Understanding the Ethanol Tariff Issue

Submitted by R-Squared Energy Blog

You may have seen the announcement earlier in the week that Brazil has eliminated tariffs on imported ethanol:

Brazil Announces Temporary Elimination of Ethanol Tariff
WASHINGTON – On Monday, the Brazilian Chamber of Foreign Trade said it would remove the country’s 20 percent ethanol tariff until Dec. 31, 2011, Congress Daily reports. With the temporary elimination of the tariff, Brazil was hoping to pressure the United States into lowering or removing its own tariff and taxes on imported ethanol. Currently, imported ethanol is subjected to a 2.5 percent ad valorem tax and an additional 54 cents a gallon surcharge, which terminates Dec. 31, 2010.

The Brazilian Sugarcane Industry Association is urging both countries to eliminate the ethanol tariffs. “Consumers win when industries compete,” said Joel Velasco, chief North American representative for the association. “Brazilian ethanol producers are willing to compete for consumers. What about American producers?”
I have been engaged for the past few days in a dialogue with the Brazilian Sugarcane Industry Association (UNICA), and I want to share some of that in order to shed some transparency on this tariff issue, as there are some complexities involved.

In my mind, there are three key issues that one should understand regarding the tariffs. The first is that U.S. taxpayers directly support ethanol usage through the VEETC. But that tax credit does not require that the ethanol be domestically produced. Any ethanol imported from Brazil can qualify the gasoline blender with the same VEETC as ethanol purchased from a producer in Iowa.

Therefore, to the extent that the tariff is there to offset the VEETC, then I agree with keeping the tariff in place. A tariff of equal value to the VEETC merely means that any taxpayer money that is directed at Brazilian ethanol is refunded via the tariff. (It isn’t clear to me, though, since domestically produced ethanol is assigned a unique serial number called the Renewable Identification Number or RIN, why it isn’t straightforward to make sure the VEETC is only directed at domestic ethanol).

However, the amount of the tariff is higher than the amount of the VEETC. At …

Energy Security Populism: Oil Prices, American Leaders, and Media

Submitted by R-Squared Energy Blog

The following guest essay is by Kevin Kane. Kevin is an energy market strategist, Asia political affairs analyst, and Korean language linguist living in Seoul, South Korea. Kevin previously published American Freedom from Oil: A Bipartisan Pipedream.
Energy Security Populism:
Oil Prices, American Leaders, and Media

By Kevin P. Kane

American leaders and news outlets often refer to American-company overseas oil field purchases, oil & gas discoveries, freedom-from-oil initiatives, and offshore drilling as vehicles towards energy security. These efforts do not, and cannot, enhance oil security for the U.S. without simultaneously increasing global oil security—defined as insulation from price and supply shocks.

Inaccurate views and statements coming from our leaders continue to misinform the public about the nature of oil and its relationship to energy security. Insofar, leaders often refer to supply initiatives such as offshore drilling, foreign oil field developments, and exploratory block procurements as national zero-sum pursuits for energy security; statements that perpetuate these views reflect a calculating effort to appeal to American liberal and conservative energy populism. No choice of energy-related rhetoric could be more misleading to the public and farther from the economic and financial integration truth. Although Republican and Democrat leaders are equally responsible for appealing to energy security populism for political support, reporters also help to circulate these misleading and framing-loaded statements through media outlets.
Past & Present Oil Supply Security
In 1980 following Soviet military gains near oil producing states, the Iranian Revolution, the Arab Oil Embargo, and the Organization of Petroleum Export Countries (OPEC) price hikes, President Jimmy Carter contended in his State of the Union address,

“The region which is now threatened by Soviet troops in Afghanistan is of great strategic importance: It contains more than two-thirds of the world’s exportable oil… therefore, that poses a grave threat to the free movement of Middle East oil… An attempt by any outside force to gain control of the Persian Gulf region

Changes Coming to R-Squared

Submitted by R-Squared Energy Blog

At the end of the week, I have to go to New Zealand for 10 days. As is often the case, my posting will be limited while I am traveling. Any time I travel, this always highlights one of the major weaknesses with a personal blog: Traffic is driven by new content, and if there is no new content for a week, traffic falls off. For this, and other reasons detailed below, I have decided that I would make some changes to the operation of this blog. I believe that they will ultimately result in a better experience for readers.

There are multiple reasons for making the changes. In addition to the travel issue, the blog is taking up more of my time. But a large portion of that is due to peripheral issues. Each morning I have to clear out a lot of spam, make template changes as needed, and deal with any technical issues.

Second, I don’t like Blogger’s comment structure. It becomes difficult to keep up with who said what, and then when comments exceed 200 in number, it becomes difficult to find the newer ones.

Third, I have a great number of technically savvy readers. My readers have shown that they have a lot to contribute. They frequently bring my attention to new energy stories, and they often post links to new stories. I have always felt like we needed a forum where readers can start their own discussions - and then discussions needn’t fall off if I am traveling.

If there is a noteworthy or controversial energy-related news story (e.g., the Bloom Box), instead of posting a link in the comments following the latest essay, I want readers to have the ability to start that topic themselves. That would also open up the discussions so that they aren’t so dependent upon me posting something new. I am always hesitant to post on areas that I don’t know a lot about, but with more reader-driven content the discussions could become more diverse.

I have been thinking about this change for over a year, but never quite found a good solution. Now I have found a solution (or maybe the solution found me) to all of these issues, but it requires migrating my blog to a different place. After a number of discussions with Sam Avro, founder and editor of Consumer Energy Report (CER), I have decided to base my blog there. CER is a comprehensive site for all things energy-related. It covers the spectrum from fossil fuels to alternative energy to politics to investments.

Over the next week or so, my blog will migrate there. You can read about CER’s mission here, which is consistent with my mission to have serious, thoughtful discussions on energy issues. But by combining with CER, I will have access to more tools than I have now. You can check out the new blog format here:

R-Squared Energy Blog at Consumer Energy Report

There will be a discussion forum for readers to start their own threads:

Discussion Forum

Readers who wish to participate in the forum will need to go through a 30-second registration procedure (Link here). It simply requires a user name and an e-mail address (which will not be shared, nor will it be publicly visible). This should help to minimize the spam. I also believe that this will facilitate civil discussions.

There will be a redirect from this blog starting later this week. Hopefully readers will come and join the discussions there. I will continue to post on a regular basis. It will still be “R-Squared”, just under a different roof with a number of improvements.

I want to build on the foundation that Sam and his staff have put together so that I can take R-Squared to another level. But it is of utmost importance to make sure it is a good experience for readers. We are open to suggestions from readers, and happy to answer any questions you may have. I believe Sam will be stopping by to introduce himself in the comments.

Questions, comments, or concerns?

Strategizing for the Ethanol Industry

Submitted by R-Squared Energy Blog

A reader recently sent me a link to the following story:

D.C. Discussions Advance Corn Issues

Extension of the Volumetric Ethanol Excise Tax Credit (VEETC) – This blender’s tax credit provides $.45 for each gallon of ethanol blended with gasoline and expires at the end of this year. The credit provides thousands of jobs, fuels economies and helps the U.S. to meet its mandated biofuels-production standard. The elimination of this credit will result in a 38-percent jobs and production loss. VEETC brings dollars back to the U.S. Treasury in the billions, eliminates more than $22 billion in oil imports and has led to a reduction of farm payments of more than $10 billion. Despite the success of the ethanol industry, some members of the Ohio delegation want its advancement to end – even delegates from areas where corn represents the largest economic portion of their district.

Granted, this is from the corn lobby, but that’s just unadulterated nonsense. It is scare-mongering, and given the advantages they already enjoy (and I am not opposed to some subsidies for the industry) it is sad to see corn farmers groveling for welfare like this. (The irony of this is that I grew up on a farm, in a farm community, and farmers love to gather at the local coffee shop to complain about “people on welfare” taking their tax dollars).

As I have been arguing, eliminating the ethanol credit (VEETC) wouldn’t absolve gasoline blenders from their obligations under the Renewable Fuel Standard (RFS). If the credit was eliminated today, gasoline blenders must still blend 12 billion gallons of ethanol in 2010, and 15 billion gallons by 2015. They just wouldn’t get paid to comply with the law.

Most of the attempted rebuttals to my recent essays on eliminating the VEETC completely missed the mark. People acted as if there was no RFS in place, and therefore they argued that eliminating the VEETC would completely destroy the ethanol industry. That was the gist of Growth Energy’s call to arms for their members; the VEETC was just too important to ethanol’s survival. That might have been a valid argument prior to implementation of the RFS, but it is not a valid argument today. If they really require both a mandate and a subsidy in order to compete, then we might as well stop this charade right now.

There was one response to my argument - made by several different people - that does have some merit. That response was that the VEETC helps incentivize blenders to blend more ethanol than what is required by law.

OK, setting aside for a moment the other arguments for and against the subsidies, it is true that the subsidy may result in the blender going above and beyond the law. But the response to that is simple: Only pay for what was blended above and beyond the law. Arguing for a subsidy that will cost almost $6 billion this year by some incremental blending above what the law requires is silly. In fact, that means you would be paying a very high subsidy for that incremental ethanol blending. How much? Try $4.18 per gallon of incremental ethanol blended.

Several related articles have recently been published along the same theme; that not only is a subsidy on top of a mandate redundant, but it subsidizes driving and wastes taxpayer dollars:

Mandates, Tax Credits, and Tariffs: Does the U.S. Biofuels Industry Need Them All?

It is puzzling why the biofuels industry continues to defend these subsidies when it has its mandates in place. Tax credits cost taxpayers more than $5 billion per year, and import tariffs convey the message that the ethanol industry is so uncompetitive that it needs protection against foreign competition. It would seem that there would be major political benefits from simply giving up all subsidies and import tariffs and for the industry to rely solely on the mandates . . .

Pay close attention to this bit: “Expanded mandates under the Renewable Fuel Standard provide ethanol and biodiesel producers a guaranteed future market at volumes that exceed what they have produced in the past.”

Think about what is going on here. Ethanol producers already enjoy mandates that guarantee a growing market. What other industry has that luxury? And on top of that, they want subsidies to complement the mandates? Outrageous.

I am in the middle of preparing my taxes, so tax dollars are much on my mind right now. And I strongly resent my tax dollars being wasted. The issue of taxpayer money has become a bit of a running joke with all of the multi-billion dollar bailouts and stimulus packages, but that money still comes from taxpayers, present and future. I will not sit idly by while we mortgage our children’s futures to pay a redundant subsidy.

That is a perfect lead-in to the theme of this article, which is what I think the ethanol industry’s strategy should be with the VEETC expiring this year. Now the ethanol/farm lobby might be able to push this redundant subsidy through regardless. I won’t be surprised if they do. But it is going to be a nasty fight, and it is going to shine a spotlight on this issue that they would rather have keep at a low profile. They are going to have to resort to scare tactics and exaggerations (as in the corn lobby’s missive above), and major questions will be asked as to why this industry still requires so much protectionism and taxpayer money to survive.

But imagine that instead of spreading a $6 billion subsidy across 12 billion gallons of ethanol (that oil companies are legally obligated to blend), that it was instead targeted at incremental E85 production. So instead of $6 billion, you could maybe spend $2 billion to get an incremental 2-4 billion gallons of E85 into the market. That would be smart politics by the ethanol industry, would save taxpayer dollars, and would still potentially grow their industry above and beyond their already guaranteed future market.

I haven’t been able to find E85 sales statistics for 2009, but there were lots of stories about how demand had dropped off during the year. The major problem here is in pricing; E85 is currently at about a 15 cent disadvantage (with the subsidy) relative to mid-grade gasoline (but only a nickel disadvantage relative to premium gasoline). If the VEETC was focused entirely on the E85 market, that disadvantage could be made to disappear at a fraction of the cost of the current program.

Further, I think E85 would be a much better outlet for the ethanol industry than trying to get nationwide E15 or E20 in the system. Instead of fighting the EPA, boat owners, the oil industry, the auto industry, etc. to force higher ethanol blends into the system (and I haven’t seen them step up and offer to assume the liability from potential damage caused by these higher ethanol blends), use it in cars that were designed for it.

There are numerous E85-ready cars on the road now. If the price is right, the demand will be there. The industry doesn’t even have to rely on the oil companies. There is nothing stopping farmer’s coops from getting together and opening up their own E-85 stations throughout the Midwest.

I am a fan of efficiency, and to me it doesn’t make much sense to produce ethanol in Iowa and ship it to Texas, while shipping finished gasoline products from Texas to Iowa. The Midwest consumes 40 billion gallons of gasoline per year. The ethanol industry should enjoy the largest cost advantage in the Midwest, close to the source of production. If we are going to incentivize ethanol, let’s first focus on getting E85 sales up in the Midwest, in the local markets where ethanol is produced.

