Block’s Indicator of Sustainable Growth

by Ray Block

Extreme views all too often dominate discussion on climate change policies. The Post Carbon Institute (January 13 2008) in the US, a green group released a political pamphlet calling for an immediate end to a fossil fuel dependent economy, with a series  of “bold measures to  electrify the transportation system, rebuild the electricity grid, relocalise the food system, and retrofit the nation’s building stock for both energy efficiency and energy production.”

All worthy aims, but totally impractical in terms of the current economic and financial malaise, which sums up the struggling US economy. Over a period of time, a number of major reforms can be achieved, but certainly not all at once, when the economy is bleeding 500,000 job losses a month.  America has been able to get by, with a lot of band aids for a long time, but no longer can it afford to continue that way.

There is no attempt to cost the Post Carbon Institute’s program. But it would run into tens of trillions if not more, and the US, the world’s largest debtor nation cannot fund such huge outlays at this time.

The other extreme is posed by another US study group called the Institute for Energy Research. IER is totally opposed to any attempt to limit carbon emissions, or atmospheric pollution. Having finally parted with the environment sceptics in the Bush camp, there is no way a return to such attitudes will be accepted. Their two part plan would be opposed by the Obama Administration. The program consists of the following:

Ø      Vow to defend jobs and investments against expensive, job-killing climate regulations.

Ø      Halt the attempt to regulate carbon dioxide using the Clean Air Act.

Ø      Renounce plans to bankrupt coal companies.

Ø      Denounce billions for projects that depend on significant taxpayer subsidies while potentially doubling of power costs.

Ø      Abandon all efforts to implement Federal Renewable Fuels Standard, and Low Carbon Fuel Standard.

Ø      End subsidies for all forms of energy.

Ø      Support exploration and energy production in Arctic National Wildlife Refuge.

Ø      Allow the exploration necessary to produce affordable energy from America’s oil shale resources amounting to an estimated 800 billion barrels of recoverable oil equivalent in oil shale in the western states.

Ø      Remove regulatory barriers to building the next generation of nuclear power.

As you can see, extreme views such as those from the Post Carbon Institute, or the carbon friendly Institute for Energy Research.are designed to confuse policy makers, not encourage the practical reforms needed. The IER would muzzle the growth of the jobs creating  renewable energy industries.

What do you think? Do you support either of the two policy extremes and why? I  would be glad to receive your replies.

by Ray Block

If you marry venture capital with renewable energy, you can’t help getting excited about the potential for some big new industries determined to move forward. Although the consequences of greenhouse gas emissions are unfavourable, I have faith in the entrepreneurial talents of the new crop of inventors to make major breakthroughs.

A series of reports on renewable energy by the Economist (June 19 2008) included pond scum as a possible replacement for gasoline.

Another name for green pond scum is the oil-filled green algae, now seen by start ups and venture capitalists alike as a hot sector to invest in. In first generation biofuels produced mainly from corn, and in the case of Brazil from bagasse, a by-product of sugar cane, there is a finite limit to the potential for growth. So far US farmers have enjoyed high subsidies to produce corn on prime land as a fuel stock for ethanol.  And the same high subsidies applies to the grain and sugar beet farmers in Europe

The American and European need for fuel security, to reduce dependence on foreign sources of crude oil needs to be anchored to a wider technology platform, than just relying on first generation biofuels, such as ethanol and biodiesel.. There are second, third and even fourth generation biofuels that don’t use prime agricultural land, which should be preserved for growing food, rather than tied up for fuel feedstock.

The US Renewable Fuels Standard (RFS) for 2009 provides for10.5 billion gallons of renewable transportation fuel in the form of ethanol be used as a transportation fuel. This target will increase yearly until 2022, when the RFS will rise to 36 billion gallons. Of this total, 15 billion gallons will be corn based and 21 billion will come from advanced biofuels like celluosic ethanol from woody materials and other sources.

