Bill Ford mad about lack of cellulosic ethanol

Bill Ford, former CEO of Ford, gave some disappointing words at the progress of cellulosic ethanol at a presentation at the University of Michigan.

Here’s a takeaway from the NYTimes article:

“It certainly appeared a year ago that we were going to have a national push on ethanol, and we wanted to have the vehicles ready,” Mr. Ford said. “But we always knew that food-based ethanol would not be the answer. The shift to cellulosic ethanol has been slower than we were led to believe.”

He added: “If we don’t end up with cellulosic ethanol quickly, we are going to hit the wall on ethanol.”

Clearly, Bill is no scientist.

It’s a bit of a bad theme in this country about the prospects of technology. We have gotten so used to technological breakthrough being a given, that we mostly only give it a timeline – not the actual credence and uncertainty that are inherent to scientific discovery and commercial development.

Bill is right though. The auto industry really put the cart before the horse on the whole E85 thing. We couldn’t nearly had enough ethanol to supply even a nice little niche of the market given current technology. There way too much growth needed to happen in this industry, even without technology barriers. It really seemed, then, that Bill Ford (and perhaps the rest of the auto industry) really jumped the gun on this. Perhaps they’re renewed interest in hybrids is a hedge on this bet.

What is missing, however, is an acknowledgment that this technology is harder than most others that human beings have faced. Creating a fuel, altering biology, and turning photons into electricity are deceptively monumental tasks. These are the most basic of engineering questions that human beings have never really been able to extend. Remember, we’ve known how to make ethanol and biodiesel for decades. We didn’t know how to make it economically – and we still don’t. (That’s the real difficulty – the economics of it all, not so much the “technology”, or understanding the science. Or in other words, the science doesn’t scale in ways that are consistent with our sense of economy). Now that oil is becoming uneconomical, we’re forced to look at alternatives…and there aren’t good ones.

Tapping into nature’s energy flows is deceptively difficult to make economical. Human beings consume on scales significantly larger than any other animal on earth. Relying on technology to extend this reach will be daunting. We may actually have to change humanity instead.

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WSJ Videos from LA Auto Show

Interview with Bob Lutz of GM

Various “Green”Cars…and Lincoln.

V8 SUV wins green award
http://link.brightcove.com/services/link/bcpid86195573/bclid1312371556/bctid1312369929

…for all the press I give GM, they should pay me some kicks-backs. Unfortunately, I’m not affiliated with them at all (or anyone else for that matter).

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FCX Clarity

Honda unvelied its FCX concept hydrogen fuel cell car as the Honda FCX Clarity at the LA Auto Show. Rumor has it that there will be only around 100 produced – a “beta test” of sorts – and only be available for lease ($600/mo) to a select few customers in Southern California (Santa Monica, Torrance – my old stomping grounds – and Irvine).

(photos by CNet.com)

There are good reasons for the locality of this test. First, proximity to Honda. Honda’s USA R&D center is in Torrance, California. It’s had a solar-generated hydrogen refuling station at this center for several years that has served their initial FCX concept testers. Second, California has an initiative to develop several hydrogen fueling stations along the entire coast. Southern California has several in the planning stages making refueling more convenient for these users. Third, it’s close to Hollywood. Something tells me that someone like, say, Jay Leno or that crazy white-haired guy with the show where he and his wife show off all the sustainability stuff they have on their house. Hey – it’s cheap publicity and these people’s voices count weather its relevant or not.

It looks very much like the concept vehicle unveiled last year. It sports the more aggressive grill that Honda is putting on its Accord and Civic models. It also has a very nicely equipped interior with upholstery made of sustainable fibers. It’s quite the interesting vehicle.

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Cool Site: CARMA – Carbon Monitoring website mashup

CARMA is an interesting web mash-up of Google maps of polluting power plants throughout the world.

http://carma.org/

An intriguing point is the available API. It’ll be interesting to see what can be constructed with this application and what insights it may uncover.

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Range Fuels starts on new plant

RangeFuels is breaking ground on their new plant in Georgia. This facility will be their first commercial-scale test of biomass gasification and liquefaction.

Technology Review Article:

The Range Fuels plant, to be located in southeast Georgia, could be producing ethanol as soon as next year. It’s being funded by the U.S. Department of Energy (DOE) as part of the agency’s effort to increase the use of biofuels. The DOE is providing a total of $76 million to the company for the construction of its new plant. At first, it will produce 20 million gallons, eventually increasing that amount to 100 million.

and goes on to say:

Even if the cost of Range Fuels’ plant is twice as much as that of a conventional plant, or $80 million, the DOE is providing the lion’s share of the investment–money that Mandich says is “very important” to the success of Range Fuels. Such a heavy dependence on government financing, rather than on private investors, could suggest that commercially viable cellulosic ethanol remains a good way off.

What’s interesting about this comment is that it’s not all that important. While it’s probably not “fair” that Range Fuels gets the “Lion’s share” of their plant paid for by the government, they were one of only a handful who were selected as a viable use of the government program to finance cellulosic ethanol projects. So it’s still all on the up-and-up in the grand scheme of things – no one is getting kept out of the market because of it. And furthermore, $76 Million isn’t all that much money.

