Wednesday, May 7, 2008

Cellulosic ethanol gets a boost from Detroit 

A car company in search of a new fuel that doesn’t rely on corn? That’s the story according to a joint announcement by General Motors Corp. and Mascoma Corp. In a press release dated May 1, the companies said they have partnered to “develop cellulosic ethanol focused on Mascoma’s single-step biochemical conversion of non-grain biomass into low-carbon alternative fuels to help address increasing energy demand.” GM is providing an “undisclosed equity investment.”

Mascoma’s method for turning biomass into fuel is called “consolidated bioprocessing,” or CBP, and it relies on microorganisms and enzymes to turn biomass into biofuels. Mascoma says it is using proprietary microorganisms developed at the company’s laboratories in Lebanon, N.H.

The company says the CBP process lowers costs by limiting the additives and enzymes used in other biochemical processes. The company has an explanation and diagram of the process on its website.

Mascoma is testing the process now and expects to begin producing ethanol later this year at a demonstration plant under construction in Rome, N.Y.

GM says it cares about alternative fuels because it sells flex-fuel vehicles (FFVs) -- cars that can run on traditional gasoline or 85% ethanol. GM says that of the roughly 7 million flex-fuel vehicles on U.S. roads, 3 million are GM cars and trucks. But even though these millions of cars can use high ethanol mixes, almost all Americans with FFVs in their driveways or garages are actually just filling them with gasoline.

Mascoma, a privately-held company in Massachusetts, has raised equity from venture capital investments and “secured more than $60 million in state and federal grants.” Investors in the company include a who’s-who of venture capital firms: Flagship Ventures, Khosla Ventures, Atlas Venture, General Catalyst Partners, Kleiner Perkins Caufield & Byers, Pinnacle Ventures, VantagePoint Venture Partners.

Mascoma has also partnered with the University of Tennessee to develop a pilot facility in Tennessee to turn switch grass and wood chips into fuel. The plant is expected to be operational by 2009. It is one of three small-scale cellulosic ethanol biorefineries the Energy Department announced in April it was giving a total of $86 million over the next four years. The other two will be built by London-based Ecofin, LLC (in Kentucky) and RSE Pulp & Chemical, LLC (Maine), a subsidiary of Red Shield Environmental.

Interesting tidbits: The chairman and CEO of Mascoma is Bruce Jamerson. He was the president of VeraSun Energy Corporation -- a leading maker of ethanol from grain -- from 2003 to 2007; Mascoma was founded in 2005 based on technology developed by Drs. Lee Lynd and Charles Wyman in Dartmouth’s Thayer School of Engineering.

GM previously announced a separate investment in a cellulosic ethanol startup that “uses a thermo-chemical process to make ethanol from non-grain sources.”

posted by Stephanie Cohen | 9:12 pm
File As: Biofuels

Monday, May 5, 2008

... but in Kansas, proposed coal plants are nixed 

A veto by Kansas Gov. Kathleen Sebelius of two proposed 700-megawatt coal-burning coal-fired plants stands. According to news reports, members of the state House rebuffed the effort to override her veto of the power plants.

"The Kansas House voted 80-45, falling four votes short of the required two-thirds majority needed in the 125-member chamber to override the veto," according to the Lawrence Journal-World & News.

Speaker Melvin Neufeld, a Republican, reportedly kept the roll call open in the House for two hours and kept the chamber under lock-down (members could only leave with permission and had to return quickly) while proponents of the project tried to muster the needed votes -- to no avail.

But the two chambers of the state legislature were divided over the veto. On Wednesday of last week the state Senate overrode Sebelius’s veto 32-7, five votes more than the required two-thirds majority.

Apparently, the original rejection of the permit for a coal-fired power plant by the Kansas Department of Health and Environment marked the first time that any government agency in the United States cited carbon dioxide emissions and greenhouse gas concerns in rejecting such a permit.

