Posts tagged “biofuels”
I just spent two weeks on the Galapagos Islands. Their economies are driven almost entirely by Eco-tourism. Like the rest of us, the people of the Galapagos Islands are utterly dependent on affordable sources of energy for their existence.
As a result of a fuel tanker grounding and attendant oil spill in 2001, a consortium of energy companies from the G7, calling themselves e7 (created to bring renewable energy to developing nations), funded the installation of three wind turbines on San Cristobal, an island in the Galapagos archipelago, to minimize the amount of fuel that had to be delivered to run the generators. They also created a trust fund for maintenance and eventual removal of the turbines at the end of their twenty year life spans.
My youngest daughter is studying in San Cristobal. Her class took a field trip to the power station shortly after my arrival. I sent along a list of questions.
The Energy Experts Reconvene at the WSJ
Generally when I find myself having to write a follow-up post to something I wrote, it’s because I obviously didn’t make my points clearly enough. I found this to be the case during a lively Twitter discussion following my latest contribution to the Wall Street Journal’s (WSJ) Energy Experts Panel. But I love these sorts of discussions because they help me hone the message I am trying to deliver.
This week the WSJ began publishing the latest round of answers to questions that were submitted to their energy panel several weeks ago. The first question answered this week was: What is the single biggest misconception people have about renewable energy in the U.S.?
First, if you don’t know about the WSJ Expert Panels, I explained that in some detail here. Essentially, the WSJ has groups of experts in different fields, and they pose questions on various topics. We are asked to write ~ 300-word answers to these questions, which often means leaving out caveats and/or clarifications. The answers are more detailed than the 140 characters allowed by Twitter, but some topics leave a lot of issues unaddressed with just a 300-word answer. CONTINUE»
Today I begin a series that looks at the recently released 2013 BP Statistical Review of World Energy. Because the past two posts have dealt with the Keystone XL pipeline project, I thought it would be a good change of pace to kick off this series by looking at the current global picture of renewable energy. Additional articles in the series will examine the world’s fossil fuel consumption and carbon emissions.
Overall, renewable energy once more displayed very strong growth in 2012. Renewable energy accounted for 2.4% of global energy consumption in 2012, and a record 4.7% of global power generation.
The only renewable energy sector that stagnated in 2012 was the production of biofuels. For the first time since 2000, global biofuels production declined. This decline was primarily a result of a 4.3% drop in the production of biofuels in the US (but I expect production will be higher for 2013).
US Ethanol Policy Should Reflect Circumstances and Consequences
This April, two separate bills were introduced in the US House of Representatives to reform, or repeal, the federal Renewable Fuel Standard (RFS) that mandates how much ethanol and other biofuels must be blended into gasoline.
To understand why reform or repeal makes sense now, we should recall the factors that led Congress to enact this standard six years ago and consider how many of the basic assumptions underlying its design have changed since then. That requires a review of US fuel consumption and import trends, commodity prices, and the impact of the RFS on food prices. After summarizing the other points I want to focus on the last one, based on an interview I conducted with Dr. Yaneer Bar-Yam, an expert on complex systems who has developed a model that explains the behavior of food prices since the introduction of the first, less ambitious RFS in 2005.
The military has been a leader in the development of biofuels – for good reason. As I’ve written before, the military’s single-source dependence on petroleum for fuel is a strategic vulnerability. Oil has a monopoly on energy supply for 80% of our military’s energy needs, including virtually all of the non-nuclear transportation. To simply accept that oil is going to remain as the sole source of liquid fuel that the US military relies on for its transportation, operations, and training is to say that we should accept the long-term strategic risks of price volatility and dependence upon uncertain foreign countries.
We should remember that, even if the military uses oil solely from the United States and its allies, the price that the Defense Logistics Agency pays for oil is largely set by global market conditions – and saying that those are highly vulnerable to conflict and unrest in the Middle East is an understatement.
