I have been a critic of Pacific Ethanol’s (PEIX) business model for a long time. I criticized it a year and a half ago in an article I wrote for Financial Sense, arguing that it would be very difficult for them to compete with Midwestern ethanol producers. Add in the excess ethanol capacity spawned by government subsidies, which in turn drove corn prices up and crushed ethanol margins, and I couldn’t see how Pacific Ethanol would consistently make money.
Today, they announced they were halting construction of their newest ethanol plant:
Pacific Ethanol Halts Plant Construction
NEW YORK (Associated Press) – Pacific Ethanol Inc. said Monday it has halted construction of an ethanol plant near Calipatria, Calif., because of weakened market fundamentals that have hurt the industry in recent months.
Ethanol prices have dropped because of oversupply as the industry expanded beyond demand. At the same time, prices for the product’s key feedstock, corn, have risen dramatically, squeezing profit margins further.
“Given current ethanol market conditions, we feel it is prudent and strategic to suspend construction until the market improves,” Chief Executive Neil Koehler said in a statement. He added that Pacific Ethanol is committed to completing the project and is moving ahead with construction of plants in Stockton, Calif., and Burley, Idaho.
Of course after every bit of bad news (and there has been a lot from them lately), there will be those who think this is a buying opportunity. Take this guy, for example. He was critical of an article I wrote about Bill Gates’ PEIX investment. He thought the plunge was a buying opportunity, and I was an idiot for not recognizing it. But if he acted on it, he is down over 40% since I wrote that article.
Remember, just because the share price had already fallen by 75%, that didn’t mean that it couldn’t fall farther. It could, and it did. And I still wouldn’t touch Pacific Ethanol, even though you might make some money on the volatility. I just don’t think they can be profitable long-term. They certainly don’t enjoy any kind of competitive advantage. They will continue to be, in my opinion, at a distinct competitive disadvantage.
Tangentially related: From New Scientist.
“An alternative energy company called SunEthanol based in Massachusetts, US, hit the headlines earlier this year when it claimed to have found a naturally occurring organism called “Microbe Q” that could convert waste biomass such as corn stalks, sawdust and grass cuttings into ethanol.
“This is important because bioethanol could replace petrol as a fuel for internal combustion engines. Ethanol can already be made from biomass, but requires a multistage process employing enzymes to break down the cellulose before the biomass sugars can be fermented.
“Now the company has filed a patent application for an industrial process that employs a microbe called Clostridium phytofermentans. The organism was discovered by company co-founder Susan Leschine and colleague Tom Warnick from the University of Massachusetts at Amherst, US, in soil near the Quabbin Reservoir in Massachusetts.
“They say this naturally occurring anaerobic microbe can produce ethanol in a composting tank, in which biomass is fermented in the presence of the microbe. The process works without the need for enzymes of any kind, making it potentially cheaper than other approaches.“
Mind you, I still think there will be problems supplying enough feedstock to generate enough ethanol to make a significant contribution to the US transportation fuel supply, let alone actually being able to replace petroleum.
Take this guy, for example. He was critical of an article I wrote about Bill Gates’ PEIX investment. He thought the plunge was a buying opportunity, and I was an idiot for not recognizing it. But if he acted on it, he is down over 40% since I wrote that article.
Man, you just won’t relent, will you? Take that, “James”!
Then again, the wise ass was asking for it…
larryd said: Mind you, I still think there will be problems supplying enough feedstock to generate enough ethanol to make a significant contribution to the US transportation fuel supply.”
Larry,
By “supplying enough feedstock” I’m sure you mean getting the feedstock to an ethanol plant. There will be no shortage of feedstock, the problem will be the logistics of gathering and transporting that feedstock to a biomass plant economically.
Just in the eastern half of the United States there are billions of tons of dead leaves each autumn that would provide an excellent and plentiful feedstock.
But the cost of sending crews and trucks out to gather up and transport all those dead leaves to a cellulosic ethanol plant will be prohibitive.
Regards,
Gary Dikkers
Gary, the feedstock you cite is also the natural fertilizer for the areas that generate it. If you collect leaves and grass clippings from a lawn and don’t compost it, you’ll eventually have to apply synthetic fertilizer.
