oldblog-Dec-natgasvehicles

A Big Year for Natural Gas Vehicles

“The NGV market experienced a growth spurt in late 2013, and that is expected to continue in early 2014, with new engineers and vehicles coming to market.”

That’s the conclusion of a very optimistic report issued by Navigant Research on the progress of natural gas vehicles – particularly NG trucks and buses – in the United States and the world.  (The report, sorry to say, costs $4000 but the executive summary can be seen online at http://www.navigantresearch.com/research/natural-gas-trucks-and-buses.)

“As the cost of oil climbs and emission from large diesel and gasoline engineers garner more scrutiny, fleets and governments are increasingly looking for alternative to fulfill their needs at lower costs and with lower emissions,” says the study.  “At the same time, new drilling techniques and new pipelines make natural gas a significantly more competitive vehicles than a decade ago.  The result is growing markets for medium duty and heavy duty NG trucks and buses.”

Indeed, the Navigant report does not anticipate an expanding market for natural gas vehicles in general but sees growth concentrated in the area of trucks and buses, particularly fleet vehicles for large corporations and municipalities.  The great advantages here are: a) vehicles can be bought in bulk; b) they can be fueled at central depots, and c) fleet vehicles tend to pile up the mileage, which means a quicker payback period from savings over gasoline.

In Palmdale, California, AT&T has converted its utility trucks to compressed natural gas in an effort to save money on fuel and cut down on carbon emissions.  “The vans are large enough to accommodate bulky gas canisters hidden beneath the floor,” reports Robert Wright in the Financial Times.  [http://www.ft.com/intl/cms/s/0/9f06bea8-69ea-11e3-aba3-00144feabdc0.html#axzz2osEhWAna]  The conversion costs $6,000 but operating costs will be reduced 10 cents per mile, meaning the initial investment will be recouped after 60,000 miles.  Most utility fleet vehicles hit that number within two years.

Some municipalities are even finding it worthwhile to switch to natural gas in smaller vehicles.  In Conway, Arkansas, the police department’s Chevy Tahoes are being converted to run on natural gas.  The effort is being promoted by Southwestern Energy, which will be building two CNG filling stations in the area.  Trussville, Alabama is scheduled to make the same conversion next year.

The switch to natural gas will receive a big boost in 2014 when Cummins Westport, a Connecticut company, introduces a 12-liter NG engine that is designed to sell between the existing 9- and 15-liter products.  “This will is expected to provide robust growth for the day cab market in North America,” says Navigant.  Volvo Trucks will also be taking aim at that market niche with a 13-liter LNG dual fuel engine.

Hovering behind all this is the effort by T. Boone Pickens’ Clean Energy Fuels to build a “natural gas highway” across America.  CLNE, which trades on the NASDAQ, plans to sell natural gas at truck stops along the nation’s interstate highway system.  The company is even planning to build its own liquid natural gas terminal in Jacksonville, Florida.

“Natural gas is a better transportation fuel than gasoline,” says the indomitable Pickens, who is engaged to be married for the fifth time at age 85.  “It’s cheaper, it’s cleaner and it’s a domestic resource.”

In fact the market is now getting so crowded that providers are starting to bump up against each other.  In the Northwest, Clean Energy is objecting to plans by Puget Sound Electric, Portland-based NW Natural and Spokane-based Avista Utilities to build filling stations for natural gas vehicles.  “We feel that because of their monopoly status, regulated utilities will have an unfair advantage entering the natural gas refueling market,” said Warren Mitchell, chairman of Clean Energy.   “Choices in the marketplace are a good thing,” responded Ben Farrow, of Puget Sound.  “We don’t want to compete unfairly.”

Nevertheless, despite all this activity in the United States, Navigant actually sees Asia as natural gas’s prime growth market.  By 2020 the report anticipates annual sales of 400,000 medium and heavy-duty trucks and buses, but the Asian Pacific will account for an astounding 76.2 percent of these sales while North America will provide only 12.7 percent and Europe 8.6 percent.  With 1.2 million NGVs on the road by that time, China and the United States will represent a combined 96 percent of the world market.

