State starts a green era

Law encourages renewable sources; Utilities expected to help cut costs - By Beth Daley Globe Staff / July 3, 2008

Governor Deval Patrick signed a landmark energy bill yesterday that does away with long-standing obstacles to building renewable power projects in Massachusetts and making homes and businesses more energy efficient.

The Green Communities Act was hailed by environmentalists as among the most innovative efforts in the nation to reduce dependence on fossil fuels and to encourage use of clean technologies that don't contribute to global warming.

The law will probably result in utilities' designing customized plans for homeowners and businesses to cut energy costs and providing rebates to pay for measures such as installing insulating windows and more efficient boilers. Homeowners and businesses will be able to rent solar panels from utilities to avoid expensive up-front costs, and the law makes it easier for homeowners who have installed wind turbines or solar panels to sell surplus energy.

Supporters said the new law could save hundreds of millions of dollars through energy efficiency, helping to hold down consumers' electric bills as energy prices are skyrocketing.

"I am here today to sign into law the best clean energy bill in America," a jubilant Patrick said during a signing ceremony at the Museum of Science. "Climate change is the challenge of our times, and we in Massachusetts are rising to that challenge."

Massachusetts has long been a leader in energy legislation, and it is taking part in a regional effort to reduce greenhouse gases from power plants. Patrick has set an aggressive goal to increase solar power in the state by 600 percent in four years.

The law "maintains Massachusetts' status as a state leader," said Patrick Hogan of the Pew Center on Global Climate Change, a Virginia-based environmental policy think tank.

Business leaders praised the legislation, saying it could stabilize electric rates in New England, already among the highest in the nation. Utilities, including NStar and National Grid, said they have long focused on energy efficiency but are eager to ramp up the effort, as well as to provide solar power to customers.

"It pushes us to a new level," said Tom May, NStar's chief executive. "We get to cross the street to our customer side and help them with energy choices . . . such as windmills in a neighborhood or solar panels. It's helping them reduce their carbon footprint."

Among the law's major provisions:

A requirement for utilities to invest in energy efficiency when it is cheaper to do so than it is to buy power. Historically, companies would simply buy more power when demand went up, which over time would lead to construction of very costly and polluting power plants. Now, utilities will have to invest in energy efficiency if to do so is equal to or cheaper than buying power. The law will also use at least 80 percent of the revenue from the regional effort to cap power plant emissions for efficiency programs, such as home energy audits to identify how to save on energy bills.

"The cleanest power plant is the one that never gets built," said Sam Krasnow, attorney for Environment Northeast, a research and advocacy group. "Energy efficiency is the cheapest and cleanest energy resource available."

Several efforts to promote renewable power. Utilities would have to enter into 10- or 15-year contracts with renewable energy developers, an effort to help those developers get financing from banks. The Patrick administration is particularly proud of a provision that lifts a prohibition on utilities owning solar electric panels and allows them to rent the panels to customers. The law is designed to allow utilities to recoup the cost of panels over time from rental fees while the customers reap energy savings.

Utilities will have to purchase a greater amount of their electricity from renewable power sources than under current law. By 2030, utilities would buy 25 percent of their power from renewables.

It is unclear whether that goal, one of the most ambitious in the nation, can be met, however. The current requirement of 3.5 percent has not been met, partly because of the difficulty in siting renewable projects. The utilities instead pay a fee to the state.

The creation of "Green Communities." The state will commit $10 million annually to help communities figure out ways to become more energy efficient or invest in renewables, including giving them no-interest loans. New buildings in the state will have to meet updated building codes with energy-savings provisions.

The energy bill encountered some controversy during the two years it took to become law. Early versions guaranteed a market for coal gasification, a technology that is cleaner than conventional coal-burning power plants but still emits large amounts of carbon dioxide.

The final language would give financial incentives to gasification technologies only in limited cirumstances and only to those that capture and store the carbon dioxide underground.

Environmentalists had nothing but praise for the law yesterday, saying it was a paradigm shift in the way energy will be created, bought and sold.

"This is a tremendous advancement that comes not a moment too soon, given rising energy prices and the climate crisis," said Sue Reid, a lawyer with the Conservation Law Foundation.

Article source:

Beth Daley can be reached at bdaley@globe.com.

Money Troubles Stall BioTown USA Project

REYNOLDS, Ind. (AP) — This one-stoplight farming hamlet had big dreams in 2005 when it was christened BioTown USA.

Its goal: to become the first U.S. community to meet all electricity and gas needs through renewable energy by using everything from farm waste to sewage.

Industry and government officials led the early charge. BP installed a gas pump offering an ethanol fuel blend, and South Dakota-based VeraSun Energy Corp. started building an ethanol production plant near town.

Former U.S. agriculture secretary Mike Johanns stopped by in support, as did the band Crosby, Stills, Nash & Young. Visitors also included a group of Chilean corn farmers who were touring the Midwest and interested in learning more about biofuels.

But the visitors are long gone, and many say the excitement is too. Money problems, leadership changes and other obstacles have sparked skepticism that Reynolds will ever succeed at moving the state, much less the nation, toward homegrown energy and away from foreign oil.

"I'm not happy about the whole situation, and a lot of people in town aren't either," said farmer Tonie Snyder. He helped provide thousands of bales of corn stover last fall that were supposed to be burned using technology that now may never be built.

From the outset, the vision for BioTown was ambitious. Indiana Gov. Mitch Daniels and the state Department of Agriculture wanted to create a model for energy self-sufficiency. No other U.S. community produces all its own energy, and a German village that runs on renewable energy took eight years to develop.

But project officials believed they could turn this community of about 550 people, surrounded by silos and stubbly corn fields, into something special.

"We are taking challenges and turning them into opportunities by developing homegrown, local energy production to become independent from foreign sources," Daniels said in announcing the project.

The timetable was aggressive. State officials hoped to break ground in November 2006 on a $10 million facility that would house the core equipment needed to turn manure and other biomass material into energy, and start generating electricity for the town by July 2007.

The groundbreaking happened, and General Motors offered deals on flex fuel vehicles to people living in the Reynolds ZIP code. But there has been little other progress, and now BioTown leaders acknowledge they have adjusted their vision. But they insist the project will happen.

"What we try to remind folks all the time is that this project, there's no manual that you pull out and say, 'How do you do a BioTown?'" Indiana Agriculture Director Andy Miller said. "We're kind of inventing it as we go."

BioTown seemed like a "shot in the arm" to Fred Buschman, a lifelong resident of this community about 80 miles northwest of downtown Indianapolis.

"It was like something you dreamed of but never really believed could happen," the 77-year-old town council member said.

A couple of restaurants, car dealerships and a gas station make up most of Reynolds proper. But steady streams of truck traffic flow through town each day on state route 43 and U.S. 24, and railroads crisscross the community. State leaders said the infrastructure and surrounding farms made Reynolds an ideal location for BioTown.

"They were going to make this a showtown for the whole world to come in and look at, and I thought it was the greatest thing that ever could happen to the town of Reynolds," Snyder said.

State officials said private funding would drive the project. The startup firm Rose Energy Discovery Inc. would install an anaerobic digester, a device that converts manure methane into electricity, and a gassifier would be built to create a gas that can be burned for heat or put in a boiler to make steam.

But Rose Energy dropped out last summer after failing to line up enough private investment. In October, VeraSun suspended construction on its ethanol plant due to a steep drop in ethanol prices, which combined with high corn prices has slowed factory construction around the country.

Work has not begun on the Reynolds digester.

Last fall, Snyder and his fellow farmers readied about 5,000 bales of mostly corn stover that was supposed to feed the gassifier. Months later, thousands of the unused bales collect snow and rain as they sit in a field just outside town.

The farmers finally received full payment for the bales earlier this month, Snyder said.

The new technology developer, Energy Systems Group, hasn't decided whether to install the gassifier, so state officials say the bales will become animal bedding.

BioTown proponents say there's still plenty going on.

Energy Systems Group, a Vectren Corp. subsidiary, will spend about $10 million on the digester and is still lining up financing for it. President Jim Adams said he hopes to start building within the next month or so and wants to produce power by the end of this year.

"The whole process has gone a little slower than we anticipated, securing the fuel and a power purchase agreement for some of the output," he said. "But that's all coming together."

Most of what they produce will likely be sold to a power company. BioTown leaders learned early that it would be nearly impossible to take Reynolds off an established electricity grid so it could supply its own power.

Miller said the cost to build a grid just for Reynolds would be prohibitive, and the community would still need backup help to prevent service interruptions.

BioTown Development Authority President John Heimlich preaches patience as the project sputters on. Last year, he and other BioTown leaders visited the German village of Juehnde, which runs on renewable energy.

"I think what we see now, maybe as our vision, is kind of an evolving project, so maybe there isn't a final look so to speak," he said.

Despite the setbacks, BioTown is attacking global energy problems with local solutions, and that's the best approach, said Brooke Coleman, director of the Boston-based New Fuels Alliance, a renewable energy advocacy group.