All ethanol production will have an ecological footprint. Some of it won’t be obvious until they attempt to scale production up to millions of barrels per year. Some problems are foreseeable, though. One is that a lot of the “waste” that people are thinking of as potential feedstock, really isn’t waste at all.
Another interesting bit of news, this time in the solar category:
“Using concentrated solar energy to reverse combustion, a research team from Sandia National Laboratories is building a prototype device intended to chemically “reenergize” carbon dioxide into carbon monoxide using concentrated solar power. The carbon monoxide could then be used to make hydrogen or serve as a building block to synthesize a liquid combustible fuel, such as methanol or even gasoline, diesel and jet fuel.
“… What’s exciting about this invention is that it will result in fossil fuels being used at least twice, meaning less carbon dioxide being put into the atmosphere and a reduction of the rate that fossil fuels are pulled out of the ground,” Diver says.
“As an example, he says, coal would be burned at a clean coal power plant. The carbon dioxide from the burning of the coal would be captured and reduced to carbon monoxide in the CR5. The carbon monoxide would then be the starting point of making gasoline, jet fuel, methanol, or almost any type of liquid fuel.
“The prospect of a liquid fuel is significant because it fits in with the current gasoline and oil infrastructure. After the synthesized fuel is made from the carbon monoxide, it could be transported through a pipeline or put in a truck and hauled to a gas station, just like gasoline refined from petroleum is now. Plus it would work in ordinary gasoline and diesel engine vehicles.”
By “supplying enough feedstock” I’m sure you mean getting the feedstock to an ethanol plant.
Not necessarily. It all depends on what you assume for the efficiency of the conversion process. Iogen’s getting 70 gallons per ton. If we’re using 400,000,000 gallons of gas a day (roughly half our oil consumption), we’d need almost 6 million tons of biomass per day.
That’s alot of fallen leaves.
Also, bear in mind that just because humans aren’t using something doesn’t mean that it is “wasted”. All those fallen leaves represent a carbon cycling process that maintains soil health. Biomass is not an inexhaustible resource. It just seems that way, because currently we (humans) have no particular use for large volumes of it.
a research team from Sandia National Laboratories is building a prototype device intended to chemically “reenergize” carbon dioxide
Seems like photosynthesis has been doing a sterling job of “renergizing” CO2 for something like 2 Billion years or more.
But seriously, let’s wish the guys at Sandia every success, and the guys at Pacific Ethanol too. But I wish they weren’t (directly or indirectly) sending me the bill when either fails.
There are lots of interesting technological avenues, and eventually someone is going to find an energy supply pathway that is cheaper & better & more plentiful than fossils. It is just a pity that our politicians keep trying to get in the way.
It would be wonderful if we could get (a) a serious X-Prize for alternate energy, and (b) a temporary suspension of most governmental regulations for entrants to that X-Prize. Then alternate energy might really start to go somewhere.
But I wish they weren’t (directly or indirectly) sending me the bill when either fails.
And I’m sure the people of Nigeria and Chad (and etc) feel similarly about paying the externalized costs of your gasoline consumption.
I understand as well as anyone (and better than most, perhaps) how badly the government can screw things up by meddling. But first-worlders who get uppity about their property rights really get up my nose. Our entire way of life is based on consuming vast quantities, and pushing the environmental and social costs of that consumption off overseas.
And I’m sure the people of Nigeria and Chad (and etc) feel similarly about paying the externalized costs of your gasoline consumption.
Nigeria would be better off without exporting oil? Interesting theory – but I doubt they will be willing to give it a try.
Nigeria’s problems are directly linked to their corrupt leadership. Incompetence doesn’t help.
Why is it that Texas got rich from pumping oil (while it lasted), but Nigeria is just paying the environmental and social costs?
Our entire way of life is based on consuming vast quantities, and pushing the environmental and social costs of that consumption off overseas.
Wowa – you are getting into US fiscal policy, as well as global economic trends.
The world would indeed be a better place if Nigerians (or Chinese) consumed more of the goods they produce. Unfortunately, they don’t have the freedom to do so, and as a result the US consumer became the consumer for the world – not a healthy situation, but how does one change it?
