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Here you will find Alternative Energy News Source editorials written about various topics important to the alternative energy industry. Editorials cover topics such as hybrid cars, environmentalist documentaries, the anti-wind farm lobby, and ethanol incentives.
Is This the End of Ethanol?
by Russell Hasan
Altenews.com
Outline:
1. Ethanol’s Rise
2. Ethanol’s Collapse
3. Will Ethanol Survive?
4. Technology
5. Energy Independence
6. The Environment
7. Conclusion: Ethanol Stocks
Ethanol burst upon the scene in 2006 and became hugely popular, both with investors and the general public. It was thought that ethanol would reduce greenhouse gas emissions, stop global warming, solve America’s addiction to oil imports, and create energy independence. Ethanol usage was mandated when it was passed into law that ethanol would replace an additive blended into gasoline. Investors jumped on board, and ethanol stocks shot up.
But ethanol always had critics. People pointed to the fact that it was not energy efficient, that it contained less energy per gallon than gasoline, that ethanol plants polluted and used excessive water, and that ethanol still produced air pollution when used in cars. Critics said that corn for ethanol would compete with corn for food, raising the price of corn in supermarkets, and of animals that eat corn. Critics said that cropland for ethanol would compete with cropland for other crops, raising all food prices. Critics said that ethanol could never replace gasoline, because to make enough ethanol to do so would expand all of the problems associated with ethanol. Even more dangerous, as Altenews reported at the time, too many ethanol plants were being created, making too much ethanol capacity, far more than demand and the market could support.
In late 2007 all of these problems came to the attention of the public, and the ethanol speculative bubble burst. Now, the critics of ethanol feel that they have won, and their vindication comes in the form of a recent paper in the journal “Science.” This paper claims that when the carbon released from land cleared for ethanol crops is taken into account, ethanol has no environmental benefit at all.
So, is this the end for ethanol? Is now the time to abandon ethanol, or should one look at ethanol stocks as good buys, in the hope that ethanol will stage a comeback in the future?
We at Altenews.com are cautiously optimistic about the long-term prospects for ethanol. We feel this way for three reasons: 1. technology, 2. energy independence, and 3. the environment.
First, technology: The technology for making ethanol from corn or sugarcane is fairly standard. But a technological breakthrough in ethanol is on the horizon. This will come in the form of cellulosic ethanol. Whereas corn ethanol is made from the starch in corn, cellulosic ethanol is made from the sugars in the cellulose of plant matter. Cellulosic ethanol promises to solve many of the problems associated with corn ethanol. It will be more energy efficient and produce much less pollution. It can be made from inedible biomass, such as corn stalks, sugarcane bagasse, sawdust and paper pulp, inedible crops such as switchgrass, and also from plant matter in garbage. Because of this, it will not compete with the food supply. It will also be able to be made in large quantities, enough so that instead of merely acting as an additive in gasoline, it will be able one day to replace gasoline (perhaps replacing as much as 20% by 2030). Some people believe that cellulosic ethanol will be commercially viable by 2020 and will overtake gasoline by 2050. That may produce surprising growth for ethanol companies.
Second, energy independence: Putting all environmental concerns aside, there are still plausible political and economic reasons for promoting ethanol. America’s addition to imported oil forces America into areas of the Middle East and elsewhere that involves costly military commitments in unstable and conflicted regions. By replacing some of our oil use with domestic ethanol, we can shift our focus from interfering in other areas to promoting our success at home. For this reason it will be necessary for the government to continue supporting ethanol projects in the U.S. Also, ethanol is necessary for economic reasons. Ethanol in America gives a new source of income to struggling farmers in the Midwest and is a great help to the American economy. (RFA estimates the new Renewable Fuels Standard will add $1.7 trillion to GDP and create 1.1 million new jobs from 2008 to 2022.) Farmers are now able to rely not only on food but also on fuel for their income. Mandates for ethanol usage could help stabilize ethanol demand, and the growing number of flex-fuel cars and E85 gas stations will also add to demand. If America could become a center for fuel production (with the help of cellulosic ethanol), it could turn America into an energy powerhouse such as the Middle East is for oil right now. This could spark a new energy-based renaissance in the American economy.
Third, the environment: Corn-based ethanol does have many factors that make it less than ideal as a solution to our environmental problems. It uses a lot of water and is sometimes made in coal-fired plants. But studies have found that it is still better than using gasoline, in terms of the greenhouse effect. When cellulosic ethanol is perfected for commercial usage, it will solve many of the environmental problems of ethanol. This is helped by the fact that crops soak up carbon as they grow.
The critics of ethanol should learn that there is a growing debate on this subject. In answer to the “Science” report, this report assumes that if the land is not cleared for ethanol crops, it will be not be cleared at all. But this is not a useful assumption. In a growing American economy, and a growing world economy, with a continuously growing population, it will be necessary to continuously clear land for new crops to support the growing populace. The only question is what we do with the land, not whether we clear it or not. Thus, land clearing should not be a factor.
Furthermore, even if one does consider land clearing to be a factor, to a large extent land clearing will not be necessary to provide biomass feedstock for cellulosic ethanol. Cellulosic ethanol can be made from corn stover, sugarcane bagasse, and rice straw, all naturally occurring waste byproducts of land already in use making corn, sugarcane and rice. It can also be made from wood chips, sawdust and paper pulp, already naturally occurring from logging and manufacturing. It can also use vegetable matter in garbage as a feedstock, which will not require land clearing but which will reduce landfill dumping. A vast quantity of cellulosic ethanol can be made in the USA without any new land clearing at all. Thus, carbon release from land clearing is not a major factor for cellulosic ethanol.
With this key assumption, that land clearing should be factored into the equation, challenged and dismissed, the “Science” study’s findings relating the environmental benefits of ethanol fall apart. Other studies have found that corn-based ethanol is 30% better for the environment than oil-based gasoline, and that cellulosic ethanol may be 80% better.