He said the project takes on some steep obstacles like removing a community from an established power grid. Renewable energy developers have tried to do this for years and have long met resistance from power companies.

Aside from that, the slumping economy and falling dollar make investors cautious about renewable energy technology.

"This town is tackling some of the most challenging issues facing the move toward energy independence," he said.


Source - The Associated Press
AP Photo/Tom Strickland

Google Will Finance Enhanced Geothermal

Expect Google.org to make investments in the next couple of months in enhanced geothermal energy, says Dan Reicher, the Internet giant's director of climate change and energy initiatives.

Google's philanthropic arm is in talks with universities on funding basic research into tapping into the vast stores of energy underground, Reicher said at a two-day energy summit sponsored by the National Academy of Sciences. He said it also expects to finance companies that are working toward advances in this form of renewable energy.

A description of enhanced geothermal, graphics that show how it works, and a map of its potential can be found with this story in U.S. News.
Google announced its "renewable energy cheaper than coal" initiative late last year, but this is the clearest signal yet that the company is poised to add enhanced geothermal to its investment portfolio.

So far, Google's program has made $10 million investments in two companies that seek to produce renewable energy cheaper than coal: eSolar, a concentrating solar thermal power firm, and Makani Power, which seeks to develop ultra-high-altitude wind power. Reicher said tapping into wind power at 3,000 or even 10,000 feet up is "admittedly very high risk" but fits in well with Google's game plan on renewable energy investments.

"We don't have the constraints of venture capital firms, with the usual three-to-six-year exit strategy and need for return," Reicher says. "We're looking for higher-risk, higher-payoff investments." He also said Google.org is likely to invest in commercialization of cellulosic ethanol—another example of a promising technology that has a hard time getting out of the so-called Valley of Death, development of risky, first-of-a-kind plants.

Reicher also addressed why Google is engaged in the issue of renewable energy. As a large user of electricity, Google has aimed to purchase green resources and has often found them not available or prohibitively expensive.

"There's a great deal of optimism about renewable energy, great engagement of the public, and interest of the investment community," Reicher says. "There needs to be a fundamental change in the cost structure of renewables if we expect them to compete. And let's talk about the competitive landscape—first and foremost about coal. The aim has to be to make renewable energy competitive with coal and to do it in years, not decades."

to the source

Carbon Capture Strategy Could Lead To Emission-free Cars

Researchers at the Georgia Institute of Technology have developed a strategy to capture, store and eventually recycle carbon from vehicles to prevent the pollutant from finding its way from a car tailpipe into the atmosphere. Georgia Tech researchers envision a zero emission car, and a transportation system completely free of fossil fuels.

Technologies to capture carbon dioxide emissions from large-scale sources such as power plants have recently gained some impressive scientific ground, but nearly two-thirds of global carbon emissions are created by much smaller polluters — automobiles, transportation vehicles and distributed industrial power generation applications (e.g., diesel power generators).

The Georgia Tech team’s goal is to create a sustainable transportation system that uses a liquid fuel and traps the carbon emission in the vehicle for later processing at a fueling station. The carbon would then be shuttled back to a processing plant where it could be transformed into liquid fuel. Currently, Georgia Tech researchers are developing a fuel processing device to separate the carbon and store it in the vehicle in liquid form.

“Presently, we have an unsustainable carbon-based economy with several severe limitations, including a limited supply of fossil fuels, high cost and carbon dioxide pollution,” said Andrei Fedorov, associate professor in the Woodruff School of Mechanical Engineering at Georgia Tech and a lead researcher on the project. “We wanted to create a practical and sustainable energy strategy for automobiles that could solve each of those limitations, eventually using renewable energy sources and in an environmentally conscious way.”

Little research has been done to explore carbon capture from vehicles, but the Georgia Tech team outlines an economically feasible strategy for processing fossil or synthetic, carbon-containing liquid fuels that allows for the capture and recycling of carbon at the point of emission. In the long term, this strategy would enable the development of a sustainable transportation system with no carbon emission.

Georgia Tech’s near-future strategy involves capturing carbon emissions from conventional (fossil) liquid hydrocarbon-fueled vehicles with an onboard fuel processor designed to separate the hydrogen in the fuel from the carbon. Hydrogen is then used to power the vehicle, while the carbon is stored on board the vehicle in a liquid form until it is disposed at a refueling station. It is then transported to a centralized site to be sequestered in a permanent location currently under investigation by scientists, such as geological formations, under the oceans or in solid carbonate form.

In the long-term strategy, the carbon dioxide will be recycled forming a closed-loop system, involving synthesis of high energy density liquid fuel suitable for the transportation sector.

Georgia Tech settled on a hydrogen-fueled vehicle for its carbon capture plan because pure hydrogen produces no carbon emissions when it is used as a fuel to power the vehicle. The fuel processor produces the hydrogen on-board the vehicle from the hydrocarbon fuel without introducing air into the process, resulting in an enriched carbon byproduct that can be captured with minimal energetic penalty. Traditional combustion systems, including current gasoline-powered automobiles, have a combustion process that combines fuel and air — leaving the carbon dioxide emissions highly diluted and very difficult to capture.

“We had to look for a system that never dilutes fuel with air because once the CO2 is diluted, it is not practical to capture it on vehicles or other small systems,” said David Damm, PhD candidate in the School of Mechanical Engineering, the lead author on the paper and Fedorov’s collaborator on the project.

The Georgia Tech team compared the proposed system with other systems that are currently being considered, focusing on the logistic and economic challenges of adopting them on a global scale. In particular, electric vehicles could be part of a long-term solution to carbon emissions, but the team raised concerns about the limits of battery technology, including capacity and charging time.

The hydrogen economy presents yet another possible solution to carbon emissions but also yet another roadblock — infrastructure. While liquid-based hydrogen carriers could be conveniently transported and stored using existing fuel infrastructure, the distribution of gaseous hydrogen would require the creation of a new and costly infrastructure of pipelines, tanks and filling stations.

The Georgia Tech team has already created a fuel processor, called CO2/H2 Active Membrane Piston (CHAMP) reactor, capable of efficiently producing hydrogen and separating and liquefying CO2 from a liquid hydrocarbon or synthetic fuel used by an internal combustion engine or fuel cell. After the carbon dioxide is separated from the hydrogen, it can then be stored in liquefied state on-board the vehicle. The liquid state provides a much more stable and dense form of carbon, which is easy to store and transport.

The Georgia Tech paper also details the subsequent long-term strategy to create a truly sustainable system, including moving past carbon sequestration and into a method to recycle the captured carbon back into fuel. Once captured on-board the vehicle, the liquid carbon dioxide is deposited back at the fueling station and piped back to a facility where it is converted into a synthetic liquid fuel to complete the cycle.

Now that the Georgia Tech team has come up with a proposed system and device to produce hydrogen and, at the same time, capture carbon emissions, the greatest remaining challenge to a truly carbon-free transportation system will be developing a method for making a synthetic liquid fuel from just CO2 and water using renewable energy sources, Fedorov said. The team is exploring a few ideas in this area, he added.

The research was published in Energy Conversion and Management . The research was funded by NASA, the U.S. Department of Defense NDSEG Fellowship Program and Georgia Tech’s CEO (Creating Energy Options) Program.

source - ScienceDaily

'Green' becomes red-hot

Green was once just a color.

Of broccoli. Of preppy pants. Of Kermit the frog.

Now it's a call to arms.

With Al Gore's Oscar-winning "An Inconvenient Truth" as a wake-up call to the masses, the idea of green living and green building has taken off in the past couple of years, inspiring books, TV shows and hundreds of products. Environmentally friendly changes have come about in everything from exterior siding to countertops, fireplace logs to cutting boards, towels to toothbrushes.

"Things are evolving fast.... In the last year, it's really picked up for the average, everyday consumer. I expected it would be a couple more years before it got to this level," said Jeff Rogers, founder of New England Green Building Center in Provincetown. "There was a general shift that I could see was coming, but Al Gore just put it over the top."

Green "is the big topic of conversation right now," said Michael Dingley, senior vice president of programming for HGTV, which is in the middle of a "green testing season" to see how much viewers want to hear about environmentally friendly practices. While officials there saw the trend coming in 2006, now "we're pitched 'green' every day, from producers all over the world."

Sure, not everyone is making changes for unselfish motives. In a winter of high gas and heating oil prices, more people are finding it's cheaper to go solar or drive a hybrid. And some energy-efficient home upgrades can win a federal tax credit, with the new Commonwealth Solar program offering state rebates to homeowners getting energy from the sun.

"It's not a political issue, it's an environmental issue," said Nicole Goldman, owner of 'g' Green Design Center in Mashpee Commons. "People think it doesn't address them, they think it's not affecting them, but as soon as they see it in their pocketbook, they wake up."

"The majority of Americans are usually motivated by, 'It's impacting me, OK, it's saving me money,' " Dingley said.

And, for some, there are health issues. Using chemical-free products can literally make a home's air cleaner to breathe.