I think we are slowly coming to a realization here that the problem with large-scale biofuel is not the technology, it’s getting the feedstock. There are two challenges here, which I see as insurmountable unless the prices of fossil fuels fall dramatically. (1) Gathering and transporting huge volumes of biomass to biofuel manufacturing facilities. Presumably, trucks will be powered with gasoline or diesel. If not, they will soon consume the output of the plants they’re supplying. High oil prices (the very motive for making biofuels) will ruin the economy of the plants. It’s a Catch-22 situation, just like the relationship between fuel taxes and road maintenance. (2) Skyrocketing fertilizer prices are already here. Doubts about the feedstock supply for biofuel plants have already surfaced. (I have posted links.) All those dead leaves and other unused biomass will be in high demand by food producers as they start falling back on organic inputs to replace chemical inputs.
In this village where I live, we already rake huge volumes of dead leaves from the surrounding mountains to fertilize our rice paddies. If biofuel producers came to take them, they would face instant resistance. And soon this will be the situation worldwide.
Conclusion: the large-scale biofuel industry is dead, D-E-A-D.
I am not against biofuels themselves. I just see that the solution is local and small-scale.
Why is it that Texas got rich from pumping oil (while it lasted), but Nigeria is just paying the environmental and social costs?
Probably has something to do with being a democracy vs. a bunch of chieftain-led tribes.
I’m pretty sure that the average Nigerian fisherman would be perfectly happy if the oil companies went away and never came back — as long as they restored the fishing grounds they destroyed before they went. Their leaders, yeah, they’d be sorry to see the oil money go. But the average dude isn’t getting any of the action, even as employment (they import their workers, apparently).
At any rate, the situation is a mess, and getting out now wouldn’t actually help much — the damage is done. But the point remains: we get cheap petroleum, the locals get shafted. So let’s not get our panties in a bunch about the fact that our tax money is being spent on research that might allow us to maintain our way of life without further raping over theirs. (That point being directed primarily at Kinuachdrach.)
Gathering and transporting huge volumes of biomass to biofuel manufacturing facilities.
It is already done – it’s called landfills. Bulk of US landfill waste is renewable and ~85% is organic. Put your BTL plant right there next to the landfill and go.
Skyrocketing fertilizer prices are already here.
There’s a cheap solution for that too: human waste. As with toilet->tap we just need to get around the YUCK! factor. Prices may need to go a little higher…
But the point remains: we get cheap petroleum, the locals get shafted.
What? Are you on a guilt high? Why do we take blame for the shortcomings of Nigerian politicians? Surely, you are not proposing the Bush doctrine: invade and force democracy down their throats, are you? If not, what would be the solution?
Slightly counter intuitive result on ethanol: at 20 and 30 percent blends with gasoline, MPG is higher than with 100 gasoline.
http://thefraserdomain.typepad.com/energy/2007/12/ethanol-blends.html
“Green” engineer fulminated:
So let’s not get our panties in a bunch about the fact that our tax money is being spent on research that might allow us to maintain our way of life without further raping over theirs. (That point being directed primarily at Kinuachdrach.)
Rough night, Green? You ought to be happy that Big Al got half-nobelized today — not getting all nasty and incoherent.
If you knew some history (the real stuff, not the politically-correct version), you would know that much of the West is only about 100 years away from using children in coal-mining operations. And the world is only about 150 years away from having almost hunted the whales into extinction for their oil.
Things have become a hell of a lot better for most people in the Western world as our energy consumption has grown. Now the challenge is to find a way to make it possible for every human being to bring his energy consumption up to a similar level and enjoy the same benefits.
Unfortunately, there are a lot of “greenies” (if you will excuse the term) who don’t seem to give a damn about the poor of this world. I hope you are not one of them.
Another of your incoherencies is your assumption that Nigeria’s problems stem from lack of democracy, at the same time as you are giving vent to your colorfully-expressed concerns about a tax-payer having a strong interest in seeing tax revenues spent wisely. Honestly, have you ever listened to yourself, Mr. “Green” engineer?
I am very hopeful that there humanity will be able to devise technological solutions that will let us improve energy supplies & living standards around the world. But political processes in western democracies are currently not part of the solution. Maybe the world needs more people getting their knickers in a twist about that.