 

Speaking at a Yale climate change event two weeks ago (I was in attendance), Governor Sebelius said she was opposed to the plants because much of the electricity they produced would be exported to other states (namely Colorado and Texas) while Kansas residents would be forced to live with the emissions pumped into the air and the effects of climate change.

Prior to the veto override vote, lawmakers approved a separate bill that would have increased the amount of energy from the project for Kansas residents from 200 megawatts to 400 megawatts.

According to the Energy Department, seven coal-fired power plants supply more than 75% of electricity to Kansas residents. Almost all of the coal used in Kansas’s power plants is shipped by railcar from other states -- mostly from Wyoming.

The Kansas supreme court decided in April to put on hold its review of the commission's decision blocking the power plants to allow legal challenges to be considered in district court and in administrative hearings involving the Kansas Department of Health and Environment, according to news reports.

posted by Stephanie Cohen | 3:41 pm
File As: Energy Policy

Friday, May 2, 2008

Indiana clean-coal plant price tag goes up... 

Duke Energy filed a report with the Indiana Utility Regulatory Commission updating the agency on the expected cost of completing a clean coal gasification power plant currently under construction in southwest Indiana. The company upped the cost estimate of the plant by $365 million to $2.35 billion. This translates into a 2% rate impact for customers between 2008 and 2013. Duke president James Turner said the increase was similar to increases for other types of buildings. The plant is located in Edwardsport, Ind. and is expected to be completed in 2012. The 630-megawatt plant will use integrated gasification combined cycle technology. That total cost will be offset by about $460 million in local, state, and federal tax incentives.

posted by Stephanie Cohen | 12:53 pm
File As: Energy Technology

Friday, April 18, 2008

Why Switchgrass? 

Panicum virgatum and American energy policy

On Wednesday of this past week, the Department of Energy (DOE) released a report — first prepared and published in the summer of 2007 by Lynn Wright — titled Historical Perspective on How and Why Switchgrass was Selected as a “Model” High-Potential Energy Crop. The report is a detailed, chronological look at how the United States came to focus on switchgrass as a potential fuel source. It reveals how an unheard-of crop came to be mentioned by President Bush in his 2006 State of the Union address and has since become a symbol of the biofuel revolution.

Switchgrass may have seemed to come out of nowhere in that speech, but Wright shows it has interested alternative-energy analysts for a surprisingly long time. DOE started developing biomass resources as early as 1976 when its Biomass Systems Branch funded several studies on sugar crops, agricultural residues, wood energy farms, grains and grasses, and aquatic plant production. In 1977, the department co-funded a field study with the Department of Agriculture on woody crops, sugar cane, and tropical grasses. This led the Energy Department to established its own energy crop research effort.

Wright points to the “screening trials” funded by DOE in the late 1980s and early 1990s as a key development in the department’s efforts to assess the potential of so-called energy crops. The agency funded research projects looking at 34 species on 31 different sites spread over seven states in crop-producing regions of the U.S. The research was conducted by six universities and one private company.

In 1984, the Herbaceous Energy Crops Program was launched to focus on “grass and legume herbage” that could be grown in the Southeast and Midwest states. The focus was on these sources because a government report had identified them “as second in size only to wood.”

Wright finds that while “several species were identified as having merit for further development,” a majority of the groups conducting research identified switchgrass as “having high priority for further development.”

The results of these trials, along with assessments by Oak Ridge National Laboratory’s Biofuels Feedstock Development Program (and funding limitations — of course), led to a decision by DOE in 1991 to invest in switchgrass as a “model” or “prototype” bioenergy crop.

In a 1992 report, the Biofuels Feedstock Development Program justified the decision to focus on switchgrass, saying that the annual yields from these crops on test sites were “well above the production level considered prerequisite for a successful biofuels industry.” The potential land base for switchgrass was also believed to be large, namely the 48 million acres of marginal land that has severe restrictions for conventional crop production:

As a widely adapted endemic species of the tall grass prairies, switchgrass has demonstrated a capacity for high yields on relative poor quality sites.... Research at Virginia Polytechnic Institute and State University has shown that ... switchgrass has a significant capacity to improve soil quality by sequestering carbon belowground. Improved erosion control, reduced fertilizer and pesticide requirements and a capacity for providing wildlife cover are additional positive environmental attributes. An important quality of switchgrass is its strong potential appeal to landowners, for whom cultivation of a perennial crop that can be grown, harvested, and stored with conventional equipment represents an easy interface with current agricultural practices.

