Tuesday, September 08, 2009

MIssion Impossible

There are well over 250 million passenger vehicles in the U.S. today requiring approximately 390 million gallons of fuel per day. Yet one barrel of crude oil only produces 19 gallons of gas or 11 gallons of diesel fuel. This is one of the reasons we have to import as many as 9 million barrels of crude oil per day, putting our country as risk politically and exposing our future to extraordinary environmental jeopardy.

Your job, if you choose to accept it, is to find a replacement for as much of that expensive imported crude oil as possible.

Consider the alternative fuels: ethanol, biofuel, renewable diesel, propane, hydrogen. You could even go electric.

Of course, an electric battery solution takes a more significant redesign of the car than does hydrogen or propane. Then there is a question of how to generate and transport all that electricity to end-users. Our electrical grid leaves something to be desired as it is. Cross out electric (for now).

The obstacles to making ethanol a meaningful replacement have turned the industry in a target of night time talk show hosts. Even if we are willing to give up corn muffins and sugar for our breakfast coffee (which for the record I am not a volunteer), the U.S. would need to plow under a fair number of apartment complexes, homes and businesses to make way for enough corn fields to produce ethanol in material quantities. Plowed up shore to shore, we would still come up short.

As we noted in the August 28th post “A Cellulosic Call” ethanol from corn stover or wood chips is still something of a science project. Nor are these feed stocks available in sufficient quantities at locations that make economic sense for a transportation fuel. Ethanol from any feedstock still cannot be sent down the existing oil and gas pipelines.

Renewable fuel from other waste streams appears to be working well already. There is little pressure - so far - on food prices or alternative uses. The science is fully proven and producers are amassing enough experience to have begun creating efficiencies. Yet the 1.3 billion tons of agriculture and municipal waste generated each year are probably adequate to replace only 20% of our current transport fuel requirement. The twin problems of widely dispersed feed stock location and transport issues put wrenches in the economic works for waste streams as feed stock. This suggests that municipal or agriculture waste can only be counted on to supplement the fuel requirement for the waste stream producer itself, i.e. municipal vehicles. We note there are some renewable diesel processes that turn out a fuel blendable at the refinery and transportable in existing pipelines.

One might conclude there is no “killer app” in the transport fuel conundrum. The good guys at Mission Impossible headquarters never give up, turning the tide with the most unusual solution.

In the case of renewable fuel replacement for crude oil, it is a tiny little green “operative” who might be our savior. They are available in battalion after battalion after battalion. There is no demand competition with the food supply chain. They can be located anywhere and in any size force required. They are also efficient, can yield over 30 times more energy per unit area than other, second-generation biofuel crop feedstock.

Have you guessed the Mission Impossible story ending? It is algae to the rescue! Not very romantic, but algae is the only renewable energy source that could be made available in sufficient quantities to scale up production to replace fossil fuels as a transportation fuel.

In the next posts, we look closer at the algae promise as well as investment opportunities in what appears to be a building industry.

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