I think some version of this argument - only use the VEETC to incentivize incremental ethanol production - would be a win-win for the ethanol industry. But continuing to argue that they need a subsidy for something oil companies are legally obligated to do anyway is not going to sit well with most people.

Note 1: (My recent Range Fuels’ essay has been republished in the current issue of Subsidy Watch).

Note 2: Major changes are coming to R-Squared. Details on Monday.

Book Review: Big Coal

Submitted by R-Squared Energy Blog

One of the triumphs of modern life is our ability to distance ourselves from the simple facts of our own existence. - Jeff Goodell

Big Coal by Jeff Goodell is a book I have had on my reading list for a long time, but I only got around to reading it during my recent trip to Europe. It has taken me a very long time to finish this review for a number of reasons, but one is that I had a hard time deciding what to write. Normally, when I read a book I will dog-ear the pages that I want to revisit either because 1). There was something significant that I did not know; or 2). I want to reference a particular point in the book review. By the time I finished reading this book, I probably had 50 pages dog-eared.

My introduction to Jeff Goodell came a couple of years ago when he was writing an article for Rolling Stone about ethanol. He contacted me and we talked a few times, I got to know him a bit, and he published a pretty scathing article during the early days of the ethanol euphoria. For more on that episode, see Rolling Stone Article, Jeff Goodell Debates the Rolling Stone Article on CNBC, or Bob Dinneen Responds to Rolling Stone.

I wish I could write like Goodell. I really enjoy his writing style. I sometimes disagree with particular points, but in Big Coal he makes a very compelling argument that we don’t come close to paying the societal costs of coal usage when we pay our electric bill.

Even though we don’t often see it, coal is a part of daily life for most of us. It produces a great deal of our electricity. But we don’t spend a lot of time thinking about the implications. As Goodell notes on the first page, “We love our hamburgers, but we’ve never seen the inside of a slaughterhouse.” Isn’t that the truth? I have always imagined the number of people who would become vegetarians if they ever saw the inner workings of a slaughterhouse.

When we fuel up our cars, we don’t think (much) about the ramifications of our oil dependence. When we flip a light switch, we do not associate that with the coal-driven mountaintop removals in West Virginia. In this book, Goodell thrusts those associations right in your face.

The book is divided into three parts: Extraction, conversion to power, and the resulting emissions. He covers the history of the industry, tells the stories of the people in and around the business, and while most of the book is based on U.S.-happenings, he does spend a chapter on China.

I would imagine the coal industry was none too pleased with Big Coal, because it paints a really ugly picture of the industry.  Goodell contrasts the coal industry with the individuals whose lives have been negatively impacted by coal in one way or another. He details corruption and politics that allowed the industry to delay implementation of pollution control equipment. And on a big picture level, he argues that continued usage of coal poses a serious threat to the earth’s climate.

This book will leave you shaking your head, wondering why we use coal at all if the overall picture is as troublesome as Goodell suggests. I found myself wondering as well, which was actually what led to my post on the cost of various energy sources. There at the top of the list for the cheapest source of energy was Powder River Basin coal, which is why we continue to heavily use coal despite the issues Goodell spells out.

We humans aren’t very good at willingly making sacrifices today in order to potentially improve the situation a few years down the line. We want instant gratification and coal fits the bill. (I would argue this is also why the U.S. is so deeply in debt and our personal savings rate is so low.)

I noted in my book review of Crude World that Peter Maass didn’t present a balanced picture of the oil industry; it was all bad. His book was intended to highlight the negative aspect of our oil dependency. Big Coal is the same in that respect. It is hard to argue that coal hasn’t improved the lives of a great many people around the world, and I know a number of people who would argue that these improvements outweigh the negatives. Further, it is fair to say that the coal industry has come a long way in cleaning up their emission profile over the past few decades.

But it is clear which side of that argument Goodell would come down on. To be honest, I come down on that side as well. I would like to see us limit our coal consumption and boost electricity generation from other resources. I know a great number of people who feel this way, but coal is like oil in that replacing it will likely entail economic sacrifices that individuals don’t like to make. Coal produces half of the electricity in the U.S., and I would have a hard time arguing that anything - outside of nuclear power - can scale up and take on the role that coal currently plays.

The realist in me thinks that we will eventually use up all of our coal, as will China, Australia, India, and all of the other major coal producers. This is primarily why I sit out the debates on climate change; I can’t realistically envision anything that will get the world to collectively NOT burn up all the coal. In an energy-constrained future, prices will rise and people who feel morally opposed to coal will suddenly find their moral fiber weakening as high energy prices bite into their budgets.

I don’t discount that renewable energy can eventually make a bigger impact (I hope so, because that’s what I am doing for a living), but it is starting from a very small basis compared to electricity generated from coal. While coal produces about half of the electricity in the U.S., renewables other than hydropower account for only about 3.5% (per the EIA).

So I think Big Coal will continue to be a very big part of our lives for many years to come - although with a strong political commitment the nuclear option could put a dent in our coal dependence.

Why Summer Gasoline Means Higher Prices

Submitted by R-Squared Energy Blog

Spring is approaching, and gasoline prices are once again climbing. But you may not know that this ritual of climbing prices happens almost every year about this time. If you check the history of gasoline prices at the Energy Information Administration’s (EIA) website you can see that gasoline prices almost always rise between January and May.

The primary reason this happens is due to a seasonal switch in gasoline blends. There are two key (although not the only) specifications that refiners must meet for gasoline. The gasoline must have the proper octane, and it must have the proper Reid vapor pressure (RVP). While the octane specification of a particular grade is constant throughout the year, the RVP specification changes with the seasons. (See Refining 101: Winter Gasoline for a more detailed explanation of gasoline blends).

The RVP is based on a test that measures vapor pressure of the gasoline blend at 100 degrees F. Normal atmospheric pressure varies, but is usually around 14.7 lbs per square inch (psi). Atmospheric pressure is caused by the weight of the air over our heads. If a liquid has a vapor pressure of greater than atmospheric pressure, that liquid boils. For example, when you heat a pan of water the vapor pressure increases until it reaches atmospheric pressure. At that point the water begins to boil.

In the summer, when temperatures can exceed 100 degrees F in many locations, it is important that the RVP of gasoline is well below 14.7 psi. Otherwise, it can pressure up your gas tanks and gas cans, and it can boil in open containers. Gas that is vaporized ends up in the atmosphere, and contributes to air pollution. Therefore, the Environmental Protection Agency (EPA) has declared that summer gasoline blends may not exceed 7.8 psi in some locations, and 9.0 psi in others. The particulars vary, but key considerations are the altitude and motor vehicle density of a specific location.

The EPA publishes a schedule for the RVP transition:

Guide on Federal and State Summer RVP Standards for Conventional Gasoline Only

The schedule varies somewhat from region to region, but in general is as follows. After allowing vapor pressures as high as 15 psi in the winter, the limit drops starting on May 1st:

May: 9.0 psi
June – Sept. 15: 7/7.8 psi

More congested areas and hotter areas will tend to have a limit of 7.0 psi, while cooler climates generally opt for 7.8 psi. Some cooler climates maintain a 9.0 psi limit throughout the summer. One of the disadvantages of having different requirements for different areas is that summer gasoline is less fungible. This can cause price imbalances in different areas, and sometimes prevents product from flowing from one area into another to ease the shortage.

Refiners will start to pull down their inventory of winter gasoline well in advance of the May 1st deadline. On that date, all gasoline in the system has to meet the stricter requirements, and this “summer blend” is costlier to produce because it contains less butane.

Butane, which has an RVP of 52 psi, can be blended into gasoline in higher proportions in the winter because the vapor pressure allowance is higher. There are two advantages in doing this. First, butane is a cheaper blending component than most of the other ingredients. That makes fall and winter gasoline cheaper to produce.

But butane also adds to the total gasoline pool, so that means that gasoline supplies increase in the winter as more butane is added to the mix. Not only that, but this takes place after summer driving season, when demand typically falls off. These factors normally combine each year to reduce gasoline prices in the fall (even in non-election years). The RVP is stepped back down to summer levels starting in the spring, and this usually causes prices to increase.

One misconception some have is that they can save money by buying cheap gasoline in the winter and storing it for the summer. Remember that winter gasoline will pressure up as the weather heats up, and the contained butane will start to vaporize out of the mix. You will end up with less gasoline than you paid for, and that would also contribute to the air pollution problem that summer gasoline was designed to avoid.

If, on the other hand, you were to buy summer gasoline and try to store it until winter, you might find yourself having problems getting the fuel to ignite, due to the lower vapor pressure. This would be like putting a little bit of diesel in your gasoline – not very good for your car.

So how high might gasoline prices climb this spring? The EIA’s gasoline inventory database can provide some guidance. In the spring of 2007 gasoline prices spiked above $3.00 a gallon for the first time. But that year gasoline inventories also dropped sharply. Rapidly falling gasoline inventories are a good predictor of sharply higher gasoline prices. In the fall of 2005, Hurricane Katrica also caused a sharp drop in gasoline stocks, leading to an atypical fall price increase.

So far in 2010, gasoline inventories have been at very healthy levels. While some inventory draw down can be expected during the transition to summer gasoline, it is a pretty safe bet that the current high level of gasoline stocks will prevent a rapid escalation of prices this spring. I would expect no more than a mild price increase between now and summer, and at the current inventory levels it would not be surprising to see prices start to decline from present levels.

However if oil prices escalate, that could trump high gasoline inventory levels. This is why gasoline is presently about $1 more than it was last year at this time; oil prices were $30-$40 lower than they are now. But that’s a topic for a future essay.

Will Solar Prices Fall into Grid Parity?

 Submitted by R-Squared Energy Blog

• Rising gas prices
• Renewable portfolio standards that make renewable energy credits (RECs) more valuable
• The passage of carbon legislation that would force gas power producers to buy carbon credits, thus forcing an increase in price for natural gas.

Range Responds

Submitted by R-Squared Energy Blog

I just became aware that BiofuelsDigest wrote a story on my recent blog on Range Fuels, and got some comments back from Range Fuels’ CEO David Aldous:

Battle of the Falling Timbers

Aldous said pretty much what I would expect the CEO of Range Fuels to say. He defended his company, and complained that the funding includes money for future phases. That may be, but it is true that Range recently went back to the DOE for more money. If they are already funded for future phases, then why not show us what you can do before asking for more money now?

The truth is that the early public statements from those involved with Range - prior to them getting taxpayer funding - don’t remotely reconcile with what they are now prepared to deliver. The costs have escalated, the capacity has been ramped down, and production went from “cellulosic ethanol” to “cellulosic biofuels” to “mixed alcohols” to “methanol.” Those are the facts, and I think Aldous is trying to put the best possible spin on a bad situation that he inherited.

In fact, left unsaid in my original blog is that things have obviously gone horribly wrong from the days of Range’s early claims. Reading between the lines, I think the capacity downgrades are an indication that the gasifier didn’t scale up as expected. Gasifiers are tricky, and one that works fine at one scale and with one feedstock may not work at all at a different scale. I also think Range found out that producing ethanol from syngas is much more difficult than they expected, and they couldn’t get a catalyst to do what they had hoped.

One interesting comment from Aldous was that their methanol would be a qualifying fuel because they will put it into biodiesel. Imagine that. Biodiesel is already struggling to compete, and now we are going to pay a subsidy on the methanol that is used to produce biodiesel, and then we will probably end up reinstituting the subsidy on the finished biodiesel.

That is going to be some expensive biodiesel (from a taxpayer perspective). Methanol presently trades at about $1.10 a gallon, so if we subsidize that as a cellulosic biofuel we would presumable pay a subsidy of $1.01 per gallon on top of the market price. In a nutshell, the real cost of that methanol going into biodiesel would be double what it should be.

There was a comment left following the story that allows me to finally tell a funny story that happened at the Pacific Rim Summit last November (here are my slides from my presentation). Alan Propp wrote the following:

Dear Editor,

My comment is this: you describe Mr. Rapier at the outset of your article with these terms, “Noted and widely respected energy writer…” I have met Mr. Rapier, and my description of him would have been, “Controversial, highly opinionated and frequently misinformed energy writer…”

His lack of knowledge or understanding of the Range Fuels project is indicative of his blog and other writings.

Sincerely,

Alan Propp, Ph.D., P.E.
Merrick & Company

That comment is priceless on several levels. First, while Propp is smearing me he conveniently doesn’t mention that his company is the engineering firm for the Range Fuels plant. His company has made a lot of money on all the hype, and his fingerprints are all over the project. Think he might have an axe to grind?