In short, part of the potential promise of switchgrass was that it could be produced using land in danger of erosion — and could even help protect the soil.

Following the decision to focus on switchgrass in 1991, the Energy Department kicked off a decade-long study of switchgrass at ten institutions.

Fast forward to 2007: “It is very apparent that while switchgrass may not be a perfect energy crop (and there may not be a perfect crop),” Wright says, it is clear today that it is “one of the more sustainable feedstocks for the production of renewable alternative fuels in the U.S.”

Wright points out that while the Energy Department decided to focus on switchgrass because it was an “environmentally and economically sound choice for many parts of the country, it was not a clear winner in all locations.” Wright also points that research conducted specifically to improve switchgrass as a “model biomass energy crop during the 1990s has been very successful in improving its potential as a dedicated biomass energy crop.”

In 2006, a paper published in Science brought attention to “mixed grassland biomass” as an environmentally preferable, low-cost alternative resource for bioenergy, Wright notes. The paper focused on the energy input/output comparisons between growing corn grain for ethanol, soybeans for biodiesel, and grassland crops for biomass electric, biomass ethanol, or biomass synfuels. The grassland-crop-based systems were shown to have significantly higher net energy balances than either the corn-grain-to-ethanol or soybeans-to-biodiesel systems.

posted by Stephanie Cohen | 10:54 pm
File As: Biofuels

Wednesday, April 16, 2008

The Curse of Oil Wealth 

In an article in the new issue of Foreign Affairs (“Blood Barrels: Why Oil Wealth Fuels Conflict”), UCLA political scientist Michael L. Ross argues that while the world has generally grown much more peaceful over the past fifteen years, oil-rich countries are a mess.

How do we know the world is more peaceful? Ross looks at the number of civil wars: at the end of the Cold War there were seventeen major civil wars going on in the world (meaning civil wars in which more than 1,000 people were killed). In 2006, there were just five. The number of “smaller conflicts” also dropped 18 percent from 33 to 27 over the same period.

But Ross’s main thesis is that “despite this trend, there has been no drop in the number of wars in countries that produce oil” and “oil-producing states make up a growing fraction of the world’s conflict-ridden countries.” The main reason, according to Ross, is that oil wealth often wreaks havoc on a country’s economy and politics, makes it easier for insurgents to fund their rebellions, and aggravates ethnic grievances.

Ross tries to weave the Iraq war into his essay, writing that “according to some, the U.S.-led invasion of Iraq shows that oil breeds conflict between countries, but the more widespread problem is that it breeds conflict within them” (emphasis added).

And the correlation between oil and violence is likely to grow stronger, since as Ross points out, countries in Africa, the Caspian basin, and Southeast Asia will soon become “significant oil and gas exporters. Some of these countries, including Chad, East Timor, and Myanmar, have already suffered internal strife. Most of the rest are poor, undemocratic, and badly governed, which means that they are likely to experience violence as well.”

Ross is careful to point out that “oil is not unique; diamonds and other minerals produce similar problems.” And he makes clear that oil does not guarantee strife: “Oil alone cannot create conflict,” and indeed, “almost half of all the states that have produced oil since 1970 have been conflict-free.”

Nevertheless, there almost seems to be what Ross calls an “oil curse.” Great oil wealth often deprives a country “of the benefits of dynamic manufacturing and agricultural bases ... leaving it dependent on its resource sector and so at the mercy of often volatile international markets.” And a sudden glut of oil revenue can be highly disruptive: “Few oil-rich countries have the fiscal discipline to invest the windfalls prudently; most squander them on wasteful projects.”