In conclusion, we must look at what this means for investors. To a large extent, the ethanol bubble was propped up by unjustified hype and “irrational exuberance.” Losses in ethanol are unlikely to be recovered in the short-term, and there are a number of ethanol stocks which were overvalued and which will not recover. It will take some time before demand is capable of sustaining the ethanol capacity that exists or is under construction. But for the larger ethanol companies, and the ethanol companies that are more stable because of non-ethanol business, there is some hope that in the future these stocks may once again reap benefits from ethanol. Each ethanol stock must be looked at individually to see if it has the strength to weather the storm and one day cash in on a return to ethanol. One must look closely because those ethanol companies that are positioning themselves to develop and use cellulosic ethanol will be able to dominate the ethanol industry once the cellulosic ethanol technology matures. Some ethanol stocks are still bad buys no matter what, but to some degree the ethanol stocks may have gone from being overvalued to being undervalued. This is not the end for ethanol, in fact it is just the beginning.
Investors who want to know more about ethanol investment opportunities should read the upcoming Altenews.com research report on cellulosic ethanol, due out later in 2008.
Geothermal, Wave and Tidal Power: The Underappreciated Energy Supplies
By Russell Hasan
Renewable energy saw a huge rise in popularity in 2006, and things look to be even better in 2007. All around the world, people are engaging in projects involving solar panels and wind farms. 2006 also saw a boom in the ethanol industry, so big that the ethanol trend has been called a “craze.” Corn farmers and ethanol makers are excited about ethanol, and soy and jatropha farmers also hope to cash in on biodiesel. The number of ethanol and biodiesel producers is rapidly growing, as is the number of solar- and wind-powered buildings.
Unfortunately, popularity has not shined evenly upon every area of renewable energy. There are three forms of renewable energy that hold huge potential, but about which little is known. These three energy supplies have the ability to provide power for most regions of the world, but there is only a small amount of research being done in these, and progress is surprisingly slow. These three energies are geothermal, wave power, and tidal power.
Geothermal energy takes heat from underground and converts it into energy. The temperature far beneath the ground is much hotter than it is on the surface. Wells can be dug to access this heat, which is then used to make electricity. This can also be done when there are naturally occurring hot springs that bring the heat to the surface. In geothermal heating and cooling, pipes are laid below a building, and the pipes transfer heat and coldness from underground that warms and cools the building. In other areas of the world, such as Greenland and Australia, geothermal power is being exploited in big and imaginative ways. Sadly, geothermal power goes largely ignored in the United States, and the White House wants to eliminate the budget for geothermal research. In some places in the USA, geothermal heating and cooling is being used, but this has been slow to catch on. The heat inside the Earth is a resource that can be utilized anywhere on the planet, and it has a huge potential to provide clean, green electricity to millions of homes. This potential is being ignored.
Wave and tidal energy are two forms of power that take energy from the ocean and convert it into electricity. With tidal power, turbines are placed in the ocean at points where there is a heavy tide. The tide turns the turbines, producing power. With wave power, structures are floated on the surface of the ocean. These structures capture wave motion and convert it into power. At least two thirds of the planet’s surface is covered with oceans, and this represents a gigantic source of energy if it could be harvested. Sadly, tidal and wave power are still in the experimental stage, and there is little interest in wave and tidal power research. The seas of the world carry the potential to power entire nations in a clean, environmentally responsible manner, but there is not enough being done to make that a reality.
Obviously, it is a good thing that there is a great deal of interest in solar, wind, ethanol, and biodiesel. However, room must be made within the dialogue of renewable energy for geothermal, wave, and tidal power. These technologies, once they are well developed and implemented, have a great deal of potential. In order to stop global warming it may become necessary to exploit the attractive qualities of geothermal power, wave power, and tidal power.
The Price of Oil: $500/bbl in 2030?
By Russell Hasan of Altenews.com
For decades, the oil industry has been claiming that there is plenty of oil left in the ground and that the remaining oil will last for a very long time. Recently, however, energy industry experts are starting to believe in the theory of peak oil. Peak oil states that there is not much oil left to be discovered, and that oil will run out within the next hundred years. When that happens, the global economy will have to transition from oil to renewable energy, such as solar, wind, ethanol and hydrogen. Oil not only fuels power plants, which can be replaced by solar and wind, it also powers cars with gasoline, which can be replaced by ethanol and hydrogen.
The mechanism that the economy uses to predict the future of oil discovery is the price of oil. Oil is a traded commodity, and the price of oil reflects future expectations of oil supply and oil demand. The price of oil not only affects oil stocks, it also has a strong impact on renewable energy stocks, because the future of renewable energy is tied to the end of oil. As peak oil happens, the price of oil will shoot up, and investors can take advantage of this to make large profits.
The purpose of this report is to offer data relating to when peak oil will happen. The report will then conclude with a bold prediction of the price of oil in 25 years. The report will argue that, because of tight oil supply and the dynamics of the oil industry, the world may see $500/bbl oil in 2030.
The United States Geological Survey (USGS), in its World Petroleum Assessment from 2000, lists oil reserves in billion of barrels. According to their data, which is divided between the USA and the rest of the world, the proven oil reserves that are present, and the oil that has not yet been discovered, are:
Oil in Billion Barrels:
Non-US:
Undiscovered conventional oil, 649
Total: 2,659
US:
Undiscovered conventional oil, 83
Total, 362
Worldwide Total: 3,021 billion bbl
Paul Roberts, in his book “The End of Oil,” offers details relating to peak oil. He states that the USGS claims that worldwide there are 1.7 trillion barrels proven reserves, 900 billion barrels of undiscovered oil, and an estimated 1.5 trillion barrels yet to be found. He claims that peak oil will happen in 2030 according to those estimates. A more conservative estimate, calculated by a peak oil research group, claims that there are only 1 trillion barrels left, including both proven reserves and undiscovered oil. Peak Oil will take place in 2010, according to that estimate.
