Block’s Indicator of Sustainable Growth

by Ray Block

I have written on algae three times before. It is back in the news.

This time, the emphasis is not on Sapphire Energy, but on Solzayme, the South San Francisco start up. With an additional $ 22 million from the US Department of Energy for financing demonstration scale facilities preparatory to scaling up to a commercial plant. The company now has a capital base of $100 million. This should be sufficient for it make a faster breakout than its peers to become a real supplier of diesel and aviation fuel. And not just in token amounts.

The problem so far has been the great  difficulties biofuel companies, outside the highly subsidised corn ethanol producers, are having in getting costs down to a point, where they can ever compete with conventional hydrocarbons.

I must confess that there is something appealing to me in algae, the humble pond scum, turning into a highly valuable commodity. And for good measure, you can make very tasty goodies out of it as well. Solazyme is gaining valuable cash flow in a sideline, which is quickly taking off.

Bryan Walsh writing in Time magazine (March 17 2010) says “the vanilla drink is the colour of butter and tastes almost as good- creamy and sweet, like a liquid pudding. Next I try a pair of golden cookies, lightly touched with sugar- they’re soft, chewy and filling. Last is a mustard dipping sauce, tangy, that coats a handful of pretzels with a pleasant honeyed zing.”

And to top it off for the health conscious, “the vanilla drink has 20 per cent fewer calories and 75 per cent less saturated fat than regular milk, while the dipping sauce has 74 per cent less calories and 85 less overall fat than average honey mustard dip.”

Unlike, Sapphire Energy, which grows algae by feeding it on carbon dioxide in sunlight in ponds, this is the process of photosynthesis to make the fuel, Solazyme feeds algae sugar fermenting it in a dark kind of beer brewing kettle.

The economics of production in the two systems are very different.

The open ponds and photo-bioreactor (PBR) techniques are infinitely more expensive. Says Joshua Kagan, who has researched algae in detail, Greentech Media(April 3 2010 “an algae strain must be identified and optimised for maximum growth. The correct location must be found, and as the algae grows, they need a constant supply of nutrients, C02, heat and light, which requires the consistent movement of water.

“Once the algae grows to a sufficient mass, it must be harvested, dewatered and dried before extracts of the oil can commence. These steps are energy and capital intensive. Once the oil is extracted, it is relatively simple to upgrade the fuel into jet fuel or diesel using traditional refinery techniques, but still costs an additional $0.25-0.40/gal. Taken together, algae grown in open ponds or PBRs are estimated to cost $8-$30/gal.”

The comparison to Solazyme’s methods of production could not be any greater, and it is also far more cost effective. By growing the algae in the dark, the energy costs of artificial light is avoided, and the fermentation process requires a fraction of the water usage. Another positive is that the strains of algae don’t require CO2, which depending on the location can be a big cost. Finally, removing the water isn’t an issue when grown in dark vessels.

Although Solazyme uses a lot of sugar to feed the algae, the company has a supply agreement with second generation sugar producer, BlueFire Energy to obtain sugars derived from non food sources.

The big advantage algae has is that it can double in size daily and account for approximately 60 per cent of the oxygen production on earth. By comparison with corn ethanol, harvesting yields the equivalence of 270 gallons per acre per year, compared with algae’s 1500-1800 gallons per acre per year.

Let’s hope that Solazyme’s dark vessel production method is as cost effective as they say, and commercial production is only around the corner.

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by Ray Block

I have often said that clean energy technologies will be among the very top investment drivers in the 21st century, just as the electrical, electronic  and telecommunications technologies have been to the 20th century.

The countries leading the new revolution in energy will dominate economic activity in coming decades. Evidence is mounting that United States is losing its economic leadership in clean energy, and the inheritor of this mantle is China.

And that worries me, because as the Stern Hu bribery and industrial espionage case demonstrates only too plainly how despotic the Chinese authorities are in treating industrial espionage, as theft of state secrets over an issue as low level, as bargaining over iron ore pricing.

Let me spell out three warning signs of the coming Chinese hegemony.

Keith Brasher, a long time New York Times correspondent in China (January 20 2010) said that China has vaulted past competitors in Denmark, Germany, Spain and United States to become world’s largest manufacturer of wind turbines, and in 2010 is poised to expand that lead.

Brasher also said that China has leapfrogged its competitors to become world largest manufacturer of solar panels.