Oil wealth, Ross writes, “both exacerbates latent tensions and gives governments and their more militant opponents the means to fight them out.” International sanctions are likely to be useless to quell the violence in countries where deadly conflict has broken out, since the coffers in those countries are flush from oil revenue. And the solution Ross considers ideal — essentially making those countries poor again and challenging them to find a new source of revenue — is, he concedes, not very realistic. Instead, he proposes a mix of other mild and meek solutions, including encouraging the governments of resource-rich states to be more transparent; having oil-importing countries like the United States disclose where their petroleum supplies come from; and help oil-exporting states better manage the flow of their oil revenues. And in some cases, Ross notes, “the best way to steer clear of the oil curse may be not to sell oil for cash at all but to trade it directly for the goods and services their people need,” as Angola and Nigeria are attempting to do.

Again, Ross’s article can be read here.

posted by Stephanie Cohen | 9:26 am
File As: Energy

Wednesday, April 16, 2008

Biofuels and the Price of Food 

 

Also at the White House press conference on Monday (previously discussed here), Press Secretary Dana Perino was asked about worldwide food shortages and whether President Bush feels “any responsibility himself for that, because he’s been such a hard backer of ethanol,” specifically corn-based ethanol which some claim is driving up the price of food.

Perino responded:

There are a lot of factors that go into higher food prices or food shortages in countries that need help in order to feed their populations. One is demand; demand is extremely high. You also have transportation costs. And of course energy costs come into that, when people are trying to move food from one place to the other. In addition, you have weather-related events, such as the drought in Australia, in which their wheat crops have been not as fruitful as in the past, and so the prices have gone up there.

We recognize that moving from an oil-based economy to one that’s based more on renewable or alternative fuels is going to be one that requires a transition period. That’s one of the reasons that the President, in the State of the Union in 2006, suggested that we move to cellulosic ethanol, which, as you remember, the famous line of using switchgrass or wood chips.

But that technology is advancing, and the President was able to go to a Dole plant where they were showing how to — I’m sorry, I’m not sure if it was Dole, excuse me. I can’t remember the name of the plant, but I remember going to the event, and looking at how the scientists were approaching this issue with gusto, with a lot of money behind them, because there is going to be demand for alternative fuels, because we realize that we have two problems: one, we are too dependent on foreign sources of energy; and two, we have environmental concerns that we want to address.

The question came amid reports of riots in Haiti, Bangladesh, and Egypt (along with recent reports of riots in Senegal, Cameroon and Côte d’Ivoire) over the soaring costs of food. The White House said Monday it planned to make $200 million in emergency food aid available through the U.S. Agency for International Development.

Also on Monday, Jeffrey Sachs, director of Columbia University’s Earth Institute, spoke out against biofuel policies like the U.S. mandate to produce corn-based ethanol: “We’ve been putting our food into the gas tank — this corn-to-ethanol subsidy which our government is doing really makes little sense.”

At the moment, no one is questioning whether there is a global food crisis. The debate is over why food prices are surging so suddenly now and how much can be attributed to increasing demand for biofuels. An article in the Houston Chronicle on Sunday had this take on the situation: “According to the head of the United Nations Food and Agriculture Organization, Jacques Diouf, the world’s poorest countries can expect the cost of imported food to rise 56 percent, even though the world’s cereal production is forecast to increase slightly. That will spell extreme hardship for developing countries that already spend a large portion of their gross domestic product to buy food from abroad.”

New York Times reporter Andrew Martin offers a “news analysis” piece on the food versus fuel debate titled, “Fuel Choices, Food Crises and Finger-Pointing.” As Martin points out, it is difficult to figure out how much of the rising price of food can be attributed to the growing demand for biofuels. “Many specialists in food policy consider government mandates for biofuels to be ill advised, agreeing that the diversion of crops like corn into fuel production has contributed to the higher prices,” Martin writes. “But other factors have played big roles, including droughts that have limited output and rapid global economic growth that has created higher demand for food. That growth, much faster over the last four years than the historical norm, is lifting millions of people out of destitution and giving them access to better diets.”