The Southern States Energy Board Report has published a research report relating to peak oil. In the report, it is claimed that:
If oil peaks in 2010, and nothing is done, $4.6 trillion GDP will be lost.
If oil peaks in 2020, and nothing is done, $13 trillion in GDP will be lost.
Oil consumption is: total, 83.6 MM bpd, 30,514 MM barrels per year
World conventional oil proven reserves are: total, are 1,188.5 billion barrels
Forecast of world oil consumption: in 2010, 91.0 MMbpd, in 2020, 103.7 MMbpd
Forecast of world oil prices, in 2010 $62.65, in 2020 $85.06
Based on these estimates, peak oil may happen as soon as in 20 years. Assuming global 5% economic growth per year, and taking into account faster growth in China and India, peak oil may happen in 10 years.
The EIA (energy information administration) report International Energy Outlook 2006 also offers interesting data on peak oil. The report claims that:
World oil demand will increase 47% from 2003 to 2030
World oil demand will be:
In 2015 it will be 98 MMbpd (million bbl/day)
In 2030 it will be 118 MMbpd
Oil demand will grow 1.4% per year until 2030
In 2025 oil demand will be 111 MMbpd
In 2030 it will be 118 MMbpd
There are proven oil reserves of 1,293 billion bbl according to “Oil & Gas Journal.”
The proven oil reserves, global, are 1,292.5 billion bbl, and the total oil including proven reserves, reserve growth, and undiscovered oil, global, is 2,961.6.
The report also claims that the possible high oil price is $96/bbl in 2030.
Based on these estimates, a safe guess would be that peak oil will happen in 2030, and the price of oil will be over $100/bbl in 2030. However, Altenews is willing to make a more daring guess. Taking into account inflation and the profit margins of the Big Oil companies, as well as peak oil data, we guess that oil will be $500/bbl in 2030. It may end up being even higher. This estimate is significantly higher than more conservative estimates, but with good reason.
This is because the above data does not factor in the nature of the oil industry. In oil, there are three types of oil reserve calculations: proven, probable, and possible. These relate to the likelihood of finding oil. Oil exploration technology is still limited in its ability to accurately determine the presence or absence of oil in geological formations, so nobody knows exactly how much oil is left. However, it is known that there are huge undiscovered unconventional oil reserves, which are more costly to extract than conventional oil. These include oil sand and oil shale. Thus, there is a great deal of oil in the ground that is unaccounted for. There are huge amounts of oil in the ground, vast oceans of black gold, that could be exploited, but which it is not looked at or explored. This is because most of this oil is difficult and expensive to extract. When conventional reserves run out, it will be necessary to extract all unconventional oil to keep the economy running. When this becomes necessary, the price of oil will have to be high enough to motivate this extra oil extraction. The price of extracting a barrel of oil from oil sand or oil shale is significantly higher than the cost of a barrel of conventional oil, and the price of oil in the future will have to reflect higher production costs.
Also, not only will global warming destroy the planet if nothing is done, but it has also been claimed that peak oil will damage GDP and the economy if left unchecked. The cost of climate change and economic harm will also factor into the future price of oil. We at Altenews believe that the mechanism of the free market, the invisible hand, will move the price of oil up to $500/bbl by 2030, to motivate new oil exploration and the extraction of unconventional oil, to protect the human ecology from climate change and to protect the economy during the transition to renewable energy.
This is not a forecast, it is just a guess. However, if $500/bbl happens in 2030, it will be great for the unconventional oil industry, and it will also be great for renewable energy. Oil at that price will spark the renewable energy industry to new heights of success. The time to invest in alternative energy is now, while oil is relatively cheap, because it will only go up in the future.
Team Players: Ethanol, Hydrogen and Hybrids
Altenews President Russell Hasan Calls for Peace Between Advocates of Ethanol, Hydrogen Fuel Cells, and Electric Vehicles
“A house divided against itself cannot stand. An alternative fuels movement with infighting and bickering will not last.”
Hybrid cars, ethanol, and hydrogen have all seen growing popularity as ways to fight the “triple threat” of global warming, declining oil production and the need for energy independence. Because of this, the major car companies have all become very supportive of alternative energy. Ford has announced plans for a “Tri-Flex-Fuel” SUV/truck, capable of running on gasoline, hydrogen and ethanol. Ford is also working on a line of hybrid cars, showing that the same company can support ethanol, hydrogen, and hybridization as alternative fuels. Mazda, Honda and others are also testing fuel cell cars, DaimlerChrysler is experimenting with fuel cells and clean diesel, while GM continues to promote ethanol-powered flex-fuel cars, and Toyota pursues leadership in hybrids. It makes us optimistic to see alternative fuels becoming so widely accepted among the major car companies. However, as these fuels have become popular, conflicts between their advocates have erupted. Renewable energy promoters argue about whether ethanol, hydrogen, or plug-in hybrids and electric cars are the best way to end the dependence upon politically unstable oil imports, fight climate change, and end the addiction to oil. This debate has grown into a full-scale war between the supporters of these three rival alternatives to gasoline. Competition is healthy, but this renewable fuels war has reached dangerous proportions.
