The Dominant Fuel in 2030

I just spent a fruitful week in Canada, learning about some of the biomass resources in Alberta. There are some interesting opportunities there for the right technology, and I expect that I will be making future trips up there.

One of the questions I was asked this week by one of my new Canadian friends was “Do you believe fossil fuels will still be the dominant power source in 20 years?” Without hesitation, I said “Absolutely.” Others around the table nodded their heads in agreement, and the questioner said “So do I.” It isn’t that this is what we want, but this is how we see it. Government agencies like the EIA see it the same way. While they show renewable energy growing, there is a very long hill to climb before they begin to challenge fossil fuels for supremacy.

I think the question was meant to gauge whether I am realistic about the potential contribution of biofuels in the years ahead. I believe that I am. While I believe that biofuels – or more appropriately renewable energy in general – will eventually become our predominant source of energy, that is going to take a long time. I also believe that it is going to happen by necessity – because of the depletion of fossil fuels – rather than a breakthrough that makes something like algal biofuel as cheap to produce as petroleum. Regardless, we need to pave the path to that potential future today, so when the need is pressing we aren’t scrambling to come up with solutions.

Speaking of algae, you may have seen the story on ExxonMobil plunking down $600 million for algal biofuel development. When I was in Canada, someone referred to this as “Dead Money Walking”:

Exxon’s algae

Exxon, the west’s biggest oil company, has launched a new research programme into producing biofuels from algae, in a break from its general antipathy towards alternative energy.

At first sight, this looks a pretty bizarre thing for the company to be doing. Rex Tillerson, Exxon’s CEO, has been consistently sceptical about biofuels, even the advanced “second generation” variety. (Or, as Steven Chu, US energy secretary, described them to the FT, “fourth generation” biofuels.)

Incidentally, I did an interview in the airport yesterday on “4th generation biofuels.” I told the interviewer that I hate that term “4th generation biofuels.” Can we at least wait until we see what the 2nd generation really looks like?

But back to the ExxonMobil story. I am highly skeptical of the conventional paths to produce biodiesel from algae. In fact, John Benemann recently commented here that if you really want to know where algal biofuels stand, offer to buy some for $100/gal. He said you can’t get it. On the other hand ExxonMobil is certainly not stupid, so you have to wonder about their angle. The reporter I spoke with asked about algal biofuel, and I did say that I could see one circumstance in which it might work. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae. That would potentially be a much lower cost fuel, provided the production rates were decent.

Finally, it looks like I have 100 responses to the previous open thread, and I presume at least some of those are questions for me. I will try to work my way through those over the next few days. First, as indicated before I will speak with POET tomorrow about their ethanol work, and I will report on that conversation here in the next couple of days. If you have anything that you would like to ask them, let me know in the comments and I will try to get your questions answered.

34 thoughts on “The Dominant Fuel in 2030”

  1. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae.

    I'd rather engineer algae that excreted 100 year old scotch.

  2. "The Dominant Fuel in 2030" ?

    That's Easy.

    It's the same fuel, energy source, and energy carrier that was the dominant force in the 20th Century.

    Electricity……….

  3. you are a retard ^^ caus to start with electricity is produced from some other energy source retard

  4. RR writes:
    I could see one circumstance in which it might work. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae.

    That does look to be the idea with this Exxon investment.

    http://bloomberg.com/apps/news?pid=20601072&sid=a_LXT.tSEkKo
    "Researchers at Rockville, Maryland-based SGI and Exxon Mobil will look for strains of algae that can withstand concentrated sunlight, high temperatures, dense growing environments and secretions of hydrocarbons, Venter said."

  5. Dr Venter, however, has succeeded in engineering a secretion pathway from another organism into experimental algae. These algae now release their oil, which floats to the surface of the culture vessel. That is why he refers to the process as biomanufacturing. It is not farming, he reckons, because the algae themselves are never harvested.”

    This claims Venter has done just that here. Although Im sure there are tons of questions if this translate to a real viable oil production situation.

    http://biofuelsdigest.com/blog2/2009/07/16/exxonmobil-tunes-in-to-drop-in-biofuels-turns-on-to-algae/

  6. Exxon must think he's onto something viable. I can't imagine 600 million being spent on just research and a pilot plant. Maybe they intend to employ a million Haitians for a year or two.

