmental and other torts in the future.”

While Daum was given an award for his work in defending Big Oil’s environmental offenses, Mary Nichols, who is the chairman of the California Air Resources Board and Daum’s wife, was given an award for her role in passing the Global Warming Solutions Act of 2006. This piece of legislation is intended to reduce CO2 emissions to 1990 levels by 2020. While the final rules are just now coming through the pipeline, the policy could potentially regulate all areas of energy use including land use and will be enforced through a “cap-and-trade” program. It is important to note that through this program, Big Oil doesn’t have to reduce its CO2 emissions solely through alternative fuels. If they bring to market technology that reduces CO2 but still uses fossil fuels, the technology will still meet policy requirements.

Not allowing to let the relationship fizzle, the state rekindeled its love with its latest proffering and now its sizzling once again.
Read the rest of this post…

Last week, I wrote a story regarding President Obama’s executive order for the federal government to reduce its greenhouse gas emissions 28 percent by 2020. One goal of this program is to get other companies to follow suit, but many companies don’t know where to start. Enter the Hondo Green Assessment Tool (HGAT). To learn more about how companies can become more sustainable, I spoke with the Hondo Group’s CEO Lynn Balinas.

HGAT is an internet based tool for small to mid-sized companies that can measure a company’s carbon footprint, manage its carbon footprint and maintain carbon footprint goals, explained Balinas. The tool measures five categories: water, energy, transportation, materials and waste. Ultimately the tool helps companies become not only more sustainable but more profitable as well.

“People usually first think, it’s about the environment, it’s about global warming. That’s part of it,” said Balinas. “But it’s good governance and it’s actually profitable for organizations.”

A few years ago, people perceived that going green meant going broke. That is actually not the case. Going green will actually help you make more green. For example, if all small to mid-sized businesses turned off their computers and printers at night (unplug the electronics) nearly $2.1 billion could be saved annually.

Here is how it works. After 35 days of metrics based on the five categories outlined above, the HGAT will tell a company how to reduce the carbon footprint and give suggestions that a company can choose to integrate. Ultimately, the tools that are put into place will help a company manage its program and save money.

Companies can implement the program alone or partner with other small to mid-sized companies. Balinas said that the average cost to a company with less than 50 employees is around $50 per month but the return is much greater.

Listen to my interview with Lynn below to learn more about HGAT.

Podcast: Play in new window | Download (2.8MB)

The Next Generation Bio-Based Chemicals Summit is taking place in San Diego this week and Poet’s Vice President of Commercial Development, Scott Wishaar, will be discussing how new ethanol co-products can help ethanol plants become true biorefineries.

Photo Credit: Poet

Wishaar is participating in the panel discussion, “Perspectives of Biorefinery Owners and Development on the Bio-Based Chemicals Value Chain” taking place on Wednesday, February 10th.

According to Poet, co-products such as Inviz zein, open many new markets for producers today. Inviz is a biodegradable, low-nutrient protein found in corn and can be used as a gum base or in films, packaging, adhesives, coatings and glazes. Inviz zein is extracted using a patent-pending process developed by POET.

The company is also researching other co-products to further expand the value of corn and anticipates that bio-based chemicals and related products will likely emerge as viable co-products as part of the production process of Project LIBERTY. Poet is is using corn cobs to create cellulosic ethanol as part of this pilot project.

Yesterday, the Environmental Protection Agency confirmed in its expanded rules of implementation for the Renewable Fuel Standard (RFS), that ethanol made from sugarcane is considered an advanced biofuel that lowers greenhouse gas emissions (GHGs) by more than 50 percent. Specifically, EPA’s calculations show that sugarcane ethanol from Brazil reduces GHG emissions compared to gasoline by 61%, using a 30-year payback for indirect land use change (ILUC) emissions.

“The EPA’s decision underscores the many environmental benefits of sugarcane ethanol and reaffirms how this low carbon, advanced renewable fuel can help the world mitigate against climate change while diversifying America’s energy resources,” said Joel Velasco, Chief Representative in Washington for the Brazilian Sugarcane Industry Association (UNICA).

Brazil is the second largest ethanol producer in the world, behind the U.S., and the largest producer of ethanol made from sugarcane. Sugarcane ethanol, when compared to most types of ethanol produced today, yields less CO2 and can be less expensive for drives to purchase at the pump, this according to UNICA. The organization also says that “many observers point to sugarcane ethanol as a good option for diversifying U.S. energy supplies, increasing healthy competition among biofuel manufacturers and improving America’s energy security.”

A recent study in the November 2009 edition of the journal Energy Policy indicated that since 1975, over 600 million tons of CO2 emissions have been avoided thanks to the use of ethanol in Brazil.