These groups seem to use the same arguments against each other. Electric car advocates claim that hydrogen is a conspiracy by Big Oil to prevent real progress, because fuel cells will take too long to commercialize, and hydrogen will be too expensive to make. There is an ongoing debate about how long it will take for hydrogen research to produce commercial fuel cell vehicles, with some saying four years and some saying forty years. The claim was made famous in the pro-electric vehicle movie “Who Killed The Electric Car?” that hydrogen advocates are “guilty” of helping to kill the electric car in California. The book “The Hype About Hydrogen” by Joseph Romm also claims that fuel cells are a ploy by Big Oil to delay alternatives to gasoline, and says that hydrogen could be made from polluting fossil fuels instead of renewable energy. Critics of hydrogen say that hydrogen takes the same amount of energy to produce as it releases in automotive fuel cells, meaning that there is no net energy benefit from hydrogen use. In eerily similar fashion, some prominent hydrogen fuel cell advocates say that ethanol is a conspiracy by Big Oil, because, according to them, ethanol takes more energy to produce than it releases in flex-fuel motor engines, and so has no net energy benefit. They claim that most renewable energy subsidies go to ethanol, and not enough goes to hydrogen research, and therefore ethanol is stealing government funding from hydrogen. Both hydrogen advocates and ethanol advocates try to marginalize electric cars by not including hybrid technology in the mainstream dialogue of alternative fuels, and they also say that plug-in hybrids have had their chance and were a commercial failure, as shown in the case of California’s CARB electric vehicle mandate, which is the subject of the electric car movie. This is a claim that “Who Killed The Electric Car?” disputes. In general, the promoters of hybrids, ethanol, and hydrogen are all fighting against claims that their alternative fuel has no advantages, and they are savagely attacking the rival alternative fuels in an effort to bolster their own image.
This is not helpful, because the best way for renewable energy to succeed, and to not be sabotaged and blocked by the well-funded fossil fuels industry, is for all renewable energy advocates to be unified and to stand behind the common goal, which is clean, green, pollution-free energy and national energy independence. Hybrids, ethanol, and hydrogen each have different advantages and disadvantages, and none is obviously superior to the other two. Hydrogen fuel cells need more research to be commercialized, and this research could take several years to complete. Ethanol has food vs. fuel problems which may lead to a corn shortage, and ethanol use is not very popular. Hybrid cars are also not very popular, and most drivers do not even understand how electric vehicles work. There is credible science that indicates that ethanol, hydrogen, and hybrids all reduce pollution and promote energy independence. The people promoting these new technologies should be focused on comparing their products with gasoline, not with the other alternatives. Alternative fuels are so named because they are alternatives to gasoline, and their purpose is to compete with gasoline, which currently dominates the automotive fuel industry, not with each other. Big Oil is the main force that opposes these alternatives. It has been shown that lobbying by special interest groups funded by oil, coal, and nuclear are attacking the wind power industry, and many suspect that the fossil fuels lobby is also responsible for much of the opposition to alternative fuels. The oil industry posts billion dollar profits every year, they would like to prevent alternative fuels from competing with their main product, gasoline, and they have the money and the lobbyists to exert political influence against renewable fuels. Rather than nitpicking the flaws of the other alternatives, all green driving advocates should present a united front against external opposition.
Spokespeople for these hydrogen, ethanol and hybrids are divided on the matter. Some advocates promote the war, while others are worried. Chris Paine, director of “Who Killed the Electric Car?”, makes it clear both in his movie and on his website that he thinks hydrogen is a conspiracy by Big Oil to delay alternatives to gasoline from developing. Rick Masters of the International Clearinghouse for Hydrogen Commerce supports the theory that ethanol steals research money from hydrogen. On the other side, Jennifer Gangi of Fuel Cells 2000 told us that she thinks that “it’s bad that it’s a competition. They should be complementary. Ethanol could be used to make hydrogen.” Company executives also have mixed opinions. Gary Starr, the Chairman of electric vehicle company Zap, when asked about competition between hybrids and hydrogen, told us that “the infrastructure for EVs is a lot easier to implement, it is available through a garage plug. We have a prototype hydrogen fuel cell vehicle at ZAP, but it is difficult to get it refueled. Customers can fuel EVs in their garage, the infrastructure is here today. It is an easy way to get off of using gas.” Byron Fink, President of Golden Triangle Energy, an ethanol company, told us “I do not see a competition in the near term. I think somewhere out in the future (competition between ethanol and hydrogen might happen). Our studies show that as a fuel source for hydrogen, ethanol is better than some of the other things. Looking out in the future, maybe ten years from now, both cellulosic ethanol and hydrogen are well in the future. I have another comment also. The fuel cell is going to take a complete restructuring of our fueling infrastructure. That will take a long time. To change the whole fueling system, breakthroughs are needed. That is a long time in the future.” The California Air Resources Board, accused of favoring hydrogen over hybrids in the Electric Car movie, declined to give us a comment.
Some industry people are for peace and an end to the renewable fuels war, and some are not worried about competition right now. However, it is clear that many renewable fuel supporters welcome the conflict between alternative fuels and are willing to see sharp divisions in the alternative energy movement. This is a sad state of affairs for renewable energy. There are ample opportunities for flex-fuel, fuel cell, and plug-in hybrid cars to provide significant help in preventing climate change and helping energy independence. With oil at $70/barrel and gas at $3/gallon, they can all compete effectively in terms of price. Big Oil is still dominant in the energy industry, and it is the main competition for renewable fuels. It is also clear that the anti-renewable energy lobby would like to see all three of those fuels stopped. It would seem strange for three players on a baseball team to swing the bats at each other’s heads instead of swinging their bats at the ball, yet this is what is happening with Team Renewable Fuels, and it can only benefit the anti-renewable energy lobby. Altenews President Russell Hasan says that “a house divided against itself cannot stand. An alternative fuels movement with infighting and bickering will not last, because renewable energy is not established enough to survive a civil war.” The major car companies have embraced ethanol, hydrogen, and hybrids, and the market can support all three of these automotive energy solutions. Supporters of ethanol, hydrogen, and electric cars need to learn how to be team players, so that they can stop attacking each other and focus on competing with gasoline.
Flex-Fuel: The Car of the Future
“Surprisingly, things that may hurt ethanol producers may actually help flex-fuel cars sales. The main thing of this kind would be a drop in the price of ethanol.”
In various research reports and articles, we at Alternative Energy News Source have pointed out a variety of problems with the American corn ethanol industry. However, we have not yet commented upon the future prospects of flex-fuel cars. There are many reasons why, despite the problems with the American ethanol producers, there may be a surge of popularity in American “flex-fuel” cars, cars with ethanol-capable engines, within the next ten years. More so than hydrogen fuel cell cars or hybrid cars, flex-fuel cars may combine an attractive fuel with both political support and consumer popularity to become “the car of the future.”