The second warning sign comes from the Obama Administration energy secretary, Steven Chu, nobel prize laureate for physics, who in March 2010 told Stanford University students, a college where he had taught physics for 20 years, (E&ETV newsletter group March 9 2010), that other countries, mostly China, were outstripping US investments by a factor of 10.

“Our market share is 10 per cent on clean technology,” he said ticking off fuel efficiency, general auto technology, energy transmission equipment, energy transmission equipment and nuclear reactors as specific sectors, where the United States is severely lacking.”

“What’s China doing?” he asked. “Spending over $9 billion a month cleaning up and improving their energy efficiency. The (Chinese) state grid is spending $44 billion by 2012 and $88 billion by 2020 on transmission.”

The third warning sign comes from the report Who’s winning the clean energy race? by the Pew Charitable Trusts, with their partner Bloomberg New Energy Finance March 2010. 

The report  said that “for the first time in 2009, China took the top spot for overall clean energy finance and investment, pushing the US into second place. Having built a strong manufacturing base and export markets, China is working now to meet domestic demand by installing substantial new clean energy-generating capacity to meet ambitious renewable energy targets.”

In 2009, $162 billion was invested in clean energy globally. Of this, China invested $34.6 billion, almost double that of the US $18.6 billion, and more than four times the combined total of UK $11.2 billion, Spain $10.4 billion, Brazil $ 7.4 billion and Germany $4.3 billion.

The top 10 in investment intensity shows up United States in a less attractive light. Spain emerges as No1 on 0.74 % ; UK O.51%; China 0. 39%; Brail 0.37%; Canada 0.25%; Germany 0.15 %; Italy O.14 ; US O.13%.

“Relative to the size of its economy, the United States clean energy finance and investments lag behind many of its G-20 partners. For example, in relative terms, Spain invested five times more than the US last year, and China, Brazil and UK more than three times.”

by Ray Block

There is a political campaign in California to begin the unwinding of the far reaching reforms, which liberal Republican governor Arnold Schwarzenegger inspired and campaigned for to transform the state to a low carbon economy.

In the process of starting the transformation under Schwarzenegger, the state legislature passed trailblazing measures, never attempted before in the US. These included the Global Warming Solutions Act of 2006 to achieve a reduction of greenhouse gas emissions in the state by 20 per cent from 1990 levels by 2020. This act has not yet come into force.

Another positive step was the Governor’s executive order in 2007 to create the world’s first Low Carbon Fuel Standard (LCFS). This requires fuel producers reduce the carbon intensity of transportation fuels sold in the state by 10 per cent to 2020. The effect of this is to reduce greenhouse gas emissions by more than 13 million metric tons a year, equivalent to taking three million cars off the road.

The third positive was establishing California’s Renewable Portfolio Standard (RPS) by executive order to provide clear and permanent direction for the creation, delivery and servicing of the state’s renewable energy programs, while increasing the renewable energy use. The California Air Resources Board (CARB) will adopt regulations to increase the state’s RPS to 33 per cent by 2020.

The state’s leadership on energy conservation and the environment led to the first step to national Green Building Standards, which will serve as a foundation for commercial buildings worldwide. Another initiative was California’s encouragement to other western states in launching the Western Climate Initiative in February 2007. The other states taking part were the governors of Arizona, New Mexico, Oregon and Washington to develop a regional strategy aiming for a uniform approach to cutting greenhouse gas.

The states of Montana and Utah, and the Canadian provinces of British Columbia, Manitoba, Ontario and Quebec also saw the advantages of joining. The partners resolved to reduce greenhouse gas by 15 per cent below 2005 levels by 2020, and to build compatible systems to ensure that programs could be linked for maximum environmental benefits and at the lowest cost.

All these advantages are now at threat. Schwarzenegger retires as Californian governor in January 2010, having been elected in the November 2003 state wide Recall election, after the Democrat Grey Davis was removed from office of governor by a vote of 55.4 per cent. In a second ballot, Schwarzenegger was elected by 48.6 per cent of the vote.

The most likely successor as governor is expected to be conservative Republican Meg Whitman, the one time very successful chief executive of eBay. At immediate threat is to the Global Warming Solutions Act (this is AB 32, which mandates the reduction of about 30 per cent in the state’s greenhouse gas in 2020 from 1990 levels).