There is a lot of enthusiasm by both prominent Democrats and Republicans for extending ethanol production as much as possible, although corn based ethanol is already absorbing 20 per cent of the US corn crop. There is currently no mention in the RFS for algae derived fuels as a source for a new renewable transportation fuel. President Obama showed keen interest during the election campaign in extending the Renewable Fuels Standard further.

Jason Pyle, CEO of the algae firm Sapphire Energy in an address to the 2^nd Annual Algae Biomass Summit in October 2008 said that there was a need for a united voice on algae lobbying in Washington, participating in the national debate about the need for technology neutrality. So that Congress could see the merit of widening the definition of the materials for use in the RFS to include algae and similar materials as suitable feedstock.  

Of the nine or 10 algae companies, three are outstanding at least in terms of the capital so far raised. Sapphire Energy is at the head of the list with over US$150 million, Algenol  has $100 million received  from a Mexican business partner Biofields, which is investing a further $850 million in a related activity.  Solazyme has also been rewarded with $75 million in capital, which is a sign of the keenness of venture capital interests in this sector. Algenol Biofuels is the most remarkable of all other algae groups dedicated to supply biofuels, for Algenol with 3rd generation technology is going to turn algae back into cheap ethanol, and compete directly with the corn based fuel. 

Sapphire Energy hails from San Diego, and was told at its commencement in 2007 that the company could draw as much capital as necessary to commercialise the technology as rapidly as possible. One of its shareholders is Bill Gates’s private group Cascade Investments, and one of the original investors continuing to invest is the venture capital group Arch Venture Partners.

Sapphire says that it has created a green biofuel close to crude oil, that can be processed by existing refineries into high octane motor spirit, transported through existing infrastructure, and would be on a par with gasoline in conventional vehicles. Rather than processing wild algae, Sapphire Energy combines sunlight, carbon dioxide, waste water and photosynthetic microorganisms to produce its renewable green crude, which is achieving a 91 octane rating while meeting fuel quality standards. The company is planning to build a demonstration plant in Las Cruces, New Mexico.

From automotive fuel to jet fuel is another leap, but the US commercial airline company Continental had a demonstration flight in January 2009 testing the fuel, which was found to be satisfactory. It used a two engine aircraft, one engine powered by a blend of 50 per cent traditional jet fuel and 50 per cent biofuel. The fuel prepared by Sapphire was a mix of algae and jatropha, the latter a drought resistant inedible oilseed bearing tree, that can grow almost anywhere, even on gravelly, sandy and saline soils. More test flights are planned, before the biofuel can be substituted for regular fuel.

Solazme based in South San Francisco is concentrating on a biodiesel product and expecting to be market ready by 2010 or 2012. It is the only company so far to get approval from the American Society for Testing and Materials for its algae based diesel, which has met the ASTM D-975 specifications for petroleum diesel fuels. Its brand name is Soladiesel RD.                                                                    

Venture capital, debt and US government research funding has enabled the company to invent a fermentation process for growing algae in the dark. When market ready, the company will have built a plant capable of producing about 100 million gallons of biodiesel. In January 2008, Solazme entered into biodiesel feedstock development and testing agreement to work on developing algae optimised to produce oils for use in hydrotreatment at a refinery.

Algenol Biofuels of Florida sets a new standard of turning algae back into ethanol, which is a new departure, because hitherto only biomass products such as corn and sugar have been used. Algenol has prepared the ground well, after 11 years of research and 10 years of securing patents. To make the fuel, the modified algae is enclosed in a bioreactor full of seawater and CO2, where the ethanol is produced, which evaporates and is piped out. The company is expecting yields of 6,000 gallons per acre per year, and expects to increase that figure to 10,000 by year end. The aim is to produce yearly up to a billion gallons of algal ethanol from a Biofields facility in Mexico. It sounds incredible, but if it is successful commercially, it’s all that matters.