But here is the really priceless part. At the Pacific Rim Summit, I was having a bite with a colleague at an evening conference event. Joining us was David Bransby, a professor from Auburn (and advisor to Range Fuels) who gave a presentation that I really enjoyed. His wife was also present, as well as some members of the Hawaii Science and Technology Council. We were having some interesting discussions around logistics, energy density, and the problems of scaling up biomass-based solutions.

Up walks Alan Propp, Ph.D., and he immediately began to berate me. Shortly thereafter, one person got up and left the table (telling me later that Propp’s behavior was the reason he left the table), and two more later asked “What was that guy’s problem?”

We were talking about the difficulties with scaling up biobutanol (which I have blogged on here) and Propp said “You are wrong. They now have a new process which can get butanol titers above 10%.” I looked at him with a puzzled look, and said “That’s impossible. Butanol phases out of water at 7.7% concentration. You can’t have a 10% solution.”

Propp was undeterred. He said that a certain company had given a presentation that day, and if I had attended it “I might have learned a thing or two.” (I would have attended but had a conflict). I was really puzzled, and couldn’t figure out what he was talking about. I decided I would investigate later, but I knew one thing: He was wrong about butanol titers above 10%. That’s like saying “Our water freezes at 40 degrees.”

The conversation turned to energy balances, and Propp’s position was “Energy balances don’t matter.” We were discussing a municipal solid waste project for converting trash into fuel. I said that if the energy inputs into the project were higher than your outputs, then in most cases you don’t do the project (unless you are using non-fungible fuel like coal as an input to produce a liquid fuel output). Propp said (paraphrasing) “If the biomass is free, then usage of those BTUs is what matters.”

I knew that we were looking at this problem in two very different ways. I was looking at it from the long-term viability of an energy project. Propp was locked into the idea that because the BTUs are free, then any usage of them is an improvement over the status quo. I couldn’t get it through his head that if the usage involved consuming more BTUs than you could extract from the free biomass, you don’t do the project. So we had a very fundamental disagreement. For an energy project, I won’t consume more than 1 BTU of fungible fuel to produce 1 BTU of fuel unless there are some really special circumstances (e.g., if the project is really a waste disposal project and energy would have been consumed regardless).

The evening went on like that. Propp was extremely arrogant and condescending. Had I known then of his involvement in some of these biofuel projects, I would have had a better grasp on why he behaved as he did. But then I went back to my hotel and looked up the company he had been talking about. It turns out that the good Dr. Propp was actually confused and had been talking about iso-butanol, a fundamentally different compound than normal butanol (which is almost always shortened to just “butanol”).

From a bio-perspective, it is true that i-butanol is less toxic to microbes than n-butanol, but the phasing concentration for i-butanol is also higher. What is needed to crack open the economics of producing butanol biologically (which used to be the case before the much cheaper petro-route came along) would be to get butanol concentrations above the phasing level, so it could be skimmed off instead of having to distill it all. From that perspective, the lower toxicity of i-butanol is offset by the higher phasing concentration.

Further, in the chemical industry the chemical properties of n-butanol are generally preferred over i-butanol. Therefore, butanol production is shifted to the greatest possible extent to n-butanol, and i-butanol almost always trades at a discount to n-butanol. There is still a market for i-butanol, but it is unclear if i-butanol would be an attractive renewable fuel. The published test results I have seen were all of n-butanol.

So I chuckled at the thought that Alan Propp, Ph.D., didn’t know the difference between i-butanol and n-butanol, yet berated me for not knowing about new technology that produced “butanol titers above 10%.” I sent him a note later that night and said “I think you meant iso-butanol.” He responded back “Yes, that’s correct.” (In fairness to Merrick, Propp did have a colleague with him - Steven Wagner, VP from Merrick - who I found to be much more reasonable and more interested in simply have a conversation about technology).

The next day, I saw Propp and his demeanor had changed entirely. Gone was the arrogance from the night before. (I presumed he was feeling pretty sheepish). He had promised to show up for my presentation later that day and put some tough questions to me, and I said “By all means, show up and give me your best.” He was a no-show.

So it is with an extreme sense of irony that I read Propp’s comment above. It is a classic case of projection. Of course the sort of pseudo-knowledge displayed by Propp that night is a big reason that Range is in the position it is in. They failed to distinguish between cellulosic ethanol and biomass gasification, and therefore made certain representations that many of us knew were incorrect.

Second, they didn’t understand the chemistry of alcohol production well enough to know that the production of pure ethanol via this route is problematic, and that a mixed alcohol is what they would produce. As reality began to settle in, we have seen the statements from Range evolve a very long way from the initial claims of what they would do.

So despite comments from Aldous and Propp, the verdict on Range is the same. What they are proposing to deliver is a far cry from the technology (and cost) that they initially went out and hyped. The public statements are there for anyone to read, and don’t need any particular interpretation from me to see that things have not gone according to plan.

A Day Late on the Bloom Box

Submitted by R-Squared Energy Blog

I wasn’t going to write anything on the Bloom Box, but people keep writing to ask what I think. My initial reactions were “What a lot of hype” and “I have seen this all before.” I also wondered why it is that people keep falling for these kinds of stories.

But fuel cells aren’t my specialty, and as such I won’t weigh in on the relative technical merits of this design over another. I know that fuel cells have been very expensive for many years, and the initial projections I have seen over the Bloom Box are that they will be very expensive.

Lots of people with expertise in fuel cells have weighed in on the matter, though. If you want a more technical assessment, see the National Geographic story:

Bloom Box Launch Is “Big Hype”–Invention Nothing New?

The Bloom Box—an as yet unbuilt in-home “power plant” designed to be about the size of a mini-fridge—could provide cheap, environmentally friendly electricity to U.S. households within ten years, according to Bloom Energy. Or not.

But fuel cell experts say that, based on the information the company made public today, the Bloom Box technology is not revolutionary, nor is it the cheapest or most efficient fuel cell system available.

“It’s a big hype. I’m actually pretty pissed off about it, to be quite honest,” said Nigel Sammes, a ceramic engineer and fuel cell expert at the Colorado School of Mines. “It really is nothing new. Go to any [solid oxide fuel cell] Web site and you’ll see the same stuff.”

Those were my initial feelings as well, and here is why I say we have seen this before. The year was about 2001, and I was younger and a bit more subject to being influenced by massive hype. There was a company called Plug Power (still in existence today; stock symbol PLUG, but they are flirting with getting themselves delisted) and they came out with pretty much the same story.

In fact, if you go back into Google’s news archives on Plug Power, you can see a histogram that shows the news stories on Plug Power spiking in 2000, remaining fairly strong until about 2005, and then falling to lower levels in the past few years.

The buzzwords used to describe Plug Power were the same as those used to describe the Bloom Box. The technology was called revolutionary and a real game-changer. There was a prediction made that most people would have Plug Power’s fuel cells in their homes by 2010 and we would all be locally producing and using our electricity in a refrigerator-sized box.

What happened? Plug Power’s stock soared to $2 billion on the hype at a time when investors would bid up companies that had no earnings but incredibly high growth projections. It just so happens that hype can lead to those growth projections (a hard lesson for me that permanently changed my investing style), and what happened was that reality eventually caught up with the hype.

Plug Power, like Range Fuels from my previous essay, could not deliver on the hype. They couldn’t deliver cheap fuel cells, and so they didn’t get the market penetration many had (unreasonably) expected. Their valuation came crashing back down to earth. Today Plug Power is worth about $70 million, or about 96.5% less than it was when I was following the story.

Bloom Energy looks like both Plug Power and Range Fuels to me. It is a company that is attempting to produce energy cheaper than all those who came before using known technology - and using hype to attract investors. And if Bloom Energy fails to deliver, they will learn just like Range Fuels that hype is a two-edged sword.

What’s the Stock Play in Wake of the Over-hyped Story About Fuel Cell Developer Bloom Energy?

Submitted by EnergyTechStocks.com

Having been a Wall Street Journal energy and environment reporter, one of the first experts I would have called before running a story on privately-held solid oxide fuel cell (SOFC) developer Bloom Energy would have been Neal Dikeman, who in addition to being a prominent alternative energy investor and the writer of an authoritative blog on clean technology, was involved in developing a fuel cell company.

But as Dikeman posted lasted week – Saving Cleantech: Bloom town Silicon Valley? – he didn’t get a call from the folks at CBS’s 60 Minutes, so the raft of legitimate technical questions Dikeman raised in his column went unanswered even as breathless 60 Minutes correspondent Lesley Stahl all-but-declared the energy crisis over thanks to Bloom.

To its credit, CBS did include an interview with a Bloom skeptic; however, he was more-or-less a prop inserted to make the story look balanced. If you read Dikeman’s list of unanswered technical questions surrounding Bloom’s technology, you realize that CBS never should have aired this piece in the first place, at least not without a lot more on-camera independent expert testimony.

But if Bloom Energy is over-hyped, investors might want to look closer at two fuel cell companies Dikeman says “are arguably shipping commercial product today,” FuelCell Energy (Symbol FCEL) and SFC Smart Fuel Cell. (Symbol SSMFF).

In announcing last week that it was initiating coverage on FuelCell Energy, Liberty Analytics noted that the company is the “world leader in the development and production of stationary fuel cells for commercial, industrial, municipal and utility customers,” and that its direct fuel cells (DFC) are generating power at over 55 locations worldwide.

Although still in the red, FuelCell Energy recently hired a seasoned senior executive in a bid to accelerate market penetration. The company is scheduled to announce its first-quarter results on March 10.

Smart Fuel is a German company that EnergyTechStocks.com has previously suggested investors might want to look at more closely. While also still in he red, the company’s losses have been narrowing significantly. The company describes itself as the market leader in fuel cell technologies for mobile and off-grid power applications serving leisure, industrial and military markets. Importantly, the company, in partnership with DuPont (Symbol DD), recently got a glowing review from the U.S. Defense Department for its lightweight power packs that soldiers can use in the field. DOD said the power pack “could offer a significant advancement in the area of soldier portable power in the field. (For more see From Small Fries to Big Shots? CBD Energy and SFC Smart Fuel Cell Look Promising - Part 2 of 2.)

Broken Promises from Range Fuels

Submitted by R-Squared Energy Blog

When I first began my career, a wise old-timer gave me a piece of advice that I took to heart. He said “When you are planning and executing a project, it is important for you to do what you say you are going to do. People are going to make investment decisions on the basis of the numbers you project. So don’t over-promise and under-deliver.”

As I began to do become involved in projects, the wisdom of the advice I was given became clear. I learned to be conservative with my claims, because failing to deliver can have far-reaching impacts. Plus, a pattern of over-promising and under-delivering will ultimately destroy your credibility, and thus your ability to get anything done. (On the other hand, excessive “sand-bagging” is also poor practice, as too much money gets budgeted where it needn’t be).

Now imagine the following scenario. I go to the government and ask for $5 million to build a 10 million gallon per year ethanol plant. I announce that it is cutting edge technology, and I make various far-reaching claims. I issue press releases, and Congress invites me to give testimony in D.C. The government grants me the money I ask for, because I have had success in other ventures and I seem like a credible fellow.

Later, I go back to the government, and tell them I need another $5 million, and that unfortunately the project schedule is slipping. “By the way”, I tell them, “I will now only be producing 5 million gallons.”

As construction continues, I start to realize that the energy business is a bit more difficult than I had imagined, and things that I thought were new weren’t new. It becomes clear that I can’t even deliver on my downgraded promises because I hadn’t appreciated the challenges of scale-up. The government calls me up and asks me how it is going. “Well”, I explain to them, “I am out raising $10 million more in investor money. I am also going to only produce 1 million gallons, and it is going to be methanol instead of ethanol as I have been claiming. I am not really sure when I will produce ethanol. By the way, could you give me some more money?”

So I went from claiming $5 million for a 10 million gallon ethanol plant to $20 million for a 1 million gallon methanol plant. I still have not delivered. I am asking for more money. You still trust me, don’t you?

Range Fuels: Years of Broken Promises

I have for the most part held my tongue over Range Fuels for the past 3 years, but the scenario above essentially describes what has happened. The reason I have held my tongue is that I have heard various bits about their progress that was not public, and so I have held back on commenting. But I firmly believed they were making reckless claims from Day 1.

Now the EPA has just issued a report that gives some remarkable updates on Range Fuels, and I feel I have held my tongue long enough. Let’s walk through the timeline to show the remarkable evolution of their progress that has gone largely unreported.

