The Post-election Energy Future

December 19, 2010 § Leave a comment

This post is loosely based upon the November 18th RTEC Breakfast Forum topic, Implications of New State and Federal Leadership on Clean Energy Enterprise

The midterm elections produced dramatic shifts in the political balance in Congress and both legislative bodies in North Carolina.  The effect on energy policies can be expected to be significant as job creation will trump climate change.  Conventional energy will be up while ethanol will be down.  A price on carbon, barely possible in the previous regime, will now be off the table.  That will likely put the Integrated Gasification Combined Cycle (IGCC) variant of clean coal on life support.  It will be interesting to see whether son-of-SuperGen in Illinois will survive.

National energy security will move up on the agenda.  Steve Chu and his aggressive research agenda will go under the microscope.  Business friendly policy will be in and energy efficiency should be unaffected.  In the “anybody’s guess” category is the federal subsidy on electric cars.  In North Carolina, oil and gas exploitation will be in.  Wind could be buffeted because of fervent championship by the past administration; hopefully they will rise above that.  These and more are discussed below.

Energy security considerations are likely to lead to encouragement of domestic resource exploitation.  This will entirely be in the province of oil, and to a lesser degree gas.  Replacing imported oil with domestic fuel substitutes will create jobs. The obvious implications will be toward deep-water exploitation related policy.  Also, expect considerable pick up in oil from tight rock, such as the Bakken and Eagle Ford prospects.

Electric vehicles fall in the category of oil replacement.  The current subsidy of $7,500 per vehicle will probably be kept, but the timetable for taper off and elimination will probably accelerate.  General Motors has been reborn and their results, including the post IPO stock price, are healthy.  Their considerable bet on the Volt and the attendant job creation will be a factor.  Some corporations, most notably GE, are doing their bit in this regard.  GE recently committed to purchasing 25,000 electric cars from GM and Nissan by 2015.  Their purpose was to give the manufacturers the certainty to move into mass production.

Biofuels will be a mixed bag.  Drop-in fuels such as alkanes from plant matter will be favored over ethanol, and mixed alcohols will be somewhere between.  This is because of the plug-and-play convenience of drop-ins; nothing different about the engine, the fuel pump or the distribution infrastructure.  A story in the Economist expands on this point.  Alkanes made with sugar as feedstock may be advantaged by the fact that Brazilian sugar has no import tariff.  In fact, there is a good chance that the 50 cents per gallon tariff on Brazilian ethanol will go away, as may the 52 cents subsidy to blenders of corn derived ethanol into gasoline.  In a burst of candor, Al Gore admitted recently that his Senate tie-breaking vote for it was solely for the purpose of being elected.  He now says the subsidy for first generation ethanol, read corn based, must go away.  The new Congress will likely make this happen.  But not any time soon.  The recent Obama compromise on taxes contained an extension of the ethanol subsidies.

Low carbon sources of energy will be disadvantaged by carbon not having a price.  However, the cap and trade system in Europe has not really worked either.  The price has fluctuated and has generally been too low to make much difference.  Consequently, the responsibility will shift to clean energy, making it purely on economic terms.  This is not all bad because if and when carbon emissions carry a penalty, the alternatives will be even more advantaged.

Wind energy from certain sources is already very competitive with coal, especially if externalities relating to the environmental cost are considered.  Help in the form of federal support for research and development could be helpful.  The recent report from the President’s Council of Advisors on Science and Technology suggests major funding initiatives and associated models in revenue generation for this.  But the revenue models are in fact taxes on existing energy units.  While modest in size, the new Congress will likely be opposed unless job creation is pitched as a principal benefit.  Healthy skepticism of federal coffers of this sort will also be an impediment.  The fund created previously by a tax on nuclear energy was not seen as spent wisely.  Even France has gone away from this model.  The French Petroleum Institute (IFP) used to be funded by a tax on vehicle fuel.  Similarly, the Gas Research Institute in Illinois was funded by a tax on natural gas transport.  Both models are now defunct.

In North Carolina, offshore drilling will potentially become permitted but is unlikely to lead to any actual activity because past exploration of the Atlantic coast has not been promising.  Even if allowed, the oil industry will probably invest elsewhere.  Shale gas drilling might find a home in the state.  It is not believed to be as prospective as the Marcellus in Pennsylvania and New York.  But economic accumulations are plausible.  Pennsylvania leaning on regulation to assure environmental security will likely have to be studied and used as a basis for policy.

Many see the new sheriff in town as a blow to sustainable energy goals.  Climate change based policy may well take a back seat. Energy security drivers and energy efficiency measures, however, will have an important impact.  The International Energy Agency has forecast that well over 40% of carbon mitigation will need to come from using less; carbon dioxide sequestration will account for only about 10%.  In conclusion, energy efficiency measures are important and largely unaffected by the political shift.