Last year, in an attempt to address this threat, the Department of Defense, the Department of Agriculture, and the Department of Energy were authorized under the Defense Production Act (DPA) to support the development of an alternative source of fuel. The funding agreed in a joint memorandum, and appropriated by Congress, each agency will invest $170 million over three years in helping to build a domestic biofuel industry (read more about the DoD’s biofuels policy here). This funding will be matched by investment from the private sector. Over the past several months, the agencies have been deliberating over which companies will partner with the government.
The Navy’s Biofuels Program
In 2010 I conducted an interview with Tom Hicks, who is the Deputy Assistant Secretary to the Navy (Energy). During the interview, Tom described the Navy’s efforts in pushing for widespread availability of biofuels for Naval operations. He stated that sourcing alternative energy is a top priority for the Navy, and would enhance its war-fighting capabilities. He said the Navy sees itself in a leadership role in driving a transition to “homegrown, secure, independent sources of fuel.”
The goal, as described by Tom, is for biofuels to make a major contribution toward the fuel needs of the Navy by 2020. The Navy has embarked upon an initiative called the “Great Green Fleet” in which they would deploy a strike group on all alternative fuels by 2016. By 2020, the goal is for 50% of all of the Navy’s energy consumption to come from alternative sources. In pursuit of this initiative, the Navy is doing research, and testing and certifying all of their engines on renewable fuels. CONTINUE»
A recent article by George Monbiot explains one of the potential ramifications of diverting grains into fuel. Thanks to extreme weather around the globe:
”…this is also a year of food deficit, in which we will consume (31 million tons) more grain than farmers produced. If 2013′s harvest does not establish a new world record, the poor are in serious trouble.”
His main point is that thanks to a growing demand for food driven by an increasing population and improving standards of living, along with the conversion of grains into fuel, the world has to break harvest records every year to keep up. Thanks to grain reserves, humanity can weather years that don’t break records, but failing to break records for two or three years in a row means hunger for hundreds of millions because the price of food will spike as speculators capitalize on the fact that low supply relative to demand equates to higher prices. If weather extremes become more and more common, the odds of running out of reserves becomes more and more likely. (See more: Midwestern Drought, Ethanol, & Renewable Fuel Standard)
The European Union announced a major change in its biofuel policy earlier this week, making clear that new laws aimed at limiting crop-based biofuels to only 5 percent of transport fuel used in the region will soon be introduced, putting the biofuel industry itself in peril.
The decision is being made in order to allow room for so-called “advanced biofuels,” a source of energy made from waste products that the EU hopes will take the lead in the industry. This would allow more crops, such as grains and sugar, to be used to feed the world’s population, a cause that has been championed by groups influential enough to paint a negative public image of the biofuel industry at large. (See also: Are You Looking to Invest in the Google of Biofuels?)
The following article was written by Andrew Holland for Energy Trends Insider, a free subscriber-only newsletter published by Consumer Energy Report that identifies financial trends in the energy sector. Get you free subscription today.
The ethanol industry has seen its position in Washington severely weakened over the last year. The modern ethanol industry is a creation of Congress; the Renewable Fuels Standard (RFS), the ethanol tax credit, and a tariff on imported ethanol were all responsible for creating the ethanol industry we see today. We should note that this industry has seen some remarkable successes: it has replaced almost 10% of the country’s gasoline fuel supply, with an impact on prices that is marginal at best.
It is important to note that more advanced biofuels still receive tax support: cellulosic ethanol receives $1.01 per gallon in tax credits, but that is set to expire at the end of this year. A Senate bill would extend that credit for a year, as well as retroactively re-instate the $1 per gallon biodiesel tax credit that expired at the end of last year. The fate of these credits is up in the air, as Congress will have to consider a broad range of tax policy questions before the ‘fiscal cliff’ coming this year.
Last Wednesday, the Green Strike Group sailed during the international Rim of the Pacific (RIMPAC) exercises off the coast of Hawaii. These exercises are the Navy’s largest of the year, and feature participants from around the world. The reason, however, that this is important to clean energy investors is that the Navy could act as a market maker for the struggling biofuels industry. If the Navy guarantees its market over the next decade, there will be certainty for biofuels companies to make the investments necessary to reach commercial scale.