First, flex-fuel cars can run on gasoline, ethanol, or any combination, such as the “E85” eighty-five percent ethanol blend. Thus, drivers who buy flex-fuel cars are not bound to a dependence upon ethanol, but nonetheless have the option of refueling with E85 where it is available. This is in contrast to electric cars, which must be plugged in, or fuel cell cars that must have hydrogen fuel. The ability to use gasoline will make the transition from gasoline to ethanol much easier for consumers. Second, factors concerning the American corn ethanol market may cause the price of ethanol at American pumps to drop, making ethanol cheaper and more economically viable, while at the same time increasing the number of gas stations that offer E85.
The reason for this is simple. We have claimed in our ethanol research reports that due to the ethanol investment craze, ethanol producers are building ethanol plants at a rapid pace. Meanwhile, the American laws that set the mandated ethanol usage remain fixed and unlikely to change. When the future ethanol capacity is compared to the future ethanol usage requirement, it is clear that in five to ten years there will a lot more ethanol produced than there will be mandated ethanol demand. This will leave many ethanol producers with billions of gallons of ethanol inventory and no easy way to sell it. Right now, the vast majority of ethanol is sold to oil companies, who blend it with their gasoline as a gasoline additive. There are few flex-fuel cars on the road, and few E85 pumps. However, the desire of ethanol companies to sell this excess ethanol will motivate them to apply political and economic pressure to increase the number of E85 pumps in gas stations and the number of flex-fuel cars on the road, as market conditions force them to find new ethanol consumers. A variety of ethanol companies may find that their future depends upon the number of available E85 pumps, which will give them a frantic need to promote flex-fuel cars and E85 gas stations.
Also, according to the laws of economics, when supply exceeds demand, the price of the product, in this case ethanol, will drop. Cheaper ethanol and a wider availability of E85 pumps will make it more appealing for drivers to buy flex-fuel cars, and if ethanol becomes significantly cheaper than gasoline, which may happen if the price of oil continues to climb, then flex-fuel drivers will end up saving considerable money at the pump. This scenario will not do much to help ethanol producers’ profits, as a lower ethanol price combined with a steady corn price will lower profit margins, but it will do much to popularize flex-fuel cars. Altenews President Russell Hasan has said that “surprisingly, things that may hurt ethanol producers may actually help flex-fuel cars sales. The main thing of this kind would be a drop in the price of ethanol.”
There are two other reasons why the price of ethanol at gas stations may drop: sugarcane ethanol and cellulosic ethanol. As we have said before, despite the import tariff that protects American ethanol, there are legal loopholes in CAFTA and CBI that may enable Brazilian sugarcane ethanol to reach U.S. markets without paying the tariff. These cheap ethanol imports from South and Central America will put pressure on American ethanol companies to lower their price. There are also some Americans, in Florida and Minnesota, who want to make sugar-based ethanol from Floridian sugarcane or Minnesotan beets. Some people claim that cellulosic ethanol will move from lab research to mass production by 2012, just six years from now. When cellulosic ethanol reaches consumer markets, its unique qualities, such as low pollution, high efficiency, and the variety of cheap biomass sources that can be used to produce it will make cellulosic ethanol popular and affordable. When that happens, flex-fuel cars will see new heights of popularity.
Ethanol also has the political support necessary to apply pressure to Big Oil to have more E85 pumps at gas stations. The ethanol boom has given ethanol center stage in political campaigns in Midwestern corn states, and corn state representatives will be forced to find new markets for ethanol by seeking more E85 pumps in gas stations. It is not unreasonable to expect some pork spending in the coming years to end up earmarked for promoting E85 among gas station owners. Because ethanol is usually blended with gasoline, Big Oil is not opposed to it in the same way that they oppose electric cars. It has also been shown that American car companies have embraced the idea of selling flex-fuel cars, as demonstrated with GM’s extensive “live green go yellow” ad campaign to promote their flex-fuel cars, and with the firm support of farm state senators and the ethanol lobby, it is likely that GM and Ford will maintain the supply of flex-fuel vehicles.
The bottom line, as Altenews readers know, is that the “Peak Oil” theory claims that global oil reserves will dwindle in the near future, and great commercial opportunities will be available for those who can find substitutes for oil-based products, such as gasoline. Ethanol, either from corn, sugarcane, or cellulose, may become the next majority fuel and achieve popularity among drivers. The research suggests that ethanol is less polluting than gasoline and also provides more energy than is required to produce it, and various factors make it highly probable that the ethanol lobby will seek to sell more ethanol to drivers. Unlike hybrids or hydrogen, ethanol has the political support of the entire American Midwest behind it, and since E85 contains gasoline the Big Oil lobby will have little interest in fighting against ethanol. There is some concern over the competition between corn for food and corn for fuel, and we have also noted that tight corn supply may raise ethanol manufacturing costs. However, the Midwest is heavily invested in ethanol, enough so that they will put a lot of their corn into ethanol production, and the rise of cellulosic ethanol may come soon. These two factors should help prevent corn for food and tight corn supply from hurting flex-fuel car sales.
Electric cars and hydrogen fuel cell cars may both become popular in the 21st Century, but fuel cell technology is still in development, and there is heavy opposition to electric cars from the Big Oil lobby. If the described factors take effect, then in six years you will probably go to your garage, start up your flex-fuel car, drive to the gas station down the street, fill up the tank with E85, and then drive off to your destination. Ethanol may also be a great opportunity for car companies, both American and international, to establish a new market for a new kind of car, a “car of the future.”
The Truth About Hybrids, Ethanol and Hydrogen
Altenews Editorial, July 17th
By Russell Hasan
“Who Killed the Electric Car?” is both a documentary and a thriller, a movie that begins with a funeral and presents itself as a murder mystery. In this Altenews editorial we will begin with a summary of the movie, and then offer our review of the movie. Then we will provide opinions on the comparative value of hybrids, ethanol, and hydrogen, the three main alternatives to gasoline, and in the conclusion we will offer a unique answer to the question of who killed the electric cars.