Beyond Ethanol

November 4, 2010 § Leave a comment

A recent article in the Economist describes an important new direction for biofuels, namely the pursuit of drop-in fuels. These are synthesized hydrocarbons and can be used directly in any proportion for engines running on gasoline, diesel or jet fuel. The last two cannot be served by ethanol.

As we have discussed in the past, ethanol has about 33% less energy than the same quantity of gasoline. This calorific penalty decreases as we move to higher alcohols. The article discusses ongoing work on the production of butanol. It has 4 carbons compared to 2 in ethanol, so it has more calories. It is very similar to gasoline in calorific content and less corrosive and water absorbent than ethanol, and so a better substitute.

Most of the story is directed to the production of alkanes from sugar. These are straight chain compounds with the formula CnH2n+2. Conventional oil derived fuels have this formula as well. The number n is about 7 to 9 for gasoline and about 12 to 16 for diesel and a bit higher for jet fuel. So, alkanes with the right number are for all practical purposes direct drop-ins for these conventional fuels.

Herein lies the attraction. Also, being tailored, often through genetic engineering, the composition will be predictably uniform. This is not the case for the input to refineries from a variety of crude oil sources. In fact oil refineries today are forced to be very picky about the mix of crude they will accept. Seed based oils also suffer from this variability.

No small wonder, therefore, that many of the leading players in the drop-in biofuels space are supported by major oil companies. The list includes ExxonMobil, Shell and Total – all heavy hitters.

The reliance on sugar as feed stock is of note. Today, Brazil is the only source for economical sugar for this purpose. Tariffs apply only for ethanol; at least for now. So the long term potential for this feed stock can be debated.

One company is even reported to be using sugar to grow algae for diesel. This is quite a departure from the original allure of algal diesel. It was seen as using sunlight and waste carbon dioxide, a sustainability home run of sorts. Now we see folks going to the dark side of algae, literally. These algae are grown in the dark! The photosynthetic part is transferred to the growing of sugar. So we still have the sunlight and carbon dioxide (from the air in this case) put to use.

An interesting twist is the use of existing ethanol plants by some of these companies. This is a good trend, to deploy assets created by a flawed national policy and subsequently idled by realities.

So, what of corn and cellulose? Both are challenged by the fact that the chemical structure renders them more difficult to convert to alkanes. Of the two, corn, while simpler to react, is the worse in part because of water usage. Cellulosic materials such as grasses offer the promise of draught resistance. Price of Brazilian sugar over the long haul will be a determinant.

An interesting avenue for biomass in general is pyrolysis such as practiced by RTI International under DOE funding. This produces a liquid akin to crude oil. Close enough to merit inclusion as a portion of the feed to a refinery. This is the pre-refinery analog to a post-refinery drop-in fuel. Requiring no modification to current practices. A chemical plug and play, as it were.

Finally, the Economist story discusses the place of electric cars in this context. They opine that while alcohol will get trampled, drop-in fuels will survive. In the next thirty years, gasoline will continue to be used to a significant degree. So, ethanol will continue to be used as a means of assuring complete burn of the fuel. This use as an oxygenate came about from the outlawing of MTBE, but is only needed at the 6% or so level. Beyond that, ethanol is a liability on many grounds and will probably fade away.

But drop-ins will hang around a lot longer. The Beyond Ethanol story will feature electric cars but drop-ins will get serious second billing.

The Energy/Water Nexus

June 23, 2010 § Leave a comment

This piece is loosely based upon the RTEC Breakfast Forum on June 15, 2010

Sustainable energy can fall in two buckets.  One comprises all the means to lower the carbon footprint of current energy sources.  This would include clean coal, using natural gas in place of coal to produce electricity, combined cycle approaches to energy production, and the like.  The second bucket is that of renewable energy.  The outstanding examples of that are biofuels, wind energy and solar energy.

Each of the foregoing has very different water utilization.  One billion persons do not have access to drinking water.  Should efficiency of water utilization be a factor in our choice of alternatives, and not just carbon footprint?  Going further, should water usage be a litmus test in areas in which the citizenry suffer a high level of privation?  This was the subject of the RTEC Breakfast Forum on June 15, 2010.

We tend to use fresh water for everything when something less could do the job.  This is likely an artifact of water being relatively cheap.  If some of the major users were able to tolerate less than fresh water, water would be freed up for human consumption. An extremely topical area for this thought is shale gas drilling in the US.  Each well uses up to 5 million gallons per well as the main component of fracturing fluid.  Only about a third of the fluid used returns to the surface.  Currently it cannot be re-used because of contaminants, salt in particular.   Even if this were to be cleaned up for re-use, the other two thirds would need to be made up from fresh water sources.