Chris Morrison of Venture Beat reporting on Algenol has the last word. “The similarity between all these start ups is that they’re just counting eggs. None of those eggs, as of  yet, have hatched. So while the claims continue to get bigger, keep an eye on what’s actually growing. For some schemes, it’s bound not to be as much as they hope”

by Ray Block

 Over the last two years, Greenpeace has been condemning the palm oil cartel for being behind the destruction of the Indonesian Kalimantan Borneo rainforest. First came Greenpeace’s  report Cooking the Climate. A two year study linking the palm oil cartel with the international oil and fats producers, with the latter standing idly by, while the rainforest was being destroyed tree by tree to grow more oil palm. Also destroyed were colonies of orangutans and other animals, birds, along with the diversity of tropical plants.

In April 2008, Greenpeace openly accused Unilever, the British/Dutch margarine and specialty chemical supplier for its cosy relationship with Sime Darby, the diversified Malaysian oil palm plantation group and its downstream oil, fats and oleo chemical interests. Now the same wholesale destruction of rainforests is happening in the remote West Papua province.

Add these facts together. Malaysia and Indonesia control 85 per cent of world palm oil production and 98 per cent of world exports (2006-07 stats). Palm oil represents more than 50 per cent of the total world supply of edible oils and fats.

At the apex is the Malaysian Palm Oil Council led by the aggressive Dr Yusof Basiron, the CEO. Basiron acts like a mini OPEC chief wanting to dominate edible oil prices, as he did in November 2008, when world prices of palm oil was considered too low. The agricultural ministers of both Indonesia and Malaysia agreed to initiate a 300,000 hectare replanting program, that will replace aging trees with seedlings of higher yielding varieties.

The seedlings will begin to bear oil palm fruit for harvest in three to four years. This stratagem reduces overall supply over a period of weeks, and some years later when prices will be substantially higher after the world recession, supply will rise dramatically.

Yusof Basiron hates the position taken by environmental scientists, who persist correctly in comparing the biodiversity of oil palm plantations with the former rainforests, which have been ripped out for oil palms. Mongabay.com, an environmental site, which is a strong supporter of tropical rainforest conservation (November 11 2008) reported a study published earlier in 2008. That showed oil palm plantations retaining less than one sixth the biodiversity of old growth forests, and less than a quarter of that in secondary forests.

What Basiron prefers to say is that “if a comparison is to be made, the biodiversity of the oil palm, an agricultural crop, should be compared with that of soyabean or rapeseed, corn or sugar cane, or other agricultural crops. “He rejoices in the fact that oil palm is the highest yielding conventional oilseed on the market- far outstripping the production per unit of area for rapessed and soy.

The Malaysian Palm Oil Council was also strongly supporting  a heavy handed move by eight developing countries, led by Brazil, Malaysia and Indonesia, which threatened to file a World Trade Organisation complaint against the European Union for its proposed legislation requiring imported biofuels to meet environmental standards. The EU ministers under pressure from environmental groups and domestic biofuel producers had been considering measures to restrict imports of biofuels that fail to reduce greenhouse emissions. The impacts of environmental damage on forests are overwhelming, taking into account the consequences of deforestation – mud slides, and extreme flood conditions.

But some amends are being made with a new international carbon accounting standard, aiming to reduce carbon emissions. It is a voluntary carbon accounting standard, as it was excluded from the Kyoto Protocol. Currently, one third of global greenhouse emissions are coming from a mixture of deforestation (15-20 per cent), more than the global transportation sector, and agriculture makes up the balance.

Conservation International, a non government agency that has several forest carbon projects under development in tropical nations believes that the voluntary accounting standard will enable projects benefiting local communities and biodiversity to access significant new global investment.

Hopefully, the UN Framework Convention on Climate Change to be held in Copenhagen at the end of 2009 will include provision for avoided deforestation. A coalition of rainforest nations and some environmentalists are promoting recognition of forest carbon credits. Were this to happen, it would enable the funding of sustainable forest development for the benefit of the indigenous people who live there.

by Ray Block

 Wind energy in both Europe and the US is becoming a major source of alternative energy. The American Wind Energy Association (AWEA) reported on December 22 2008 that at the end of September, the US wind energy industry had reached an installed capacity of over 21 GW (21,000 MW), passing Germany in size to become world leader in wind generation.

