Gas 2.0

Editor’s Note: Sasha is one of the newest additions to the Gas 2.0 writing team. Welcome Sasha!

North Dakota’s fund for helping ethanol producers hedge against fluctuating corn prices is about to run out, and the producers are getting worried.

The fund, paid for in part by farm vehicle registrations, was drained by high corn prices earlier this year, according to the Bismark Tribune. Ethanol facilities operate on very slim margins, amplifying the effect of market turbulence. The goal of the fund, run by the North Dakota Commerce Department, was to create a safety net — $1.6 million per year to be exact — for existing ethanol production facilities and to draw new facilities in as well. Now the fund only has $2.4 million left.

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It is well-known, of course, that the rich and their descendants will be completely immune to the effects of climate change. Thus, many of them have been driving efficiency-challenged cars that carelessly drain the last of the world’s oil, making their carbon footprint heavier than that of lesser beings.

So, from a climate-change point of view, who better to target with the security of their own driveway supply to power their gas guzzlers — from a carbon free fuel in place of oil? The I’ve got mine crowd.

Everyone who drives gas guzzlers could recoup the cost in a bit over a year. How?

Because this home ethanol distillation unit-cum-driveway pump invented by the Los Gatos company E-Fueler can distill ethanol from a nearly free feed stock; waste alcohol from vineyards or restaurants.
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Researchers reported Monday that they have re-engineered a common bacteria to produce complex and energy-dense alcohols similar to the hydrocarbon compounds found in fuels such as gasoline. This is the first time these types of alcohols have been synthesized by bacteria (man-made or otherwise) in the lab.

E. coli is normally found in the guts of most warm-blooded animals (yes, even yours) and if you’ve had an encounter with it that you remember, chances are you spent the weekend on the toilet wishing you were dead. Yet, while it’s true that some strains of e. coli can cause food poisoning in humans, most are actually quite harmless.

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CNN is reporting that the ethanol industry’s top lobbying groups have sent a letter to the executives at Ford, GM and Chrysler, urging the Big Three to adopt widespread support for higher ethanol blends in gasoline and mandatory E85 flex fuel capability on all new cars.

The three ethanol groups — Growth Energy, the Renewable Fuels Association and the American Council on Renewable Energy — painted a bit of a doomsday picture for the Big Three in their letter, suggesting that the only way for the auto industry to avoid “dire consequences” is to “bring resourceful, innovative and practical solutions” to the table.

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It’s a fact. Corn ethanol has lost its luster. Its intrigue has gone from, say, Sean Connery in Dr. No, to the “let’s-just-pretend-they-never-happened” Timothy Dalton years. Each day now brings news of another ethanol plant closure or project put on “hold.” In fact, the stream of bad news for corn ethanol has become so steady that it has largely faded into background noise — just another sign of a crashing economy.

In reality, however, corn ethanol was set up for a crash before the faltering world economy gave it the impetus to go over the edge. I’m not suggesting that corn ethanol is going extinct, just that, as some industry experts have put it, corn ethanol is going through a “major adjustment” where the outcome will be large swaths of consolidation and efficiency improvements within the industry.

In a way, corn ethanol is finally coming of age. To put it crudely, little Timmy has stopped having wet dreams and gone out and met some actual women. Read the rest of this entry »

The technology to make biobutanol, a non-food based biofuel, cost-competitive with gasoline isn’t here yet, but companies in the know say that it could be by 2010.

Regardless of how the debate between corn ethanol and second-generation, non-food ethanol (cellulosic ethanol) pans out, we may be arguing about the wrong thing. “Why’s that?” you might ask. You see, as a source of fuel, ethanol poses several serious problems.

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Tom Vilsack — former two-term Governor of Iowa, strong biofuels supporter, and former democratic candidate for president himself — has been leaked as President-elect Obama’s frontrunner for Agriculture Secretary.

From a biofuels standpoint, the choice of Vilsack would be a clear indication of the direction an Obama administration would likely take. As a political leader from a corn farming state, Vilsack has shown strong allegiances with the corn ethanol industry in the past and has been an outspoken advocate of alternative energy.

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When the only factor that determined if farms lived or died was the price of food, farm income was rather boringly steady. Now that biofuels have given agriculture a value greater than staple food crops, farmers have seen some huge rewards. But with those rewards have come greatly increased risks — risks that farmers are finding out the hard way right now.

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Now that Barack Obama is President Elect, it seems a good idea to recap some of his previous newsmaking thoughts about the future of energy in the US. One of his most telling comments came at a stop in Terre Haute, Indiana last March, where Barack Obama spoke of his support for alternative energy, saying that corn-based ethanol is not optimal.

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A Texas-based company has announced the “world’s first mini-refinery” for consumer use that can produce both ethanol and biodiesel from the same small machine at the same time. It’s capable of generating up to 120 gallons per day of ethanol and 450 gallons per day of biodiesel.

Consisting of two pieces of equipment — an ethanol boiler and the mini-refinery — the whole system can fit into an area of less than 30 square feet with 8 feet of clearance and is completely automated.

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According to a VeraSun press release, a “series of events” had shrunk its liquidity, impairing its ability to invest in production facilities and operate its business. “A dramatic spike in corn costs,” partly due to its hedging arrangements and “worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the company’s liquidity position,” the release said.

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Over the last few month’s we’ve seen a tide of News about the ethanol industry and it’s staggering growth, but in just the last few days, it seems as if the tides have turned. A confluence of events ranging from  rising corn prices and falling gas prices to increased rains and late corn harvests that some say are due to global warming, have resulted in a number of ethanol plants either shutting down or not being built.

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In a new report, the Renewable Fuels Association (RFA) says the events of recent months clearly indicate that production of corn ethanol is not a major driving factor behind the continued high food prices at the supermarket.

In the report, “Will the Plunge in Grain Prices Mean Lower Food Prices at the Supermarket?,” the RFA points out that, while prices for agricultural staple commodities such as corn, wheat, and soybeans have all plummeted by about 50% in the last half year, food prices at the grocery store have remained highly elevated. At the same time, ethanol production has dramatically increased.

When the above factors are taken together, the link between grocery store food prices and corn ethanol production becomes dubious. Not only that, and also somewhat unintuitively, it seems that the diversion of relatively large portions of the US corn crop to ethanol production has very little effect on even the market price of corn.

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Several bits of news trickled out this week that, when put together, indicate great confusion even among experts about whether or not corn ethanol government subsidies are helping or hurting.

To start with, researchers at Iowa State University have found that, even though $1.3 billion was given to the corn ethanol farming industry in the form of subsidies in 2007, the government saved $3.45 billion on what are called loan deficiency payments as a direct result of these ethanol subsidies.

Loan deficiency payments were established in 1985 as a way to ensure farmers’ incomes remained steady even when prices for commodities such as corn were abnormally low. Since 1998 the loan deficiency payment program has cost taxpayers more than $29 billion.

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The Des Moines Register reported the other day that Iowa’s ethanol plants contribute 15 Percent — 7.6 million metric tons out of a total of 52 million metric tons — of greenhouse-gas emissions found in the state’s new inventory of major manufacturers, businesses and power plants.

Iowa’s Department of Natural Resources found that the largest portion of the state’s overall emissions came from fermenting grain at the plants and not from burning natural gas or coal. In addition, burning biomass such as switchgrass at various industrial plants added another 0.13 million metric tons.

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