Turning Oil Into Salt (5): Alcohol as fuel

Given the low incremental cost of making vehicles flex-fuel, the key barrier to the liquid fuels half of the Open Fuel Standard aspiration is sourcing the non-oil-based fuel itself. The authors focus on two in particular, methanol and ethanol.

Their section on methanol is OK, but I still have questions around the feedstock. The throwaway line on biomass that “The raw material is plentiful, and most of the biomass products are currently discarded” is facile and unhelpful, as anyone familiar with the economics of biomass-to-power will know (the upshot is, not many plants are being built in the U.S. because the feedstock isn’t free and thus the economics aren’t great). Coal-to-liquids and gas-to-liquids technology is indeed fairly mature, but the current cost is not great and the GHG emissions (particularly for CTL) are terrible. And while the U.S. has abundant coal, their argument on gas sourcing is inconsistent, as I mentioned before.

Their section on ethanol is way off, and the worst part of the entire book. They correctly rail against ethanol tariffs, but become apologists for ethanol subsidies, calculating the absurd claim that $6 billion in ethanol subsidies reduced the world price of oil in 2008 by enough to save the U.S. alone $60 billion on fuel imports (“ten times the subsidy”). They misleadingly quote the energy requirements of gasoline vs ethanol:

The amount of fossil fuel in mega joules needed to make one mega joule of gasoline is 1.19 versus 0.77 for corn ethanol and 0.10 for cellulosic ethanol.

(That 1.19 includes the mega joule of energy from combusting the gasoline, which is why the wording is misleading.)

Even more flawed, though, is their thinking on the “food vs. fuels myth”:

How could that drastic increase in the price of food commodities from fish to rice possibly be attributed to ethanol? Nobody was growing corn in rice paddies or making biofuels out of fish.

Yikes. Agricultural commodities are largely fungible, like oil, from both the supply and demand sides. Increased corn cultivation reduces the land available to grow other cereals like wheat, and higher prices affect the prices of substitutes like rice as consumers shift their consumption patterns in response. Farmed fish are often fed corn, as are industrially-raised cattle, pigs and poultry, which are meat substitutes for fish. Ethanol is certainly not responsible for all of the rise in food prices, but the most credible estimates link it to ~30% of the rise in grain prices (more for corn and less for wheat and rice.

This lack of understanding infects their analysis of CO2 emissions from indirect land use change and deforestation. Yes, Brazilian sugarcane is not grown near the Amazon, but it displaces commercial soy and corn farming, which in turn displaces lower-value farming and ranching activities and pushes them further into the Amazon. Throughout the world, increasing food production in response to higher prices often means extension onto marginal land (which in turn is often forest). Yes, this effect is hard to measure precisely, but that does not mean it doesn’t exist.

Finally, like many others, they take a rich-world-centric view of food price increases (“farm commodity prices have almost no effect on the retail consumers”). Yes in America, but in poorer countries where food purchases account for >50% of income and raw commodities make up >65% of end food prices, that is not the case – food price rises have a huge negative impact on nourishment, nutrition and overall welfare, which is not something to be casually ignored.

Turning Oil Into Salt (3): Intellectual consistency

The authors more than once deride other points of view as lacking intellectual consistency. Sadly, I cannot give them high marks for intellectual consistency themselves. While there is much to like in both their thesis and how they defend it, there are numerous examples where they take both sides of an approach in different parts of the book to suit their persuasive goals.

(I differentiate this from couching arguments in politically/emotionally charged terms, such as referring to Obama bowing to King Abdullah as a “symbolic act of self-denigration.” This is also rampant, and I find it quite irritating for a book aspiring to be a clear-headed policy brief, but I don’t feel dissecting this is worth much further effort.)

One major inconsistency is their selective thinking on fungibility – to them oil is fungible, but corn and other agricultural commodities (and the resources used to grow them) are not.

Second, they dismiss some energy sources up front, only to subtly return to them later. They reject the Pickens Plan to build wind power and run vehicles on displaced natural gas since, despite currently producing 98% of its natural gas consumption, the U.S. only has 3% of world gas reserves and a reserve-to-production ratio of less than 10 years. And yet, in plugging methanol two chapters later, they cite natural gas as one likely feedstock (specifically the 5 tcf of natural gas that is flared each year, especially in Nigeria).

Similarly, they demolish the argument for hydrogen cars based on the energy intensity of producing elemental hydrogen, but later propose a plan to produce methanol from CO2. It sounds win-win, but aside from the energy intensity of splitting CO2 into CO and oxygen, the process then requires… you guessed it… the resulting CO to be reacted with… hydrogen.

Finally, while they generally acknowledge the importance of economics, this emphasis is not consistent through (for example, when extolling the vast photosynthetic potential and CO2-consuming benefits of algae, a more fair-handed author would have felt compelled to at least mention that algae is nowhere near cost-competitive at commercial scale).

Turning Oil Into Salt (2): Fuel choice via the Open Fuel Standard

The heart Turning Oil Into Salt’s thesis is the idea fuel choice via the Open Fuel Standard (OFS). This basically means turning car engines into flexible platforms that can use a wide variety of energy sources, incentivizing competition and reducing the strategic predominance of oil. One attraction is that it avoids the picking winners syndrome/game that seldom ends well.

One major pillar is flex-fuel vehicles, a la Brazil. I didn’t realize it cost only $100/car, for corrosion-resistant fuel line and a different fuel sensor, to make a car flex-fuel, and if this is true I think the argument for flex-fuel vehicles is strong (although of course consumers will be the ultimate arbiters). The authors’ other push is for flex-fuel vehicles to be certified for a wide range of alcohols (e.g. methanol, their favorite case study), which certainly makes sense if it is similarly inexpensive (is it?).

The other pillar is electric vehicles – unsurprisingly – but more specifically plug-in hybrid electric vehicles (PHEVs), to overcome the issue of limited range which plagues pure EVs. This is also not a new idea, but for me it gains new life in the context of a broader push for an Open Fuel Standard.

Flex-fuel PHEVs could get 500 mpgg (miles per gallons of gasoline, as the authors say) – note that this is not a measure of energy efficiency, but rather of lessening strategic dependence on oil. That said, it is also easy to see this resulting in higher systemic efficiency (using braking energy and charging on off-peak hours) and lower GHG emissions (if electricity generation is clean and if biofuels are environmentally friendly).

The other tiny obstacle, of course, is making flex-fuel PHEVs economical. More on this here.