“We are pleased that EPA took the time to improve the regulations, particularly by more accurately quantifying the full lifecycle greenhouse emission reductions of biofuels. EPA’s reaffirmation of sugarcane ethanol’s superior GHG reduction confirms that sustainably-produced biofuels can play a important role in climate mitigation. Perhaps this recognition will sway those who have sought to raise trade barriers against clean energy here in the U.S. and around the world. Sugarcane ethanol is a first generation biofuel with third generation performance,” said Velasco.

UNICA concluded by congratulating the administration for its “transparency and scientific integrity in the environmental rulemaking,” and encouraged other governments around the world to “take note of the manner that EPA has handled this process.”

It’s a busy day for the federal government. Here is what has happened today. The EPA has released its expanded rules for the Renewable Fuel Standard, The U.S. Department of Agriculture has proposed a rule on the Biomass Crop Assistance Program (BCAP) that would provide financing to increase the conversion of biomass to bioenergy, and the President’s Biofuels Interagency Working Group released its first report – Growing America’s Fuel. The report was co-authored by co-chairs Secretaries Vilsack and Chu along with EPA Administrator Lisa Jackson and lays out the strategy to advance and bring to market sustainable biofuels.

“Advancing biomass and biofuel production holds the potential to create green jobs, which is one of the many ways the Obama Administration is working to rebuild and revitalize rural America,” said Agriculture Secretary Tom Vilsack. “Facilities that produce renewable fuel from biomass have to be designed, built and operated. Additionally, BCAP will stimulate biomass production and that will benefit producers and provide the materials necessary to generate clean energy and reduce carbon pollution.”

Several industry organizations responded to the report today including the American Coalition for Ethanol (ACE) and Growth Energy.

“We welcome this new vision focused on biofuels production targets, and we encourage equal if not greater attention on distribution and creating long-term, sustainable demand for today’s corn ethanol and the next generation of biofuels,” said Brian Jennings, Executive Vice President of ACE.  “Approving the pending E15 waiver request, requiring the production of more Flexible Fuel Vehicles (FFVs), and providing incentives for the installation of blender pumps to dispense mid level ethanol blends all need to occur if we are to ensure that both corn ethanol and the next generation of biofuels can make good on their promise to reduce our dependence on foreign oil.”

Growth Energy CEO, Tom Buis agreed with Jenning’s statement and added, “Growth Energy commends President Obama for recognizing the value of grain ethanol and the need to move forward with cellulosic ethanol to help our nation meet the goal of producing 36 billion gallons of renewable fuels by 2022. The President understands the need for enhanced support for the existing ethanol industry and greater investment to create jobs, improve our environment and increase our national security.”

The Environmental Protection Agency (EPA)  made an upwards revision today when releasing the expanded Renewable Fuels Standard. They gave corn-based ethanol a 21 percent advantage over conventional gasoline, more than what was originally slated. This new revision also qualifies all corn ethanol, including existing and new production, for the conventional biofuels targets in the RFS.

“While we’re pleased that the U.S. EPA recognizes corn ethanol’s distinct advantage over gasoline when it comes to greenhouse gas emissions and gratified that EPA modified ethanol’s carbon footprint calculation to more accurately reflect real-world data, we don’t believe the agency’s overall assessment of ethanol’s greenhouse gas reduction potential was good enough or accurate,” said Brian Jennings, Executive Vice President of ACE.  “By continuing to apply scientifically indefensible ‘international indirect land use’ penalties to corn ethanol, these regulations seriously underestimate ethanol’s greenhouse gas benefits over oil while completely ignoring the indirect emissions associated with petroleum – for example, the military protection of world oil supplies and oil transportation routes.”

One of the complaints of indirect land use change  (ILUC) theory is that it is not based on sound science or real data but simply derived using computer modeling. When ILUC theory is eliminated from the equation, corn-based ethanol’s GHG reductions are significantly higher – 61 percent according to ACE who comnissed the study, “Lifecycle Analysis of Greenhouse Gas Emissions Associated with Starch-Based Ethanol.”

Among the key findings of the report: “the scientific literature available to date shows a huge variation in estimates of carbon release from land clearing in general, on the order of 50 percent plus or minus – a huge margin of error that should not be relied upon to make policy.”

Jennings concluded, “America’s ethanol producers are committed to providing a clean, renewable fuel that supports the nation’s economy through job creation and reduces our dependence on foreign oil. The revisions in this proposed rule are a positive step by EPA, but corn-based ethanol must not be unfairly singled-out for penalty based on the indirect land use change theory.”

This afternoon, Growth Energy responded to the Environmental Protection Agency’s expanded Renewable Fuels Standard, that will create the platform for reaching 36 billions gallons of biofuels by 2022, and specifically praised the Obama administration and EPA Administrator Lisa Jackson.