Although AB 32 is unlikely to come into force before 2012, conservative Republicans want to see a 12 month moratorium on its implementation. A separate call for a legislated stay on AB32 is a movement led by two ethanol producers based in Texas, who are spending freely to get sufficient signatures to require a special state election. This bar would remain in place, until the state unemployment fell to 5 per cent. They need to get 433,000 signatures for this special election, and hopefully they may miss out.

The fact that the not so “golden state”, with a jobless rate of 12.5 per cent in January 2010, compared to the national average of 9.7 per cent makes it a daunting task for any governor to deal with, however well experienced to restore balance to the economy.

Coupled with a potential state budget deficit of $20 billion, largely due to an undue reliance on state income taxes, with property tax reserved mainly for local government, it becomes a herculean task.

In May 2009, Schwarzenegger tried to get a raft of ballot measures carried by the state’s special election process to restore some balance to the budget process. The key proposition was to place a spending cap on the budget forcing the state to more than double the amount of funds it puts away in reserves for spending during times of economic difficulties. These ballot measures failed.

California’s chief justice, Ronald George (San Francisco Chronicle Feb 20 2010) trenchantly criticise the state’s legislative process saying “unrestrained ballot lawmaking is paralysing government.”

The state and its lawmakers “have been placed in a virtual straitjacket” by a requirement of a two thirds legislative vote to raise taxes, imposed by Proposition 13 in 1978. Ronald George said other ballot measures further tied legislators’ hands by reserving specified portions of state funding for public transportation and education.

This is where the threat to unravel Schwarzenegger’s renewable energy program comes in. If AB 32 is cancelled or rescinded, who is to prevent the unravelling of the rest of Schwarzenegger’s dream of a low carbon economy.

by Ray Block

My faith in climate scientists is restored. That is with the exception of the people at the Climatic Research Centre, University of East Anglia, who manipulated some data and exaggerated other data.

By comparison with those frauds, the heads of two highly respected Australian scientific bodies, Australian Bureau of Meteorology and CSIRO came together to express confidence in climate science.  Megan Clark, head of the CSIRO said: “We are seeing significant evidence of a changing climate. All of Australia has experienced warming over the last 50 years.”

“We are warming in every part of the country during every season and as each decade goes by, the records are being broken. Our records of the ‘70 were broken in the ‘80s, broken in the ‘90s and are also seeing fewer cold days. So we are seeing some very significant long term trends in Australia’s climate.”

“We are also seeing consistency. I think we can certainly look at the long term trends, what we are seeing in our rainfall, what we are seeing in the increase of carbon dioxide and methane in our atmosphere and of course, what we are seeing in our oceans.”

“So it is not just one measurement that is telling us. It is our observations and science that we are seeing in many areas being consistent.”

Bureau of Meteorology director Greg Ayres said the reality of climate change was clearly evident in Australia. “Australia holds one of the best national climate records in the world. The bureau’s been responsible for keeping that record for more than 100 years, and it’s there for anyone and everyone to see and analyse.”

So, there you are climate deniers. Eat your heart out.

by Ray Block

I have never been as excited in alternative energy technologies, such as wind and solar, as I am about fuel cells, now powering hydrogen fuelled vehicles. My interest here is in small stationary fuel cells, a segment of the market, which is starting to take off in a big way, although total revenue numbers are still small (under US$ 1 billion).

 As a reference source puts it modestly: “fuel cells are the perfect melding of benefits from energy sources.” They combine the benefits of easy refuelling and continuous operation potential of internal combustion engines, and the efficient and quiet operation of batteries. So they are the ideal energy alternative.

 They don’t require recharging as batteries do, and they are pollution free, unlike batteries and combustion engines. However, they do require refuelling, although this can be as simple as using low cost biogas.

 “Fuel cells work via an electrochemical reaction that converts the chemical energy stored in a fuel directly into electricity. There are five types of fuel cells, which utilise different electrochemical reactions, but the general process is always the same. Fuel is oxidised at the anode, electrons flow through an external circuit to do electrical work, and then fuel is reduced at the cathode.”

 The different fuel cell technologies are PEM (polymer electrolyte membrane); PA (phosphoric acid); SO (solid oxide); AFC (alkaline); (MC) molten carbonate; DM (direct methanol)

 Fuel cells first came to light back in 1838, when “William Robert Grove arranged two platinum electrodes with one end of each immersed in a container of sulphuric acid and the other ends separately sealed in containers of oxygen and hydrogen, a constant current would flow between the electrodes.”