That's not to say a world view, a desire to help "save the planet," plays no role in consumer choices.

"It's the impact on global warming and on consumption of foreign oil, both of which are big factors right now," explains Laela Sayigh of Woods Hole, whose family's home largely runs on solar energy and who recently bought a hybrid car. "We try to live in a way that can minimize both of those things."

"I look at the whole green movement as a way to save money as well as reduce your carbon footprint," said Scott Beels of Marstons Mills, who changed almost all of his home's light bulbs to compact fluorescents, uses a wood stove for part of his heating and last year bought a hybrid car. Going green, a little or a lot, he said, "is a great chance to not only save money, but to make a contribution."

"Green" may be a trend, but it's not a fad, emphasizes Goldman, who said it's a "moral imperative" to act now.

A growing trend

So how much are we paying attention to environmentally friendly living? Consider:

• The green building industry, barely a blip at the turn of the century, is now worth about $12 billion annually, according to the U.S. Green Building Council.
  
• The number of building materials made with recycled content that can be found on the Internet has more than doubled in each of the last few years, according to store owners who seek out green building materials to sell.
  
• Close to 60 percent of consumers were taking steps in 2007 to make their home more environmentally friendly, according to an American Home Furnishings Alliance survey.
  
• By late 2007, more than half of National Association of Home Builders members — who build more than 80 percent of America's homes — were incorporating green practices into the development, design and construction of new homes, according to an association survey. About 20,000 homes a year are now built nationally using green guidelines.
  
• Last month, Congress and President Bush approved an energy bill that included increased efficiency standards for light bulbs, appliances and buildings — including the phasing out of incandescent light bulbs by 2012 in favor of compact fluorescent bulbs.
  
• Home Depot had a 30 percent increase in sales of Energy Star appliances in 2006 and sold more than 50 million compact fluorescent bulbs.
  
• HGTV has added a second home giveaway this year — a "green home" in South Carolina, designed to show "you don't have to be extreme to be green." Last year's main project on PBS's "This Old House" was a green remodel in Texas.
  
• Energy code changes adopted as part of the state building code at the start of this year include requiring a tighter "thermal envelope," or insulation, of a home, as well as more energy-efficient windows.
  
• Locally, Cape Cod Community College's Environmental Technology program will add a "sustainable design" course for builders, architects and homeowners next fall, and the Cape chapter of the National Association of the Remodeling Industry's "green team" will begin offering information and education in March.

"It's definitely become more and more of a focus for the building industry," said Alison Alessi of A&E Architects Inc. in Brewster. "You hear green this, green that, especially in the last six months to a year. It's in every magazine."

Right at home

Nowhere has the idea of "green" made more of a personal impact than in home-related industries.

With homeowners wanting to make their dwelling and yards efficient and "friendly," the idea has reverberated from architects to construction crews to designers to landscapers.

"Homeowners are demanding more energy-efficient products and sustainable designs," said Kermit Baker, chief economist of the American Institute of Architects. "Structural insulation panels, geothermal heating and cooling systems, tankless water heaters, and green flooring products such as bamboo and cork are all in high consumer demand."

And suppliers say new products are being created every day.

Take your kitchen, for example: A survey by thisoldhouse.com last fall found cabinets of recycled wood pulp with non-formaldehyde glue; butcher block made from bamboo; pendant lights and backsplashes of recycled glass and aluminum; cabinet hardware of lead-free pewter and recycled-material eco-resin; and terrazzo flooring made from 90 percent recycled material.

Recycled materials are, in fact, a hot component of the green building movement — both from post-consumer waste, such as milk jugs and shampoo bottles, and post-production wastes, materials that weren't ever used, such as glass left over from window-making. Products include roofing tiles from recycled vinyl and cellulose and countertops of recycled newsprint.

Furniture displayed at a national market show last fall included steel springs made of 50 percent recycled metal; "organic" cotton fabric; and throw pillows with fibers from recycled soda bottles.

Both New England Green Building in Provincetown and 'g' in Mashpee sell insulation made of blue jeans. A fabric wallcovering recently cited by BuildingGreen Inc. is made from 100 percent recycled polyester. At this month's Consumer Electronics Show in Las Vegas, manufacturers were talking about new products that don't waste as much electricity, are easier to recycle and even have components made of plants.

And if the environmental friendliness of their product doesn't go far enough, some manufacturers are getting proactive. Last fall, Vaughan-Bassett announced a plan to plant one tree for every tree it uses to produce furniture; the company estimated it would pay for 150,000 saplings each year.

"Green" standards

So what makes a home product "green"? There has been no strict definition for it, though regional and national standards in everything from electrical, water and chemical use to wood sustainability have recently been created or are now being formulated to help consumers make choices.

They'll need that help because, if the trend continues as experts predict, they will only have more products to choose from.

Last spring, Home Depot began putting its Eco Options designation on more than 2,000 new and existing products that have "less of an impact on the environment," including all-natural insect repellents, cellulose insulation, front-load washing machines, programmable thermostats and certified- sustainable wood products. Since then, the number of Eco Option products has risen to more than 2,800 and is growing — as is customer interest.

"People are catching on," said spokesperson Sheriee Bowman. "The small step is changing the light bulb. If they want to make a bigger impact, there are all sorts of ways they can do that."
And on a regular basis.

"We're hoping 'green' settles down and becomes not the exception, not something special," said Dingley from HGTV. "We believe it should be a part of everyday life."

source - Cape Cod Times

Car-Free, Solar City in Gulf Could Set a New Standard for Green Design

In an ever more crowded world facing environmental limits, the push is on to create entire communities with reduced needs for energy, water, land and other resources.

The latest effort comes not in some green hub like Portland, Ore., but in the Persian Gulf, fueled as much by oil wealth — and the need to find postpetroleum business models — as environmental zeal.

Groundbreaking is scheduled for Saturday for Masdar City, a nearly self-contained mini-municipality designed for up to 50,000 people rising from the desert next to Abu Dhabi’s international airport and intended as a hub for academic and corporate research on nonpolluting energy technologies.

The 2.3-square-mile community, set behind walls to divert hot desert winds and airport noise, will be car free, according to the design by Foster + Partners, the London firm that has become a leading practitioner of energy-saving architecture.

The community, slightly smaller than the historic district of Venice, will have similar narrow pedestrian streets, but shaded by canopies made of photovoltaic panels. It will produce all of its own energy from sunlight.

Water will flow from a solar-powered seawater-desalinization plant. Produce will come from nearby greenhouses, and all waste will be composted or otherwise recycled, said Khaled Awad, property manager for the project.

The first phase, to be completed over the next two years, will be construction of the Masdar Institute, a graduate-level academic research center associated with the Massachusetts Institute of Technology.

Readers can see a simulated video tour of the city and post comments on the Dot Earth blog.
Attempts at such green communities have had mixed results. Arcosanti, the ecotopian town in the Arizona desert, was started three decades ago. Still a work in progress, it is now being encroached on by Phoenix’s suburban expansion.

China, with help from American partners, has embarked on building instant rural communities and cities designed to limit environmental impacts, but recent reports have disclosed many problems.

Still, environmental campaigners appear enthusiastic about Masdar City, which is part of a planned $15 billion investment in new energy technologies by Abu Dhabi.

At an international energy conference in that city last month, Jean-Paul Jeanrenaud, director of the One Planet Living initiative of the environmental group WWF International (known in North America as the World Wildlife Fund), said independent monitoring would help ensure that the project lived up to its billing.

the source

Shell Oil Exec Ponders Impending Energy Crossroads

By Jeroen van der Veer

By 2100, the world’s energy system will be radically different from today’s. Renewable energy like solar, wind, hydroelectricity, and biofuels will make up a large share of the energy mix, and nuclear energy, too, will have a place.

Humans will have found ways of dealing with air pollution and greenhouse gas emissions. New technologies will have reduced the amount of energy needed to power buildings and vehicles.

Indeed, the distant future looks bright, but much depends on how we get there. There are two possible routes. Let’s call the first scenario Scramble. Like an off-road rally through a mountainous desert, it promises excitement and fierce competition. However, the unintended consequence of “more haste” will often be “less speed,” and many will crash along the way.

The alternative scenario can be called Blueprints, which resembles a cautious ride, with some false starts, on a road that is still under construction. Whether we arrive safely at our destination depends on the discipline of the drivers and the ingenuity of all those involved in the construction effort. Technological innovation provides the excitement.

Regardless of which route we choose, the world’s current predicament limits our room to maneuver. We are experiencing a step-change in the growth rate of energy demand due to rising population and economic development. After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand.

As a result, we will have no choice but to add other sources of energy – renewables, yes, but also more nuclear power and unconventional fossil fuels such as oil sands. Using more energy inevitably means emitting more CO2 at a time when climate change has become a critical global issue.