October 2006 - In an interview with Wired Magazine called My Big Bet on Biofuels, Vinod Khosla gushed about E3 Biofuels (now bankrupt) and wrote about them as if they were a running, proven plant. He wrote about what they were achieving, despite the fact that they hadn’t started up (and would be out of business shortly after they started up). In the article, Khosla described his investment in Kergy (which later became Range Fuels).

IN THE CORNER of an unmarked warehouse tucked away in an industrial neighborhood north of Denver, a new company called Kergy has what is, to my knowledge, the first anaerobic thermal conversion machine (which explains why Khosla Ventures is a seed investor). It’s a 6- by 4-foot contraption that stands about 8 feet high. It looks vaguely like a souped-up potbellied stove. But it runs cleanly enough to operate indoors.

With those comments, everyone in the energy business knew Khosla was operating outside of his element. People have been gasifying biomass for decades, and there are numerous “anaerobic thermal conversion machines” out there. What happened was that Khosla wasn’t aware of this, so he thought this was all new and novel, and he invested - and then began to promote. He also went to the government telling them how wonderful it was, and that he would change the world if they would only fund him.

In that article, the inventor of the gasifier, Bud Klepper, is ominously quoted “We could double the ethanol output of the Mead facility.” I hope not. The output of the Mead facility (E3 Biofuels) is zero, so double that is…

February 2007 - Kergy changed its name to Range Fuels. They announced that they would build their first “cellulosic ethanol” plant in Georgia. The capacity was announced at “more than 1 billion gallons of ethanol per year” (Source.)

I had a problem with this announcement on two counts. First, this is not “cellulosic ethanol”, as I explained in Cellulosic Ethanol vs. Biomass Gasification. Further, if you are going to make an alcohol from syngas (the product of the gasifier), ethanol is a strange choice to make. Methanol is more efficient to produce, and ethanol is generally just a co-product when producing mixed alcohols (which also work well as fuel; see Standard Alcohol). It is only separated out at a great expense of energy - and then you have a lot of lower-value methanol to deal with. So this was looking like a very confused project from the start.

March 2007 - Range Fuels announced a $76 million grant from the U.S. Department of Energy.

Also during 2007, articles on Range Fuels began to appear everywhere. There were high profile pieces in The New York Times and in Forbes. In the Times’ article, the company refused to disclose how much had been invested to date.

An article in USA Today reported that the initial capacity would be 20 million gallons. The site was permitted for 100 million gallons of eventual capacity, and the cost of building a 100 million gallon per year plant was quoted at $150 million. Range said they thought they would be the first to win the “cellulosic ethanol” race (again, ignoring that the race was won a hundred years ago):

By next year [2008], the company intends to have a facility capable of creating 20 million gallons of ethanol per year. The site in Treutlen County, Ga., has received a permit to produce 100 million gallons per year, and Range Fuels expects to eventually reach that production amount, according to company CEO Mitch Mandich.

“A lot of people are talking about 2009, or 10 or 11—even Secretary of Energy (Samuel) Bodman will say cellulosic ethanol is five years away,” Mandich said. “We think by the time we enter production, we’ll be the first, so the race is on between us and some competitors.”

Well, it is 2010, and we still aren’t seeing any ethanol from the facility. Welcome to the real world.

November 2007 - To much fanfare, Range Fuels announced the groundbreaking of their Georgia facility. They continued to maintain that the first 20 million gallon phase would be completely finished in 2008. Those of us who have been involved in plant construction wondered when they would actually face the music and admit they couldn’t deliver.

March 2008 - Range announced that they had raised another $100 million to build the plant. By April this number was announced as $130 million in venture capital funding. They were still treated as media darlings - and nobody in the press was asking them critical questions. But their story was about to begin to unravel.

April 2008 - Range announced that they have received a $6 million grant from the state of Georgia.

October 2008 - In an incredibly ironic story, Discover Magazine published Anything Into Ethanol. It was incredibly ironic because in 2003 they had written Anything Into Oil, a gushing story about a company called Changing World Technologies (CWT) and their claim that they could make oil from biomass for $8-$12 a gallon. After a lot of wasted investor and taxpayer dollars, CWT declared bankruptcy when they couldn’t deliver on their claims. I did a post-mortem on CWT here. There were many more parallels here than just two nearly identical, uncritical stories from Discover Magazine.

November 2008 - Range Fuels CEO Mitch Manditch was replaced.

January 2009 - Although the plant in Georgia was still not complete, there was no explanation regarding the delay. But Range announced another $80 million loan from the U.S. Department of Agriculture. One story announced that the company had received a total of $158 million in VC funding in 2008. This story also announced that the first phase was still under construction, and production was now not expected until 2010! (This new production time frame was probably the result of getting in a new CEO who was actually experienced in the energy business, ex-Shell executive David Aldous).

May 2009 - While Range Fuels stopped issuing so many press releases, former CEO Mitch Mandich was quoted in the New York Times admitting that “The soup’s not quite cooked yet.” This was extraordinary given previous claims from him that they would produce cellulosic ethanol at less than the price of corn ethanol.

October 2009 - In a New York Times’ story that warned that cellulosic ethanol was falling far short of expectations, it was announced that Range Fuels had applied for even more funding from the DOE! This time, the DOE said no.

For the most of 2009, Range went into silent mode. Again, I attribute this to a new CEO who came from the energy business, where you better do what you say you are going to do. One pattern that started to emerge was that they referred less to cellulosic ethanol and more to cellulosic biofuels. This was significant, because I had always maintained that it wouldn’t be cost-competitive for them to produce ethanol via gasification. I was just waiting for the other shoe to drop…

February 2010 - A rather extraordinary update was issued that the mainstream media has still not absorbed. The EPA released an update to the Renewable Fuel Standards Program (RFS2). In that update, they had the following report on Range Fuels (see this document). From Pages 175 and 178:

At the time of our assessment, we were also anticipating cellulosic biofuel production from Range Fuels’ first commercial-scale plant in Soperton, GA. The company received a $76 million grant from DOE to help build a 40 MGY wood-based ethanol plant and they broke ground in November 2007. In January 2009, Range was awarded an $80 million loan guarantee from USDA. With the addition of this latest capital, the company seemed well on its way to completing construction of its first 10 MGY phase by the end of 2009 and beginning production in 2010.

As for the Range Fuels plant, construction of phase one in Soperton, GA, is about 85% complete, with start-up planned for mid-2010. However, there have been some changes to the scope of the project that will limit the amount of cellulosic biofuel that can be produced in 2010. The initial capacity has been reduced from 10 to 4 million gallons per year. In addition, since they plan to start up the plant using a methanol catalyst they are not expected to produce qualifying renewable fuel in 2010. During phase two of their project, currently slated for mid- 2012, Range plans to expand production at the Soperton plant and transition from a methanol to a mixed alcohol catalyst. This will allow for a greater alcohol production potential as well as a greater cellulosic biofuel production potential.

Did you catch that? Initial capacity is now slated at 4 million gallons per year and will be methanol. There will still be no qualifying “cellulosic ethanol” produced in 2010. The amount of money that we know has been poured into this - beyond Khosla and company’s initial investment - is $158 million in VC money, $76 million of DOE money, $80 million from the USDA, and $6 million from the state of Georgia. Further, they asked for more DOE money and were turned down.

So we have Khosla’s initial investment of unknown amount plus $320 million for 4 million gallons of methanol. Wow. At this point, I don’t know why anyone would care about what they say they are going to do during Phase 2, I am more interested in seeing some accountability for what has happened to date.

Let’s recap the highlights:

February 2007 - Range Fuels announced that they would build their first “cellulosic ethanol” plant in Georgia. In a story at Green Car Congress, the capacity was announced at “more than 1 billion gallons of ethanol per year.”

March 2007 - Range Fuels announced a $76 million grant from the Department of Energy.

July 2007 – In a story in USA Today, the Phase 1 capacity was announced at 20 million gallons. The full scale would be 100 million gallons at a cost of $150 million.

November 2007 – Range broke ground on the plant; announced they would be finished with Phase 1 (still 20 million gallons) by the end of 2008.

April 2008 - Range announced a $6 million grant from the state of Georgia.

January 2009 – Range received another $80 million, this time from the USDA, and announced receipt of $158 million in venture capital funding for 2008.

October 2009 – Range asked for more money. This time they were told no.

February 2010 – After investments that have been publicly announced at $320 million, the EPA announced that Range would initially produce 4 million gallons, and it would be ethanol it would be methanol. Further, there would be no ethanol produced in 2010.

February 2010 – I write an article wondering why the mainstream media has completely missed this story.

In summary, we were given numbers of $150 million to build 100 million gallons of cellulosic ethanol capacity. What we are being told now is > $320 million to build 4 million gallons of methanol capacity. Of course they intend to do so much more, but I have a very big problem giving more taxpayer money to an organization with this history.

I don’t blame current CEO David Aldous for this. I think Range’s tendency to talk to the press every chance they got ceased once  reality started to take hold and they got an experienced energy veteran in. I think Aldous inherited a ship in which people had been in the habit of promising the moon to secure ever more funding. But I do blame a number of the original promoters of the company.

I have criticized Vinod Khosla in the past for what I said were unrealistic claims. I felt like he came into the energy industry without a very good comprehension of if, but felt that he would apply his golden touch from Silicon Valley to show the dinosaurs how Silicon Valley innovates. I also felt like he was attracted to people who made grandiose claims, but didn’t have the proper historical perspective to determine when something was truly novel (and really worked).

The thing is, the energy industry is full of very smart people who went to the same schools the people in Silicon Valley attended. There isn’t much that hasn’t been tried, and most of what is being announced to great fanfare by newcomers is being worked on in silence in numerous places around the globe.

When you step out there and make the sorts of claims that were made, you have some responsibility for your words. Failure tars an entire renewable industry as being hopelessly unrealistic. This is the reason I go after claims that I believe are unrealistic. If you promise and fail repeatedly, funding will dry up for everyone as the government and the public all become cynical. So your actions impact lots of people - and can impact the energy policy of the entire country - thus you need to be accountable for the things you say.

This has played out exactly like I thought it would. Claims that most industry insiders laughed at in private have now come to naught at great cost to taxpayers. Methanol from syngas? Oh, that technology has only been with us since 1923. Congratulations on reinventing the wheel and burning through taxpayer money in the process.

In summary, I will point out that the two primary sources of cellulosic production being counted on by the EPA for 2010 were Range Fuels and Cello Energy. Both are Vinod Khosla ventures, and neither has come remotely close to delivering despite lots of funding and taxpayer assistance. I don’t think these are isolated cases. I think they are a symptom of things to come. We have gotten a lot of overpromises, because face it, that has worked to secure funding. But what this leads to are completely unrealistic expectations regarding our energy policy, and numerous bad decisions regarding where tax dollars should be spent.

Finally, I want to make one thing crystal clear. I am not criticizing failure here. That is normal and expected. Failure is a part of what it takes to learn and move forward. What I am criticizing is the nature of the failure; that it was primarily because inexperienced people were making claims they shouldn’t have made, and taxpayers are going to get stuck with the bills. Personally, I have a problem with my tax dollars being squandered away by smooth-talking salesmen.

Keep Your Eye on DME

Submitted by R-Squared Energy Blog

Di-methyl-ether (DME) is a fuel that I have been talking about since at least 2006. I have blogged about it, and I have classified it in several of my presentations as a “Sustainable Contender” (including in a slide at last year’s ASPO conference). I want to use this post to explore DME in a little more detail, and explain why I think you should keep an eye on it as an attractive renewable replacement for diesel.

DME is a pretty simple compound. Methane, the least complex hydrocarbon, has the chemical formula CH4. That is one carbon atom bonded to four hydrogen atoms. When methane is burned - which is to say reacted with oxygen - it produces carbon dioxide (CO2) and water (H20).

DME can be thought of as a couple of methane molecules with an oxygen separating them. It looks like this: CH3 - O - CH3. This is an ether; in fact the simplest ether (characterized by the oxygen separating two hydrocarbon groups). Note that each methane (methyl) group is missing one hydrogen, which allows it to form the bond with oxygen. But when DME is burned, you still end up with carbon dioxide and water.

DME is produced from methanol, the simplest (and cheapest) alcohol. The current price for methanol as listed by Methanex is $1.10/gal, compared to a national average rack price of $2.26/gallon for ethanol and a national average spot price of $1.83/gallon for gasoline.

Methanol works fine as a transportation fuel, but has some disadvantages. While methanol is cheaper to produce than ethanol, the energy content per gallon is even lower than for ethanol (and methanol is more toxic). Ethanol has about 2/3rds of the energy content of gasoline, but methanol contains only half the energy content of gasoline. As a transportation fuel, this is a disadvantage (but not a knockout) because it limits the range of your car.