In the 1990’s, GM engineers developed an electric car, a car that could run on electricity in a battery in the engine that could be charged with power from power lines and was as good as a typical gasoline-powered car, although with more limited range. This car was the GM electric vehicle EV1. When the California Air Resources Board (CARB) learned of the electric car, they came up with a plan to promote the EV1 as a way to reduce air pollution in California cities, which was known to be causing smog and lung disease. They passed a law, the Zero-Emissions Vehicle (ZEV) law, an electric vehicle mandate requiring that a percentage of all cars sold in California be electric vehicles. GM, Ford, Toyota and Honda released electric cars in California available by lease, and they sold well and became popular. However, car companies and oil companies fought the law, eventually filing a lawsuit that was joined by the Bush White House, and the law was removed. After that, instead of selling the electric cars when their leases expired, which would have been possible due to the consumer demand, the car companies mysteriously took back all of their new electric vehicles and had them destroyed. That event is the “murder” that the movie investigates.
The movie has two moving scenes. In the first, at the beginning of the movie, a group of electric car fans stage a mock funeral to mourn the loss of their cars. Towards the end of the movie, when the electric car enthusiasts learn that the repossessed cars are being destroyed, they present the car companies with an offer of a check for over one million dollars to buy back the cars. The offer is rejected. Then the electric car supporters organize a protest at the site where some of the electric cars are being removed, and some of the protesters who try to block the activity are arrested. With this much support for electric cars, the reasons behind their destruction are very mysterious. The movie explores the events leading up to the death, offering a range of interviews, documents and footage. Cinematically, the movie is very well done, but its conclusions are a bit over-simplified.
The movie offers a list of suspects and then passes judgment on each one. This list includes many candidates, all of whom are “guilty.” There are the car companies, who are shown to be both for and against their product, who resent being controlled by the law, who sabotage their own electric car programs, claiming that there is no consumer demand when there were waiting lists of car buyers, and claiming that the cars were too expensive to build. There is Big Oil. Documents show that Big Oil funded anti-electric car activists and sponsored the lawsuit against CARB. There is the Chairman of CARB, a one-time electric car advocate who runs a sham hearing and then kills the electric car law, and then goes on to become a hydrogen fuel cell promoter. In the most controversial part of the movie, it is argued that interest in hydrogen fuel cells also helped kill the electric car, and that Big Oil and politicians are promoting hydrogen because it will not be ready for public use for another twenty years and in the meantime gasoline will continue to dominate. There is the Bush White House, with all of their ties to Big Oil companies and car companies, and then there are the California consumers, most of whom were not informed about electric cars. The one “not guilty” verdict is given to battery technology, which is shown to be competent for electric cars to compete with gas-powered cars.
The message of environmentalism is simple and obvious, but it must be restated: industrial society’s excessive waste and pollution are destroying the world’s natural resources and poisoning the environment, and unless there is a change the world could become uninhabitable. One of the main polluters is exhaust from gas-burning car engines. If cars were lighter, or ran on electricity, or got better mileage per gallon, there would be a major decrease of air pollution. Many environmentalists and scientific experts believe that lighter and more fuel efficient cars would have the single biggest impact on reducing air pollution out of all of the solutions that are available. However, everyone wants their big gas-guzzling SUV, and no one wants to take the lead and promote responsible cars. Hybrids and electric cars may be one of the greenest, cleanest technologies, and unlike hydrogen or cellulosic ethanol, it is ready for immediate usage.
The truth about global warming, as presented in Al Gore’s movie “An Inconvenient Truth,” shows that global warming is the next big threat, the way the Cold War was before and the War on Terror is now. The War on Pollution is coming. Then there is the problem of American dependence on Middle Eastern oil, contributing to such events as the War in Iraq and the threat of Iran. More environmentally responsible alternative fuel cars are necessary to combat these threats.
Critics have raised a number of complaints about the movie and electric cars. Some critics claim that hybrid cars are not as good as “normal” cars. The EV range was claimed to be 60 miles, while the average driver goes approximately 30 miles per day, and the EV could get potentially 300 miles with more expensive batteries. Since the EV could be charged at a cost comparable to $0.60/gallon, it had an advantage over gas cars. Drivers afraid of reliance on a battery may be ignorant as to how their car works, since gas engines rely on the battery to start the car, and if they are very worried they can get a gasoline-electric hybrid. The real fear among the public is that hybrid cars are not “Big, Strong, Dependable,” as said in the movie, and so consumers want SUVs or Hummers instead of smaller cars so that they will feel safer on the road. What is needed here is public education, to warn the public that smaller cars are much safer than big cars, because the big cars will melt the polar icecaps and cause global flooding, and hybrids are also far more trendy, futuristic and cutting-edge than gas-guzzlers.
Another criticism is that the price of the electric vehicles in the movies is not given. It has been reported that the GM EV1 was leased according to a price of approximately $34,000 to $44,000. EV fans were shown in the movie making a very real offer to GM to pay over one million dollars to buy the remaining EVs that were about to be destroyed, and given that Saturn of California had a waiting list of people signed up to buy GM EV1s when the cars were taken off the market, it is evident that there were many people willing to pay the high price for the EV. This makes sense, since the cars could be charged with electricity at a rate equivalent to paying $0.60/gallon for gas, which would partially negate the extra cost. Given the rise in gas prices, the charging price would be far smaller in 2006. GM claimed that each EV1 cost $80,000 to manufacture, but they were including research costs, which would have been paid off had the sale of the cars continued, and it also seems that the market would have supported a higher retail sale price. The sale of hybrids continue to this day, and hybrids are reported to get very good mileage per gallon, making them very attractive.
