ALTERNATIVE FUELS AND TECHNOLOGY LOCK-Ins

Welcome to Charge: the future of energy

ALTERNATIVE FUELS AND TECHNOLOGY LOCK-Ins

BY DANIEL C. SWEENEY, PhD

We’ve been here before. Back in the nineties when concerns about global warming and dependence on foreign oil first began to assume some urgency, much of the energy and transportation industries as well as the U.S. government and various policy consortia representing European governments made a collective decision to support hydrogen as the fuel of the future and fuel cells as the energy conversion device of the future. Now, after the billions of dollars spent in research that has borne startlingly little fruit, hydrogen appears to be receding to be replaced—it would seem—by ethanol. The power brokers, economic and political have spoken.

It’s easy to see why ethanol would have a strong constituency, or, rather constituencies because the support for this product is diverse. Lots of people are already making lots of money off ethanol, and its use as a fuel additive is already well established. Furthermore, the logistics of a transition to an all ethanol or largely ethanol future seem far less problematic than is the case for hydrogen. Existing internal combustion engines can be easily modified to run off pure ethanol mixtures—there’s no requirement to substitute fuel injectors or redesign cylinder heads as is the case with hydrogen—and storage presents far fewer problems, though ethanol cannot be transported through oil pipes nor stored in tanks intended for gasoline or crude oil. And, of course, the technology for producing ethanol is well established, while at the same time subject to continuing improvements in efficiencies and cost effectiveness.

There are other arguments, as well, some fairly persuasive, at least at first hearing. Ethanol will revitalize the farm belt, the American heartland, as it were, will create new jobs and will stimulate the atrophying hard manufacturing sector of the American economy. Then there’s the carbon neutral argument which is just a bit disingenuous in respect to current production techniques but which always sounds encouraging.

So why not ethanol?

The economics of ethanol are indisputably better than those for hydrogen which had zero emissions going for it and absolutely nothing else. The hydrogen economy was like human life extension. It was an idea everyone could warm too, but which couldn’t be implemented with current technology, and very possibly, not with any technology that would exist in the next quarter century. Ethanol is much less of a stretch, and indeed was extensively used as a fuel at the beginning of the automotive age in the early twentieth century when the extent of oil resources was largely unknown and automobile manufacturers, in many cases, were unwilling to predicate their businesses on the uncertainties of future oil supplies.

So why not ethanol? What are the obstacles and problems that could derail this latest world energy initiative.

As in the case of hydrogen, we find the degree to which energy incumbents and other industrial constituencies as well as governments themselves are committing to ethanol disquieting. As with the hydrogen, the whole idea is to preserve the economic status quo as much as possible. Let the major automobiles switch to flex fuel. Let the largest chemical companies finance ethanol plants. And let the oil companies distribute the product. All very sane, orderly, and rational, and all very contrary to the way in which energy revolutions have proceeded in the past. Maybe there’s no way that entrepreneurship and sheer market forces can make a revolution anymore, but we’re not quite ready to believe that yet.

We don’t think that bureaucracies, whether corporate or governmental, manage revolutions very well. And a major reason that they don’t is that they pursue a course of trials, pilots, and “rational planning” that results in technology lock-ins, that is, commitments to failed technologies long after their failures have become apparent—witness the case of automotive fuel cells which now, it appears, are never going to happen.

One thing we’re seeing in the many government and academic reports we’ve been reading on alternative fuels is an insistence that manufacturing processes can’t scale downward, that ethanol or other alternative plants have to be immense to be profitable. We’re not convinced that this is true, even at present, and we’re absolutely convinced that designing for immense production volumes is absolutely the wrong way to launch an industry. Those with a real faith in alternative fuels need to start small, need to identify niches, and need to forget pilots and proof of concept. After all, most of the early aviators never wore parachutes.

Ethanol may in fact be the best choice available to supplement refined petroleum products, but we’re not absolutely convinced of that. The only way to manufacture ethanol that is cost competitive with petroleum at present is to use cane juice, and the restriction of cane to tropical regions means that that method can never meet the needs of the global transportation industry. Ethanol can also be made from grains, coal, natural gas, and from forestry and agricultural wastes—so called cellulosic ethanol—but the economics for these other methods are unproven except for the case of grain. Cellulosic ethanol has been mightily hyped, but it is debatable as to whether any of the technologies for producing it are fully mature. Many studies indicate that cellulosic ethanol carries much higher capital and operational expenses than grain ethanol although the feedstock of course is cheaper.

Liquid fuels that are chemically very close to petroleum based gasoline and diesel and are based on unconventional fossil fuel feedstocks and/or biomass can be manufactured by many different processes, including pyrolysis, gasification, plasma treatment, steam reforming, hydro-thermal upgrading, anaerobic digestion, and other completely proprietary techniques and some of these rivals may offer better economics than cellulosic ethanol. But the money is going to ethanol, and we may be facing a technology lock-in if the investment continues without a serious debate.

Thank God, the lock-in never occurred with hydrogen. It eventually became obvious that the economics were unfavorable, and the stream of investment began to dwindle. What was left was a bunch of pilot hydrogen fueling stations but no extensive infrastructure. But with ethanol the cost of production today is sufficiently lower that a heavy reliance may be established, followed by a crisis as the economics fail to prove out.

While we hesitate to suggest policy initiatives, we believe that whatever liquid fuel proves most feasible, the usage of liquid fuel, especially in transportation must decline precipitately. More reliance has to be placed on stored electricity in personal vehicles, and innovative forms of rapid transit have to be initiated on a fairly wide scale. Such measures would give the industrial world a fighting chance while truly sustainable energy technologies are perfected—and, incidentally, we don’t believe that simply building a million wind turbine constitutes any permanent fix for our energy needs.

That sane measures will be taken cannot be assumed, however. They generally haven’t been in the past when societies have faced resource crises. Rather the tendency is to pursue ultimately destructive practices for short term gain until the society collapses. Clive Ponting’s brilliant “A Green History of the World” is a comprehensive historical examination of resource depletion in every region of the world, and it suggests that go-for-broke rather than save-for-the-future is norm for our species. Anyway, we anticipate an interesting decade ahead in the liquid fuels business.