As a fuel, DME can be used in either an internal combustion engine or a diesel engine. That makes the potential market huge. DME is a gas at room temperature, but compresses to a liquid under mild pressures. It is currently used as a propellant in many consumer products, and is classified as non-toxic and non-carcinogenic. (Granted that if you stand around in a room filled with nothing but DME, you will die due to oxygen deprivation. The same is also true of nitrogen, which makes up 79% of our atmosphere).

DME is completely miscible with LPG, and can be used as a supplement/replacement in either transportation or heating applications. When combusted, DME burns very cleanly. There are no associated sulfur or particulate emissions (even in a diesel engine).

DME can be produced from biomass, coal, natural gas, or essentially any source of carbon. Unlike many ‘next generation’ biofuels, production from biomass is a straightforward route and not especially complex. You gasify biomass to produce syngas, react syngas to produce methanol, and then dehydrate the methanol. Each of these steps takes place every day at large scale at chemical companies around the world.

There are some specific disadvantages from DME, but this is true for just about any fuel. First, the fact that it is a gas at room temperature means that if there is a leak, it can form an explosive mixture in the air. The same is true for natural gas or LPG. Second, the energy density of the fuel is lower than for gasoline or diesel. The volumetric energy density lies between that of ethanol and methanol.

So why aren’t we using it in North America? Like many other fuels, it is a chicken and egg problem. We don’t have the infrastructure in place in the U.S. Some vehicle modifications would be required to accommodate it as well. But these are not insurmountable problems, as the continuing roll-out of E85 vehicles and service stations has shown.

The Chinese have embraced DME for years, and are increasing their DME capacity. This allows them to convert their coal into something much more desirable for them - transportation fuel.

The Swedes are also at the forefront of rolling out DME. The Swedish company Chemrec has been converting pulp mills into biorefineries that produce DME. Volvo has announced that they are conducting studies on the performance of DME in 14 of their heavy trucks over the next two years. (Here is another story on that at Green Car Congress).

In North America, I know several people or groups who have expressed interest in, or are dabbling with DME. My expectation has been that at some point there will be an entry into the market here, but it will be slow due to the aforementioned lack of infrastructure. What prompted me to write this essay was I spotted a story yesterday about a Canadian company that is going to give it a shot:

Dimethyl ether: The unknown fuel that’s gaining fame

A clean fuel that’s already gaining traction in Asia could be getting a toehold in Canada, just in time to help northwest B.C.’s hard-hit forest industry. Dimethyl ether, or DME, is almost unknown in North America but may soon get a big boost here from new tough emission standards coming to the U.S.

DME is a mixture of hydrogen and carbon monoxide that can be produced from biomass, natural gas or coal. It is now used as a propellant in aerosol spray cans because it is non-toxic and breaks down. But DME also has the potential to replace diesel fuel because it produces 95 per cent fewer greenhouse gases, no soot, low levels of nitrogen oxide and no sulphur dioxide.

Calgary-based GV Energy is proposing to build a biorefinery to produce DME in Terrace, B.C.

While some of those details are slightly inaccurate, the article is a good read on how DME can fit into the fuel mix and add jobs in an area with the right resource base. Especially interesting to me is to view the comments from readers. I find it amazing at times the emotional attachment some people have to trees. I can understand opposition to the conversion of forest to pasture or agricultural land. I can understand the opposition to clear-cutting and not replanting. But it seems that to some people, cutting down a tree is just wrong. Period. This coming from people who are living in houses made from wood.

If we use managed forestry to produce DME, then that has the potential to be an improvement over the status quo. Like anything else, there is a right way and a wrong way. But just because a wrong way exists doesn’t mean that you don’t try at all. We (my company) are not going stop trying to responsibly manage and use forest assets just because some aren’t doing so. We will just continue to do things in the most sustainable way we can, and hope that the proper incentives are in place to make sure others do so as well.

But I digress a bit. To learn more about DME, see this presentation put together by Europe’s BioDME project. Note especially the slide that shows the land usage efficiency of DME relative to competing fuels.

The market for DME is bound to continue growing due to its versatility as a fuel and because it can be produced relatively easily from a wide variety of starting materials. The question is whether North America will continue to watch that growth occur in Europe and China.

Platts Survey of Top Energy Stories of 2009

Submitted by R-Squared Energy Blog

As I compile my year end list of the biggest energy stories of the year, I have just gotten an e-mail from Platts that is very helpful. As they have done in previous years, they have a survey up so readers can rank the top stories:

Platts wants to know: the biggest oil stories of ‘09

They will publish the results shortly after Christmas. Scanning the list and comparing to my rough draft of the Top 10, I see one story that isn’t currently on my list that I missed: The Valero Foray into Ethanol. Other than that, all of the stories that I have tentatively in my Top 10 are on their list except for two (and I bet people who take the survey will suggest both of them).

I will post my list prior to Christmas, and hope that we don’t see another big year end story like the XOM acquisition of XTO. That is a Top 10 story that came in right at the end of the year. Here is how I ranked the stories Platts had listed, but this was off the top of my head and very subjective. I may decide later on that #3 should really be #8, or that something that didn’t make the list should really be on there. My Top 10 will be a bit different because I have combined some topics that they treated separately.

1. Prices (basis WTI) comes roaring back to the $80 level after almost hitting $30
2. Full-year decline in demand heads toward biggest drop since 1981
3. Natural gas-crude spread in US blows out to unprecedented levels
4. Refinery woes: Valero shuts Delaware City , Sunoco shuts Eagle Point, Repsol shuts Cartegena, Japan cutbacks underway (RR: related to Reliance news)
5. Valero makes big foray into ethanol with multiple ethanol plant purchases; Sunoco follows on smaller scale
6. EU slaps duties on US sales of biodiesel into Europe
7. OPEC holds to its 24.845 million b/d ceiling all year
8. US EPA rules greenhouses gases are a threat to public health, plans on using authority to regulate them
9. ExxonMobil gets into bidding war with Chinese, others over Ghana stake (RR: more for what it signals for the future).
10. Exxon buys XTO for $41 billion

Biomass Is Not Crazy Logic

Submitted by R-Squared Energy Blog

I saw a story about a week ago that I flagged to comment on when I got caught up. I suppose I am caught up enough now to do so. The story is:

Burn a Tree to Save the Planet? The Crazy Logic Behind Biomass

The author is listed as Joshua Frank, described as an environmental journalist and the author of Left Out!: How Liberals Helped Reelect George W. Bush. Frank has previously written an article critical of Oregon’s usage of electricity derived from coal, and in the current essay he turns his attention to biomass.

The article is confusing from the start:

It might seem crazy that anyone would even consider the incineration of wood and its byproducts to be a green substitute for toxic fuels such as coal. Yet that’s exactly what is happening all over the country, and it has many environmentalists scratching their heads in disbelief.

I find those comments baffling. Why would it seem crazy to believe that burning biomass - which utilizes CO2 when it is growing and helps sequester carbon in the soil through the root systems, leaves, and slash - would be greener than burning a fossil fuel like coal that has a long list of potentially undesirable environmental impacts? Do you know what happens to waste biomass that isn’t utilized? It decomposes and ends up as the same CO2 it would end up as if you burned it.

While it is true that emissions controls on coal-fired power plants are much improved in recent years, it is also true that burning coal has resulted in acid rain and increased levels of mercury in our waterways. Burning coal also increases the concentration of CO2 in the atmosphere. To suggest that burning trees isn’t greener than burning coal is one of the most ludicrous things I have ever heard. From the tone of the article, it sounds as if the author believes that forestry and the harvesting of trees is by definition bad.

Now it is true that if you cut down an old growth forest and inefficiently turn it into a liquid fuel, that isn’t environmentally responsible. I could certainly envision any number of schemes to make the burning of biomass come out with a higher environmental impact than from burning coal. If I cut down a chunk of the Amazon, displace the people and the wildlife living there, ship the wood halfway around the world, and combust it in an old, inefficient boiler - then yes, the environmental impact of that would be higher than from burning Powder River coal. But such exceptions aren’t the norm. This article, however, paints with a very broad, one-sided brush and acts as if all usage of biomass is by definition bad:

NASA’s James Hansen says that the burning of coal is the single largest contributor to anthropogenic global warming, so any alternative fuel source must decrease the amount of carbon dioxide (CO2) released into the atmosphere if we are to put the breaks on climate change. Biomass, despite its label as a renewable energy source, does not solve the problem because burning trees actually emits a large amount of CO2.

That is another very odd comment. Burning coal releases ancient CO2 that was sequestered away. Burning biomass releases recently recycled CO2. That’s why it is renewable. If the author is concerned about CO2 emissions - and he clearly is - then coal and biomass are night and day. And while they acknowledge in their next paragraph that this is what “proponents counter with”, Frank quickly tries to shoot that one down:

An article in Science released last October attempted to debunk the myth that biomass is a good alternative to traditional coal and oil burning. The study, authored by climate scientists, claimed that when an existing forest is chopped and cleared to produce fuel, the ability of those harvested trees to absorb CO2 is eliminated entirely while the amount of greenhouse gases in the atmosphere actually increases.

This entire article seems bent on the notion that the biomass we utilize will come from old growth forest that is slashed, burned, and left fallow. The people interviewed for the article must envision a scenario like turning the Amazon into biofuels - and this is the future they must foresee for biomass to come up with these sorts of conclusions. Such a notion isn’t remotely indicative of the future of biomass. Biomass will be grown for purpose (as I explained in Don’t Weep for the Trees), and it can definitely be grown responsibly and sustainably.

“The game is up,” stated biomass skeptic Ellen Moyer, a principal of green engineering firm Greenvironment, after the release of the report. “The problem has been identified, and the clarion call for course correction has rung out around the world. The days of biomass burning … are numbered and pending legislation needs to be corrected before perverse incentives to burn our forests are enshrined in law.”

You will have to show me the laws that incentivize the burning of our forests. If you mean laws that incentivize the usage of biomass for energy - well that isn’t the same as burning our forests. You first grow the forest, and while that is taking place everything you are complaining about when you burn it is running in reverse. Oh, there can be particulate emissions from improper burning, but it is also true that proper forest management can result in improved soil and increased carbon sequestration in the soil.

Another problem with biomass is that it is typically mixed with substances like coal to produce energy. In Nevada, for example, NV Energy is set to use a mix of coal and wood at its Reid Gardner coal-fired power plant. As a result, the company hopes to qualify for the state’s renewable energy credits.

The first problem is that this isn’t true. That is not how biomass is typically used. It can only be blended with coal in small amounts due to differences in chemical and physical properties, and it requires a substantial investment in the coal plant to allow such mixing. There is a technology called torrefaction that has the potential to allow much greater mixing, as it converts biomass into something like bio-coal. But torrefaction is still mostly at a pre-commercialization stage.

If a coal-fired power plant receiving energy credits isn’t mind boggling enough,…

Why is that mind-boggling? You just wrote that they were going to use wood to displace coal. Why wouldn’t they qualify for the same energy credit anyone else gets for using biomass? Or do you prefer that they simply continue to use 100% coal?

“They are burning more than trees because wood is simply not a good energy source,” said Jeff Gibbs, who resides in Michigan and is fighting the state’s six operating biomass plants. “Look, wood produces 50 percent more CO2 than coal, for the same amount of energy output. We have to stop this before more plants begin to pop up.”

I am sorry, but that’s another ludicrous statement. I would really love to see the analysis that provided that figure.

Not only is biomass not a good source of power, claims a 2007 paper presented at the European Aerosol Conference, it’s also not a healthy alternative to coal. The paper claimed that particulate matter (particles, such as dust, dirt, soot or smoke) was actually higher for a 7 megawatt wood gasification plant than it was for a large coal-fired power station.

There’s that broad brush again. While it is true that wood gasification plants can have lots of particulate emissions, that is not an inherent quality. You can put the same pollution controls on them that you can on coal plants. So once again a bad starting assumption leads to a sweeping, but false conclusion.

In summary, this was a very one-sided view that presented the worst extremes as more or less the status quo for biomass utilization. It is true that you can do things a right way or a wrong way. Water is healthy and I need it to live, but if I drink too much it can kill me. Taking a page from this article, I suppose I should avoid water from now on, as it has the potential to kill me.

For those quoted in the article, I hope they don’t freeze to death in the dark as the biomass they are so opposed to rots and releases its CO2 anyway. As I tell people sometimes, if you are opposed to everything, then prepare to be happy with the status quo.