  7. Venter got started trying to make an ethanol Wonderbug >3.5 years ago – http://tinyurl.com/m7hun6
    Have not heard of any breakthroughs he's engineered on that, so have to assume he really didn't succeed making any huge advances there, or at least has not yet?
    I'm not so sure he will have any better luck with a breakthrough SuperAlgae, but I wish him and XOM all the luck (as well as all the others jumping on the algal bandwagon).
    Also, don't overstate the $600 mil XOM investment. That is 'only' an upfront commitment for $300 mil over the next 5+ years, and that includes XOM's internal work as well, not just for Venter

    Biofuels will certainly be a major contributor to overall fuel pool in 2030 (actually, they already are), but remember it too oil about 100 years to overcome coal as the dominant fuel. Those kinds of transitions don't happen fast.

  8. Being an "algae denier", I also scratched my head at the XOM investment. They are a superbly run company, so it is hard for me to accept that they may be doing this solely for PR. They must believe there is a reasonable chance of success.

  9. FWIW, I once heard a big oil executive say not to invest in a company with a new process until you saw them starting to build their second production facility. Not lab, not pilot but second production facility.

  10. From RR's EIA link.

    “In the no GHG concern case, electricity prices are 3 percent lower in 2030 than in the reference case; in the LW110 case, they are 22 percent higher in 2030 than in the reference case.”

    My coal generated electricity rate is soaring. My rates have increased from way below average to way below average. Not so much because of increase in fuel cost but the cost of adding $300 million in pollution control equipment to each plant.

    When discussing energy it is important to separate electricity generation from transportation. It is within the industrial capacity of of the US for nuclear to be the dominate fuel by 2030 for generating electricity based on the performance of the 104 operating. Also keep in mind that many the 400+ operating reactors in the world were designed by American companies such as GE and Westinghouse. In some cases, one new reactor will produce the same amount of electricity as two old reactors.

    However, I am not predicting this. The US has lots of coal and NG. Maybe nukes will increase from 20% to 30%. Building enough new nukes and maintaining the old ones will a challenge with the current president and congress.

    There is also no technical reason that ethanol could not become the dominate transportation fuel. The industrial has just been demonstrated and does not require any technical leaks as RR has suggested. It does require lots more E85 POV on the road. As demand from India and China drives up the oil costs, American farmers will save the day (again). Clearly there are those who do not like ethanol. However, folks like Wendell are not going to buy BEV charged with personal solar PV. They will buy ethanol and gripe about it. Griping about fueling POV is an American pastime. I do not have to listen to these gripes. Complain to be me and I will invite you to carpool. Tell me when you will pick me up at my door. I will be happy to share the cost.

  11. I remain dubious about this venture, mostly as I tried to contact Venter about a year ago, to ask him about some rather dramatic statements his company had made about palm oil trees. Venter's company has said something to the effect that they were cracking the genomic code on palm trees, and that many-fold increases in oil yields were possible.
    But when I called, and sent e-mails, nobody wanted to talk.
    No doubt Venter is smart. The doubt is whether he is even smarter at raising money. The algae-to-oil pathway was investigated intensively by the Israelis back in the first oil spike, 20 years ago. They came up with nada, like everybody since.
    Until shale gas, I though perhaps there was a role for biofuels. There is, but it will have to come from palm trees and perhaps pongamia pinnata. We know that palm oil is price-competitive with crude. The key is that you till and plant a tree once. Yields are easily harvested–no huge and complicated combines necessary. The yields are very high per acre, and rising as better hybrids, and selective breeding improve the trees. Yields are rising about 3-4 percent a year through traditional agricultural techniques. Acreage is increasing too. We can expect the world's output of palm oil to double every 10 years, maybe more if Brazil gets into the act.
    I wish Exxon every success at this algae venture. I can only assume even an Exxon will make boo-boos, like any other organization.

  12. The flip side of that argument, Benny, is that One American Farmer on a combine can harvest, maybe, 150,000 gallons of "fuel"/day; whereas, it might take 500 Malasian laborers to do the same.

    Also, that combine might start down in Texas, and work it's way North, staying busy for 3, or 4 months out of a year.