I also think the author is incorrect in their $2/gallon capacity number. I actually think it’s on the order of $5/gallon of capacity (for their first plant anyways). That would make the price tag around $100Million – $500Million range (Let’s say $150 Million). So that’s still a lot of money for a venture-backed company to put up. So the risk is properly appropriated to a variety of parties. Without this investment, projects like this would never take place.

Only in America. Only sometimes in Canada.

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Good Technology

More on the PSU Hydrogen Research
I posted an article on the research on hydrogen production done by Penn State a few months ago. A new article describes their novel research in more detail:

The researchers used naturally occurring bacteria in a microbial electrolysis cell with acetic acid – the acid found in vinegar. Acetic acid also is the predominant acid produced by fermentation of glucose or cellulose. The anode was granulated graphite, the cathode was carbon with a platinum catalyst, and they used an off-the-shelf anion exchange membrane. The bacteria consume the acetic acid and release electrons and protons creating up to 0.3 volts. When more than 0.2 volts are added from an outside source, hydrogen gas bubbles up from the liquid.

“This process produces 288 percent more energy in hydrogen than the electrical energy that is added to the process,” said Logan.

I’ll post more on this research in the future. But it sounds like a very compelling system performance.

Solar cell savings
Researchers in Japan have identified a method for producing solar panels that utilize significantly less silicon. The technology consists of hexagonally-shaped reflecting trays centered with silicon spheres. The innovation comes from the lower usage of silicon.

CV21’s solution was to place each of the one-millimeter-diameter silicon spheres in its own hexagonal aluminium reflector. These work like car headlights but in reverse, ensuring that any light hitting the reflector is directed toward the sphere. When this approach is used, even the underside of the sphere is utilized. The hexagonal shape of the reflectors allows them to be slotted together without dead space between them. “Effectively, these are mini-concentrators,” says Branz.

Read Technology Review article.

Bioengineered crop for cellulosic biofuels
Sygenta will trial a bioengineered form of corn that naturally produces its own bioconversion enzymes. Currently, breaking down cellulosic materials from corn (stover, etc) requires an expensive, hard-to-make enzyme. This is the primary hurdle for the production of ethanol from non-food feedstocks. Syngenta’s crop will produce its own enzymes reducing the cost involved in conversion into a fuel product (or otherwise).
Read the Biopact posting.

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What isn’t really news

Most of the research I do on the biofuels and bioproducts industry doesn’t end up in this blog. There are many reasons for this – mostly because what I read tends to be a bit more technical (although not as technical as I’d like). I tend to try and comment on things that are popular in the news that, I think, are important to these industries. My commentary tends to try and focus on the economics, technology impact, or misleading press.

But sometimes I omit things because after thinking about them for a while, they’re just not that important. Sometimes reading or watching the news is like reading a middle-school newspaper. Some things that get a lot of head lines just aren’t that important.

Take the latest one: Al Gore joins Kleiner Perkins Caufield and Byers.

While one would find this a significant movement, it’s really not. And for many reasons – not the least of which being that most VCs lose money or make very low returns (I’ll let you guess which camp Kleiner falls into). Al Gore isn’t an investor – I’m sure he couldn’t do one cap table or financial model.

But he is connected to policy-makers – a critically important component to any clean tech venture. But here’s the kicker: Kleiner already has access to all the important policy makers.

I’m reminded that Kleiner hired Colin Powell a couple of years back too. And I haven’t heard of him since the press release. Something tells me, this is all just a fundvraising publicity stunt. And as far as publicity stunts go, it’s a good one. I’m sure they’ll get a lot of takers to their fund.

Another favorite of mine to ignore is late stage rounds of funding. A Series C or D is a strange funding round. It means you’ve hit another important milestone…but you still need money. It’s like getting good grades as a senior in high school after you’ve already gotten into Northwestern. It’s nice…but nobody really cares anymore. You just better not fail or you can kiss Northwestern goodbye.

So who hit their later-stage funding? A123 for one. This company has great technology and a laundry list of corporate and VC backers. They just got another $30 mil from their VC backers. But is it news? Not really. News is when they finally get their battery for the Chevy Volt done and delivered.

Hope this helps.

So who’s gotten a Series C lately? Well…

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Car News

Hybrid Escalade
Yes, even rappers can be just a little more environmentally helpful. The 2009 Escalade Hybrid will use the same 2-Mode system that the Hybrid Tahoe/Yukon. It promises to improve overall fuel efficiency by 25%.
See Car & Driver Article.

Like the Tahoe and Yukon gas-electrics, the Escalade hybrid will be a two-mode hybrid that supplements GM’s venerable 6.0-liter V-8 with power from two electric motors. At low speeds, the vehicle can run on batteries only, the engine only, or a combination of both. At higher speeds, another operating mode engages the electric motors and the cylinder deactivation system for more efficient operation. GM claims that harmful emissions will drop significantly, and fuel economy will be boosted by some 25 percent compared with utes equipped with the 5.3-liter V-8. The fuel-economy disparity with the standard Escalade, which comes with the gluttonous 403-hp, 6.2-liter V-8, should be even more significant.

