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By Robert Rapier on Aug 23, 2009 with 1 response

Another Journalist Fails Due Diligence 101

I have had a number of people ask me about the E-Fuel MicroFueler, so at one point I did a bit of investigating. It is essentially a small still, but apparently has a fermentation capability if the feedstock contains sugar. However, they stress that it works best with wastes that contain alcohols (which a still would simply clean up) and they say in their FAQ that “under most circumstances consumers will contract with their dealer to service the MicroFueler and maintain a regular delivery and supply of feedstock.” What that means to me is that they will send you spoiled beer or wine, and the person who failed Economics 101 and bought one of these can then use electricity to turn the feedstock into alcohol. They can then tell those Arabs that they don’t need their stinking oil.

The unit lists for 10 grand, but they claim the government will gladly pitch in half the cost. I can’t tell you how pleased I am at the thought that the government is making such good use of my tax dollars.

They are also setting themselves up for a lawsuit when someone puts too much ethanol in their vehicle and damages the engine. Their website highlights a study suggesting that the optimal blend for an auto may be E20 or E30.

But today, a journalist who has absolutely no business writing about something like this wrote a very misleading story on the unit. And the reason the story is so misleading is that the journalist was completely out of her element and couldn’t tell how badly she was being duped. Yet it ended up in the Business Section of the L.A. Times:

Making fuel at home: Waste wine primes the pump

The subtitle states: “The MicroFueler makes ethanol out of organic waste in minutes. It can be installed at individual homes, and companies are eager to supply owners with garbage.”

There is so much wrong in this story, but I am going to focus on some choice excerpts:

It sounds too good to be true:

She could have stopped right there and applied the first rule of Due Diligence 101. It is easy to fool people when they are outside of their area of expertise. If she is not qualified to ask the right questions, then if it sounds too good to be true she probably should have dropped the story or pulled in an expert for an opinion. But alas, she continued:

The problem with ethanol, [inventor and CEO Tom] Quinn said, was energy inefficiency — not only in the carbon cost of growing, harvesting and transporting the corn that was used to make it, but also in the distillation process that turned it into usable fuel.

Yet ironically this system works best with waste ethanol that was produced using corn, and will be cleaned up with a distillation process that will be less energy efficient than the ones in full-scale ethanol plants.

“In the U.S. alone, more than 100 billion gallons of organic fuel is thrown out,” said Quinn, who reached out to ethanol scientist Floyd Butterfield to see if they could collaborate on a system that could make ethanol in a manner that was cost effective and better for the environment.

I would like to see a source for that. I do not believe it. Our gasoline demand is around 140 billion gallons per year right now, and I am to believe that we throw away an amount equivalent to over 70% of what we actually use? And I guess that would be this Floyd Butterfield? At the link Floyd tells the tale of having converted a truck to run off of pure ethanol. Once when he was running out of ethanol and wasn’t going to be able to make it home, he stopped and put 3 gallons of water in and drove the rest of the way home. This is great news, because the MicroFueler produces ethanol with 5% water.

As they say on their technology page, “E-Fuel scientists have experimented with multiple blends of ethanol and water and have determined, contrary to conventional wisdom, small amounts of water improve the efficiency of burning ethanol.” It occurs to me that they should sell this research to the government and the ethanol industry, which is currently spending lots of money to get that last 5% of water out.

Here is where the ignorance of the journalist starts to show badly:

The idea was to use organic waste rather than corn to make a product known as cellulosic ethanol. Although Quinn’s MicroFueler is most effective with wastes that are high in alcohol, ethanol “can be made out of any waste — lawn clippings, dairy products, old chemicals, cardboard, paper, bruised and discarded apples from the grocery store. It can be fermented and turned into fuel in minutes,” Quinn said.

First of all, this unit does not make cellulosic ethanol. To suggest or imply that it does is simply false. In fact, here is what they have on their website:

To further simplify the E-Fuel100 ethanol production for consumers, the MicroFueler supports a variety of organic waste as fuel (among them are discarded liquids rich in sugar, waste sugar, liquids with residual alcohol, cellulosic materials** and even algae**).