    I think you might be underestimating, by a tad, the work involved in the orchardry business.

  13. Rufus-
    Of course, there is more than just planting the trees. You need water for palm oil (not so much for pongamia). There are blights. In the early years, you have to yank poor trees out and re-plant. Fertilizer helps in early years.
    Still, the inputs are small after first few years.
    Also, palm tree leaves are used to fire boilers and make medium density fibreboard.
    The yields are much higher, per acre, than with corn.
    In any event, palm oil stands on its own two feet, no subsidies on world markets. The market for palm oil seems limitless.
    I hope the day is reached when U.S. ethanol is market-proven, although I would accept some sort of subsidy, in order to reduce dependence on thug oil. I agree with your sentiments that if one counts in the $1 trillion we have wasted in Iraq, and the $650 billion annually we spend no the US military, then domestic ethanol is a wide-open bargain.
    In any event, I would rather give $2 to a corn farmer (and keep the $2 in the US economy), than give $1 to an oil thug.
    Still, since the discovery of epic supplies of domestic natural gas, my fervor for domestic biofuels has diminished.
    I would like to see some Texans plant pongamia pinnata. I suspect it would be a go in the wet, hot area down by Houston, or Louisiana. Or other hot areas with good irrigation, but land is expensive in California, and you have to wait four-five years before harvest. Might not pencil out here.
    I enjoy your posts Rufus, and your spirited defense of corn ethanol.

  14. My prediction for the dominant fuel in 2030?

    Coal-to-liquid. Massive amounts of coal just sitting in the West, easily converted to methanol or diesel fuel. The downsides are the potential adverse affect on the environment, and the shortage of water. But people will quickly learn to ignore that if it becomes a choice over the environment or maintaining an extravagant lifestyle that is so dependent on liquid motor fuels. And I predict a day when pipelines will carry water from the Great Lakes to Wyoming and Utah expressly for the purpose of CTL, and will carry liquid fuel back east.

    Kit P. ~ "However, folks like Wendell are not going to buy BEV charged with personal solar PV."

    Now why on earth would you say that? You have no idea how I feel about electric vehicles and solar power.

    Just because I recognize corn ethanol as little more than a political con game that runs counter to the laws of thermodynamics doesn't mean I oppose solar power. I'm not even opposed to ethanol – just ethanol from corn starch.

    Personally, I would like to see many more electric cars on the road, receiving their energy from wind parks and fusion reactors.

    Benny ~ "In any event, palm oil stands on its own two feet, no subsidies on world markets. The market for palm oil seems limitless."

    Although you might change your tune about palm oil standing on its own two feet if you ever saw up close the hectare after hectare of Malaysian and Indonesian rain forest that has been bulldozed and turned into oil palm plantations. Of particular concern is the carbon dioxide that had been captured over millenia and that comes out of the laterite, humus, and peat soils after the rain forests are bulldozed and that soil is exposed to the Sun and air.

    Palm oil is hardly "green," although as with CTL, many people won't care if comes to a choice of a maintaining our indulgent lifestyle or preserving the environment.

  15. The palm trees will capture just as much CO2 as the trees that were standing there. In fact, if the hardwoods are cut down, and made into furniture (which they are,) and palm trees planted the whole process should be CO2 Negative.

    If you care about that sort of thing. Many of us think it's plain silly, but that's the stuff of another thread.

    However, we do subsidize palm oil. In fact, if I'm not mistaken, the tax credit for blending palm oil into diesel is $1.00/gal (a little over twice the subsidy for corn ethanol.)

  16. CTL is just about the most expensive, dirty way you could possibly go. Not a chance in the world.

    In 2020 Oil will be the primary energy source with Nuclear, Solar, and Wind gaining ground fast.

    Ethanol/biodiesel – hard to figure. Cellulosic (without subsidies) needs a gasoline price in excess of $3.50/gal. Will we continue the subsidies? Can we pay over $3.50/gal without going/staying in recession? Hmm, gets complicated.

  17. Rufus ~ "The palm trees will capture just as much CO2 as the trees that were standing there."

    It's not the CO2 in the trees that were standing in the rain forest. It's the tens of thousands of years worth of CO2 that had been captured in the humus and peat soils as biomass fell off the trees and decayed into the soil. Exposing that soil to the Sun and air is what releases vast amounts of stored CO2, not cutting the trees down. All the present trees and vegatation do is shield the soil from the Sun.