There has been much more interest in ethanol and hydrogen than in hybrids, on the part of the public, politicians, investors, and environmentalists. Hybrids seem to be just as good as ethanol or hydrogen, so this is suspicious. Altnews is strongly pro-ethanol and pro-hydrogen, and we consider the claim that hydrogen killed hybrids to be overly dramatic and untrue. However, there are problems with ethanol and hydrogen that cannot be ignored.
The problems with ethanol are many, including a lack of “flex fuel” cars that can run on ethanol, a lack of ethanol fueling stations, ethanol getting worse mileage per gallon than gasoline, and various other problems specific to American corn-based ethanol. Ethanol does reduce air pollution and dependence on oil imports, but it has many negatives, such as the fact that many ethanol plants run on coal power, which negates the air pollution benefits. Hydrogen fuel cell cars also have problems. Hydrogen fuel cells are still in laboratory development, and reliable experts believe that it will take 10 to 20 years before mass production can begin. Global warming will not wait for hydrogen technology to become commercialized. Also, fuel-grade pure hydrogen is not found in nature and requires energy to produce. Therefore, for environmentally sound hydrogen fuel to be produced, there must be renewable energy such as solar or wind to use to make the hydrogen.
Altenews is pro-ethanol and pro-hydrogen just as we are pro-hybrid cars, but the timing of the promotion of these three alternatives to gasoline is awful and could not have been worse. What we mean is that hydrogen is meant for 20 years in the future but is being promoted now, hybrid cars would work great now but are said to be 20 years in the future, and ethanol should have been promoted 20 years ago so that we would have cellulosic ethanol and more flex-fuel cars and ethanol fueling stations, but instead ethanol is being promoted now. Based on the hype you would think that ethanol and hydrogen fuel is well developed and electric cars would need a technological breakthrough to commercialize, but it is the other way around. Highly efficient mass produced electric cars can be made now, while cellulosic ethanol and hydrogen fuel cells are still being developed in research labs. The public’s ignorance on this is disturbing.
Cellulosic ethanol and hydrogen both need time for technological development, and they will probably not see mass production until 2010 (for cellulosic) or 2015 (for hydrogen) at the earliest. Meanwhile, hybrid cars should be targeted for use from 2006 to 2015. Cellulosic ethanol and hydrogen fuel cells both contain investment opportunities, but nobody should realistically expect them to be commercialized and mass-produced until around 2015. With hydrogen in particular there is a danger of abuse, because the money that goes to hydrogen research should be balanced against the money for incentives for renewable alternatives that will work right now, not 10 years from now, such as hybrid cars, solar power, biodiesel, geothermal, and wind power, all of which have underappreciated, undervalued potential.
All of this leads to another disturbing development. For most people, what is known as alternative energy, renewable energy, clean tech, or green power, which includes hybrids, ethanol, hydrogen, solar, wind, geothermal, tidal power, etc., are all lumped together. Since these things collectively are the alternative to the traditional fossil fuels, oil, natural gas and coal, and since they all share the qualities of reducing pollution and helping achieve energy independence, many green advocates promote all of these together. Altenews is itself in the practice of grouping these things, since they are all areas with exciting growth potential. However, as green power grows, the competition between different kinds of green power may grow, as each area tries to claim superiority to get political support and financial investment. This competition can be healthy and spur growth, or it can be unhealthy, as different green power industries may tear each other apart and then be easy prey for opposition from fossil fuels. It is important, in the view of Altenews, that environmentalists not turn against each other in this way, as we believe that there is ample room for green power of every kind, and the hybrids vs. hydrogen conflict promoted in the movie is not healthy.
“Who killed the Electric Car?” raises the question of why the GM EV1s, the Toyota electric Rav4s, and the electric Ford and Honda models, which had been leased in California and developed a cult following, were taken back and destroyed instead of being sold to consumers when the leases expired, ending the era of the California electric vehicle. This seems like a very confusing and malevolent event, since it was a direct attack on environmentally responsible driving with no explanation from the car companies. The movie gives a list of suspects, such as Big Oil including Chevron-Texaco, car companies including GM, California consumers, politicians including the California CARB chairman, and competition from hydrogen fuel cells. The movie claims that all are “guilty,” but the arguments offered are simplistic, and as intelligent environmentalists we must probe more deeply to try to answer this question. We should remember the phrase “follow the money,” which Deep Throat said about Watergate, and that is a good rule to follow in any mystery.
Now here is where you have to pay attention, as we follow the money: Take the money Big Oil gets from the profits of the gas it sells to car drivers, what politicians get from Big Oil in campaign contributions and lobbying, the money Big Oil pays to pro-oil special interest groups, the money Big Oil paid to anti-electric car activist groups, what middle eastern royal families and ruling governments get from Big Oil, what middle eastern royal families and ruling governments give to American politicians in the form of campaign contributions and lobbying, the money that Big Oil is willing to spend on lobbying to prevent environmentalist anti-oil regulations, the money that car companies make from the sale of gasoline-fueled cars, the money that car companies get from Big Oil in the form of political support and special interest groups, the money car companies give to politicians, the money car companies are willing to spend not to be controlled by government regulation, the possible money lost if the cost of manufacturing an electric car was greater than the retail sale price of the car, the money that Big Oil loses when it has to lower the price of gasoline to compete with alternatives, and the money that Big Oil saves by reducing or eliminating or controlling the competition for its gasoline, and the money that various interests including Big Oil, politicians, military contractors, and various other special interest groups get from the American dependence upon oil imported from the politically unstable region of the Middle East.
Now compare that sum of money to what California consumers would have paid for the electric cars, the loss of the profits that the car companies would have made from the sale of those electric cars had they sold the electric cars to consumers instead of having them destroyed, what money that environmentalist groups give to politicians, what money environmental groups can raise from the public or special interest groups, money paid to electric utilities by EV drivers to charge the electric cars, the cost of taking all the electric cars from California and having them destroyed, the profit car companies would have made had they made California a success for electric vehicles and then expanded their line of electric cars to the other states of America, the cost to Big Oil of fighting electric car promoters such as the makers of the film, the cost to car companies of the bad publicity associated with the events, and the cost of air pollution and global warming, including the cost of treating illness caused by air pollution going from car exhaust pipes to the air in California as evidenced by the official “smog alerts” of Los Angeles and a corresponding increase in lung disease, and the money that will need to be spent to bring greenhouse gases down to acceptable levels to prevent global flooding before the end of the century.
