Domestic Fuel

Some others have started to notice something I told you about back in January. It seems that while he campaigned on the word “biodiesel,” President Barack Obama is now talking “biofuels” … a more ambiguous term that is leaving some biodiesel producers scratching their heads wondering whether the president backs them.

This piece from Biodiesel Magazine points out that Stimulus Act monies seem to be going to too many unproven technologies, such as fuel cells, cellulosic ethanol and electric motors, instead of proven, reliable biodiesel:

The Obama administration coming out with billions of dollars from the American Recovery and Reinvestment Act to increase “clean energy manufacturing” could seem almost like a taunt to biodiesel producers.Obama announced “awardees” of the $2.3 billion clean energy manufacturing tax credits as existing biodiesel producers languish over the lapse of their specific federal blender tax credit. “Projects are assessed based on the following criteria: commercial viability, domestic job creation, technological innovation, speed to project completion, and potential for reducing air pollution and greenhouse gas emissions,” the White House stated on Jan. 8.

“I don’t think this Obama administration is any different than any other—Republican or Democrat—in that often the right hand doesn’t know what the left is doing,” said Joe Gershen of Los Angeles’ Tellurian Biodiesel. “So it does hurt, but I will say that I don’t think they’re doing it on purpose.”

I think the fact that the biodiesel tax incentive was allowed to expire and the White House not pushing for renewal speaks volumes … actions always speak louder than words.

My Week of Oil is coming to a close (but will never end) and California has made another interesting move. The California Energy Commission has a new Commissioner – Anthony Eggert. Two highlights of his career include his time serving as the Science and Technology Adviser to Mary Nichols at the California Air Resources Board. Prior to that, he did his Ph.D under Daniel Sperling at the UC Davis Institute of Transportation Studies. Sperling is a huge proponent of hydrogen and opponent of ethanol.

Wowzers. Things could get even uglier in California.

While we wait for the fall-out of yet another Big Oil enthusiast securing a high-level energy position, I want to reiterate my disgust over the state’s earlier move in turning down the $11 million in stimulus funds for 55 E85 pumps in Southern California. The reason according to an article in The San Diego Union Tribune, “But the regional agency in Los Angeles that would have received the money for the project voted last week to reject it, in part because its members don’t believe that ethanol is a worthy alternative to gasoline.”

Really? Then why did you bother wasting your time in passing and enacting the Low Carbon Fuels Standard? The only options to reduce carbon dioxide are propane, natural gas and biofuels and natural gas is fossil-fuel based and propane is virtually only available for fleets. Biofuels are the only immediate option today to reduce CO2 emissions.

The state of California is like a person cheating on his diet – they are advocating a clean energy diet, but eating copious amounts ‘fossil fuels’ mainly sugar and carbs. With this type of thinking, and other states unfortunately looking up to California, our country will never achieve a sustainable and secure energy program, and this my friends, is a very scary position in which to be.

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.
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During the Copenhagen Climate Conference, President Obama announced findings from the Environmental Protection Agency that the six major groups of greenhouse gas emissions are “an endangerment” to public health and welfare. This could lead to stricter emission regulations for vehicles, manufacturing and power plant emissions.

This also shines an even brighter light on low CO2 emitting technologies such as solar energy. Opportunities are ripe for policy makers to “get out of their own way” and help the industry grow by reducing the difficulties for projects including increased funding and smoother, reduced time for acquiring permits – especially now that the media are reporting that the “recession” has hit the solar industry.

Permit acquisition is one of the largest barriers to seeing solar utility projects come to fruition. Mike Nedd, Assistant Director – Minerals and Realty Management with the Bureau of Land Management (BLM) notes that the BLM has received a large amount of proposed applications for renewable energy projects and have set in motion ways to respond to the applications in a timely manner.

“We have responded by partnering with the Department of Energy on the Solar PEIS, by working through the Federal budget cycle to fund Renewable Energy Coordination Offices and renewable energy related positions, and by developing a coordinated, focused effort to move projects through the environmental review and permitting process more quickly but without taking shortcuts,” said Nedd who will be a presenter at the upcoming Solar Power Generation USA conference in Las Vegas on January 20-21, 2010.

While the move to streamline the permitting process is needed, it shouldn’t happen to the detriment of the environment. Therefore, the solar industry and environmental organizations will need to forge stronger relationships to ensure solar energy sees the light of day.

A leader in large-scale community wind project development is making the case that wind turbines on farmland would only take up 1 percent of the land but could double a farmer’s profitability.

