Wednesday, April 8, 2009

2009 Energy Conference - Renewable fuels

The renewable energies panel was moderated by Michael Schaal of EIA, and again took the form of a panel sitting around a table chatting. The panel each gave a short presentation and that took up most of the time before a short discussion.

Andy Arden of the National Renewable Energy Lab spoke mainly about the production path for ethanol, since the future supply of gasoline is likely to be flat, and ethanol provides therefore the only path to growth. He anticipates that with a 7% growth in use each year, the contribution from this fuel will grow from 2% to 15% of the total. A considerable part of the ultimate expansion in supply is to come from cellulosic ethanol, and the assumption, since companies are now constructing pilot and production plants, is that the techno-economic analyses are now coming up favorable. This is needed given that the target for that milestone is 2012, for it to be cost competitive, and that by 2022 the yield needs to be 21 billion gallons. The enabling bill has set specific targets for production after 2012, and all that is needed (ALL ??) is for the process to become cost effective.

The problem with that goal now is likely to be a lack of available credit, given the financial condition.

In the division of tasks for the National Labs, NREL deals with the thermo and chemical treatment of the biomass, INL and ORNL are responsible for the biomass production (including such examples as poplar). There is a concern however over logistics and an understanding of the issues of both quality and quantity. Because of scale issues in the economics of these plants a 5-mile gathering radius is too small, but as one goes to a larger harvesting radius then the costs of the harvesting, transport and storage also begin to factor into the equation (see the story from Dubuque). The resulting ethanol has to live within a price spread that makes it viable, which is thought to be around $2.50 as an equivalent price to gasoline).

Unfortunately the long-term numbers are not inspiring for ethanol, it is the current “biofuel du jour” mainly because it only “requires only one miracle to work” while some of the alternatives require several. And so there is a need to look beyond ethanol, to those technologies that, usually based on bacteria, will generate other fuels generally through aqueous phase reforming. One that I had not heard much of before was dark algae, which is a form of algae grown in the dark, that feed on sugar. Companies to watch in these areas are Virent, but the challenge will always be in the provision of an adequate feedstock at an acceptable price.

Matthew Hardwick of the Renewable Fuels Association lists 26 cellulosic programs, but things arre changing, since now credit is hard to come by and this is a capital intensive industry. He felt that the EPA models that consider ethanol were too low when it came to judging it against a carbon production standard, and felt that it was less of a polluter than it was painted to be. But there are other constraints, such as water and land use, that are only now becoming evident as plans to scale up production start to be put in place. And in developing the market forward, there is a blend wall that comes into play at 10% of the fuel market. This will hurt the ability to meet the target goals since they require that ethanol surplant gasoline at levels above 10% of the blend. The hope, therefore, is that EPA will change the mix max to 15% with the target of using an E50 by 2015. However once the mix gets to 12% engines will need to be changed to effectively use the new blend.

Denise Bode (who is the voice on the video at the American Clean Skies website, though is now with American Wind Energy) talked about the benefits of the coming growth in Wind Energy. Though did recognize that there are some concerns about transmission to get it where it needs to be.

Bryan Hannegan of EPRI spoke more from the point of view of the utilities, and noted that renewables still have a long way to go to ramp up to the levels of scale of production that are needed. He quoted a fiure of $27 a ton for carbon credit (allowance) that comes in in 2015, as being part of the models that they use for prediction. In their models gas prices float in the $4.95 to $7.95 range. But in looking at a goal of 35% of the national energy coming from renewables by 2050, there are some things that still must happen. Bear in mind that for that much penetration the renewable source must replace some of the existing legacy systems that are well established, and paid for. Without that there is not enough market for the growth.

He sees wind being the initial market penetration, penetrating even into the Tennessee Valley where there isn’t much wind, and a lot of competition. He had some land use and water concerns over biomass, though this will also be a big player by 2050. From the generation stations there will then be the need for transmission and linkage into the coming smart grids and those also are questions not yet answered. The EPRI position is spelled out in a report available on the EPRI website. He noted that just using natural gas as a fall back when the wind does not blow will put too high a demand on dedicated gas turbines, and that just relying on the grid being big enough so that the wind will be blowing somewhere might be a little optimistic. In the end he felt that to meet the carbon goals the country will need to do more than just rely on the renewables.

It was further noted in the discussion that less than half of the country could name a renewable fuel. And we need to avoid complacency over energy supply when business returns to normal.

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