Man, you just won’t relent, will you? Take that, “James”!
They don’t call me Relentless Robert for nothing. 🙂
There are two companies – Pacific Ethanol and Xethanol – that are both textbook cases of the kinds of dangerous scenarios that can arise during any boom. Their case studies provide valuable lessons to investors, and well as to the public who bought into the hype. As such, I do return to them again and again.
Pacific Ethanol was a media darling. Vinod Khosla was backing it. Bill Gates was investing in it. The plants were located in California, where demand should be high. The sky was the limit. But investors ignored fundamentals. Khosla and Gates were investing, and that was good enough for many. When the price started falling, it became a buying opportunity. “James” provides a perfect illustration of the dangers of attempting to buy a stock with poor fundamentals just because the price keeps getting cheaper. So it isn’t about rubbing it in (OK, maybe a little), it is mostly to illustrate that the stock has fallen and fallen and fallen from his “buying opportunity.”
Xethanol is a perfect illustration of how some companies attempt to piggyback on hype. They successfully rode the hype to well over $10 a share. They were going to be the first to produce commercial cellulosic ethanol. Yet again, fundamentals were ignored. It’s going to be tough to produce commercial quantities of cellulosic ethanol. Investors who didn’t know any better bought into the hype. Now the stock is at $0.42, and probably overvalued.
Cheers, Robert
P.S. Take that, “James.” 🙂
I’m pretty sure that the average Nigerian fisherman would be perfectly happy if the oil companies went away and never came back — as long as they restored the fishing grounds they destroyed before they went.
Your posts warrant several corrections.
First, the Nigerian National Petroleum Company (state owned) is the majority (more than 50%) owner in all the consortiums in Nigeria. The largest being the Shell Petroleum Develoment Company of Nigeria Ltd. (55% NNPC, 30% Shell, 10% TotalFinaElf, 5% Agip). So NNPC and the government shares responsibility for what happens in the oil producing regions.
Next, a significant portion of the oil in Nigeria is stolen. It is this practice which has led to environmental destruction. Perhaps as much as 20% of the oil disappears through “bunkering” operations where gathering and transmission lines are tapped illegally. Another ploy is for local tribes to sabotage the lines, then collect damages and cleanup costs from the joint ventures. The foreign partners would like to replace much of Nigeria’s failing oil infrastructure, burying the pipelines 10 meters deep to prevent tampering, but NNPC and the givernment won’t approve the capital investment. This article gives you a sense of the problem Oil Inferno
If it isn’t welded down and guarded, it gets stolen. In pursuit of quick riches from oil, Nigeria has neglected the wider economy and failed to provide jobs for its people. There just isn’t enough oil wealth to go around and what there is the government squanders building soccer stadiums and other useless (but full of corruption) public works projects.
Foreign oil companies do the best they can under the circumstances, and are likely a moderating influence. Things would be much worse if the Chinese or Russians operated the joint ventures.
Contrast Nigeria with Norway, where Shell also operates. Virtually no corruption, rule of law, property rights, transparency, honest judiciary, clear rules, a very model of oil development which has contributed to the largest per capita millionaires in the EU and a very high standard of living.
This isn’t about guilt. It’s about taking responsibility for the impacts of our actions. As consumers, we vote with our dollar every day. As citizens of a wealthy industrial nation, it’s incumbent upon us to consider the ramifications of our decisions and choose wisely at the cash register, just as it is our responsibility as citizens of a democracy to choose wisely at the ballot box. (The fact that so few do either one is no excuse.)
I picked Nigerian oil as an example of a larger pattern. Maybe it’s a bad example (although the “if we weren’t doing bad thing X, someone else would be” is a weak excuse at best). But the point is that when you live beyond your ecological means, off of fossil energy, in a linear dig-process-discard industrial system, someone downstream always winds up holding a bag of your sh*t. The cost is borne somewhere: by the developed world, by the poor in our own country, by the environment, or by the future.
I’m well aware of history, and of how far we have come. And to get where we are, we had to exploit the resources that were available to us. But we’re now at a point where continuing to rely on those resources is a matter of convenience, not of necessity. It’s also really bad risk management policy. We could go to an all-renewable energy infrastructure and a closed-loop material economy. If we started now, we could do it in my lifetime (and maybe we have started, after a fashion). So I have very little patience with people who are so short-sighted that they are unwilling to invest in this transition. Especially when the total investment in the future is so miniscule compared to what we invest just running faster and faster to stay where we are.