In the Scramble scenario, nations rush to secure energy resources for themselves, fearing that energy security is a zero-sum game, with clear winners and losers. The use of local coal and homegrown biofuels increases fast. Taking the path of least resistance, policymakers pay little attention to curbing energy consumption – until supplies run short. Likewise, despite much rhetoric, greenhouse gas emissions are not seriously addressed until major shocks trigger political reactions. Since these responses are overdue, they are severe and lead to energy price spikes and volatility.

The Blueprints scenario is less painful, even if the start is more disorderly. Numerous coalitions emerge to take on the challenges of economic development, energy security, and environmental pollution through cross-border cooperation. Much innovation occurs at the local level, as major cities develop links with industry to reduce local emissions. National governments introduce efficiency standards, taxes, and other policy instruments to improve the environmental performance of buildings, vehicles, and transport fuels.

Moreover, as calls for harmonization increase, policies converge across the globe. Cap-and-trade mechanisms that put a price on industrial CO2 emissions gain international acceptance. Rising CO2 prices in turn accelerate innovation, spawning breakthroughs. A growing number of cars are powered by electricity and hydrogen, while industrial facilities are fitted with technology to capture CO2 and store it underground.

Against the backdrop of these two equally plausible scenarios, we will know only in a few years whether December’s Bali declaration on climate change was just rhetoric or the start of a global effort to counter it. Much will depend on how attitudes evolve in China, the European Union, India, and the United States.

Shell traditionally uses its scenarios to prepare for the future without expressing a preference for one over another. But, faced with the need to manage climate risk for our investors and our descendants, we believe the Blueprints outcomes provide the best balance between economy, energy, and environment. For a second opinion, we appealed to climate change calculations made at the Massachusetts Institute of Technology. These calculations indicate that a Blueprints world with CO2 capture and storage results in the least amount of climate change, provided emissions of other major manmade greenhouse gases are similarly reduced.

But the Blueprints scenario will be realized only if policymakers agree on a global approach to emissions trading and actively promote energy efficiency and new technology in four sectors: heat and power generation, industry, transport, and buildings.

This will require hard work, and time is short. For example, Blueprints assumes CO2 is captured at 90% of all coal- and gas-fired power plants in developed countries by 2050, plus at least 50% of those in non-OECD countries. Today, none capture CO2. Because CO2 capture and storage adds costs and yields no revenues, government support is needed to make it happen quickly on a scale large enough to affect global emissions. At the least, companies should earn carbon credits for the CO2 they capture and store.

Blueprints will not be easy. But it offers the world the best chance of reaching a sustainable energy future unscathed, so we should explore this route with the same ingenuity and persistence that put humans on the moon and created the digital age.

The world faces a long voyage before it reaches a low-carbon energy system. Companies can suggest possible routes to get there, but governments are in the driver’s seat. And governments will determine whether we should prepare for bitter competition or a true team effort.

* Jeroen van der Veer, Chief Executive of Royal Dutch Shell plc, is Energy Community leader of the World Economic Forum energy industry partnership in 2007-2008 and chaired this year’s Energy Summit in Davos. He also chairs the Energy and Climate Change working group of the European Round Table of Industrialists.

Solar to take on coal within three years!

Solar power will prove as cost effective as electricity from coal-fired power stations within three years, according to a new report from US environmental think tank the Earth Policy Institute.

Released last week, the study predicts that advancements in thin film photovoltaic (PV) cells that can be manufactured using cost-effective printing processes will ensure that production costs reach $1 per watt by 2010, making solar PV competitive with coal-fired electricity.

The report echoes predictions from US solar start up Nanosolar, which last month began shipping printed thin-film solar cells, which it claimed could soon be sold profitably for as little as $0.99 per watt.

The Earth Policy Institute also predicted that traditional silicon-based PV cells would become more cost effective over the next three years as raw material shortages are addressed and production facilities are scaled up.

"The average price for a PV module, excluding installation and other system costs, has dropped from almost $100 per watt in 1975 to less than $4 per watt at the end of 2006," the report noted. "With expanding polysilicon supplies, average PV prices are projected to drop to $2 per watt in 2010."

The study also concluded that PV solar panels are now the world's fastest growing energy source with worldwide production having increased by 50 per cent during 2007 to 3,800MW. It added that global PV cell production to date amounts to about 12,400MW - or enough to power 2.4m US homes.

US Congress Expected To Extend Renewable Energy Tax Credits

US Congress Expected To Extend Renewable Energy Tax Credits

By Ian Talley Of DOW JONES NEWSWIRES WASHINGTON

The U.S. Congress is expected to extend expiring renewable energy production and investment tax credits in the new session, industry experts and lawmakers say.

Although the White House has objected to offsetting the proposed multi-billion dollar credits by cutting tax breaks given to the oil and gas industry, lawmakers may include the credits as part of an economic stimulus package or a tax credit extension package, insiders say.

A $21 billion energy tax package that would have cut tax breaks to the top five major oil companies in order to fund renewable energy projects fell victim to repeated veto threats from the White House and wasn't included in a major new energy law passed late last year.

Solar companies such as Evergreen Solar (ESLR) and Emcore Corp. (EMKR), and wind turbine manufacturers such as Vestas Wind Systems (VWS.KO), Gamesa Corporacion Tecnologica (GAM.MC) and Siemans Power Generation, a unit of Siemans AG (SI), count on the credits to build demand in the U.S. The industry says it needs the credits - some of which expire at the end of the year - to offset the costs of expensive electricity generation projects.

Senate Majority leader Harry Reid, D-Nev., said in December that Congress would vote again on the tax proposal "more quickly than you think," and Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, said it had become a matter of urgency for many firms in the sector.

Jaime Steve, legislative director for the American Wind Energy Association, said the credits were "vitally needed to keep momentum going in the industry and keep creating jobs."

"If the credit is not extended in the next two to three months, we'll see a downturn in the industry," he said.

Lawmakers are now searching for ways to include the two major tax provisions - a renewable energy production credit and an investment credit - into other legislation, including a farm bill and fast-developing legislation that would give a boost to the economy.

Democrats have said they would work with President George W. Bush to develop a proposed major stimulus package to counter growing fears of a recession.

"The No. 1 opportunity is in an economic stimulus package," AWEA's Steve said, adding, "That would be a perfect place in an renewable production tax credit." The cost would depend on how long the credits were extended. In the energy tax package, the renewable production credit would have lasted three years, costing around $6 billion.

"We're looking for extension of current law as long as possible...because it provides certainty for investors," Steve said.

Although Steve said he believes paying for the offsets by cutting tax breaks to the oil industry is likely off the table, Mark Kibbe, a senior policy analyst at the American Petroleum Institute, is still watching Congress carefully.

Kibbe, a tax specialist at API, said he'd heard of several alternative options to include the renewable tax credits, including a tax-extenders bill that Congress has come to pass on a near annual basis that prolongs a raft of non-permanent but popular tax rules.

"I don't think they'd move the entire (energy tax) package over, but the the Section 45 renewable energy production credit is a logical one and would not be such a stretch," Kibbe said.

The API analyst said he'd also hear of another creative solution: the Federal Aviation Administration's reauthorization of the collection of excise taxes, which expires in March. If Congress lets the reauthorization expire for a day, and then reauthorizes the agency's authority, Kibbe said it could be considered new revenue, "and they get to spend all those billions of dollars as offsets."

Grass Makes Better Ethanol than Corn Does

Farmers in Nebraska and the Dakotas brought the U.S. closer to becoming a biofuel economy, planting huge tracts of land for the first time with switchgrass—a native North American perennial grass (Panicum virgatum) that often grows on the borders of cropland naturally—and proving that it can deliver more than five times more energy than it takes to grow it.

Working with the U.S. Department of Agriculture (USDA), the farmers tracked the seed used to establish the plant, fertilizer used to boost its growth, fuel used to farm it, overall rainfall and the amount of grass ultimately harvested for five years on fields ranging from seven to 23 acres in size (three to nine hectares).

Once established, the fields yielded from 5.2 to 11.1 metric tons of grass bales per hectare, depending on rainfall, says USDA plant scientist Ken Vogel. "It fluctuates with the timing of the precipitation,'' he says. "Switchgrass needs most of its moisture in spring and midsummer. If you get fall rains, it's not going to do that year's crops much good."

But yields from a grass that only needs to be planted once would deliver an average of 13.1 megajoules of energy as ethanol for every megajoule of petroleum consumed—in the form of nitrogen fertilizers or diesel for tractors—growing them. "It's a prediction because right now there are no biorefineries built that handle cellulosic material" like that which switchgrass provides, Vogel notes. "We're pretty confident the ethanol yield is pretty close." This means that switchgrass ethanol delivers 540 percent of the energy used to produce it, compared with just roughly 25 percent more energy returned by corn-based ethanol according to the most optimistic studies.

The U.S. Department of Energy (DOE) is partially funding the construction of six such cellulosic biorefineries, estimated to cost a total of $1.2 billion. The first to be built will be the Range Fuels Biorefinery in Soperton, Ga., which will process wood waste from the timber industry into biofuels and chemicals. The DOE is providing an initial $50 million to start construction.