Martin points to C. Ford Runge, director of the Center for International Food and Agricultural Policy at the University of Minnesota, who agrees that it is “extremely difficult to disentangle” the impact of biofuels on food costs. Runge, it should be noted, co-authored an article last year on “How Biofuels Could Starve the Poor” (in the May/June 2007 issue of Foreign Affairs).

Martin also points to the International Food Policy Research Institute (IFPRI) in Washington, which has suggested “that biofuel production accounts for a quarter to a third of the recent increase in global commodity prices,” and a U.N. agency that predicted late year that biofuel production would increase food costs by 10-15 percent.

Meanwhile, at a press conference on Sunday (transcript here), World Bank President Robert Zoellick claimed there is a clearcut connection between biofuels and rising food prices: “Our work shows and other work shows, there clearly is an issue linked here with some of the food‑based biofuels that has got to be part of the puzzle.... I mean, the biofuels are clearly linked to what’s going on in the underlying energy market more generally, you also have changing diets. You have the higher energy price affect the ability to produce food.” Zoellick, who also addressed the subject last week (where he used food props, as pictured above) and in a recent NPR interview, has been referring to a new World Bank report that examines the connection between increased biofuel production and the rise in food prices. That report finds the following:

• increases in global wheat prices rose 181 percent over the 36 months leading up to February 2008;
• overall global food prices increased by 83 percent for the same period;
• food crop prices are expected to remain high in 2008 and 2009 and then begin to decline;
• from 2004 to 2007, global corn (maize) production increased 51 million tons, and biofuel use in the United States increased 50 million tons;
• U.S. wheat export prices rose from $375/ton in January to $440/ton in March;
• Thai rice export prices increased from $365/ton to $562/ton.

The report bluntly concludes that “increased biofuel production has contributed to the rise in food prices.” It specifically points a finger at U.S. policies and corn production:

Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for biofuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses. Other developments, such as droughts in Australia and poor crops in the E.U. and Ukraine in 2006 and 2007, were largely offset by good crops and increased exports in other countries and would not, on their own, have had a significant impact on prices. Only a relatively small share of the increase in food production prices (around 15%) is due directly to higher energy and fertilizer costs.

The World Bank report says the benefits of biofuels — energy independence, less reliance on oil, and reductions in emissions of greenhouse gases — “have to be weighed against the potential costs of rising food prices” and points to a recent IFPRI study that finds “most scenarios of increased use of biofuels imply substantial trade-offs with food prices. These trade-offs are dampened, although not eliminated, when technological advances in biofuel and crop production are considered.”

posted by Stephanie Cohen | 0:32 am
File As: Energy Policy, Biofuels

Tuesday, April 15, 2008

A Bush administration about-face on climate change? 

On Monday, the Washington Times shocked observers when it reported that President Bush is poised to “change course and announce as early as this week that he wants Congress to pass a bill to combat global warming.” According to the article, President Bush is supposedly preparing a list of “principles” to guide lawmakers and is going to call for legislation addressing climate change directly (as opposed legislation mandating higher vehicle fuel efficiency or promoting nuclear power plants, both of which are a step removed from direct cuts in greenhouse gas emissions, and both of which have been supported by the administration in the past).

The Times explains the administration’s reasoning this way: “Bush administration officials have told Republicans in Congress that they feel pressure to act now because they fear a coming regulatory nightmare.” A similar story was published by the Associated Press on Monday.

Energy and manufacturing industry leaders have been warning lawmakers for years of an increasingly complicated maze of state efforts to address greenhouse emissions and climate change and the need for firm federal regulations to guide industry investments. While Wall Street dislikes regulation, it truly hates ambiguity; it would rather get fixed regulations so companies can begin to prepare for change than endless speculation and waiting. “This is an attempt to move the administration and the party closer to the center on global warming,” the Times quotes an administration source close to the White House who is familiar with the planning. Such a move could also bring the administration closer to Senator John McCain’s position on climate change.