In a piece e-mailed to Domestic Fuel, National Wind’s co-founder and co-chair Patrick Pelstring says wind energy doesn’t take up as much room as some people might think and would provide a steady second income without a lot of effort on the part of the landowner:

A rule of thumb regarding wind farm land use is that, while each turbine generally needs a plot of about 100 acres separating it from other turbines, the actual footprint of each turbine is less than one acre. This footprint includes the area surrounding the turbine and all access roads. Therefore, each turbine occupies less than 1% of the open land required by a wind farm, leaving the other 99% of the property available as farmland or pasture.

Now, imagine that John has five turbines on his farm, occupying five of his cropping acres, leaving him with 495 acres of corn. His farming conditions are the same, so from those acres he’ll make $29,764 in profit, based on the 10 year average profit of $60.13 per acre. But add in the revenue from the turbines–$35,000 total assuming $7,000 per turbine (on the low end of what National Wind pays)–and his total profits increase to $64,764 per year. This would be almost double his profits from growing only corn without turbines. Under National Wind’s community model, the profit structure may be even better if landowners take an ownership stake in a project company and share in the actual profits generated.

Pelstring goes on to make the case that wind turbines can be a good hedge against natural disasters, such as floods in farmland.

I found an interesting piece by Lyle Estill, a founder of Piedmont Biofuels … a Pittsboro, North Carolina-based maker of biodiesel and other “things.”

Estill’s column in the Chapel Hill (NC) News is really good piece that not only talks about his little biodiesel company’s resilience in the face of a tough market, but also of the principles his blue-collar father taught him about American industry:

By the summer of 2009 the biodiesel industry was on the ropes. Feedstocks were too expensive to be used for fuel.

Nowadays we don’t just make biodiesel. We also make worm bins for vermiculture systems, and we make rain water delivery systems out of scrap, and we make containers for square foot gardeners, and we make boiler fuel out of free fatty acids, and we build custom boiler systems, and we make seed crushing systems that extract oil, which means we also make animal feed.

I really liked Estill’s perspective at the end of the column, where he talked about being back in the manufacturing business … even if it’s not biodiesel:

There was a time when the only thing that shipped from the plant was biodiesel. These days there is no telling what is on the truck.

But it feels good to be making things again. It even smells good.

Good attitude.

This morning the Copenhagen Climate Conference kicked off. As I mentioned in earlier posts, the two big issues are the reduction of CO2 and the halting of deforestation. As I noted in other writings, there are Climate Alarmists and Climate Skeptics. Climate Alarmists, which Al Gore would be considered, believe that if we don’t curb global warming now, the earth will face unprecedented consequences. The climate skeptics, as Bjorn Lomborg would be considered, offer the view that the problem has been blown out of proportion or is focused on the wrong culprits. Actually there would be nothing more fun than a Lomborg/Gore debate.

On Friday, I presented a ’skeptics’ view…today I will present an ‘alarmists’ view. For the third book review, I chose Al Gore’s, “Our Choice A Plan to Solve the Climate Crisis.” Most people know that Gore helped to put the global warming debate on the map with his first book and movie, “An Inconvenient Truth.” These efforts led to a shared Oscar and co-recipient of the Nobel Peace Prize in 2007. Gore will also be playing a major role in Copenhagen over the next two weeks.

Gore begins, “It is now abundantly clear that we have at our fingertips all of the tools we need to solve the climate crisis. The only missing ingredient is collective will.”

Throughout the book, Gore uses a combination of words, graphics and pictures to demonstrate the climate change debate, detail many of the solutions and offer policy recommendations. There is one area where I think Gore did a great job, and that is explaining what the six categories of global warming pollution are: carbon dioxide, methane, black carbon, sulfur hexaflouride, tetrafluoroethane, carbon monoxide, butane and nitrous oxide. To date, the biggest focus has been on carbon dioxide and Gore’s focus throughout the book is no different.

Along those same lines, Gore advocates that the most effective way to curb CO2 is through putting a price on carbon. He writes, “An effective plan for solving the climate crisis must include aggressive remedies for our erroneous reliance on deceptive market signals in carbon-based energy.”
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Comments were due today to the EPA regarding the Green Jobs Waiver that would allow up to 15 percent ethanol (E15) in gasoline. Just as the clock ran out, The Association of International Automobile Manufacturers (AIAM) filed comments opposing the waiver request. It is no coincidence that AIAM filed their comments at a time when others could not respond. However, it is encouraging to note that support for the E15 waiver is mounting.