Compressed natural gas still has its problems.  Even when stored at 3,600 pounds per square inch, compressed gas takes up five times the space of a gas tank holding the same amount of energy.  This means that on a Chrysler Ram 2500 pick-up the tank still occupies nearly half the truck’s rear cargo bay.  Obviously, the bigger the truck or bus, the better it will be at accommodating this bulk.  But when it comes to ordinary passenger cars, finding room for the gas tank will be much more difficult.  That is why there is still only one NG passenger vehicle – a Honda Civic – on the road today.

Converting passenger vehicles to natural gas will probably require a liquid fuel.  Methanol and butanol, both of which can be made from natural gas feedstock, are likely candidates. But that still lies ahead. For now, the progress of CNG among heavy duty trucks and buses is an encouraging sign that we may be able to reduce our dependence on foreign oil.

oldblog-Dec-flares

There’s Gold in Them Thar’ Flares

Walter Breidenstein may be the only CEO in America who still answers the company phone himself. If his operation is still something of a shoestring, it’s because he’s spent four years trying to duel with perhaps the most formidable foe in the country, the oil companies.

“I’ve been trying to get into North Dakota for four years to show them there’s a way to make money by stopping flaring,” says the 48-year-old who started his entrepreneurial career at 15 by washing dishes. “The oil companies have done everything they can to keep me out of the state and the bureaucracy has pretty much goes along with them. The companies know that as soon as they acknowledge we’ve got a workable system here, they’d have to buy one of our rigs for every well in the state.”

North Dakota, in case you haven’t heard, has become one of the biggest wasters of natural gas in the world by flaring off $1 billion worth a year while producing carbon emissions equal to 1million automobiles.  But oil is what the drillers are after and, as it was in the early days of the oil industry; gas is regarded pretty much as a nuisance. The result is gas flares that make the whole state look like neighboring Minneapolis from outer space.

The flaring has generated a lot of negative publicity, environmentalists are up in arms and landowners have sued over lost royalties. The big guys are starting to move into the state. The New York Times ran an article this week about new pipeline construction, fertilizer factories and GE’s “CNG in a Box,” which will capture flared gas and sell it asnatural gas.

Breidenstein has a different idea.  “Somewhere around 2000 I started reading about methanol technology and realized it was a very undervalued resource,” he says. “Then I read George Olah’s The Methanol Economy in 2006 and that convinced me.  At Gas Technologies we’ve been trying to put Olah’s vision into practice.”

Gas Technologies has developed a $1.5 million portable unit that captures flared gas and converts it to methanol. “It’s a very accessible device,” says Breidenstein.  “You can move it around on a flatbed truck.”  The company ran a successful demonstration of a smaller unit at a Michigan oil well last fall but still hasn’t been able to break into North Dakota.

“The oil companies’ attitude is that money is no problem as long as they don’t have to spend it,” says Breidenstein.  “I’ve been in the business 25 years and I know where they’re coming from. But the problem is no one is forcing them to deal with flaring. And as long as they can keep throwing that stuff into the atmosphere for free, nobody’s going to look for a solution.”

You’d think with a billion dollars worth of natural gas being burning off into the atmosphere each year, though, there’d be some say to make money off it and that’s what frustrates Breidenstein.

“Our rig costs between $1 and $2 million dollars,” he says.  “But by capturing all the products of flared gas, you can make around $3500 per day.  That puts your payback at around three to four years.  But the oil companies don’t think that way. They won’t look at anything that goes out more than six months.