"Cost competitive, energy responsible cellulosic ethanol made from switchgrass or from forestry waste like sawdust and wood chips requires a more complex refining process but it's worth the investment," Energy Secretary Samuel Bodman said at the Range Fuels facility groundbreaking in November. "Cellulosic ethanol contains more net energy and emits significantly fewer greenhouse gases than ethanol made from corn."

In fact, Vogel and his team report this week in Proceedings of the National Academy of Sciences USA that switchgrass will store enough carbon in its relatively permanent root system to offset 94 percent of the greenhouse gases emitted both to cultivate it and from the derived ethanol burned by vehicles. Of course, this estimate also relies on using the leftover parts of the grass itself as fuel for the biorefinery. "The lignin in the plant cell walls can be burned," Vogel says.

The use of native prairie grasses is meant to avoid some of the other risks associated with biofuels such as reduced diversity of local animal life and displacing food crops with fuel crops. "This is an energy crop that can be grown on marginal land," Vogel argues, such as the more than 35 million acres (14.2 million hectares) of marginal land that farmers are currently paid not to plant under the terms of USDA's Conservation Reserve Program.

But even a native prairie grass needs a helping hand from scientists and farmers to deliver the yields necessary to help ethanol become a viable alternative to petroleum-derived gasoline, Vogel argues. "To really maximize their yield potential, you need to provide nitrogen fertilization," he says, as well as improved breeding techniques and genetic strains. "Low input systems are just not going to be able to get the energy per acre needed to provide feed, fuel and fiber."

To the source

Why China Is Rising and the United States Is Declining

By Lester R. Brown

I know Santa Claus is Chinese because each Christmas morning after all the gifts are unwrapped and things settle down I systematically go through the presents to see where they are made. The results are almost always the same: roughly 70 percent are from China. After some research, it seems that my one-family survey is representative of the country as a whole.

Let’s start with toys. Some 80 percent of the toys sold in the United States--from Barbie dolls to video games--are made in China. Talking toys that speak English learned the language from Chinese workers. Electronic goods--from Apple’s iPod to Microsoft’s Xbox--are made in China. Clothing--from the latest cashmere sweaters to gym suits--is also likely to have a "Made in China" label.

The Christmas tree itself may come from China. While real Christmas trees are grown in every state in the United States and are marketed locally, many families now gather around artificial Christmas trees. Eight out of every 10 artificial Christmas trees sold in the United States are made in China. Last year Americans spent over $130 million on plastic Christmas trees from China.

This year Americans will spend over $1 billion on Christmas ornaments from China. And in perhaps the greatest irony of all, even nativity scenes are made in China. Last year Americans spent more than $39 million buying nativity scenes shipped in from the East. China’s success in attracting foreign investment capital and mobilizing this huge workforce has made it the workshop of the world.

That the U.S. Christmas is made in China is a metaphor for a far deeper set of economic issues affecting the United States. Today Christmas is celebrated in both the United States and China--but for different reasons and with far different economic consequences. For the Chinese, the manufacturing bonanza means record profits, rising incomes, and, in a society where people save some 40 percent of their income, a sharp jump in savings. In the United States, Christmas shopping expenditures, headed for another record high this year, contribute to rising credit card debt and a soaring trade deficit.

Underneath the American Christmas spirit and good cheer is a debt-laden society that appears to have lost its way, marred in the quicksand of consumerism. As a society, we seem to have forgotten how to save so we can invest in a better future. Instead of leaving our children a promising economic future, we are bequeathing them the largest debt burden of any generation in history.

At the personal level, credit card debt just keeps climbing, and at the government level, we have the largest deficit in history. At the international level, we have a trade deficit that moves to a new high month after month.

It’s not the fact that our Christmas is made in China, but rather the mindset that has led to it that is most disturbing. We want to consume no matter what. We want to spend now and let our children pay. It is this same mindset that introduces tax cuts while waging a costly war. Economic sacrifice is no longer part of our vocabulary. After the Japanese attack on Pearl Harbor, President Roosevelt banned the sale of private cars in order to mobilize the manufacturing capacity and engineering skills of the U.S. automobile industry to build tanks and planes. In contrast, after 9/11, President Bush urged us to go shopping.

In the United States we are so intent on consuming that personal savings have virtually disappeared. We have an average of five credit cards for every man, woman, and child. Of the 145 million cardholders, only 55 million clear their accounts each month. The other 90 million cannot seem to catch up and are paying steep interest rates on their remaining balance. Millions of people are so deeply in debt that they may remain indebted for life.

The official national debt, the product of years of fiscal deficits, now totals $8.5 trillion--some $64,000 per taxpayer.

By the end of the Bush administration in 2008, this figure is projected to reach a staggering $9.4 trillion. We are digging a fiscal black hole and sinking deeper and deeper into it.

Each month the Treasury covers the fiscal deficit by auctioning off securities. The two leading international buyers of U.S. Treasury securities are Japan and China. In this role, China is now also becoming our banker. This developing country, where income levels are one sixth those of the United States, is financing the excesses of an affluent industrial society. What’s wrong with this picture?

In times past, when our fiscal deficits were covered largely by U.S. lenders, interest payments on the debt were reinvested in the United States. Now they are flowing abroad to Japan, China, and other foreign holders of U.S. debt.

While the U.S. fiscal deficit, driven partly by the war in Iraq, soars to stratospheric levels, the country is facing an unprecedented fiscal challenge as the baby boomer generation retires, pushing up the costs of social security, Medicaid, and Medicare. This, combined with the growing interest payments on our debt to China and other countries, will put a nearly impossible tax burden on the next generation--something for which they may never forgive us.

The U.S. trade deficit is growing by leaps and bounds, nearly doubling from $452 billion in 2000 to an estimated $850 billion in 2006. Rising oil imports and the trade deficit with China account for over half of it.

National policy failures such as not adequately supporting the use of renewable energy technologies have contributed to the growing U.S. trade deficit. For example, the United States should be a leading manufacturer and exporter of solar cells and wind turbines, but it has fallen behind both Europe and Japan. The solar cell, invented at Bell Labs in 1954, is an American technology. But the U.S. effort to develop solar energy was so weak and sporadic that both Germany and Japan forged ahead and developed robust solar cell manufacturing and export industries.

The situation is similar with wind. Although the modern wind industry was born in California at the beginning of the 1980s, the U.S. failure to sustain support for wind resource development allowed European countries to largely take over this industry.

Even though rising oil imports are widening our trade deficit, we consume oil with abandon, weakening the economy and undermining our political independence.

We have lost influence in world financial markets simply because of our mounting debt, much of it held by other countries. If China’s leaders ever become convinced that the dollar is headed continuously downward and they decide to dump their dollar holdings, the dollar could collapse.

Beholden to other countries for oil and to finance our debt, the United States is fast losing its leadership role in the world. The question we are facing is not simply whether our Christmas is made in China, but more fundamentally whether we can restore the discipline and values that made us a great nation--a nation the world admired, respected, and emulated. This is not something that Santa Claus can deliver, not even a Chinese Santa Claus. This is something only we can do.

# # #

Lester R. Brown is President of the Earth Policy Institute and author of Plan B 3.0: Mobilizing to Save Civilization.

Data and additional resources at www.earthpolicy.org.

Cumulative Oil & Gas Contributions to Senators

Cumulative Oil & Gas Contributions to Senators Voting to Block a Measure to Rollback Oil Company Giveaways on HR 6

Source: Center for Responsive Politics

SENATOR OIL & GAS CONTRIBUTIONS

over past 4 years

Kay Bailey Hutchison (R-TX) - $577,556

John Cornyn (R-TX) - $561,380

Bob Corker (R-TN) - $215,350

Pat Roberts (R-KS) - $205,850

James Inhofe (R-OK) - $196,700

Mitch McConnell (R-KY) - $150,500

Pete Domenici (R-NM) - $145,950

Jon Kyl (R-AZ) - $140,700

Mary Landrieu (D-LA) - $133,650 (the only dem to vote against)

Christopher Bond (R-MO) - $129,350

Sam Brownback (R-KS) - $129,155

Trent Lott (R-MS) - $124,300

George Voinovich (R-OH) - $122,050

Arlen Specter (R-PA) - $119,878

Lamar Alexander (R-TN) - $98,300

Jim Bunning (R-KY) - $98,269

John Ensign (R-NV) - $95,100

David Vitter (R-LA) - $81,100

Michael Crapo (R-ID) - $63,650

Jeff Sessions (R-AL) - $58,800

Robert Bennett (R-UT) - $58,700

Thad Cochran (R-MS) - $58,500

Richard Shelby (R-AL) - $56,800

Elizabeth Dole (R-NC) - $53,400

Ted Stevens (R-AK) - $44,700

Michael Enzi (R-WY) - $42,500

John Sununu (R-NH) $- 41,900

Saxby Chambliss (R-GA) - $41,250

Larry Craig (R-ID) - $33,500

Judd Gregg (R-NH) - $31,500

Lindsey Graham (R-SC) - $29,600

Richard Burr (R-NC) - $28,750

John Barrasso (R-WY) - $27,500

Johnny Isakson (R-GA) - $25,200

Jim DeMint (R-SC) - $23,722

Mel Martinez (R-FL) - $17,000

Chuck Hagel (R-NE) - $16,600

Tom Coburn (R-OK) - $9,600

John Warner (R-VA) - $9,500

Wayne Allard (R-CO) - $0*

Total $4,097,810

*Sen. Allard was last re-elected in 2002 and will be retiring in 2008

Algae Emerges as a Potential Fuel Source

Roger Ruan of the University of Minnesota says algae is a far more efficient fuel crop than corn.