Osmotic Power

Submitted by R-Squared Energy Blog

Did you ever wonder why the skin on your hands sometimes shrivels when you have them in water for too long? The underlying reason is called osmosis (a simple explanation in more detail below), and the same driving force is now being utilized as a power source.

Occasionally I encounter an energy story that catches me by surprise because it is so far under the radar. This morning I got one of those from a friend who e-mailed and referred me to this story:

The world’s first osmotic power plant opened!

My immediate reaction was skepticism that you could really make osmotic power work as a viable energy source. But first a bit of background before readers’ eyes glaze over at the usage of unfamiliar terminology. Students of chemistry or biology will have encountered the concept of osmosis, and most people have heard of reverse osmosis for the production of fresh water from saline or otherwise contaminated water.

In a simplified nutshell, water that is separated from a salt solution by a semi-permeable membrane (like a cell wall) will have a potential to migrate across into the salt solution - creating a pressure difference on the two sides of the membrane. (Lots of systems can create an osmotic pressure, but for illustration let’s focus on salt water and fresh water).

Osmosis is a very important concept in biology, as it is the mechanism by which water moves in and out of cells. A blood cell, for instance, will lose water and shrink if it encounters an outside environment that is more saline (saltier) than the internal environment. Water moves through plants by this process as well.

But to illustrate what is going on in the press release above, let’s talk about reverse osmosis. In reverse osmosis, a pressure is applied to the high salt concentration side to force fresh water back across the membrane - leaving the salt behind. The applied pressure must be greater than the osmotic pressure, or the fresh water will migrate to the saline side.

Now imagine that system in reverse. There is a saline solution on one side of the membrane, and it is allowed to build pressure from the migration of the fresh water across the membrane into the salt water. The build up of pressure - in this case osmotic pressure - could in theory be utilized for energy.

Imagine the way a dam works. Water pressure forces the water through a turbine, which generates electricity if it is coupled to a generator. If the osmotic pressure is likewise allowed to relieve through a turbine, then yes, in fact it could be used to produce electricity. Such a system would indeed produce osmotic power.

However, until this morning’s e-mail I had never heard of anyone actually building a system to do this. And I am skeptical that anyone can actually produce cost-effective electricity this way, because to generate a substantial pressure is going to require a lot of membrane surface area. A little bit of digging shows that the system above has a power output of only 4 kilowatts.

To put that into perspective, there are numerous power plants with outputs greater than 1,000 megawatts - which is 250,000 times the size of this osmotic power demonstration unit. So while this is perhaps newsworthy due to the novelty, they must prove that they can economically scale-up, and that is always a big hurdle.

One thing I wondered about as I read this article is whether it might not be more cost-effective to put in pipelines of fresh water to regions that are doing reverse osmosis of salt water. The idea being instead of using the fresh water in one location for osmosis and the salt water in the other for reverse osmosis, bypass the osmosis all together (reverse osmosis is very energy intensive).

Update: A reader just sent a link that says that IBM is looking into this as well: Energy From Sea Water? Consider IBM Intrigued

Footnote: I Googled the term “osmotic power” to see if that term had ever been used in this blog. My expectation was that it hadn’t, but I see that a reader linked to a story on this a couple of weeks ago in the comments following the story on OTEC (which I should be updating soon).

The DOE Funding Recipients

Submitted by R-Squared Energy Blog

I am so far behind on the things that I have been intending to write. It is hard to believe that it has already been over a week since the most recent US DOE biorefinery grants were announced. I have been meaning to list them and comment, but I have finally decided just to list them without too much comment. Let’s just say that some of these names have been around for a while and have issued a lot of press releases, but they haven’t produced any biofuel.

The reason for keeping my comments to a minimum is that I have potential conflicts of one sort or another with several of these companies or projects. Sometimes it is just that I know some of the people involved; in other cases it is more complicated than that. But I don’t want to be accused of possible conflicts of interest by getting into some of the names/technologies that I am surprised to see listed. I know that there were also a number of high profile companies (i.e., they issue a lot of press releases) who did not make the cut.

It is probably worth a future post to check into the six prospective cellulosic ethanol plants funded by the DOE in February 2007 (see the list at the bottom of my post here). As far as I know only one - Broin/POET - has completed a project from those funds that is producing cellulosic ethanol.

Below is the list of recent award recipients, from A(lgenol) to Z(eachem), as compiled by Biofuels Digest. I embedded links to all of the companies. There were nineteen projects awarded, for a grant total of up to $564 million.

And if you ever wondered how the DOE determines the winners and losers, the New York Times did an interesting story on that a few days ago:

How DOE Dealt With a ‘Tsunami’ of Clean-Tech Applicants

The outpouring of grants — and the preponderance of unsuccessful applicants — has stirred curiosity and some complaints over the DOE rating process.

The review involved a series of screening steps that included technology capability, job creation, likelihood of success, and ability to generate matching funds, DOE says.

Rogers was asked whether DOE would make public the winners’ applications and the review teams’ analysis, to shed more light on the decision-making.

“Our plan is not to make that public. First off, all of the [private-sector] reviewers are doing this as a matter of public service, and we don’t need to draw them into getting interviewed about every application.”

The Winners

Bluefire Ethanol
DOE Grant: $81,134,686
Non-fed funding: $223,227,314

BioEnergy International
DOE Grant: $50,000,000
Non-fed funding: $89,589,188

Enerkem
DOE Grant: $50,000,000
Non-fed funding: $90,470,217

INEOS New Planet BioEnergy
DOE Grant: $50,000,000
Non-fed funding: $50,000,000

Sapphire Energy
DOE Grant: $50,000,000
Non-fed funding: $85,064,206

Algenol Biofuels
DOE grant: $25,000,000
Other funding: $33,915,478

American Process
DOE grant: $17,944,902
Other funding: $10,148,508

Amyris Biotechnologies
DOE grant: $25,000,000
Other funding: $10,489,763

Archer Daniels Midland
DOE funding: $24,834,592
Other funding: $10,946,609

Clearfuels Technology
DOE funding: $23,000,000
Other funding: $13,433,926

Elevance Renewable Sciences
DOE funding: $2,500,000
Non-Fed funding: $625,000

Gas Technology Institute
DOE funding: $2,500,000
Non-Fed funding: $625,000

Haldor Topsoe
DOE funding: $25,000,000
Non-Fed funding: $9,701,468

ICM
DOE funding: $25,000,000
Non-Fed funding: $6,268,136

Logos Technologies
DOE funding: $20,445,849
Non-Fed funding: $5,113,962

Renewable Energy Institute International
DOE funding: $19,980,930

Solazyme
DOE funding: $21,765,738
Non-Fed funding: $3,857,111

Honeywell’s UOP
DOE funding: $25,000,000
Non-Fed funding: $6,685,340

ZeaChem
DOE funding: $25,000,000
Non-Fed funding: $625,000

Boardman, OR: This project will use purpose grown hybrid poplar trees to produce fuel-grade ethanol using hybrid technology. Additional feedstocks such as agricultural residues and energy crops will also be evaluated in the pilot plant.

Copenhagen Suggests Climate Issue Not Going Away

Submitted by R-Squared Energy Blog

I have mentioned that I think ClimateGate will end up being one of the top stories of 2009. A number of people have commented or e-mailed me and said that the story will soon be forgotten. I don’t think so. I don’t think they realize the energy this gives to those who were skeptical. In my opinion, this will galvanize the opposition and make it much harder to get any legislation passed on climate change. (I am reading through a very comprehensive examination of the raw data and the nature of the temperature adjustments now at Watt’s Up With That?: The Smoking Gun At Darwin Zero)

Regardless of whether that view is accurate, I would be remiss if I didn’t have an essay devoted to the Copenhagen Conference. Prior to the Copenhagen conference, the Great Plains Institute, an energy-focused NGO that was going to delegates to Copenhagen, asked if I would be interested in receiving dispatches from their policy analysts about what’s happening in real-time inside the convention hall.

Here is one of those dispatches:

Copenhagen Suggests Climate Issue Not Going Away

Copenhagen, Denmark

Rolf Nordstrom, Wednesday, December 9, 2009

I arrived in Copenhagen on Monday afternoon and am still suffering a little jet lag, but I am awake enough to give you a glimpse of what the climate change conference taking place here these next two weeks looks and feels like, and how you might expect it to impact your life.

First, to give you a sense of scale, I want you to imagine that the vast Mall of America is filled not with shops of every kind, but with hundreds of booths from different organizations, temporary offices for delegates from 192 countries, vast meeting rooms set up with microphones and video screens, cafes, the mother of all cloak rooms, huge banks of computer stations (many with Skype and video capability built in), and the whole place teaming with people.

To get into this global “town hall” meeting, I waited in line with hundreds of others in order to get my picture taken and go through several security check points. Indeed, the elaborate airport-like security system rivals any major airline hub, complete with scanners and sniffing dogs. And all this only hints at the scale of this gathering.

If you don’t follow the climate change issue closely, it may seem like this conference in Copenhagen is coming out of thin air. But the international negotiating process on climate change has been going on for a long time and takes place through a series of meetings, each called a “Conference of the Parties to the United Nations Framework Convention on Climate Change” (or COP for short). This one, COP15, is my first and by all accounts the very largest of them all, suggesting that concern over the world’s climate has grown dramatically over the past 17 years; and of course the issue of climate change has been studied by scientists for decades prior to that.

High-level ministers and negotiators from all over the world meet every year to review the implementation of the overall Convention, which was signed back in 1992 in New York (including by the U.S.). Its objective is “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.”

If you are a climate skeptic, being at this conference would prompt you to ask yourself, “if the science behind climate change is not compelling, then how is it that essentially every major country in the world—and many you’ve never heard of (think Tuvalu or Comoros), is convinced that climate change is a real and urgent challenge? Have their scientists and elected leaders all be hoodwinked?

We tend to be a bit isolated in our thinking in the U.S., but a lack of strong action on climate change has led to demonstrations in some 4,500 locations in 170 countries, and more are taking place here in Copenhagen. An example yesterday featured people convincingly dressed as trees being followed around by a scrum of reporters with cameras and sound booms as the tree people called for a halt to deforestation and the preservation of forests in the push for new forms of energy production.

No matter what happens here, you can expect there to eventually be an international agreement that places legally-binding limits on the emission of greenhouse gases. If I were a business, I would ask myself two questions:

1) Do I think this issue will go away? In other words, can we just wait it out (like a war of attrition) and hope that climate change goes away? If your answer is “yes”, what is the evidence for this view? What leads you to believe that the world will forget about climate change?

2) If the issue is not going away, then what can I do as a business (or an individual for that matter) to position myself to flourish in a carbon-constrained world?

At a minimum, you may want to stay informed. One good way to do that is to follow the proceedings and the U.S. government’s positions here in Copenhagen through this official Web site: http://cop15.state.gov/uscenter/multimedia/index.htm

Rolf Nordstrom is executive director of the Great Plains Institute, a Minnesota-based nonpartisan, nonprofit working with Midwestern States and Canadian provinces to accelerate the transition to a sustainable and prosperous low-carbon economy.

Hidden Gems? Why Green Investors Should Look at Daewoo Shipbuilding And Ener1 (Pt. 2 of 2)

Submitted by EnergyTechStocks.com

Neither Daewoo Shipbuilding & Marine Engineering Co. Ltd., which trades OTC under the symbol DWOTF, nor Ener1 Inc., which trades on NASDAQ under the symbol HEV, is an obvious candidate for having hidden potential.

Heck, Daewoo isn’t even a green energy stock. Or is it?

Lost in the hubbub of Copenhagen and Congress, there’s been important news about both these companies that strongly suggests – at least to me – that each has plenty of undiscovered potential that will really start paying off over the next 18 to 24 months.

South Korea’s Daewoo Shipbuilding was just awarded a contract by German utility RWE AG’s (Symbol: RWEOY) renewable energy unit for up to three vessels specially designed to install offshore wind farms. The contract reportedly could be worth upwards of half a billion dollars, depending on whether RWE picks up the option on the second and third ships. The first ship is scheduled to be completed in 2011.

A couple things: at present, offshore wind power is going gangbusters thanks to healthy project returns that one European investment bank puts at around 15%. But installing the new large wind turbines under often harsh conditions requires a special kind of vessel. Daewoo’s reportedly will be the first – quite possibly the first of many. (Simultaneously, Daewoo just said it may build a wind power equipment plant in China.)

As for Ener1, seasoned green investors may think they know everything about this lithium-ion battery manufacturer. If Pike Research is correct, the future is bright for all li-ion battery manufacturers, Pike having just forecast that the global li-ion transportation battery market will total nearly $8 billion by 2015, compared with $878 million in 2010.