 Fast forward to the late 1930s, when Frederick Thomas Bacon began researching alkali electrolyte fuel cells. During the second world war, Bacon worked on developing a fuel cell that could be used in Royal Navy submarines. In 1958, he demonstrated an alkali cell using a stack of 10 inch diameter electrodes for UK’s National Research Development Corp. Bacon’s fuel cells proved reliable and attracted the interest of Pratt & Whitney. The US company licensed Bacon’s research work for the Apollo spacecraft fuel cells.

 United Technologies Corp is the parent company of  Pratt & Whitney, and today UTC Power is a world leader in fuel cells using  the phosphoric acid technology.

 UTC Power’s latest 400kW fuel cell system is to be installed in Whole Foods Market 50,000 sq ft store, currently under construction in South San Jose CA). This will be the third Whole Foods fuel cell supermarket installation. “The UTC Power fuel cell system will generate 90 per cent of the store’s electricity needs and its thermal energy waste heat will be used for store heating, cooling and refrigeration for an overall efficiency of approximately 60 per cent, nearly twice the efficiency of the US electricity grid.”

The market research firm Fuel Cells Today says that to date more than 80 per cent of the small stationary market is held by companies producing polymer electrolyte membrane fuel cells (PEMFC).

As to the new sensation of Bloom Energy, with the technology of solid oxide fuel cells, which Science Daily (May 29, 2009) says has great potential for stationary and mobile applications. Stationary uses ranges from residential applications to power plants. Mobile applications include power for ships at sea and in space, as well as for autos. In addition to electricity, when SOFCs are operated in reverse mode as solid oxide electrolyzer cells, pure hydrogen can be generated by splitting water.

“The flaw in solid oxide fuel cells, which has delayed commercial production is in the integrity of the seals within and between power producing units. Composed of ceramic materials that can operate at temperatures as high as 1,000C (1,800 degrees F). SOFCs use high temperatures to separate oxygen ions from air. The ions pass through a crystal lattice and oxidize a fuel. The chemical reaction produces electrons, which flow through an external circuit creating electricity.”

“To produce enough energy for a particular application, SOFC modules are stacked together.  Each module’s compartments must be sealed, and there must be seals between the modules in a stack, so that air and fuel do not leak or mix.”

Bloom Energy, unlike other fuel cell systems makes a distributed energy system replacing the electricity grid, with its solid oxide fuel cells. The unveiling of Bloom attracted  around 900 articles in February 2009 in “unprecedented publicity” across major TV, newspaper and internet blogs. According to Google News, Bloom attracted one of the highest ever hit rates for a single product launch.

Commenced in 2002,   with sales of Bloom 100kW systems from 2009, the company will have its initial public offer in 2010, with John Doerr the doyen of venture capitalists of Kleiner Perkins Caulfield Byers, who floated Google so brilliantly, as the pivotal force behind the public float. Judging by the recent overwhelming successful IPO of Telsa Motors, Bloom Energy will be the big US float this year.

KR Sirdah, Bloom’s chief executive headed NASA’s fuel cells systems for use in the Apollo Mars probe, and when that mission was axed on the grounds of high costs, he took his scientific team with him. Bloom Energy located at Sunnyvale, Calif. first started raising venture capital in 2001, and was the first alternative energy company to be funded by Kleiner Perkins.

Four Bloom 100kV SOFCs have already been installed at Google’s Mountain View Californian headquarters. The 100-kilowatt modules are made of small flat 25-watt fuel cell wafers made of zirconium oxide that are stacked together.

This eliminates the problem of leaks, which as stated above, has slowed the development of this technology. The stacks are made of ceramics and metal. The Bloom box sells for US$700,000 to $800,000. Larger Bloom Boxes of 400 kW systems provides electricity to a Google building housing an experimental data centre, and similar systems are installed in Walmart’s stores.

 The company is also partnering with other blue chip companies,such as Bank of America; Coca Cola; Cox Enterprises (diversified media and communications group); eBay is said to have five Bloom Boxes; FedEx; Staples Center, (the Los  Angeles sports and entertainment landmark)  The Bloom box operates at high temperatures (over 600 C).