ST. PAUL, Dec. 1 (AP) — The 16 big flasks of bubbling bright green liquids in Roger Ruan’s laboratory at the University of Minnesota are part of a new boom in renewable energy research.
Driven by renewed investment as oil prices push $100 a barrel, Dr. Ruan and scores of scientists around the world are racing to turn algae into a commercially viable energy source.

Some algae is as much as 50 percent oil that can be converted into biodiesel or jet fuel. The biggest challenge is cutting the cost of production, which by one Defense Department estimate is running more than $20 a gallon.

“If you can get algae oils down below $2 a gallon, then you’ll be where you need to be,” said Jennifer Holmgren, director of the renewable fuels unit of UOP, an energy subsidiary of Honeywell International. “And there’s a lot of people who think you can.”

Researchers are trying to figure out how to grow enough of the right strains of algae and how to extract the oil most efficiently. Over the past two years they have received more money from governments, the Pentagon, big oil companies, utilities and venture capital firms.

The federal government halted its main algae research program nearly a decade ago, but technology has advanced and oil prices have climbed since then, and an Energy Department laboratory announced in late October that it was partnering with Chevron, the second-largest American oil company, in the hunt for better strains of algae.

“It’s not backyard inventors at this point at all,” said George Douglas, a spokesman for the National Renewable Energy Laboratory, an arm of the Energy Department. “It’s folks with experience to move it forward.”

A New Zealand company demonstrated a Range Rover powered by an algae biodiesel blend last year, but experts say algae will not be commercially viable for many years. Dr. Ruan said demonstration plants could be built within a few years.

Converting algae oil into biodiesel uses the same process that turns vegetable oils into biodiesel. But the cost of producing algae oil is hard to pin down because nobody is running the process start to finish other than in a laboratory, Mr. Douglas said.

If the price of production can be reduced, the advantages of algae include the fact that it grows much faster and in less space than conventional energy crops. An acre of corn can produce about 20 gallons of oil per year, Dr. Ruan said, compared with a possible 15,000 gallons of oil per acre of algae.

An algae farm could be located almost anywhere. It would not require converting cropland from food production to energy production. It could use sea water and could consume pollutants from sewage and power plants.

The Pentagon’s research arm, the Defense Advanced Research Projects Agency, is financing research into producing jet fuel from plants, including algae. The agency is already working with the Honeywell subsidiary, General Electric and the University of North Dakota. In November, it requested additional research proposals.

By THE ASSOCIATED PRESS
Published: December 2, 2007

Oil from Wood - Startup Kior has developed a process for creating "biocrude" directly from biomass.

Dutch biofuels startup Bioecon and Khosla Ventures have launched a joint venture called Kior, which will commercialize Bioecon's process for converting agricultural waste directly into "biocrude," a mixture of small hydrocarbon molecules that can be processed into fuels such as gasoline or diesel in existing oil refineries. The process, Kior claims, boasts numerous advantages over other methods of producing biofuels: it could prove relatively cheap, relies on a nontoxic catalyst, taps into the present fuel-refining and transportation infrastructure, and produces clean-burning fuels that can be used in existing engines.

Biofuels are widely seen as a key stepping-stone on the path from fossil fuels to renewable energy sources, particularly for transportation. Their use could also reduce emissions of carbon dioxide and other greenhouse gases. But ethanol, the most widely produced biofuel, contains little energy compared with gasoline or diesel. And a great deal of energy goes into its production: growing the grain from which it is fermented, distilling it, and transporting it. Many biofuels boosters have pinned their hopes on finding ways to produce ethanol from cellulose, the tough polymer that makes up much of plant stems and wood. In practice, though, cellulose must be broken down into simple sugars before it can be fermented into ethanol or converted into synthetic gas and turned into fuels. Despite three decades of research, these remain difficult, expensive, and energy-intensive processes that are not yet commercially viable. Additionally, recent research shows that ethanol, which is highly volatile, may actually exacerbate smog problems when it evaporates directly into the air instead of burning in vehicle engines.

The way to make cellulosic biofuels viable, says Bioecon's founder, Paul O'Connor, is to use catalysts to convert biomass into a hydrocarbon biocrude that can be processed into gasoline and diesel in existing petroleum refineries. After decades developing catalysts for the petroleum industry, O'Connor started Bioecon in early 2006 to develop methods for converting biomass directly into biofuels. His first success is a catalytic process that can convert cellulosic biomass into short-chain hydrocarbons about six to thirteen carbon atoms long. Khosla Ventures agreed to provide an undisclosed amount of series A funding to spinoff Kior in order to commercialize the process. Vinod Khosla, founder of the venture fund, believes that converting biomass into liquid transportation fuels is key to decreasing greenhouse-gas emissions and compensating for dwindling petroleum reserves. Khosla is funding a number of biofuels startups with competing technologies and says that Kior's approach is unique. "They have some very clever proprietary catalytic approaches that are pretty compelling," he says. "They can produce relatively cheap crude oil--that's attractive."

The most effective method of converting biomass into fuel is to subject it to high temperatures and high pressure to produce synthetic gas, or syngas. In the presence of a catalyst, the syngas reacts to produce fuels such as ethanol or methanol (used as an additive in biodiesel). But this is a costly process, and catalysts able to withstand the high temperature of the syngas are expensive and frequently toxic.

Attempts to produce fuel by directly exposing agricultural cellulose to a catalyst have had little success because most of the cellulose is trapped inside plant stems and stalks. O'Connor says that while the Bioecon researchers are developing new catalysts, their "biomass cracking" process is the real breakthrough. Using proprietary methods, they have been able to insert a catalyst inside the structure of the biomass, improving the contact between the materials and increasing the efficiency of the process. While O'Connor won't go into details, he says that the most basic version of the technique might involve impregnating the biomass with a solution containing the catalyst; the catalyst would then be recrystallized. "What we're doing now is improving the method to make it easier and cheaper," O'Connor says.

Such a method would eliminate the need for the superhigh temperatures and toxic catalysts used in other thermochemical methods for cellulosic-biofuel production. While O'Connor says that he is still improving Kior's catalyst, his first versions are different kinds of modified clays, which are both cheap and environmentally friendly. The product is high quality as well, containing less acid, oxygen, and water. These characteristics make it suitable for burning as heating oil or for use in petroleum refineries, which can use existing processes and equipment to convert it into the longer hydrocarbon chains of gasoline and diesel fuel.

Bioecon has produced lab-scale quantities of its biocrude, a few grams at a time, from materials such as wood shavings, sugarcane waste, and various grasses. While the input material affects the yield somewhat, O'Connor says that the output is "all very similar, so we do not have a real preference." This means that the process can work around the world, with whatever biomass is locally available, almost year-round.

Kior is already in talks with at least two oil companies to establish partnerships to further develop the technology. It is starting a pilot plant with one company that should produce around 20 kilograms of biocrude a day within six to twelve months, says Kior CEO Rob van der Meij. If all goes well, the process could scale up to production of hundreds of kilos per day by 2009, and refined versions of Kior's biocrude might be blended into gasoline or diesel by 2010. In addition to being renewable, these fuels would have lower sulfur and nitrogen content, which should decrease smog in cities such as Los Angeles and Houston.

Because of its ability to slide into the existing petroleum refining and delivery infrastructure, the technology has a huge cost advantage, says O'Connor. It could also be adopted much more rapidly, according to Khosla. "If you can do a solution that's compatible with the oil companies and their current refineries, it becomes much easier for them to get comfortable with it," he says. "Getting them into the game would be a big addition."

Steve Deutch, a senior research scientist at the National Renewable Energy Laboratory, says that the little information Kior has released about its process is plausible enough, but that until the details are available, the company's claims are "not really possible to evaluate." The main challenge for Kior, or anyone working on cellulosic fuels, Deutch says, is to develop a process simple enough to bring close to the sources of biomass--farms. "Collecting biomass and getting enough of it in one place to make a difference is a problem in the biomass world," Deutch says. "Trucking costs can become exorbitant. You want to preprocess it at the farm and then ship a high-density, high-energy intermediate to processing plants."

Google’s Next Frontier: Renewable Energy

SAN FRANCISCO, Nov. 27 — Google, the Internet company with a seemingly limitless source of revenue, plans to get into the business of finding limitless sources of energy.