US progress has been very rapid when you realise that since 2006, the American wind industry has doubled from a previous installed capacity of 10,000 MW. Growth of this order will continue in coming years, with the US Department of Energy believing that by 2030, the US wind industry will be supplying 20 per cent of the country’s electricity.

Wind energy will become much larger as an energy source, with the ability of combining batteries to store wind power. Xcel Energy is one of two US utilities, which are testing a sodium sulphur (sulfur) battery to store wind energy. They are trying it out in a 1,100 megawatt facility of wind turbines in Southern Minnesota. The utility reckoned that the experiment was worthwhile, because “the wind doesn’t always blow, and even worse, it often blows strongest when people aren’t using much electricity, like late at night.”

The smart grid software start up GridPoint has been mandated to employ its software to control the flow of power between an 11 megawatt wind farm and NGK’s one megawatt battery. For renewable energy such as intermittent wind, the sodium sulphur battery is going to be judged a great success. That’s because wind turbines only generate power when the wind blows, meaning they need backup, or “firming” power, such as peaking natural gas.

With the Japanese battery, the need for other peaking power is reduced. The use of batteries allows wind power to be stored when prices for power are cheap, and sold at peak prices in the afternoon to create a win win for wind power.

The (NAS) battery is made up of “twenty 50-kilowatt modules. The battery is roughly the size of two semi trailers and weighs approximately 80 tons. The battery is able to store about 7.2 MW hours of electricity, with a charge/discharge capacity of one megawatt. When the wind blows, the batteries are charged. When the wind calms down, the batteries supplement the power flow. Fully charged, the battery could power 500 homes for over 7 hours.”

Currently, the battery is solely produced by NGK Insulators of Japan in partnership with TEPCO (Tokyo Electric Power Co. There is a demonstration project of the NAS battery at Japan Wind Development’s Miura wind farm in Japan.

The battery originated in the US in the 1960s for use in electric vehicles, when General Motors intended to produce electric cars, and even Ford had an attempt at electric cars in the late 1980 using the battery.. While it wasn’t suitable for this use because of its operating temperatures of 300 to 350C, and the highly corrosive nature of the sodium polysulphides, the Japanese from 1983 onwards have been researching the unit with its suitability for large scale stationary use in grid storage.

The unique properties of the battery remains its high energy density, high efficiency of charge/discharge (89-92 per cent efficiency), long cycle life, and ability to be manufactured from inexpensive materials.

by Ray Block

In 2008, the standout investment was in solar energy, where it reached the milestone of generating revenue of $13 billion for the first time, with a venture capital injection in the September quarter of nearly US$1.6 billion. The year was marked with strong growth in both solar PV (photovoltaics) and solar thermal (also known as concentrating solar).

The forecast revenue for solar energy in 2012 is a cool $40 billion, so fast is the speed where renewable energy is now seen as a major growth industry. The key to growth in the PV sector is determined by those markets, which have mandated renewable energy targets, along with feed-in tariffs, which require electricity retailers to buy power from renewable energy sources at above market prices. Feed-in tariffs originated in the US in 1978, but were refined in Germany in 2000 and added to in Spain, which account for the rapid growth in renewable energy in those markets.

The eight year extension of US tax credits for renewable energy agreed to by Congress late in 2008 will be a big incentive for record growth in America, in spite of the gloom from the world wide recession.

While Japan and Germany continue to lead the PV sector with solar panels, the US is making a spirited run in innovation to leap ahead. Polysilicon is the preferred and traditional key raw material for most of the solar panels on world markets, given its exceptional efficiency in generating electricity. This where Japan, Germany and China dominate as the major world suppliers.