But the big li-ion winners should be those companies whose batteries also meet the critical need of providing energy storage for power grids. The really big winners should be those companies whose li-ion batteries also go into cars whose manufacturers can provide the rapid recharging infrastructure that consumers have indicated they want.

Tuck this away: Ener1 is the battery supplier in the world’s first project linking grid storage, electric vehicles, rapid recharging infrastructure and solar power. Other participants in the just-announced Japanese project include Mazda Motor Corp. (Symbol MZDAY) and Kyushu Electric Power, which trades in Tokyo under the symbol 9508.

Footnote: in Part 1 of this series, we explored the undiscovered potential of PFB Corp. (Symbol PFB), Vodafone Group (Symbol VOD), and Telefonica S.A. (Symbol TEF). For more please see: Hidden Gems? Why Green Investors Should Look at PFB, Vodafone And Telefonica (Pt. 1 of 2).

The Questions I Didn’t Ask

Submitted by R-Squared Energy Blog

I have been asked to submit a video question on ethanol policy that will be potentially answered in a video blog by someone who is very well-known in the energy business. I will keep the details quiet for now, including the question I did submit. (I thought I would be able to record my question with stunning Hawaiian scenery in the background, but alas it has been raining for two days).

I really had to brainstorm on exactly which question I would ask. I made a short list, and finally honed it down to one that I think is fair, but tough. But I had a number that I decided not to ask, either because I already knew how it would be answered (even if I disgreed with the expected answer) or the questions/answer to the question was so complex that it couldn’t be answered in a short video clip.

Here I discuss what I didn’t ask, but it really gets to the heart of the issues I have with U.S. ethanol policy. First, a bit of framework. I believe that I am, and have always been objective, and a realist. I don’t believe that we are ever going to have a moment where government leaders say “Let’s abandon this ethanol pathway.” We had an example of that with MTBE, but there was clear evidence that MTBE was getting into groundwater and lingering.

The issues around ethanol are more complex. Corn ethanol has been U.S. policy for the past 30 years, and it will be policy for the next 30 years. It is too embedded in agriculture policy, and I think it would be devastating for Midwestern economies if we changed direction on corn ethanol. Thus, I think we continue down that path, for better or worse.

I am not pro-ethanol nor am I anti-ethanol. In one of my earliest essays in this blog, over 3.5 years ago, I talked about some of the things I would like to see happen in the grain ethanol industry, mostly aimed at improving the energy balance. I came out in favor of the approach of E3 Biofuels, who were trying to build a highly integrated ethanol complex that minimized fossil fuel inputs. I have endorsed such approaches on multiple occasions.

My concerns are, and have always been: What are the long-term consequences? I don’t limit this to ethanol; this is a question that I ask of all energy options. Dependence on oil has some significant long-term consequences. The most serious of which, for me, is the potential for building a world that is only sustainable as long as oil production continues to expand. I see significant risk there, so it has always been my position that we need to reduce our dependence on fossil fuels in general.

With respect to ethanol, consider this thought experiment that I posed following one of my previous essays: Would you consume 2 BTUs of natural gas to produce 1 BTU of ethanol? I think most people would conclude that this would be foolish; that your natural gas supplies would stretch much further if instead you simply use the natural gas in CNG vehicles (acknowledging of course that there are lots of things you have to evaluate in that scenario). For those who would answer “Yes” to that question, I would argue that your view of ethanol is entirely one-dimensional. You probably only care that it is homegrown, and you don’t worry much about the long-term consequences.

Of course the truth is more complicated than the example above. It doesn’t take 2 BTUs of natural gas to produce 1 BTU of ethanol. Estimates vary, but it is still safe to say that most ethanol operations in the U.S. continue to have substantial fossil fuel inputs. That is the way they were built, and that is the way they will continue to operate. Over the long-term, there is potential to change that equation by using biomass boilers, but those are more expensive to operate than a standard natural gas boiler.

So on average the ethanol industry does still have a heavy fossil fuel dependence, albeit largely domestic coal (for electricity) and domestic natural gas - with some petroleum inputs for trucks, tractors, etc. (One thing to note is that more than 50% of our fertilizer supplies - derived from natural gas - are in fact imported). So what if the question was “Would you spend 1 BTU of natural gas to make 2 BTUs of ethanol?” If you are doing a holistic analysis, the answer should be “It depends. What are the other impacts?”

There are those who wrap U.S. ethanol policy in patriotism and the American flag, and who would rather not get into those questions. These questions are hand-waved away with clichés like “I would rather support American farmers than Saudi sheiks.” I try to look at it from the perspective of an engineer, a scientist, and an environmentalist. I want to stack the columns up and figure out what is really happening as a result of our ethanol policy and subsequent rapid expansion of corn production. I want to look at it from the perspective of “What is going to be the impact on the world my children will inherit?”

Just a few of the key questions for me are the following:

The Questions I Didn’t Ask

Submitted by R-Squared Energy Blog

I have been asked to submit a video question on ethanol policy that will be potentially answered in a video blog by someone who is very well-known in the energy business. I will keep the details quiet for now, including the question I did submit. (I thought I would be able to record my question with stunning Hawaiian scenery in the background, but alas it has been raining for two days).

I really had to brainstorm on exactly which question I would ask. I made a short list, and finally honed it down to one that I think is fair, but tough. But I had a number that I decided not to ask, either because I already knew how it would be answered (even if I disgreed with the expected answer) or the questions/answer to the question was so complex that it couldn’t be answered in a short video clip.

Here I discuss what I didn’t ask, but it really gets to the heart of the issues I have with U.S. ethanol policy. First, a bit of framework. I believe that I am, and have always been objective, and a realist. I don’t believe that we are ever going to have a moment where government leaders say “Let’s abandon this ethanol pathway.” We had an example of that with MTBE, but there was clear evidence that MTBE was getting into groundwater and lingering.

The issues around ethanol are more complex. Corn ethanol has been U.S. policy for the past 30 years, and it will be policy for the next 30 years. It is too embedded in agriculture policy, and I think it would be devastating for Midwestern economies if we changed direction on corn ethanol. Thus, I think we continue down that path, for better or worse.

I am not pro-ethanol nor am I anti-ethanol. In one of my earliest essays in this blog, over 3.5 years ago, I talked about some of the things I would like to see happen in the grain ethanol industry, mostly aimed at improving the energy balance. I came out in favor of the approach of E3 Biofuels, who were trying to build a highly integrated ethanol complex that minimized fossil fuel inputs. I have endorsed such approaches on multiple occasions.

My concerns are, and have always been: What are the long-term consequences? I don’t limit this to ethanol; this is a question that I ask of all energy options. Dependence on oil has some significant long-term consequences. The most serious of which, for me, is the potential for building a world that is only sustainable as long as oil production continues to expand. I see significant risk there, so it has always been my position that we need to reduce our dependence on fossil fuels in general.

With respect to ethanol, consider this thought experiment that I posed following one of my previous essays: Would you consume 2 BTUs of natural gas to produce 1 BTU of ethanol? I think most people would conclude that this would be foolish; that your natural gas supplies would stretch much further if instead you simply use the natural gas in CNG vehicles (acknowledging of course that there are lots of things you have to evaluate in that scenario). For those who would answer “Yes” to that question, I would argue that your view of ethanol is entirely one-dimensional. You probably only care that it is homegrown, and you don’t worry much about the long-term consequences.

Of course the truth is more complicated than the example above. It doesn’t take 2 BTUs of natural gas to produce 1 BTU of ethanol. Estimates vary, but it is still safe to say that most ethanol operations in the U.S. continue to have substantial fossil fuel inputs. That is the way they were built, and that is the way they will continue to operate. Over the long-term, there is potential to change that equation by using biomass boilers, but those are more expensive to operate than a standard natural gas boiler.

So on average the ethanol industry does still have a heavy fossil fuel dependence, albeit largely domestic coal (for electricity) and domestic natural gas - with some petroleum inputs for trucks, tractors, etc. (One thing to note is that more than 50% of our fertilizer supplies - derived from natural gas - are in fact imported). So what if the question was “Would you spend 1 BTU of natural gas to make 2 BTUs of ethanol?” If you are doing a holistic analysis, the answer should be “It depends. What are the other impacts?”

There are those who wrap U.S. ethanol policy in patriotism and the American flag, and who would rather not get into those questions. These questions are hand-waved away with clichés like “I would rather support American farmers than Saudi sheiks.” I try to look at it from the perspective of an engineer, a scientist, and an environmentalist. I want to stack the columns up and figure out what is really happening as a result of our ethanol policy and subsequent rapid expansion of corn production. I want to look at it from the perspective of “What is going to be the impact on the world my children will inherit?”

Just a few of the key questions for me are the following:

The Questions I Didn’t Ask

Submitted by R-Squared Energy Blog

I have been asked to submit a video question on ethanol policy that will be potentially answered in a video blog by someone who is very well-known in the energy business. I will keep the details quiet for now, including the question I did submit. (I thought I would be able to record my question with stunning Hawaiian scenery in the background, but alas it has been raining for two days).

I really had to brainstorm on exactly which question I would ask. I made a short list, and finally honed it down to one that I think is fair, but tough. But I had a number that I decided not to ask, either because I already knew how it would be answered (even if I disgreed with the expected answer) or the questions/answer to the question was so complex that it couldn’t be answered in a short video clip.

Here I discuss what I didn’t ask, but it really gets to the heart of the issues I have with U.S. ethanol policy. First, a bit of framework. I believe that I am, and have always been objective, and a realist. I don’t believe that we are ever going to have a moment where government leaders say “Let’s abandon this ethanol pathway.” We had an example of that with MTBE, but there was clear evidence that MTBE was getting into groundwater and lingering.

The issues around ethanol are more complex. Corn ethanol has been U.S. policy for the past 30 years, and it will be policy for the next 30 years. It is too embedded in agriculture policy, and I think it would be devastating for Midwestern economies if we changed direction on corn ethanol. Thus, I think we continue down that path, for better or worse.

I am not pro-ethanol nor am I anti-ethanol. In one of my earliest essays in this blog, over 3.5 years ago, I talked about some of the things I would like to see happen in the grain ethanol industry, mostly aimed at improving the energy balance. I came out in favor of the approach of E3 Biofuels, who were trying to build a highly integrated ethanol complex that minimized fossil fuel inputs. I have endorsed such approaches on multiple occasions.

My concerns are, and have always been: What are the long-term consequences? I don’t limit this to ethanol; this is a question that I ask of all energy options. Dependence on oil has some significant long-term consequences. The most serious of which, for me, is the potential for building a world that is only sustainable as long as oil production continues to expand. I see significant risk there, so it has always been my position that we need to reduce our dependence on fossil fuels in general.

With respect to ethanol, consider this thought experiment that I posed following one of my previous essays: Would you consume 2 BTUs of natural gas to produce 1 BTU of ethanol? I think most people would conclude that this would be foolish; that your natural gas supplies would stretch much further if instead you simply use the natural gas in CNG vehicles (acknowledging of course that there are lots of things you have to evaluate in that scenario). For those who would answer “Yes” to that question, I would argue that your view of ethanol is entirely one-dimensional. You probably only care that it is homegrown, and you don’t worry much about the long-term consequences.

Of course the truth is more complicated than the example above. It doesn’t take 2 BTUs of natural gas to produce 1 BTU of ethanol. Estimates vary, but it is still safe to say that most ethanol operations in the U.S. continue to have substantial fossil fuel inputs. That is the way they were built, and that is the way they will continue to operate. Over the long-term, there is potential to change that equation by using biomass boilers, but those are more expensive to operate than a standard natural gas boiler.

So on average the ethanol industry does still have a heavy fossil fuel dependence, albeit largely domestic coal (for electricity) and domestic natural gas - with some petroleum inputs for trucks, tractors, etc. (One thing to note is that more than 50% of our fertilizer supplies - derived from natural gas - are in fact imported). So what if the question was “Would you spend 1 BTU of natural gas to make 2 BTUs of ethanol?” If you are doing a holistic analysis, the answer should be “It depends. What are the other impacts?”

There are those who wrap U.S. ethanol policy in patriotism and the American flag, and who would rather not get into those questions. These questions are hand-waved away with clichés like “I would rather support American farmers than Saudi sheiks.” I try to look at it from the perspective of an engineer, a scientist, and an environmentalist. I want to stack the columns up and figure out what is really happening as a result of our ethanol policy and subsequent rapid expansion of corn production. I want to look at it from the perspective of “What is going to be the impact on the world my children will inherit?”