The company, based in Mountain View, Calif., announced Tuesday that it intended to develop and help stimulate the creation of renewable energy technologies that were cheaper than coal-generated power.

Google said it would spend hundreds of millions of dollars, part of that to hire engineers and energy experts to investigate alternative energies like solar, geothermal and wind power. The effort is aimed at reducing Google’s own mounting energy costs to run its vast data centers, while also fighting climate change and helping to reduce the world’s dependence on fossil fuels.
“We see technologies we think can mature into very capable industries that can generate electricity cheaper than coal,” said Larry Page, a Google founder and president of products, “and we don’t see people talking about that as much as we would like.”

The initiative, which Google is calling REBear Stearns agreed that “the headlines were a little scary at first” and said investors were initially worried that this was another example of Google “trying to bite off more than they can chew.”

But Google’s stock closed up more than 1 percent Tuesday in a higher market, Mr. Peck said, when investors ”realized this is more of a Google.org initiative and backed off.”

Mr. Page, in an interview, said that failing to investigate new businesses could hurt Google more than any potential distraction. “If you look at companies that don’t do anything new,” he said, “they are guaranteed never to get bigger. They miss a lot of opportunities and they miss the next big things.”

As part of the initiative, executives at Google.org said they are working with two companies that have “promising, scalable energy technologies.” One of these, eSolar, based in Pasadena, Calif., uses thousands of small mirrors to concentrate sunlight and generate steam that powers electric generators. The other, Makani Power, of Alameda, Calif., is developing wind turbines that will run on powerful and generally more predictable winds at high altitudes.

In a conference call Tuesday with reporters, Sergey Brin, Google’s other founder and president of technology, said the effort was motivated in part by the company’s frustrating search for clean, cheap energy alternatives.

“It’s very hard to find options that aren’t coal-based or other dirty technologies,” he said. “We don’t feel good about being in that situation as a company. We feel hypocritical. We want to make investments happen so there will be alternatives for us to use down the road.” Both founders declined to specify what the company spends on energy.

Idealism is hardly new at Google. In their Letter from the Founders before the company’s 2004 initial public stock offering, Mr. Page and Mr. Brin wrote: “Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious.”

Mr. Rohan of RBC Capital Markets said that the returns were not obvious. “The only positive byproduct of this project that would be anything other than environmental,” he said, “is that it might make Google managers and executives even prouder of the fact that they work there, and it may help retain key employees who think their goal is to do good in the world. But I’m really stretching.”

Google is only the latest Fortune 500 company to embrace green technologies. Also Tuesday, Hewlett-Packard said it would install a one-megawatt solar electric power system at its manufacturing plant in San Diego, and buy 80 gigawatt-hours of wind energy in Ireland next year. H.P. said that together, the agreements would save it around $800,000 in energy costs.




By BRAD STONE
Published: November 28, 2007

Beyond the Age of Petroleum

This past May, in an unheralded and almost unnoticed move, the Energy Department signaled a fundamental, near epochal shift in US and indeed world history: we are nearing the end of the Petroleum Age and have entered the Age of Insufficiency. The department stopped talking about "oil" in its projections of future petroleum availability and began speaking of "liquids." The global output of "liquids," the department indicated, would rise from 84 million barrels of oil equivalent (mboe) per day in 2005 to a projected 117.7 mboe in 2030--barely enough to satisfy anticipated world demand of 117.6 mboe. Aside from suggesting the degree to which oil companies have ceased being mere suppliers of petroleum and are now purveyors of a wide variety of liquid products--including synthetic fuels derived from natural gas, corn, coal and other substances--this change hints at something more fundamental: we have entered a new era of intensified energy competition and growing reliance on the use of force to protect overseas sources of petroleum.

To appreciate the nature of the change, it is useful to probe a bit deeper into the Energy Department's curious terminology. "Liquids," the department explains in its International Energy Outlook for 2007, encompasses "conventional" petroleum as well as "unconventional" liquids--notably tar sands (bitumen), oil shale, biofuels, coal-to-liquids and gas-to-liquids. Once a relatively insignificant component of the energy business, these fuels have come to assume much greater importance as the output of conventional petroleum has faltered. Indeed, the Energy Department projects that unconventional liquids production will jump from a mere 2.4 mboe per day in 2005 to 10.5 in 2030, a fourfold increase. But the real story is not the impressive growth in unconventional fuels but the stagnation in conventional oil output. Looked at from this perspective, it is hard to escape the conclusion that the switch from "oil" to "liquids" in the department's terminology is a not so subtle attempt to disguise the fact that worldwide oil production is at or near its peak capacity and that we can soon expect a downturn in the global availability of conventional petroleum.

Petroleum is, of course, a finite substance, and geologists have long warned of its ultimate disappearance. The extraction of oil, like that of other nonrenewable resources, will follow a parabolic curve over time. Production rises quickly at first and then gradually slows until approximately half the original supply has been exhausted; at that point, a peak in sustainable output is attained and production begins an irreversible decline until it becomes too expensive to lift what little remains. Most oil geologists believe we have already reached the midway point in the depletion of the world's original petroleum inheritance and so are nearing a peak in global output; the only real debate is over how close we have come to that point, with some experts claiming we are at the peak now and others saying it is still a few years or maybe a decade away. Until very recently, Energy Department analysts were firmly in the camp of those wild-eyed optimists who claimed that peak oil was so far in the future that we didn't really need to give it much thought. Putting aside the science of the matter, the promulgation of such a rose-colored view obviated any need to advocate improvements in automobile fuel efficiency or to accelerate progress on the development of alternative fuels. Given White House priorities, it is hardly surprising that this view prevailed in Washington.

In just the past six months, however, the signs of an imminent peak in conventional oil production have become impossible even for conservative industry analysts to ignore. These have come from the take-no-prisoners world of oil pricing and deal-making, on the one hand, and the analysis of international energy experts, on the other.

Most dramatic, perhaps, has been the spectacular rise in oil prices. The price of light, sweet crude crossed the longstanding psychological barrier of $80 per barrel on the New York Mercantile Exchange for the first time in September, and has since risen to as high as $90.

Many reasons have been cited for the rise in crude prices, including unrest in Nigeria's oil-producing Delta region, pipeline sabotage in Mexico, increased hurricane activity in the Gulf of Mexico and fears of Turkish attacks on Kurdish guerrilla sanctuaries in Iraq. But the underlying reality is that most oil-producing countries are pumping at maximum capacity and finding it increasingly difficult to boost production in the face of rising international demand.

Even a decision by the Organization of the Petroleum Exporting Countries (OPEC) to boost production by 500,000 barrels per day failed to halt the upward momentum in prices. Concerned that an excessive rise in oil costs would trigger a worldwide recession and lower demand for their products, the OPEC countries agreed to increase their combined output at a meeting in Vienna on September 11. "We think that the market is a little bit high," explained Kuwait's acting oil minister, Mohammad al-Olaim. But the move did little to slow the rise in prices. Clearly, OPEC would have to undertake a much larger production increase to alter the market environment, and it is not at all clear that its members possess the capacity to do that--now or in the future.

A warning sign of another sort was provided by Kazakhstan's August decision to suspend development of the giant Kashagan oil region in its sector of the Caspian Sea, first initiated by a consortium of Western firms in the late '90s. Kashagan was said to be the most promising oil project since the discovery of oil in Alaska's Prudhoe Bay in the late '60s. But the enterprise has encountered enormous technical problems and has yet to produce a barrel of oil. Frustrated by a failure to see any economic benefits from the project, the Kazakh government has cited environmental risks and cost overruns to justify suspending operations and demanding a greater say in the project.

Like the dramatic rise in oil prices, the Kashagan episode is an indication of the oil industry's growing difficulties in its efforts to boost production in the face of rising demand. "All the oil companies are struggling to grow production," Peter Hitchens of Teather & Greenwood brokerage told the Wall Street Journal in July. "It's becoming more and more difficult to bring projects in on time and on budget."

That this industry debilitation is not a temporary problem but symptomatic of a long-term trend was confirmed in two important studies published this past summer by conservative industry organizations.

The first of these was released July 9 by the International Energy Agency (IEA), an affiliate of the Organization for Economic Cooperation and Development, the club of major industrial powers. Titled Medium-Term Oil Market Report, it is a blunt assessment of the global supply-and-demand equation over the 2007-12 period. The news is not good.

Predicting that world economic activity will grow by an average of 4.5 percent per year during this period--much of it driven by unbridled growth in China, India and the Middle East--the report concludes that global oil demand will rise by 2.2 percent per year, pushing world oil consumption from approximately 86 million barrels per day in 2007 to 96 million in 2012. With luck and massive new investment, the oil industry will be able to increase output sufficiently to satisfy the higher level of demand anticipated for 2012--barely. Beyond that, however, there appears little likelihood that the industry will be able to sustain any increase in demand. "Oil look[s] extremely tight in five years' time," the agency declared.