Nigeria IS a bad example. Without the oil, it would be just as corrupt and broken. Look at Zimbabwe.
As far as environmental damage and leaving people “holding the bag” – utter nonsense. The oil capital of the world moved from Pennsylvania to Oklahoma to Texas. In the 1950s the US was the largest producer and exporter of oil in the world. The former oil fields of the US are hardly environmental wastelands. The Glenn Pool (one of the largest oil fields in the US) developed with 1920s technology – is now THE place to build your home in suburban Tulsa. Glennpool, OK
Americans ARE changing their habits. Oil is primarily a transportation fuel. US consumption is virtually flat. Higher prices are pushing consumers towards better gas mileage and less driving. Since 1970 the US economy is 10 times larger, but consumes only about 20% more oil. The US is just 6% of the world population and generates 40% of the world’s stuff more efficiently than just about anyone else. (BTUs per unit of GDP.)
The US is the most benign and beneficient super power in the history of the world. We aren’t the cause of the world’s problems – we are the cure.
In the matter of environmental impact, scale is all-important. How much total oil was produced from those 1920’s wells, over what period of time?
We can do pretty much whatever we want without obvious consequence, as long as the scale of our impact is less than the regenerative capacities of the local ecosystem. That’s why 100 years ago it didn’t matter — at least to people — how badly we treated the environment in this country: It was a big unspoilt land with huge resources and an enormous regenerative capacity.
Since then, the scale has grown enormously, and the planet’s ability to regenerate itself has been compromised. So the methods of the past are not a guide to the methods of the future.
Also, oil and gas (for all the problems they do cause — ask a Bay Area crabber about the harmlessness of the oil industry) are relatively low-impact compared to say, coal, or uranium.
At any rate, it’s easy enough to find specific examples of development that failed to have a particular impact, or didn’t have a local impact, or for which the impact has been erased by the passage of time. But if you look at the total pattern of our industrial system, it’s quite clear that we are using up resources (soil, water, oil, biodiversity, fishery stocks, etc, etc, etc) faster than they can be replaced.
At any rate, you are right about one thing. We are the most benign superpower in history — per capita. That is, we do less harm and more good, relative to the scale of our reach, than any other empire in history.
However, we have enormous reach and operate at unprecedented scale, unmatched by any other superpower, ever. And being less bad isn’t the same thing as being good. The planet doesn’t care how much more moral or virtuous we are than the Roman Empire or the British Empire. All that matters is our total impact — how much actual damage we do. If our impact exceeds the regenerative capacity, then sooner or later we will pay the price.
The US is the cure for the world’s ills… potentially. We have the means, the technology, and the (critically necessary) wealth to invest. But currently we are blocking a world wide consensus on the need for climate change action in Bali, and we still make economic decisions on a timescale measured in months, rather than in decades. We could save the world, but we’re going to have to grow up, and damn quick.
“But currently we are blocking a world wide consensus”
I thought there WAS a concensus.
OK, I’ll play. The Glenn Pool is still producing. It has produced 340 million barrels over its life and is estimated to hold 1 billion barrels total. Some of the pictures are here: Glenn Pool That is an open lake of oil in the picture. They used cable tool drilling rigs which was like dropping a chisel on to the rock to split it out. They had to drill thousands of wells using that technology. Now it is a prosperous suburb. Certainly the oil operations there exceeded carrying capacity at the time.
That is the beautiful thing about private capital, we clean up our messes. The most polluted places in the world are almost entirely the province of state controlled industries.
That is my issue with the proposed solutions to AGW. The useful idiots in Bali ask for more and bigger government to solve the problem. When in fact socialism is the CAUSE of some of the worst environmental problems.
Yes, we are running out of some resources, so what else is new? In the 1800s coal was king. People were worried about running out of coal because we had limited technology to exploit it. The 20th century was the oil century. Who knows about the 21st century. Hydrogen? Fusion? Biofuels? We’ll figure it out. If not, population trends will reverese and in a century or two we will be back to the carrying capacity. The OECD nations are already declining.