Fortunately, industry is taking a hard look at the problem and is moving to modify formulations to be able to tolerate significant salinity.  So, not only would the flow-back water be re-usable, but other saline waters of convenience, such as sea water, come into play.  In an odd twist, it turns out that salinity is actually good for the operation (it stabilizes the clays).  Lemonade from lemons, as it were.

While not particularly applicable to the shale gas play in the eastern United States, a lot of “tight gas” exploitation occurs in the middle of the country, in areas that are severely drought prone.  Here, water for energy competes with that for agriculture.  The ability to tolerate salinity would be huge.  This is because saline aquifers are plentiful.  Supporting technology would be required in areas such as benign biocides.  Bacteria in these waters are often pernicious, some being sulfate reducing, and thus producing hydrogen sulfide in situ when used for fracturing fluid.  But these are all tractable if the major issue of some level of salinity is traversed and if innovations in cost effective water treatment are forthcoming.

The key to water treatment is to have a fit-for-purpose output.  Potable water is the most expensive.  An intermediate product could be adequate and meet the economic hurdles.  Today almost all desalination approaches have fresh water as the output.

Agriculture tolerant of brackish water is a new area without significant currency today.  The most obvious example is algae for bio fuel production.  Algae, of course, thrive on salt water (and consume carbon dioxide as another plus).  A class of plants known as halophytes make themselves saltier than the salt water, thus causing fresh water to flow into them by osmosis.  Most such would likely be for biomass for energy production, not food.

Water used in conventional energy production is also highly variable.  The paper by Mulder et al describes water efficiency of different energy production methods.  Any eye-opener is the significant difference between closed and open loop cycles.  An interesting nuance is also the difference between water withdrawal and water use.  For example, if a facility such as a nuclear plant, withdraws water from a river, and then returns hotter water, the subsequent evaporation downstream is not counted in some measures.  The withdrawal number remains low, even though the net usage was higher.

Using less water is not always productive.  Apparently in some areas drip irrigation leads to salt build up around the plant.  Also, drip irrigation returns no water to the aquifer.  But on balance that must still be more effective than spraying, where evaporative losses may not necessarily be returned as convective rainfall.

Drought tolerant biomass is highly touted these days.  Jatropha in India and elsewhere is seen as an important crop for biodiesel production.  However, an interesting twist on this is that these plants can tolerate drought, but they grow much faster with more water.  A farmer with water access will draw on it.  So, what is needed is clever business models and associated policy drivers to encourage water conservation in the face of a compelling economic driver to use more.  An interesting problem for a behavioral economist.

A case for decision science research in energy

March 16, 2010 § Leave a comment

A sustainable low carbon future is seen by most to center around breakthroughs in technology and the associated economics.  Most of the attention has been on carbon sequestration, biofuels, renewable sources of electricity and the like.  A number of states and countries have instituted policies to make some of these happen.  Many also see electrification of transportation as an avenue to zero emission vehicles and energy security of net oil importing nations.  All of these cause people to make choices, in many cases requiring changes in behavior.  Introducers of technology know that the barrier to wide scale adoption is particularly high when it involves substitution of something familiar.   The science of why people make the decisions they do, especially those involving green alternatives, merits further investigation, if for no other reason than that it may guide product and process development into areas with higher success rates of adoption.  It will undoubtedly be effective in informing on policy.  An example is in the area of solar energy.  If the primary driver for adoption is “seen as being green”, then hiding photo voltaic devices inside shingles would be counterproductive, as also the policy of many neighborhoods to disallow visible displays of solar panels on homes.

The International Energy Agency (IEA) has posited that for any reasonable 2050 targets for atmospheric carbon dioxide nearly 40% of the mitigation has to be from energy efficiency.  Their most recent forecast calls for 57% of carbon mitigation by 2030 as being from energy efficiency (and interestingly only 10% from carbon sequestration).  Undoubtedly this will in large measure be accomplished with engineering designs that provide the same utility for less energy. This has been the case with up to 90% reduction in standby power of household appliances through the simple expedient of low energy power supplies and modified circuitry.  Since standby power constitutes 10% or so of all electricity usage in IEA countries, this is a huge gain.  The Energy Star and similar efforts have produced further results, although some of these fall in a different bucket, that of the same utility at a somewhat greater price.  In the case of compact fluorescent bulbs, the initial price is higher but the life cycle cost is lower.  Now this begins to get into the realm of decision science because the consumer is required to understand and appreciate life cycle costing.  We are firmly in it for cases where the costs are substantially higher, as in the case of hybrid vehicles. Electric cars will get squarely into the behavioral arena from the standpoint of range anxiety, which is roughly defined as the fear of running out of charge.

Electrification of transportation is an RTEC priority because we see it as the fastest route to energy security through making electricity fungible with oil.  Furthermore, well to wheel efficiency of electric cars is about 45% better than that of conventional cars and the tail pipe emissions are zero, although the burden is shifted to the power producer, where it is more tractable.  Consequently, enabling the public’s acceptance of electric cars is an RTEC priority.