International Truck and Engine begins making Hybrids
From the Press Release:

The road to a better environment will now include greener commercial vehicles. International Truck and Engine Corporation, a Navistar company (OTC: NAVZ), announced today that it is the first company to enter line production of hybrid commercial trucks. As diesel fuel prices continue their volatility and engine emissions requirements tighten, International Truck and Engine is now producing the International® DuraStar™ Hybrid, a diesel hybrid electric medium-duty truck that provides customers with improved fuel efficiency and reduced engine emissions.

This is another sign that companies are betting on hybrids being commercially viable options. Unlike with passenger cars, commercial trucks are purchased specifically for the cost advantages with fuel economy being high on the list. This move is a welcome vote of confidence for commercially producing and supporting hybrid technology.

CNet Video on Biodiesel
An interesting CNet video on the production of biodiesel.

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CARB sues EPA

California Governor Arnold Schwarzenegger and State Attorney General Edmond Brown, Jr. are suing the US Environmental Protection Agency for failing to regulate green house gas emissions from motor vehicles.

From the press release:

“Despite the mounting dangers of global warming, the EPA has delayed and ignored California’s right to impose stricter environmental standards,” Attorney General Brown told a news conference at the state capitol with Governor Schwarzenegger and California Air Resources Board chair, Mary Nichols. “We have waited two years and the Supreme Court has ruled in our favor. What is the EPA waiting for?” Brown asked.

The ruling refers to the April Supreme Court ruling noting that it was constitutional for the EPA to regulate motor vehicle emissions. This was a very under-reported event in the media, but carriers very significant weight (TV personality Jim Cramer even called this event “Green Day” on his cable show and dedicated an entire week of programming to stocks that would be effected). This lawsuit underscores how serious the matter is (it too is being under-reported).

I wrote a post a while back about who is showing leadership in this struggle to curtail/eliminate the threat of global warming. The government of California (including Schwarzenegger) and the California Air Resources Board have, rather militantly, pushed for real policy change in air regulation. California is suffering from real, present-day threats from pollution and global warming and see it as an immediate imperative. Hopefully, this lawsuit will garner some action from the Feds. But something tells me that nothing really comprehensive will come out until January 2009.

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What’s going on at VeraSun?

VeraSun reported last month that they were delaying construction of their Reynolds, Indiana facility. This is in stark contrast to their release in July stating their plan to drive their available capacity to 100MM Gal/year. The reasons posted in their press release, then, seem a little sketchy and don’t quite make sense.

“We believe it’s important to be mindful of the current market conditions and manage our business accordingly,” said Danny Herron, VeraSun Chief Financial Officer and Senior Vice President. “Given the abrupt change in market conditions that have seen ethanol prices drop nearly 50 cents per gallon in the last 60 days, it is prudent for us to adjust our current pace of expansion. Due to Reynold’s early stage of development, we believe it is wise to suspend investment until the market provides an acceptable return.”

Market conditions? Fluctuating product pricing is the name of the game in this industry. When the hell do you stop the construction of a new, efficient, production plant (with a 30 year life span) because the current prices are a bit too low at the moment?

VeraSun has touted itself as the “low cost” producer of ethanol. So shouldn’t their operations reflect this strategic push? VeraSun could not have this strategic stance without knowing how to manage its growth strategy while mitigating price fluctuations. This is certainly the type of contingency that they should have planned for. Building a plant is a long-term decision. So this action, then, could not be due to a short-term drop in prices. There’s something more here.

VeraSun has some smart people running it. They should have known that high corn demand would drive up prices and that expanding capacity would lower the price of ethanol. The missing piece here is that this movement assumes that fuel demand will be flat or decreasing over the next, say, five years. And that’s what is strange. If this assumption is true, then many ethanol plants would need to shut down – presumably the least efficient – not just stopping this one facility. In fact, it would make more sense to finish this plant now (assuming it’s the most cost efficient from a technology standpoint) and shut down one of their least efficient facilities if it’s just a capacity issue. So from a rather basic economic perspective, this movement doesn’t quite make sense.

So it seems to me that this cessation of the construction of the plant is not because of low ethanol prices. So I would speculate that one (or some combination of all) of the following is the real reason:

(1) There is an issue pertinent to the local market/politics, etc that have made finishing this plant difficult

(2) VeraSun is running short on money and is trying to save a little bit

(3) VeraSun is planning to test/install a better technology in this facility that isn’t quite ready yet.

(4) Construction materials (materials, people, and equipment) are harder to come by and are raising construction prices.

Personally, I hope that it’s #3. It would explain the level of subterfuge in this press release, but also give some hope for the company.

But we’ll see.

And in full disclosure, I don’t own any VeraSun stock and don’t plan to in the near future.

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