If nothing else, US dominance has eliminated war waged on the scale of the 19th and 20th centuries.
But if you look at the total pattern of our industrial system, it’s quite clear that we are using up resources (soil, water, oil, biodiversity, fishery stocks, etc, etc, etc) faster than they can be replaced.
I’m sorry, this is utter BS, with the exception of oil. And even the oil will keep flowing (perhaps at a much reduced rate) for decades to come.
Soil: As the Israeli’s have shown, you can do agriculture in seasand, using hydroponics. Won’t be pretty, but it works.
Water: Here’s why the planets fresh water will never run out. We just need to grow up and get past the Yuck factor.
Biodiversity: I see two threats to biodiversity: lack of knowledge and the poor in poor countries eating anything that moves. Both problems could be addressed by increased wealth (more oil, please).
Fishery Stocks: Again, the wealthy can afford to back off, and let the stocks replenish, in ways that the poor cannot.
All your concerns can be addressed by better technology (and more wealth). And will be (as long as the US is in a position to act as a superpower, anyway), as earth’s population continues to increase…
All your concerns can be addressed by better technology (and more wealth).
That is my central argument against draconian steps to curb CO2 emissions. More technology and wealth will help us solve the problems of the future. It is a matter of priorities. We could eradicate malaria, AIDS and give clean drinking water to the world for a fraction of the cost of even the most modest CO2 proposals.
I’ve noted the AGW crowd shifting its argument to “sudden climate change” as they abandoned the “warmer is bad” mantra. Technology and wealth are the answers to sudden climate change. We survived the little ice age in the era before the invention of the telegraph. At one point New York harbor completely froze, making it possible to walk from Manhattan to Staten Island. That didn’t wipe out the inhabitants of NY.
LOL at the story about how Florida might lose tourism in 100 years because sea level rise might flood hotels. Uh huh, just as the sea level rise wiped out the old 100-yr hotels. Oh wait, most of Florida was a swamp 100 years ago.
The planet doesn’t care how much more moral or virtuous we are than the Roman Empire or the British Empire.
Indeed! The planet can’t care. It is non-sentient. Sorry, the Gaia myth is just that — a myth.
Problem is — we are not dealing with the real problems. Lots of rich greenies get together in Bali (passing most of the bill onto poor working taxpayers), and all they do is bloviate about junk science, and plan for world domination. How does that help heal the sick & feed the hungry?
What we really need to do is to focus on increasing meaningful large-scale unsubsidized energy supplies. We could start that today with expanded nuclear fission, and meet growing global needs for transportation fuel through coal conversion. Doable today. But we are not doing it.
And we are not doing it because a bunch of guilty rich white liberals have some fantasy about a world in which we can “conserve” our way to Shangri-La. Not going to happen.
And technology will solve all problems… yada yada
Look, Optimist, I agree: the solution, and the goal, is a higher standard of living for everyone. Aside from the humanitarian interest, the population problem will solve itself if everyone can achieve a high standard of living.
But we’re not going to get there by blindly scaling up the approaches that we have taken thus far.
The problem with all the solutions you propose, and with any purely technological approach, is threefold:
#1 is energy. All the solutions require more energy to build, and more to run. And as has been noted, things are getting a bit tight in that department. So unless you believe in the fusion fairy, or otherwise endorse making strategic planning decisions based on the assumption that a particular technology will be ready when you need it, solutions that increase energy use intensity are not good ones.
#2 is maintenance. We’re really bad as a species at doing maintenance, because we prefer to prioritize other things that are sexier, or more fun, or more immediately in our face. Ask the ASCE about that:
http://www.asce.org/reportcard/2005/index.cfm
Also, all that maintenance requires skilled people, time and money and energy. These are all finite resources, which can be spent on innovation/advancement/improvement, or they can be spent running to stay in place (i.e. maintenance). Which path do you think leads to more health, happiness, and prosperity over the long term?
Don’t get me wrong: Maintenance is a necessary, essential part of a functioning technological society. But we need to design to minimize the necessity for it, or we will eventually find ourselves spending all of our resources doing it.
#3 is … hard to explain in a single word.