The first sum can be seen as the total in the loss column for accounting for the total value of the electric cars, and the second sum is the total in the profit column. This accounting takes into account the value to society as a whole, including businesses, politicians, and the public. The profits and losses added up so that political and corporate influences caused GM to believe that it would make more money by killing its EV1 line of cars than by selling them. This was in part because of the massive amount of money that Big Oil paid directly or indirectly to the car companies, in the form of funding anti-electric car special interest groups, filing lawsuits to have CARB regulations overturned, getting the White House to oppose the CARB electric car law, and whatever they did to financially compensate the car companies for the destruction of their electric vehicle inventories (because no car company would destroy hundreds of new cars if it did not have financial justification to do so). All of this is justified by the accounting of profit and loss for Big Oil, because the economies of scale with oil demand and gasoline sales are so big, as evidenced by Big Oil’s big three posting profits of around $60 billion per year recently, that they can spend the money to destroy the competition in such a way as to maximize profits. $60 billion is such a large number that it would take an impressive profit margin to compete against profits like that. However, various factors such as the unique qualities of green power, the demand for environmental responsibility from both business and government, and peak oil will make such competition much easier as time goes on.
The death of electric cars is very frightening for environmentalists, because just as the anti-electric car lobby killed electric vehicles in California, there is a growing and increasingly well-funded anti-wind farm lobby, in America, Australia, Scotland, Britain, and all around the world, that is trying to kill wind power. Evidence suggests that the anti-wind lobby is being funded by special interests including nuclear and coal, and it could grow into a well-organized international lobby against all renewable energy. The case of electric cars shows that environmentalist products can be killed. However, the potential of renewable energy, the environmental and political demand for it, and the natural resources like sunlight and wind and waves, are so great that they will be able to compete effectively with fossil fuel, and we at Altenews do not foresee something similar to the California electric car death happening again. What we do foresee is that without a campaign to educate the public, hybrid cars will not achieve the popularity that they deserve, and this will have a very bad consequence for air pollution and global warming.
As with so many environmentalist issues, if the public knew about the qualities of hybrid cars, there would probably be far greater consumer demand for them. What is needed is public education, and movies such as “Who Killed the Electric Car?” and “An Inconvenient Truth” are a good beginning. In recent developments, Toyota says it is making money from its hybrid sales and wants to expand and become the leader in hybrids. GM, Nissan and Hyundai are planning new hybrid lines, and Lexus is offering luxury hybrids. Unfortunately, Ford and Honda reportedly want to reduce their hybrid programs. Hybrids are an exciting area in the automotive industry with a lot of growth potential, and should be watched closely.
“The Persecution of Wind Power Endangers the Future of All Renewable Energy, Including Solar and Ethanol”
New York, NY June 1st, 2006 A dangerous trend of political opposition to wind farms has developed in 2006. Beginning with one or two isolated incidents, the opposition to wind power is rapidly growing into a global movement that threatens all future renewable energy projects. The reasons behind the opponents of wind vary, but the effect of harming a great potential for environmentally friendly energy is the same. Many foes of offshore wind farms believe that wind turbines will be ugly and will damage the coastal view. The Cape Wind project in Massachusetts has been opposed by Senator Ted Kennedy, whose house overlooks the waters of the proposed project. Donald Trump opposed a wind farm in Scotland that was near the coast of a golf course he planned to build. Wind farm enemies in Texas, Scotland and Australia have objected to wind farms by claiming that birds will fly into the turbines and be killed. In Illinois, critics have stalled a wind farm by saying that moving shadows will make people nauseous. British politicians have objected to wind turbines’ appearance, and residents of New Zealand have initiated legal proceedings against local wind farms. The FAA is blocking multiple wind farm projects, claiming they may interfere with radars.
All of these objections are flawed. Windmills are not ugly and will not do anything to detract from the beauty of a coastal view. Instead, they will add to the beauty of the planet by providing energy without polluting the environment. There is little danger that birds will fly into wind turbines that are sufficiently spaced apart, the idea of shadows causing motion sickness is dubious, and existing wind farms reportedly haven’t harmed radars. Large offshore wind farms in advantageous locations have the potential to produce clean, efficient energy, reducing our dependence on foreign oil and lowering greenhouse gas emissions. Some wind advocates invite skeptics to visit wind farms to discover the truth first-hand.
But what is concerning for environmentalists and advocates of clean energy is that these attacks are not isolated incidents. Anti-wind farm groups in different parts of Australia are meeting and sharing strategies, and are also communicating with anti-wind groups in Britain. Some anti-wind groups have hired prominent lawyers and orchestrated organized attacks upon wind projects. These anti-wind groups have the potential to develop into an international anti-wind lobby, which could be detrimental to the development of wind power. Some of these groups have ties to the British nuclear energy lobby, and American anti-wind groups have an ally in Senator Stevens of Alaska, who favors oil drilling in the National Wildlife Refuge, so it is conceivable that nuclear and oil interests could help the anti-wind lobby grow into an international, organized special interest opposing every form of renewable energy competing with oil and nuclear power. Alternative Energy News Source (www.altenews.com) President Russell Hasan believes that “the persecution of wind power endangers the future of all renewable energy, including solar and ethanol. If oil and nuclear interests provide funding for the anti-wind movement, there is no telling what the danger to alternative energy might be.” The only solution is for everyone who cares about renewable energy to become more politically active, by telling their representatives that they favor wind or by becoming active in the pro-wind lobby. Renewable power will ensure a better, greener, more energy-independent future, and wind advocates should be as organized as wind opponents. Links to pro-wind groups can be found at http://www.altenews.com/wind.htm.
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