    If we waited long enough, that peat and humus soil would eventually metamorphose into coal ~ but that would be a pretty long wait.

    It's a choice of releasing that CO2 now by bulldozing the rain forests, or letting our descendants release it millions of years in the future when they burn the coal. There is no free lunch.

    With regards to CTL, I acknowledge it's dirty. But if it becomes a choice between preserving an indulgent lifestyle or going green, staying indulgent will win every time. I don't particularly want that to happen, I'm just predicting it will because that's human nature.

    Think of it as being similar to corn ethanol. That happened because of human nature and politics, not because it was good science. 😉

  18. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae. That would potentially be a much lower cost fuel, provided the production rates were decent.
    Yeah, but is it practical? Especially considering the oceanic areas you need to cover in algal farms if you are going to produce fuel at any noticeable scale.

    OTOH, perhaps that's the genius of it: your GMO algae create an oil layer on the water surface that would basically prevent any competitor (or predator) from surviving in the pond.

    Of course, when wonderbug escapes into the wild, things get ugly pretty quickly…

    PS. Gotta say, I have my doubts about investing with Dr. Venter, regardless of his scientific achievements.

  19. Cellulosic (without subsidies) needs a gasoline price in excess of $3.50/gal.
    Love to see how you calculated that number, Rufus, considering that there are NO operating full scale cellulosic facilities out there.

    Or was that number after the usual ethanol mandates and subsidies (your tax dollars at work)?

  20. “Now why on earth would you say that? You have no idea how I feel about electric vehicles and solar power.”

    Forty years of listening to folks that dismiss the practical in favor of debating the impractical.

    “Personally, I would like to see many more electric cars on the road, receiving their energy from wind parks and fusion reactors.”

    Me too but in all honesty I am waiting for warp engines for long trips and impulse engines for short trips. Hang in there, sometimes fantasies come true.

  21. Forty years of listening to folks that dismiss the practical in favor of debating the impractical.

    Ironic, considering your ethanol boosterism.

  22. Simple, Optimist. Reading between the lines it sounds like Poet thinks they can produce cellulosic for $2.00/gal in 2011. Add in $0.55 for shipping and taxes, and $0.15 for blending, and retail profit, and I'm up to $2.70. Figure we need a seventy, or eighty cents price "spread" with gasoline, and, voila; gasoline needs to be at least $3.50/gal.

  23. Takchess–
    Of course you are right. But in follow-up conversations and e-mails I had with Univanich Oil Company (a palm oil co. in Thailand) I learned there was outright skepticism regarding Ventner's palm oil claims. And Univanich, a publicly held co. where people are also busy, resolutely returned many, many e-mails.
    They also have research facilities and have been in the business for more than 20 years years.
    I was a financial reporter for 20 years, more if you count freelance work. You get a feeling about companies, and the manner in which they return phone calls, or put out press releases. You sense if they are trying to control the news environment.
    Hey, I hope to the high heavens algae oil works. I will erect a statue to Venter if it does.
    I am just saying it sounds to me like he needed more money. He is good at putting out dramatic releases and getting the next round of capital infused.
    Let's watch and see.
    But let it be on the record: Even Benny "Boom, No Doom" Cole thinks Ventner will flop.

  24. The money spent on the US Military is not wasted. It reduces piracy. And prevents wars (fighting is lower than it has ever been). Every now and then you have to take out a thug regime to keep the rest of the thugs in check.

    Here is what happened the last time the international system broke down:

    Decline and Fall
    Desolation Row

    Once PAX Americana ends the world will be in a world of hurt.

  25. Once PAX Americana ends the world will be in a world of hurt.

    If that is true, you had better hope and pray that cheap fusion power doesn't work.

  26. "If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae."

    That sounds to me sort of like an algae-produced oil spill. It takes a great amount of resources and energy to skim and clean up oil spills, wouldn't it also take a lot of energy to skim ponds "cleaning up" after these oil excreting algae?

  27. Exxon seems to not give a fig about PR or public interest (aren't they still refusing to pay for Valdez?), so one can only assume that they are onto something. Good news hopefully.

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