Consider living systems: They all operate on a cyclical flow of resources. Waste = food = waste = food, etc. And they all operate on current solar income, or a derivative thereof (wind, etc). There are exceptions (e.g. thermal vent microbes) but they are the rare exception. And none of those exceptions support really complex ecosystems.
Compare to the human industrial paradigm: We dig it up, make something from it, consume it, and throw it away. It’s a linear flow from source to sink. Not all, but the vast majority of our infrastructure operates on that paradigm.
Basic common sense tells you that a system operating on that basis cannot scale arbitrarily.
Solutions that rely on throwing more technology at the problem, without regard for this very basic constraint, don’t actually solve the problem. They just push it off to the future.
Again: I agree that prosperity for all is the only way forward. I agree that technology is a key part of getting us there. But the technology has to be carefully applied, with an understanding of its system-wide impacts and its long-term costs.
We’ve gotten too big and too powerful as a species to go much further with the (rather juvenile) more-bigger-faster paradigm of the first industrial revolution. We can’t just use up one resource, and then turn around and expect another one to appear to take its place. We have to run the numbers — all the numbers, not just the ones that immediately interest us. We can’t ignore the system-wide impacts of our decisions and actions. Which is precisely what we are doing when we entertain the delusion that we can maintain 100% personal automobility by relying on biofuels.
More Malthusian, Club of Rome, Population Bomb, thinking that history has shown is always spectacularly wrong.
The sun provides us all the power we need. Thermal solar and PV solar could replace vast quantities of liquid fuel at just slightly higher costs than we have today. The balance of our power could come from nuclear, and reprocessing nuclear waste. That would be enough for hundreds of years – long enough for the fusion genie to arrive.
For right now it is better to burn fossil fuels and store up economic wealth rather than convert.
Suppose the US could trade economic systems with Saudi Arabia. Would anyone want more oil and gas for less technology?
Green E,
Who said anything about blindly scaling up the approaches that we have taken thus far?
What the pessimists typically fail to understand is the Free Market. Combine that with mankind’s ability to adapt, and you have a recipe that can get you out of most pinches.
So let’s make a worst case assumption: No new energy technologies come to the fore in the next 20 years, while world oil production stays at current levels (~86 million bbl/d, I believe). In the mean time, populations continue to increase and demand for energy keeps going up.
In response oil prices take off for the stratosphere, making current prices look like a bargain. That would be bad in the short term and hurt the poor. It would also necessarily destroy some demand, as some simply can’t afford to do business as usual.
It would also set off an explosion of innovations and ideas to save fuel. You can be sure that if somebody’s way of life gets threatened by fuel costs, he is going to get very inventive.
This is where the invisible hand comes in. The degree to which these innovations get implimented would depend on how long oil prices stay high, as past experience would confirm. Think about that: high oil prices as a force of good, stimulating innovation.
So, if oil prices stay high (as it would with constant production but continued economic growth), the overall efficiency of everything we do would increase. We’d also do many things differently, so as to minimize the baseline energy requirement.
So, in summary, energy requirements are not fixed. Price energy high enough and we all start to conserve, even Dick Cheney!
Yes maintenance can be a pain in the butt. But that too, is adressed by innovation: finding ways to do better maintenance, more cheaply and requiring less effort. Give it a few more years, and cars would drive themselves to the workshop when time comes for a service.
Compare to the human industrial paradigm: We dig it up, make something from it, consume it, and throw it away. It’s a linear flow from source to sink. Not all, but the vast majority of our infrastructure operates on that paradigm.
And that paradigm is already changing as my link the Groundwater Replenishment System shows. In this case, fresh water has gotten so expensive, that treating and reusing sewage has become feasible. Other resources will follow the same model, including energy.
As King says, the power we need is available as solar power. Until now we have not had a real incentive to use it wisely. That may be about to change…
Nigeria – it’s an example of rentierism. Living off money not made through producing anything, but just getting it out of the ground. The western oil companies dabbled with it, resource nationalism has forced them to work for their money and now they’re largely clean and the problems are properly ascribed to the dysfunctional governments where the resources are.