“Growth Energy commends the Obama White House and EPA Administrator Lisa Jackson for recognizing the value of domestic ethanol both as a low-carbon fuel and as a U.S. jobs creator. The expanded Renewable Fuels Standard released today rightly puts an emphasis on America’s growth energy – ethanol – and that in turn will help our economic recovery, strengthen our national security and clean our skies,” Tom Buis, CEO of Growth Energy, said.

The Association noted several improvements to the rule including the decision to make volume levels of domestic ethanol retroactive to the first of the year. Technically, the blending levels for 2010 were to have been announced back in November but the EPA held off on determining those levels until they completed the new rules.

“Further, we’re pleased that EPA recognizes grain ethanol as a low-carbon fuel, and changed its indirect land use change penalty from its original proposal last year. However, while we appreciate that the EPA recognizes the uncertainty of ILUC, the fact remains that ILUC is still in the rule. This puts the cart before the horse, and our position is that ILUC should not be applied in regulation until we have a thorough, long-term study of the issue,” continued Buis.

Another area of concern lies in the fact that ILUC gives favoritism to Brazilian sugarcane ethanol, thus opening the door to a reliance on foreign energy once again.

Buis concluded, “Further, by using skewed ILUC calculations, the RFS gives Brazilian sugarcane ethanol preferred status as an advanced biofuel. I don’t think that was the intent of Congress when it passed the Energy Independence and Security Act. It won’t make the U.S. any more energy independent by switching our addiction from foreign oil to foreign ethanol.”

*Post update*
Listen to or download an interview with Tom Buis on Growth Energy reaction to the RFS2 rule here:

Podcast: Play in new window | Download (6.1MB)

The ethanol and agriculture industry have a few things to celebrate today, one of which is EPA’s acknowledgment that ethanol, including corn-based ethanol, has greenhouse gas emission advantages over conventional gasoline. Today, the Environmental Protection Agency (EPA) announced its new released regulations for the implementation of the Renewable Fuel Standard (RFS2) which in part outlines the country’s move to 36 billion gallons of biofuels by 2022 while reducing GHG emissions in the fuel.

“We’re pleased the U.S. Environmental Protection Agency recognizes that corn ethanol provides a distinct advantage over conventional gasoline when it comes to greenhouse gas emissions, with a reduction of more than 21 percent in some cases,” said National Corn Growers Association (NCGA) President Darrin Ihnen. “This means that all corn ethanol including existing grandfathered capacity and new production will qualify to meet the conventional biofuels targets in the RFS.”

However, like others in the ethanol industry, NCGA is frustrated with EPA’s continued use of indirect land use theory, a piece of “flawed science” say industry supporters. Ihnen stressed that the EPA should reject the unproven theory of international indirect land use change, which assumes that growing more corn means planting corn on a proportionately greater amount of acreage and will impact other crops or natural resources on a global basis. Today’s yield trends show this to be false. 2009’s record corn yield was 165.2 bushels per acre, according to the U.S. Department of Agriculture, more than 11 bushels higher than 2008 and nearly 15 bushels higher than 2007.

One of the inherent problems with indirect land use is that it is only applied in the case of corn ethanol. “This is the perfect example of bad science being applied unfairly,” said Ihnen. “Removing the impacts from the international indirect land use theory means that corn ethanol actually provides a 52 percent reduction in greenhouse gas emissions, compared to gasoline. The EPA is not considering similar indirect impacts of petroleum-based fuels, so why are they so stringent when it comes to green, renewable corn ethanol?”

After a two-month delay, the Environmental Protection Agency (EPA) has finally announced the final rule for the implementation of the second phase of the Renewable Fuel Standard, aka RFS2. As part of the rules, the EPA will both set the national mandatory blend levels as well as monitor compliance through its new reporting system. The monitoring system will also track carbon emissions of fuels which will be required to be reduced as the RFS progresses.

“EPA was right to recognize that ethanol from all sources provides significant carbon benefits compared to gasoline,” said Renewable Fuels Association President Bob Dinneen. “As structured, the RFS is a workable program that will achieve the stated policy goals of reduced oil dependence, economic opportunity, and environmental stewardship.”

Dinneen continued, “The RFS is the public policy building block upon which America’s renewable fuels industry will be built. Today’s industry and tomorrow’s ethanol producers require stable federal policy that provides them the market assurances they need to commercialize new technologies. To that end, EPA has achieved that goal.”

RFA expressed their disappointment once again with EPA’s reliance on unproven science and reiterated that regardless of what “science” is used for the GHG calculations, all ethanol boasts an improvement over gasoline. Despite the areas where RFA disagrees with the new rules, they stated, “At the end of the day, the RFS is public policy that can and will work effectively.”

Click here to read RFA’s full response to the rules.

Listen to “The Ethanol Report” for an interview with RFA’s Matt Hartwig on the decision.