Michael J. Stanton, President and CEO of AIAM, outlined the association’s concerns in a public statement that you can read in full here.

“AIAM and its member companies have long recognized the importance of addressing climate change and have supported efforts to reduce greenhouse gas emissions while significantly increasing fuel economy. With so much progress made by government and industry in recent months to meet these goals, we believe it would be premature for EPA to approve the near-term distribution and sale of fuels containing more than 10% ethanol without further testing to prevent unintended negative consequences.”

Stanton continued, “The Clean Air Act requires producers of any new fuel or fuel additive to show that those fuels will not contribute to the failure of vehicles or engines to meet emissions standards. Most vehicles currently being driven by American consumers were not designed to operate on ethanol blends greater than E10. If EPA were to approve the sale of such fuels, we believe a range of problems would result that could jeopardize the control or reduction of automotive emissions.”

The range of problems they cite are harm to emissions systems and drivability problems.

The real reason AIAM opposes the passing of the waiver is that they would lose an opportunity to sell the cars that are aging on dealer lots across the country. Several programs are in place to incenticize people to buy new cars including the Cash for Clunkers program. But what AIAM and other detractors are choosing not to acknowledge is that to ensure the country blends 36 billion gallons of biofuels by 2022 the minimum blend of ethanol must be raised. We cannot let the U.S. auto industry keep us from achieving energy security. Although it’s too late to submit your comments to the EPA, I encourage people to respond to AIAM’s comments. You can learn more about the Green Jobs Waiver at www.GoE15.com.

The state of Washington has missed its goal of having biodiesel and ethanol make up at least 20 percent of its state vehicle fuel use. And that has prompted the founder of one of the nation’s biggest biodiesel facilities… which just happens to be located in Washington… to make the case that it didn’t have to happen.

John Plaza, the CEO of Imperium Renewables, writes in the Seattle Times that a recent Washington General Administration document that recommends postponing the biofuels target for another year is a sad report on biodiesel in the state… and sends a flawed mixed message:

First, let me address the GA’s wonderfully bureaucratic justification for why the state will fail to hit its goal: “limited supply.” Since January, Imperium has been storing 2 million gallons of biodiesel at our Grays Harbor facility. (Ironically, the state included this volume in its calculations to determine that the state’s Renewable Fuel Standard (RFS) was being met.) For the GA to say there is “limited supply” of biodiesel is both wrong and misleading.

Third, the report blames a lack of infrastructure for problems in accessing fuel. Shell, Sound Refining and Exxon/Mobil have collectively invested millions of dollars into biodiesel infrastructure, including terminals, tanks, blending racks and truck/rail loading facilities. I’m puzzled as to how GA overlooked these facts.

Plaza goes on to say the postponement of the biofuel requirement is most shameful part of the document. He says the answer is not to buy less biodiesel… more will help everyone involved.

Two weeks ago I reviewed, “Two Billion Cars” by Daniel Sperling and Deborah Gordon. I focused on several aspects but I did not tie together this important point: Daniel Sperling vehemently dislikes corn ethanol and he is the lead researcher for the California Air Resources Board (CARB) that just passed the Low Carbon Fuels Standard (LCFS). The LCFS was a huge set-back for the corn-ethanol industry in California, but even more so in light that other states and/or the federal government may adopt similar if not identical standards.

So, how does someone with such an outspoken, biased view have such prominent role in developing this legislation? Most people would consider this a conflict of interest.

I don’t have a crystal ball so I can’t answer that question, but I can tell you that Sperling founded and runs the Institute for Transportation Studies whose main research focus is hydrogen fuels (including from coal), natural gas fuels and fuel cells. Don’t forget California’s Hydrogen Highway and Gov. Schwarzenegger’s hydrogen powered Hummer. I surmise that Sperling had a major role in the support of a statewide hydrogen initiative.

Now I can’t criticize Sperling for supporting hydrogen. Many supporters of renewable energy support hydrogen for valid reasons but according to experts it is still 20 years away. Everyone must understand that it’s going to take all kinds of technologies to help us move away from fossil fuels – there is no silver bullet. Corn-ethanol is not perfect but it has a positive impact on the reduction of CO2 emissions and has offset some of our need to purchase foreign oil. In the future, biofuels will continue to play a major role. It is not in the best interest of our country to adopt the attitude, “Let’s wait and see. Something will save us.” We don’t have to wait. We have great technology right now.

So the moral? When making policy decisions, we need people who have an open mind, and are willing to review both current and future technologies and the roles they will play in our new energy economy.