It’s worth noting that nothing in the Times story comes out and clearly says the president is going to announce support for mandatory greenhouse gas emissions reductions, which the administration has consistently opposed. White House Press Secretary Dana Perino, when asked questions about the stories at the White House press briefing on Monday referred to establishing a “national goal.” She said the “regulatory path that we are on right now is not sustainable” and “we aren’t necessarily against cap and trade proposals.”

But Perino wouldn’t commit the White House to support for a legislative proposal per se. “We are considering how to move forward on the regulatory path that we have. We are considering how to respond to legislative proposals that are in front of Congress right now,” she said when pressed on whether the White House was prepared to support a legislative proposal to address climate change.

Perino was then pressed again as to whether the White House will specifically put forward a legislative proposal on climate change:

Reporter: Has there been no decision whether to put forth legislation, or is there a decision to do that?

Perino: That’s true.

And later:

Reporter: Is there a package that you’re developing that’s primarily legislation, or is it more regulatory in whatever it is that you --

Perino: I would say it’s neither.

But Perino also would not say that an announcement isn’t forthcoming. Question from reporter: “Are you saying nothing will be coming out imminently?” Perino: “I’m saying that — no, I’m not going to say that. There could be something. I just don’t have anything for you today.” Asked whether the announcement might come on Earth Day — next Tuesday, April 22nd — Perino said: “It could be next week, it could be never. I just don’t have anything for you.”

Some Republicans see the White House’s apparent shift as bad news. “Republican members of Congress who were briefed last week let top administration officials know that they think the White House is making a mistake, according to congressional sources and others familiar with the discussions,” the Times reported. Lawmakers who are less-than-happy with the White House’s change-of-course (if it happens): Reps. John Shimkus (R.-Ill.) and F. James Sensenbrenner Jr. (R.-Wisc.), according to the article. One Republican source in the AP story noted that “‘The meeting [on the Hill] was set up to float a few trial balloons’ and it did not go well, with some participants viewing it as ‛political appeasement’ on global warming.”

Meanwhile, the Senate is slated in June to debate a bipartisan climate change bill authored by Senators Joe Lieberman, (I.-Conn.) and John Warner, (R.-Va.), that would cap greenhouse gas emissions. (You can see that bill, in PDF format, here.)

The White House has clearly been making some moves on climate change recently. Earlier this month White House Council on Environmental Quality Chairman James Connaughton (the administration’s go-to guy on climate change) confirmed that he had met with Rep. Rick Boucher (D.-Va.) and Rep. Fred Upton (R.-Mich.), respectively the chairman and the ranking member of the House Energy and Commerce Subcommittee on Energy and Air Quality — the panel in charge of writing climate change legislation.

Ultimately, Perino refused to be pinned down on the issue when asked during Monday’s press briefing when an announcement would come. “We haven’t come forward yet and said definitively where we are, and that’s because we’re having a very robust discussion,” she said. She did, though, reiterate the White House’s opinion of the Lieberman-Warner bill, as well as of the general climate change regulatory framework:

Here in this country we are dealing with what we call a regulatory train wreck. We have several different laws that were never meant to deal with — to address climate change, heading down a path that we believe is not reasonable, nor sustainable, would hurt our economy, and is not good public policy. This would have the Clean Air Act, the Endangered Species Act, and the National Environmental Policy Act all addressing climate change in a way that is not the way that they were intended to....

We have been not shy about saying that we don’t support legislation that is currently on the Hill. We think that it would be bad for the economy, and that it wouldn’t — ultimately, it wouldn’t address the problem.

Perino noted that there will be a meeting with other major economic powers in Paris later this week that administration officials are slated to attend. The topic of climate change is expected to be on the table.

posted by Stephanie Cohen | 11:33 am
File As: Energy Policy, Environmentalism, Global Warming

Wednesday, April 9, 2008

Watching the country breathe 

The new YouTube video posted below uses computer modeling to show how and where carbon dioxide is expelled by U.S. industrial and mobile sources that rely on fossil fuels. The video is the result of Project Vulcan, funded by NASA and DOE, and researchers at Purdue University. The video has received widespread attention for its visual impact: by overlaying a map of the United States with the high-speed animation of CO₂ emissions, it creates an impression of life — like you’re watching the country breathe.