Addressing range anxiety and other behaviors falls at least in part in the area of decision science.  Some of it can be addressed with technology.   For example, Nissan’s introduction of the Leaf later this year will be accompanied by features such as remote monitoring of the state of charge of the battery and driver notification, including identification of the nearest charging station.  But in most instances, technical advances only take us so far.  When smart electricity meters are installed in homes, there is high variability in the manner in which the data are used by the homeowner.  Behavioral studies are needed to guide the programs to achieve the best results.  Non price interventions that rely on behavioral proclivities, such as conformance to societal norms, can likely be used to advantage.

In their matrix of program thrusts, DOE’s newly formed unit ARPAe has a matrix element that intersects social science efforts with transportation.  RTEC believes that this could be a fruitful area of pursuit for RTI/Duke/UNC collaboration.  One possible project would combine conventional survey based approaches with behavioral economics ones in addressing the electric car range problem.  At this time this is based on guesswork premised upon beliefs regarding consumer preferences when driving conventional cars.  Statements such as “the consumer expects a range of 300 miles” are rife.  A definitive study of driving distances in metropolitan areas that are initial target of electric vehicle entry could then be used to devise behavioral studies, the results of which could be expected to drive out interventions, both price based and not.  To aid this, the original study would be broken out by age, income and other relevant demographics. Finally, the interventions themselves could be tested on a population.

The foregoing notwithstanding, RTEC believes that the greatest gains for society in the realm of sustainable energy are going to come from simply using less.  Consequently, a major focus will be to encourage and assist members in devising social science based research with this goal in mind.

Can North Carolina be a domestic source for lithium for electric vehicle batteries?

February 14, 2009 § Leave a comment

Making transport fuel fungible with electricity offers options to net importers of oil such as the US.  As a state, North Carolina is in the unenviable position of importing all of its fuel from other states.  While biofuel will undoubtedly play a role in reducing this import, electrifying the fleet offers another avenue.  The primary mission of electric vehicles(EV’s) would be the reduction or elimination of tail pipe emissions, the notoriously most difficult site for carbon dioxide capture, although a secondary one may be to act as a storage medium for the grid.  The FRDM program, led by NC State University, targets creating all elements of a Smart Grid, which would be a key vehicle in grid optimization.  So, North Carolina is already well placed to take a lead in electrifying the passenger vehicle fleet.

EV’s such as GM’s Plug-in Hybrid (PHEV), the Volt, scheduled to be marketed in 2010, are intended to be charged in conventional electrical outlets, with a gasoline engine for charging the batteries if needed to go beyond the nominal range, 40 miles in the case of the Volt.  Pure EV’s, running solely on electricity, such as one scheduled by Nissan for limited entry in 2010, are also likely to be part of the equation.  If such vehicles are to become a substantial portion of the passenger vehicle fleet, several economic hurdles will have to be crossed, some possibly needing subsidies.  The principal of these is the expected higher cost of the vehicle (pure EV’s, because of their simplicity of design, will be somewhat lower in cost than PHEV’s), driven largely by the cost of the battery.  Research to reduce cost and increase range is ongoing in this and other countries, and the current administration has announced the intent to significantly fund this endeavor as part of the Stimulus Package.

Batteries: The Lithium Ion battery is the clear leader in this field and many believe it will continue to be so for the foreseeable future.  Other manner of sophistication, such as augmentation with super capacitors for short  bursts of power, is expected to reduce the load on the batteries.  However, the current unit costs are high, although high volume throughput has not yet been in place.  One can expect the costs to come down over time.  A point of note is that while the technology is domestic in many cases, all battery manufacture is currently in other low labor cost countries.  However, as in the case of foreign designed cars, domestic manufacture may become feasible.  Location of such capability in North Carolina would go hand in hand with any decision to make North Carolina a primary launch state for electric vehicles.

Lithium: A more pernicious issue is the sourcing of the critical commodity, Lithium.  World reserves are considerable, but the majority of these are in Latin America, including some countries such as Bolivia who are not in close alignment with the US.  There is the risk of trading foreign dependency of one commodity for another.  Unlike the battery manufacturing situation, a mineral is uniquely situated, as in the case oil.  North America does have sizeable reserves of lithium ore, in the form of spodumene, an oxide, but with current technology the processing costs are high when compared to the cost of processing the brine based deposits in other countries.  The vast majority of spodumene reserves in this country are in North Carolina, in an area northwest of Charlotte.

Call for Action: The technology for spodumene processing deemed non economic is at least half a century old.  Hints exist in the literature for more innovative methods.  In the national interest a research program should be instituted to investigate the possibility of economic recovery of Lithium from oxide ore.  RTEC has commenced a scoping exercise in this area, currently involving a literature search, but a fully fledged investigation will require State or Federal funding.

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