Rentierism has corrupted democratic states to a greater or lesser extent as well, though the democratic system is better at preventing it from taking over. There are plenty of Norwegians who are keen to tap the oil fund for money now, screw the grandchildren. Politics in Alberta at the moment – giving local citizens a ‘prosperity dividend’ just for living there! – are remarkably reminiscent of the GCC. I don’t think that the actions of Anglo-Persian, sorry BP, during the dark days of Iran are dissimilar.
Renewable power has always been more sustainable and more expensive. An economy built solely on renewables would today not be suffering inflation from the rise in energy prices. But when fossil fuels have been so cheap for so long, game theory dictates that you had to sign up for the addiction. It’s only now we’re paying the price of energy dependence (I don’t mean that in a xenophobic way, I mean it in a portfolio theory way) that we’re finally reinvesting the stuff that made sense all along.
Renewable power has always been more sustainable and more expensive.
Well, rising oil prices might take care of the more expensive part soon…
Well, rising oil prices might take care of the more expensive part soon…
There is a Professor at the University of Alaska Faribanks who has a theory about “entropy subsidy”.
Basically, when we build a windmill today, we get the benefit of cheap fossil energy to mine the ores, make the steel & cement, move the windmill to its site, etc. In effect, alternate energy gets an “entropy subsidy” from fossils. When the cost of fossil energy goes up, then so does the cost of windmill energy.
What this points to is the need for successful alternate energy to be truly competitive — cheaper, more plentiful, better than fossils. And once we get to that point, use of fossil fuels will decline automatically.
Unfortunately, the alternate energy industry is presently addicted to direct & indirect subsidies. Very unhealthy for the industry. Unsustainable too.
For those who are bitching about tax dollars being spent on energy research.
A little perspective:
http://greyfalcon.net/iraqvsoil.png
http://greyfalcon.net/energyresearch.png
http://greyfalcon.net/fossiltaxes.png
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And for the kicker.
http://greyfalcon.net/doonsbury.png
http://greyfalcon.net/debt.png
http://greyfalcon.net/canadadollar.png
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That said, I do think biofuels are a really dumb idea.
http://greyfalcon.net/zeiger
The UN announces that it will ‘offset‘ the Bali conference emissions.
“The UN estimates that the equivalent of 3370 tonnes of carbon dioxide will be released into the atmosphere as a result of its staff travelling to and from the Bali summit. This is worth $100,000 at the current price of carbon on the European Union emissions trading scheme.
“That money will be deposited into a fund – known as the Adaptation Fund – that is destined to help developing nations adapt to the effects of climate change.”
Hrump, GW Indulgance, if you ask me. The Adaption Fund is a UN managed fund, which just about guarantees it’s corrupt.
Regarding the leaves and natural recycling into the soil, it strikes me that the natural process is simply for them to decay, releasing their energy uselessly and releasing CO2 and water. The trace materials left after this process are what’s helpful to the soil, are they not? So, I don’t see the downside to running them through a process where the energy currently wasted in decomposition is put to some use by humans first. The remains from such a process could then be recycled.
Soil is actually very complex. Leaves, etc, decay into humas, which is considerably more than just trace minerals.
Still, keep thinking.
Long long term, Space Based Solar Power is the way to go, but it absolutely has to have cheap and reliable access to orbit, and the up-front costs are huge. We’ll probably need fusion power first to get the cheap orbital capability.
Just to add one->
Ethanol Deathwatch: Another One Bites the Dust
Robert from TOD ?
Great to see you including Polywell fusion. Heres Dr Bussards former assitant showing off his fusor in Philly a few years ago.
http://i38.photobucket.com/albums/e101/FogerRox/th_ligon.jpg“
http://i38.photobucket.com/albums/e101/FogerRox/th_WB620008.jpg” >
30cm coils on WB-6, circa late 2005.
Robert from TOD ?
Great to see you including Polywell fusion. Heres Dr Bussards former assitant showing off his fusor in Philly a few years ago.
http://i38.photobucket.com/albums/e101/FogerRox/th_ligon.jpg”
http://i38.photobucket.com/albums/e101/FogerRox/th_WB620008.jpg”
30cm coils on WB-6, circa late 2005.
http://www.youtube.com/watch?v=jmp1cg3-WDY&feature=user
Schematic video of Polywell.