According to Purdue, Project Vulcan is expected to complement a CO₂-monitoring satellite that NASA is slated to launch late this year. According to the researchers involved, Project Vulcan reveals new details about the sources of CO₂ emissions and the regions where emissions are most prevalent. It “makes utterly clear...that CO₂ emissions cannot be exclusively affixed to SUV drivers, manufacturers or large power producers; everybody is responsible,” said Kevin Gurney, an assistant professor of earth and atmospheric science at Purdue and the project leader. Although Gurney doesn’t want his team’s research “used to affix blame,” he hopes lawmakers will turn to it as they look for ways to address rising emissions levels. “Before now the only thing policymakers could do was take a big blunt tool and bang the U.S. economy with it,” Gurney said. “Now we have more quantifiable information about what is happening in neighborhoods, on roads and in industrial areas, and track the CO₂ by the hour. This offers policymakers something akin to a scalpel instead.”

posted by Stephanie Cohen | 6:09 pm
File As: Energy Policy, Environmentalism

Wednesday, April 9, 2008

Nothing left to eat? 

The impact of biofuels on the food supply and the environment

Peter Brabeck-Letmathe, chairman of the giant Switzerland-based beverage and snack-food maker Nestlé, told news outlets last weekend that if the world goes ahead and uses biofuels to replace 20 percent of the growing demand for oil products there will be “nothing left to eat.” Sound extreme — or maybe just extremely unlikely?

Nestlé, like many other companies, is concerned about the rising costs of raw materials used to make its products. Those rising costs are at least partially attributable to the growing demand for corn-based biofuels, which are in turn partly spurred by what Brabeck-Letmathe has angrily called “morally unacceptable and irresponsible” subsidies for biofuel production.

In a March 13 press release, Nestlé said,

During 2007 and in the current year, commodity markets have been characterized by sharp upward movements and increased volatility. This reflects strong global demand for food, accelerating usage of food raw materials for biofuels and the decisive presence in the market of non-traditional speculative players.

These higher costs for ingredients “forced” the company to “advance price increases for finished goods in order to partially absorb the higher input costs.” The result: an “outstanding organic growth rate for the first two months” of 2008. As the Times of London noted: “Nestlé is making money from the soaring cost of commodities, with the Swiss multinational forcing consumers to absorb the higher price of its food products containing milk, cocoa, coffee and cereals.” It’s far from clear that biofuels will be bad for Nestle’s bottom line.

Perhaps more worthy of consideration is a new study in the Proceedings of the National Academy of Sciences suggesting the biofuels boom in the U.S. will lead to more nitrogen from fertilized cornfields flowing into the Mississippi and Atchafalaya Rivers and then gradually making its way down to the Gulf of Mexico each summer. The authors, Simon Donner of the University of British Columbia and Christopher Kucharik of the University of Wisconsin, are concerned that growing more corn to produce ethanol as required under the U.S. federal government’s biofuels mandate will load the rivers with nitrogen and increase the size of the huge “dead zone” in the Gulf — the area of low-oxygen waters caused by nitrogen pollution from the Mississippi. The U.S. biofuels mandate will lead to more corn being grown to produce more ethanol (36 billion gallons by 2022) and more fertilizer being used in the process.

The study “is not an indictment of ethanol or biofuels, rather an analysis of the environmental effects of the preferred means of current ethanol production in the US (corn),” Donner said on his blog. “If biofuels were being produced on marginal lands without chemical fertilizer or from wastes, the story would be very different,” he added. The study concludes that “the projected expansion of corn-based ethanol production could make the already challenging goal of reducing nitrogen export by the Mississippi and Atchafalaya Rivers to the Gulf of Mexico practically impossible without radical shifts in feed production, diet and agricultural land management.”