At the bottom of the page, we see this: **Additional processing outside of the MicroFueler may be required. May be? So you are telling me that I might be able to throw cellulosic materials or algae into this thing and get ethanol from those feedstocks? Well, all I can say is prepare to be sued for fraud.

So far, only one MicroFueler is up and running. It was installed in late June at the Pacific Palisades home of Chris Ursitti, CEO of GreenHouse International Inc., the San Diego firm that is distributing the units and supplying feedstock to those who install MicroFuelers at their homes.

Once you get a few more units out there, you better line up some good lawyers. You are certainly going to be sued for false advertising.

GreenHouse has contracts with Karl Strauss Brewing Co., Gordon Biersch Brewing Co. and Sunny Delight Beverages Co. to convert 29,000 tons of their liquid waste using MicroFuelers.

Though Ursitti is the only one now using the system, the plan is for a tanker truck to pick up the companies’ waste and deliver it to home-based MicroFuelers, which convert it to ethanol on site. MicroFueler owners are charged $2 a gallon once they pump out the fuel.

So, let’s get this straight. A brewing company has a bunch of liquid waste that contains alcohol. They aren’t going to clean up this waste themselves and recover the alcohol. Instead, they are going to put it in a tanker truck and haul that waste to people’s houses and dump it in their MicroFuelers. The owner of the MicroFueler, having paid $10K to buy one of these things, is now going to pay for the electricity and then pay another $2 a gallon for the finished product. They are then going to put it into their vehicle, hopefully in proportions that don’t ruin their cars. Wow.

Again, the journalist makes a patently false statement:

Converting expired beer and other liquid wastes into cellulosic ethanol takes minutes and uses three kilowatt-hours of electricity to produce one gallon of fuel.

How about some voodoo economics?

Factoring in the $5,000 federal tax credit, an annual household fuel consumption of 2,080 gallons and a $2 charge a gallon, GreenHouse estimates the average consumer payback time is about two years.

First off, they have just about doubled the annual household fuel consumption. There are an estimated 112 million households in the U.S., and our total gasoline consumption is about 140 billion gallons. That is 1,250 gallons of gasoline per household. But because of the lower energy density, I will have to replace that gasoline with around 1,800 gallons of ethanol (actually about 1,900 since it contains 5% water).

I am going to spend $5,000 on the unit since they assure me that I will get a $5,000 tax credit (hey, they haven’t steered me wrong yet, have they?) and I am going to pay $2/gallon plus electricity. So over the course of 2 years the average household would pay $5,000 (plus another $5,000 from the taxpayer) plus $3,800 (1,900 gallons at $2/gal) plus another $1710 of electricity (again, taking their word that it is only 3 kWh of electricity per gallon, and using $0.15/kWh) for 3,800 gallons of ethanol to replace 2,500 gallons of gasoline.

Today’s average retail price of gasoline is $2.64. So in two years an average household would pay $6,600 for gasoline. The total price over two years via this ethanol route (and I am assuming free feedstock and value for your labor) is $15,510. But if they are correct and we taxpayers get to kick in $5,000 (and why wouldn’t we for such a revolutionary invention?) then the cost is only $10,510. So much for a two-year payback. As I said, this is for those who failed Economics 101, and is being helped by a journalist who failed Due Diligence 101.

I will say that things have certainly changed a lot since Quinn and Butterfield were featured in the New York Times a year ago. At that time the unit was going to be fed sugar (which they were going to import from Mexico because of the cost), was going to cost only $1/gal, and when the alcohol was burned it was only going to produce 1/8th as much carbon as you would get from burning gasoline. Quinn was also certain that it would strike fear in the heart of the oil industry. Now a year later the unit prefers to be fed alcohol so it can produce alcohol, will cost $2/gal, and will produce almost as much carbon as one would produce from burning gasoline.

What a racket.

  1. By nonny mouse on December 1, 2010 at 5:12 pm

    So really everyone has this thing wrong. It’s like a roku box for fuel. You pay for the device and then a monthly service fee to actually use it. That certainly does strike fear into the heart of the oil industry. They have never been able to find a reliable way to do subscription fuel sales to the consumer which everyone who has passed basic finance knows that a constant revenue stream is better than a fluctuating one. Don’t count this ingeniously terrible economics out yet. You may be surprised what some people will pay for to feel better about their consumption habits.

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