Underlying the report's general conclusion are a number of specific concerns. Most notably, it points to a worrisome decline in the yield of older fields in non-OPEC countries and a corresponding need for increased output from the OPEC countries, most of which are located in conflict-prone areas of the Middle East and Africa. The numbers involved are staggering. At first blush, it would seem that the need for an extra 10 million barrels per day between now and 2012 would translate into an added 2 million barrels per day in each of the next five years--a conceivably attainable goal. But that doesn't take into account the decline of older fields.

According to the report, the world actually needs an extra 5 million: 3 million to make up for the decline in older fields plus the 2 million in added requirements. This is a daunting and possibly insurmountable challenge, especially when one considers that almost all of the additional petroleum will have to come from Iran, Iraq, Kuwait, Saudi Arabia, Algeria, Angola, Libya, Nigeria, Sudan, Kazakhstan and Venezuela--countries that do not inspire the sort of investor confidence that will be needed to pour hundreds of billions of dollars into new drilling rigs, pipelines and other essential infrastructure.

Similar causes for anxiety can be found in the second major study released last summer, Facing the Hard Truths About Energy, prepared by the National Petroleum Council, a major industry organization. Because it supposedly provided a "balanced" view of the nation's energy dilemma, the NPC report was widely praised on Capitol Hill and in the media; adding to its luster was the identity of its chief author, former ExxonMobil CEO Lee Raymond.

Like the IEA report, the NPC study starts with the claim that, with the right mix of policies and higher investment, the industry is capable of satisfying US and international oil and natural gas demand. "Fortunately, the world is not running out of energy resources," the report bravely asserts. But obstacles to the development and delivery of these resources abound, so prudent policies and practices are urgently required. Although "there is no single, easy solution to the multiple challenges we face," the authors conclude, they are "confident that the prompt adoption of these strategies" will allow the United States to satisfy its long-term energy needs.

Read further into the report, however, and serious doubts emerge. Here again, worries arise from the growing difficulties of extracting oil and gas from less-favorable locations and the geopolitical risks associated with increased reliance on unfriendly and unstable suppliers. According to the NPC (using data acquired from the IEA), an estimated $20 trillion in new infrastructure will be needed over the next twenty-five years to ensure that sufficient energy is available to satisfy anticipated worldwide demand.

The report then states the obvious: "A stable and attractive investment climate will be necessary to attract adequate capital for evolution and expansion of the energy infrastructure." This is where any astute observer should begin to get truly alarmed, for, as the study notes, no such climate can be expected. As the center of gravity of world oil production shifts decisively to OPEC suppliers and state-centric energy producers like Russia, geopolitical rather than market factors will come to dominate the marketplace.

"These shifts pose profound implications for U.S. interests, strategies, and policy-making," the NPC report states. "Many of the expected changes could heighten risks to U.S. energy security in a world where U.S. influence is likely to decline as economic power shifts to other nations. In years to come, security threats to the world's main sources of oil and natural gas may worsen."
The implications are obvious: major investors are not likely to cough up the trillions of dollars needed to substantially boost production in the years ahead, suggesting that the global output of conventional petroleum will not reach the elevated levels predicted by the Energy Department but will soon begin an irreversible decline.

This conclusion leads to two obvious strategic impulses: first, the government will seek to ease the qualms of major energy investors by promising to protect their overseas investments through the deployment of American military forces; and second, the industry will seek to hedge its bets by shifting an ever-increasing share of its investment funds into the development of nonpetroleum liquids.

The New 'Washington Consensus'

The need for a vigorous US military role in protecting energy assets abroad has been a major theme in American foreign policy since 1945, when President Roosevelt met with King Abdul Aziz of Saudi Arabia and promised to protect the kingdom in return for privileged access to Saudi oil.

In the most famous expression of this linkage, President Carter affirmed in January 1980 that the unimpeded flow of Persian Gulf oil is among this country's vital interests and that to protect this interest, the United States will employ "any means necessary, including military force." This principle was later cited by President Reagan as the rationale for "reflagging" Kuwaiti oil tankers with the American ensign during the Iran-Iraq War of 1980-88 and protecting them with US warships--a stance that led to sporadic clashes with Iran. The same principle was subsequently invoked by George H.W. Bush as a justification for the Gulf War of 1991.

In considering these past events, it is important to recognize that the use of military force to protect the flow of imported petroleum has generally enjoyed broad bipartisan support in Washington. Initially, this bipartisan outlook was largely focused on the Persian Gulf area, but since 1990, it has been extended to other areas as well. President Clinton eagerly pursued close military ties with the Caspian Sea oil states of Azerbaijan and Kazakhstan after the breakup of the USSR in 1991, while George W. Bush has avidly sought an increased US military presence in Africa's oil-producing regions, going so far as to favor the establishment of a US Africa Command (Africom) in February.

One might imagine that the current debacle in Iraq would shake this consensus, but there is no evidence that this is so. In fact, the opposite appears to be the case: possibly fearful that the chaos in Iraq will spread to other countries in the Gulf region, senior figures in both parties are calling for a reinvigorated US military role in the protection of foreign energy deliveries.

Perhaps the most explicit expression of this elite consensus is an independent task force report, National Security Consequences of U.S. Oil Dependency, backed by many prominent Democrats and Republicans. It was released by the bipartisan Council on Foreign Relations (CFR), co-chaired by John Deutch, deputy secretary of defense in the Clinton Administration, and James Schlesinger, defense secretary in the Nixon and Ford administrations, in October 2006. The report warns of mounting perils to the safe flow of foreign oil. Concluding that the United States alone has the capacity to protect the global oil trade against the threat of violent obstruction, it argues the need for a strong US military presence in key producing areas and in the sea lanes that carry foreign oil to American shores.

An awareness of this new "Washington consensus" on the need to protect overseas oil supplies with American troops helps explain many recent developments in Washington. Most significant, it illuminates the strategic stance adopted by President Bush in justifying his determination to retain a potent US force in Iraq--and why the Democrats have found it so difficult to contest that stance.

Consider Bush's September 13 prime-time speech on Iraq. "If we were to be driven out of Iraq," he prophesied, "extremists of all strains would be emboldened.... Iran would benefit from the chaos and would be encouraged in its efforts to gain nuclear weapons and dominate the region. Extremists could control a key part of the global energy supply." And then came the kicker: "Whatever political party you belong to, whatever your position on Iraq, we should be able to agree that America has a vital interest in preventing chaos and providing hope in the Middle East." In other words, Iraq is no longer about democracy or WMDs or terrorism but about maintaining regional stability to ensure the safe flow of petroleum and keep the American economy on an even keel; it was almost as if he was speaking to the bipartisan crowd that backed the CFR report cited above.

It is very clear that the Democrats, or at least mainstream Democrats, are finding it exceedingly difficult to contest this argument head-on. In March, for example, Senator Hillary Clinton told the New York Times that Iraq is "right in the heart of the oil region" and so "it is directly in opposition to our interests" for it to become a failed state or a pawn of Iran. This means, she continued, that it will be necessary to keep some US troops in Iraq indefinitely, to provide logistical and training support to the Iraqi military. Senator Barack Obama has also spoken of the need to maintain a robust US military presence in Iraq and the surrounding area. Thus, while calling for the withdrawal of most US combat brigades from Iraq proper, he has championed an "over-the-horizon force that could prevent chaos in the wider region."

Given this perspective, it is very hard for mainstream Democrats to challenge Bush when he says that an "enduring" US military presence is needed in Iraq or to change the Administration's current policy, barring a major military setback or some other unforeseen event. By the same token, it will be hard for the Democrats to avert a US attack on Iran if this can be portrayed as a necessary move to prevent Tehran from threatening the long-term safety of Persian Gulf oil supplies.

Nor can we anticipate a dramatic change in US policy in the Gulf region from the next administration, whether Democratic or Republican. If anything, we should expect an increase in the use of military force to protect the overseas flow of oil, as the threat level rises along with the need for new investment to avert even further reductions in global supplies.

The Rush to Alternative Liquids

Although determined to keep expanding the supply of conventional petroleum for as long as possible, government and industry officials are aware that at some point these efforts will prove increasingly ineffective. They also know that public pressure to reduce carbon dioxide emissions--thus slowing the accumulation of climate-changing greenhouse gases--and to avoid exposure to conflict in the Middle East is sure to increase in the years ahead. Accordingly, they are placing greater emphasis on the development of oil alternatives that can be procured at home or in neighboring Canada.

The new emphasis was first given national attention in Bush's latest State of the Union address. Stressing energy independence and the need to modernize fuel economy standards, he announced an ambitious plan to increase domestic production of ethanol and other biofuels. The Administration appears to favor several types of petroleum alternatives: ethanol derived from corn stover, switch grass and other nonfood crops (cellulosic ethanol); diesel derived largely from soybeans (biodiesel); and liquids derived from coal (coal-to-liquids), natural gas (gas-to-liquids) and oil shale. All of these methods are being tested in university laboratories and small-scale facilities, and will be applied in larger, commercial-sized ventures in coming years with support from various government agencies.

Michael T. Klare

The Nation