Putting ethanol under the microscope has become a national mission — see Time magazine’s decision last week to label biofuels a “scam” — at a time when U.S. lawmakers are responding to pressure from environmental and national security groups to look for alternatives to oil, even less than perfect ones. If we want new fuels, we’ll have to make some hard choices, as Donner and Kucharik’s study makes clear. Every energy resource leaves its own footprint, and society will have to decide which ones it is willing to tolerate. Coal, nuclear, oil, and liquid natural gas terminals have increasingly been deemed unacceptable. What's left on the table?

In related news, a study published this week in Chemistry & Sustainability, Energy & Materials says George Huber of the University of Massachusetts-Amherst and his graduate students directly converted plant cellulose into “green” gasoline components — an alternative to bio-based ethanol that apparently uses less energy and could be available in the next five to ten years, according to ScienceDaily.

posted by Stephanie Cohen | 3:49 pm
File As: Energy Policy, Biofuels

Wednesday, April 9, 2008

Gas prices go up, driving goes down — then what? 

A new report (Motor Gasoline Consumption 2008) released April 8 by the Energy Information Administration (EIA), the statistical arm of the Energy Department, has the look of just-another-government-report-on-oil-prices-and-gasoline-consumption. But the short report — it’s only 14 pages — contains some interesting facts about Americans and fuel consumption today and historically.

First, the report makes the obvious point that higher gasoline prices are motivating consumers to drive less, and thereby to use less gasoline. And then come some surprising nuggets:

• The big picture: It isn’t the high price of gas alone that is leading to the drop in driving. It is the combination of high gas prices (specifically prices over $2.50 per gallon) and a slowing economy that has grabbed consumer attention and pocketbooks.
   
• The embargo reaction: “The 1973 oil embargo and the recession of the following year temporarily halted the upward trend in motor gasoline consumption, but then consumption resumed its upward march as the economy recovered and prices subsided.” Is there any reason to believe that today’s trend in consumer behavior will be permanent? Since there seems to be little indication that the price of oil will tumble sharply in the near term, perhaps consumers will become locked in to new consumption patterns.
  
  What’s more, consumer decisions to purchase more fuel-efficient vehicles will have some long-term impact. The EIA report notes that, following the Iranian revolution of 1979 and the 1980-1982 recession, the statistics for vehicle-miles traveled (the number of miles that residential vehicles are driven) resumed their upward march even though overall gasoline consumption was slowed by more fuel-efficient vehicles. “Gasoline consumption did not return to its 1978 peak until 1993, even though gasoline-powered vehicle-miles traveled had grown by almost 50 percent.”
  
  What differentiates the 1983-1993 pattern from the post-1997 pattern? There was little increase in vehicle fuel efficiency (miles per gallon) after 1997 and gasoline consumption growth was more than double than the earlier period.
   
• Baby boomers behind the wheel: The median age of the population on the roads has risen, so that most driving is now done by people age 26-55. “As the baby boomers aged, the proportion of the total population within these peak driving-demand years grew.” As the boomers age, however, some slow-down in the miles traveled is expected.
   
• American motorists are consuming less gasoline: In 2006, consumption grew 1 percent; in 2007, it grew 0.4 percent; and in 2008, it is projected to decline 0.3 percent. (Click to enlarge the graph below.)
  
  
  
  
• Bigger, not more: Since 1946, higher real income per household led to increased vehicle ownership, with some drop-off periods correlating to recessions. More recently, the continued growth in real income has gone to the purchase of larger vehicles rather than more vehicles — think light trucks, SUVs, Hummers.
   
• More ethanol in fuel tanks will mean less vehicle fuel efficiency: “The net energy content of ethanol is only 76,000 btu per gallon compared to about 114,000 btu per gallon for motor gasoline produced from crude oil refining. The increase in ethanol’s share of the total motor gasoline pool will therefore reduce average automobile fuel efficiency.”  (Click to enlarge the graph below.)
  
  

 

posted by Stephanie Cohen | 10:55 am
File As: Energy, Energy Policy, Transportation