Just a few of the key questions for me are the following:

The Questions I Didn’t Ask

Submitted by R-Squared Energy Blog

I have been asked to submit a video question on ethanol policy that will be potentially answered in a video blog by someone who is very well-known in the energy business. I will keep the details quiet for now, including the question I did submit. (I thought I would be able to record my question with stunning Hawaiian scenery in the background, but alas it has been raining for two days).

I really had to brainstorm on exactly which question I would ask. I made a short list, and finally honed it down to one that I think is fair, but tough. But I had a number that I decided not to ask, either because I already knew how it would be answered (even if I disgreed with the expected answer) or the questions/answer to the question was so complex that it couldn’t be answered in a short video clip.

Here I discuss what I didn’t ask, but it really gets to the heart of the issues I have with U.S. ethanol policy. First, a bit of framework. I believe that I am, and have always been objective, and a realist. I don’t believe that we are ever going to have a moment where government leaders say “Let’s abandon this ethanol pathway.” We had an example of that with MTBE, but there was clear evidence that MTBE was getting into groundwater and lingering.

The issues around ethanol are more complex. Corn ethanol has been U.S. policy for the past 30 years, and it will be policy for the next 30 years. It is too embedded in agriculture policy, and I think it would be devastating for Midwestern economies if we changed direction on corn ethanol. Thus, I think we continue down that path, for better or worse.

I am not pro-ethanol nor am I anti-ethanol. In one of my earliest essays in this blog, over 3.5 years ago, I talked about some of the things I would like to see happen in the grain ethanol industry, mostly aimed at improving the energy balance. I came out in favor of the approach of E3 Biofuels, who were trying to build a highly integrated ethanol complex that minimized fossil fuel inputs. I have endorsed such approaches on multiple occasions.

My concerns are, and have always been: What are the long-term consequences? I don’t limit this to ethanol; this is a question that I ask of all energy options. Dependence on oil has some significant long-term consequences. The most serious of which, for me, is the potential for building a world that is only sustainable as long as oil production continues to expand. I see significant risk there, so it has always been my position that we need to reduce our dependence on fossil fuels in general.

With respect to ethanol, consider this thought experiment that I posed following one of my previous essays: Would you consume 2 BTUs of natural gas to produce 1 BTU of ethanol? I think most people would conclude that this would be foolish; that your natural gas supplies would stretch much further if instead you simply use the natural gas in CNG vehicles (acknowledging of course that there are lots of things you have to evaluate in that scenario). For those who would answer “Yes” to that question, I would argue that your view of ethanol is entirely one-dimensional. You probably only care that it is homegrown, and you don’t worry much about the long-term consequences.

Of course the truth is more complicated than the example above. It doesn’t take 2 BTUs of natural gas to produce 1 BTU of ethanol. Estimates vary, but it is still safe to say that most ethanol operations in the U.S. continue to have substantial fossil fuel inputs. That is the way they were built, and that is the way they will continue to operate. Over the long-term, there is potential to change that equation by using biomass boilers, but those are more expensive to operate than a standard natural gas boiler.

So on average the ethanol industry does still have a heavy fossil fuel dependence, albeit largely domestic coal (for electricity) and domestic natural gas - with some petroleum inputs for trucks, tractors, etc. (One thing to note is that more than 50% of our fertilizer supplies - derived from natural gas - are in fact imported). So what if the question was “Would you spend 1 BTU of natural gas to make 2 BTUs of ethanol?” If you are doing a holistic analysis, the answer should be “It depends. What are the other impacts?”

There are those who wrap U.S. ethanol policy in patriotism and the American flag, and who would rather not get into those questions. These questions are hand-waved away with clichés like “I would rather support American farmers than Saudi sheiks.” I try to look at it from the perspective of an engineer, a scientist, and an environmentalist. I want to stack the columns up and figure out what is really happening as a result of our ethanol policy and subsequent rapid expansion of corn production. I want to look at it from the perspective of “What is going to be the impact on the world my children will inherit?”

Just a few of the key questions for me are the following:

Hidden Gems? Why Green Investors Should Look at PFB, Vodafone And Telefonica (Pt. 1 of 2)

Submitted by EnergyTechStocks.com

Looking for alternative energy stocks with undiscovered potential?

Who isn’t?

Here are three possibilities (with three more to come next week). You can decide for yourself whether they are worth further investigation.

First up: PFB Corporation, which trades on the Toronto Stock Exchange under the symbol PFB. Calgary-based PFB is an energy efficiency play. The company makes insulating building products that it sells under branded names in commercial and residential markets in North America and Japan.

The company most recently reported third quarter net income of $1.6 million or 24 cents vs. $1.1 million or 16 cents, and nine months net of $2.5 million or 38 cents compared $1.1 million or 17 cents. Earnings rose significantly despite lower sales, a reflection of the difficult economy faced by all construction-related businesses.

What would seem to make PFB a hidden gem is management’s demonstrated ability to control costs (and maintain the regular 6-cent-a-share dividend payout) in tough economic times. With energy efficiency – especially in buildings – increasingly being recognized as by far the most cost-effective way to start greening the economy, PFB has hidden potential that might really blossom as the overall economy improves.

Next up: Vodafone Group Plc, whose ADRs trade on NASDAQ under the symbol VOD, and Telefonica S.A., whose ADRs trade on the Big Board under the symbol TEF.

Although they’re already telecom giants, what gives Vodafone and Telefonica hidden potential is the role they appear destined to play in Europe’s smart grid build-out.

By 2020 the British government plans to have a smart meter in every home under a program whose cost is expected to top $11.5 billion. (The rest of Europe may not be far behind.) This will require enormous amounts of data to be wirelessly transmitted from those smart meters back to Britain’s energy companies. Vodafone and Telefonica (through its O2 unit) reportedly are negotiating to be the carriers of all that data, quite possibly through a new joint-venture firm.

While the payoff for investors won’t be immediate, Vodafone and Telefonica could become huge long-term beneficiaries of the smart grid, which a number of communications experts now think will become as big as or bigger than the Internet.

Catching Up

Submitted by R-Squared Energy Blog

Back home now, just trying to catch up on the energy news of note. Four stories that I want to highlight. First was POET’s announcement on their progress on cellulosic ethanol:

Poet hits ‘long shot,’ cuts cellulosic ethanol costs

WASHINGTON - The head of the world’s largest ethanol producer, Sioux Falls-based Poet, said Wednesday that his company has drastically cut its cellulosic ethanol production costs.

It is a breakthrough that will allow cellulosic ethanol to compete with gasoline within two years.

Jeff Broin, Poet chief executive, told reporters during a roundtable discussion that the company has reduced its cellulosic ethanol production cost during the past year from $4.13 a gallon to $2.35 a gallon.

Andrew Leonard of Salon asked me for some comments, which he included in a story on the news:

Who cares about peak oil when you have corn cobs?

In addition to what made it into the story (and those comments were specifically about the kinds of risk factors POET faces), I said that I thought the guys at POET had done a nice job on this (that comment did make it into the follow-up story at Salon). One thing that isn’t clear to me is whether the production cost includes any capital recovery. If not, then they still have some distance to go to get that $2.35 into an economic range with ethanol presently trading at about $2.00 a gallon. [Edit: A comment from Nathan Schock of POET over at Green Car Congress indicates that this is in fact the total production cost - including depreciation]. Another question I would have is how their version of the process performs with other sources of biomass.

One other thing I said to Andrew (that didn’t make it into the story) is the really big challenge is in getting those ethanol titers up. Low titers mean lots of energy is spent in getting the water out. This is why I have always favored gasification technologies over hydrolysis technologies: You don’t have water to deal with, and thus the BTU efficiency is potentially going to be higher. (Probably your capital costs as well will be higher for gasification - depending on what you are producing from the syngas). If biomass costs rise in the future - as I expect them to - then there will be added incentive for maximizing BTU efficiency.

The second story was sent by a reader. In light of the amount of corn we produce, this could have significant ramifications:

Amaizing: Corn Genome Decoded

A team of scientists led by The Genome Center at Washington University School of Medicine in St. Louis published the completed corn genome in the Nov. 20 journal Science, an accomplishment that will speed efforts to develop better crop varieties to meet the world’s growing demands for food, livestock feed and fuel.

The United States is the world’s top corn grower, producing 44 percent of the global crop. In 2009, U.S. farmers are expected to produce nearly 13 billion bushels of corn, according to the U.S. Department of Agriculture.

The next story is about a trend that I think will continue. In my presentation in Orlando, one of the trends that I pointed out is that more refineries are being built closer to the source of the oil. Saudi produces crude, but would like to capture more of that value chain by refining it as well. There are a number of very large refinery projects underway - especially in Asia and the Middle East - and in a world with stagnant oil production that means some refineries are going to shut down. In the U.S., our refining capacity is more than three times greater than our oil production rates. I see a dismal outlook for refining in the U.S., with a lot of refiners going out of business in the U.S. Valero just announced another refinery closing:

Valero refinery in Delaware City to close permanently

DELAWARE CITY, Del. — Valero Energy said this morning it plans to permanently close its Delaware City Refinery, eliminating hundreds of high-paying jobs, because of weak economic conditions, high local costs and chronic troubles at the 210,000 barrel-per-day complex.

Company spokesman Bill Day said that a plantwide maintenance shutdown, announced late last month, was already under way, and will convert to a final closing. Plant employees will continue on the payroll for 60 days under federal rules for large-scale layoffs.

Day said the plant — which produces about 70 percent of the gasoline sold on the Delmarva Peninsula— has lost $1 million a day since the start of 2009.

About 550 full time workers will be put out of work by the decision. Valero (VLO) also has notified companies that work closely with the refinery, Day said, but effects on those operations were not immediately available.

People forget that refining is a very tough business. They remember when refiners make money - as they were doing a couple of years ago - but forget that most of the time they aren’t making money. Plus, when they do make money they are subjected to accusations of gouging and calls from politicians to tax their windfall.

Finally, readers know that I have consistently avoided wading into the debate over global warming. It takes enough of my time just trying to keep up with the latest energy news, and I decided long ago to sit out the debate on climate change. It is far too politicized and people get too emotional over the issue. However, I do think it is important that the debate takes place, and I don’t like to see people trying to shut it down. Attaching labels like “denier” to people who question the science is an attempt to shut down debate, and I don’t care how right you think you are - in my view the debate needs to go on.

A couple of days ago it was announced that some e-mails from a climate research outfit in England had been hacked:

Global Warming Research Exposed After Hack

A climate change dust-up

I have to say that some of the e-mails I have seen posted are troubling. Whatever history ultimately shows, some of those e-mails appear to be agenda-driven and not science-driven. There is no place for that.

Let the debate carry on, and let science - not agendas - determine the outcome.

Thinking of Itron, EnerNOC and MYR Group as Possible Takeover Candidates

Submitted by EnergyTechStocks.com

Last week Warren Buffett bought the rest of Burlington Northern Santa Fe (Symbol BNI) in part because of railroads’ inherent ability to transport goods more energy efficiently than trucks. Meanwhile, for a still-to-be-published magazine article, I interviewed a noted information technology consultant who said there will be a number of mergers and acquisitions among IT firms engaged in improving the energy efficiency of America’s electrical power system, to the benefit of both utilities and their many millions of residential and business customers.

Could the theme of energy efficiency spark an M&A boom? It’s at least worth thinking about with regard to companies that seem to occupy the sweet spot of being pure plays that aren’t yet very big which might easily attract the eye of a corporate behemoth.

Let me emphasize: this is all speculation.

While you probably have your own, here are three of my top “logicals” – Itron Inc. (Symbol ITRI), EnerNOC Inc. (Symbol ENOC) and MYR Group Inc. (Symbol MYRG).

Why Itron? There is a worldwide surge in smart meter installations that is only going to grow over the next several years. Pike Research just forecast that 250 million smart meters will be installed by 2015, creating a market worth nearly $4 billion. As one of the world’s leading smart meter firms, Itron would seem perfectly positioned to ride this boom.

Why EnerNOC?  “Demand response” is expected to be the smart grid’s first killer app, turning energy efficiency and conservation into a new low-cost, non-polluting, base-load power source (negawatts as opposed to megawatts). The Cleantech Group recently forecast that demand response will generate $8 billion a year in revenue by 2014, compared with $1.8 billion in 2008. EnerNOC appears to be as well positioned in demand response as Itron is in smart metering.

MYR Group, meanwhile, is a nuts-and-bolts play on the pressing trillion-dollar need to repair and upgrade transmission and distribution systems all over the world. MYR walks among the industry’s giants, such as Siemens AG (Symbol SIE) and ABB Ltd. (Symbol ABB), who might well want more manpower as they aggressively pursue t&d upgrade projects all over the world.

Next week: three more “logicals.”