However, a number of exceptionally keen US solar firms believe that their development of thin film cells, which use little or no silicon in solar power is the way of the future in the ability to reach “grid parity.” That is when the cost of a kilowatt-hour of solar energy is about the same as one generated by any other fuel source. There has been a race among suppliers of thin film cells getting the cost of panels down to as low as $1 a watt.

Dwayne Lawrence in the Fast Company blog (December 12 2008) says that “if you have an acre of rooftop (or a 100 acre field), then thin film cells, which use nano size layers of silicon or futuristic metal alloys-either cadmium telluride (CdTe) or copper-indium-gallium-diselenide (CIGS) as the key ingredient to convert sunlight into electricity promise to do the job for a fraction of the cost.” The thin film cell market is full of startups, but second generation companies, led by Arizona based First Solar, is making the most rapid progress.

“First Solar has developed a CdTe panel for a production cost of $1.14 per watt, less than half the cost of its nearest rival at its debut.” The claim is that producers of second film technologies will grow its market share from 14 per cent to 28 per cent by the end of 2009. A new solar PV maker Nanosolar using CIGS cells  boasts that it will be able to sell solar panels for as little as 99 cents a watt.

Solar PV is already a 10 gigawatt industry world wide, and Fast Company suggests that another 10 gigawatts more will be brought online in 2010 alone. By comparison, solar thermal is as yet smaller in comparative terms, but it is about to grow much larger in a hurry. Solar thermal is largely a US invention for power station use in the generation and storage of electricity.

Solar thermal power is increasingly being used in California for peak power, where it is competitive with natural gas. America, Spain and Australia currently make up the solar thermal sector. The Solar Energy Industries Association (SEIA) reported that in the beginning of 2008, 419 MW came on stream in June 2007 with  Nevada Solar, the first utility scale thermal plant since the last Mohave Desert plant was completed in 1991.  

By April 2008, new solar thermal projects announced totalled 4 gigawatts, including the world’s largest, the 280 MW plant in Arizona. Renewable Energy World reported on September 2 2008, that in areas where cloud cover is minimal such as in desert and near desert areas, the technology is most suitable, if the price and site is right. These conditions exist in the South West US, Mexico, Brazil, Chile, parts of Southern Africa, the UAE, Israel, parts of China and northern Australia.

“A flat site is needed, near power transmission, amd ideally close to a load centre to avoid long  distance transmission, and where water is available for steam generation and cooling.” One estimate of future demand suggests that over 7000 MW of new power projects have been announced to the end of 2012, with Spain capturing 41 per cent of supply contracts, and the US 44 per cent. In 2004, Spain introduced a dedicated long term feed-in tariff of 27 eurocents/kWh for power from solar thermal power plants up to 50 MW. This is payable for 25 years, increasing yearly at inflation minus 1 per cent.

California has charged ahead with Governor Schwarzenegger’s green initiatives. The Governor’s latest move was to secure legislation for a high renewable energy target of 20 per cent by 2012, and 33 per cent by 2020. He is is now examining the practicality of mandating a solar requirement of 3 GW (3000 MW) of new solar power by 2015.

A recent US start up, the Australian Ausra group led by Dr David Mills, with 30 years of research in solar PV behind him, and now based in the US promises to lower investment costs, with the use of compact linear Fresnel flat mirrors to concentrate the solar radiation, instead of the more expensive conventional parabolic mirrors. Ausra also promises higher yield than the existing plants, and its plants occupy far less land, which means that its plants can be built closer to population centres, thus saving on grid costs of transmission. The company also says that it can generate electricity for 10 cents per kWh, close to the cost of using natural gas, and it expects the price to fall even further.

After completing a 5 MW solar thermal demonstration plant in central California in record time in October 2008, the company has now over $100 million in venture capital funding. Ausra has now firm contracts for at least 1000 MW of solar power in the next five years, with contracts with the utilities PG&E in California and for FPL in Florida. The company says there is a further 6000 MW in development.

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