That puts things in the hands of state regulators and so far they have sided with the oil companies. “By statute, the oil companies are allowed to flare for a year it there’s no solution that’s economical,” says Alison Ritter, public information officer for the North Dakota Department of Mineral Resources.  “There’s nothing we can do to require them to buy from one of these boutique firms. Many oil companies have already committed their gas to pipeline companies and they can’t back out of those contracts.”  Still, the pipelines may not be built for years. “You have to understand, the Bakken Oil Field is 15,000 square miles, the size of West Virginia,” adds Ritter.  “It’s hard to service it all with infrastructure. We’re building pipelines as fast as we can.” Of 40 applications for flaring exemptions submitted this year the state has approved two and denied one, with the other 37 pending.  While they are pending, flaring goes on.

Of course if Gas Technologies were to start receiving orders right now, they’d be hard pressed to produce a half-dozen of them let alone the 500 that the state might require. “We’ve had talks with venture capitalists but if you’re not from Silicon Valley, they’re not interested,” says Breidenstein.  “But we’ve got a business model here and we know it can work.”

At least someone has taken notice. This year Crain’s Detroit Business rated Gas Technologies Number One in the state for innovative technology, ahead of 99 other contenders, including General Motors, Ford, Volkswagen, Whirlpool, Dow Chemical and the University of Michigan.  “Because the Walloon Lake company’s patents are potential game-changers, its patents rank high on the value meter with a score of 156.57 (anything over 100 is considered good),” said the editors.

It may not be long before others start noticing as well.

oldblog-Dec-Nostradamus

Nostradamus, Predictions, Oil, and Alternative Fuels: 2014

Everyone’s doing it, doing it, doing it. Probably the last good prediction maker was Nostradamus and even he was probably more lucky than clairvoyant. Last year’s political predictions in retrospect did not turn out to be confidence builders.  Predictors of less, or indeed more, tension in the Middle East seem to have run up against the unpredictability of events and the actions of leaders. So called experts, who predict the ups and downs of the stock market, were seemingly immune to history and many times seem to provide more entertainment than accurate crystal balls.

Permit me to go where some angels seemingly have feared and still fear to tread; where only humans who claim absolute wisdom or clairvoyance and more often than not reflect neither function repetitively, if they still have income. Permit me to make a few 2014 predictions about energy and alternative fuels. I claim no special advantage concerning knowledge of the future than most, if not all, of my colleagues, friends, family, significant others, other Americans, Israelis, Saudis, Iranians, Chinese and my next door neighbors and their children etc. I only claim the time to think about recent studies by respected analysts and to participate in conversations with bright folks concerned with America’s energy policies (or non-policies) and the development of alternative fuels to compete with gasoline.

Here I go-no safety net!

1. Despite pleas from environmentalists and many in the energy business, because next year is an election year, efforts to make sense of the current hodgepodge of policies and programs affecting America’s energy future and to develop a comprehensive energy natural policy will likely go nowhere.

2. The president will continue to speak about the need to wean the U.S. off of oil and gasoline.  His speeches will frame issues in terms of reducing dependency on foreign oil, lessening greenhouse gas (ghg) emissions and other pollutants, increasing America’s security, improving the economy–fewer dollars spent oversees for oil will mean jobs here at home– providing lower priced fuel for consumers.

3. Many political, business, environmental and academic leaders will increasingly see natural gas and natural gas based fuels like ethanol and methanol as worthy alternative transitional or bridge fuels until electricity based and or hydrogen fuels are ready for prime time.  They are not perfect but they are better for the environment, the economy, America’s security and you and me than gasoline. Opening up the fuel market from constraints imposed by the oil companies and by, sometimes, little examined government regulations will become, for some, a nonpartisan leadership and diverse constituent battle cry.

4. Recent efforts by states such as Colorado, working with the environmental community and industry, to strengthen drilling, storage, refinery and distribution regulations responsive to ghg, methane and pollutant leakage will be exported to other states. Governors and state legislatures will use lessons learned to respond strategically to fracking and other environmental concerns.  The Federal government will encourage states to look at Colorado and other states with similarly strong but fair regulations. Based on Colorado and the experience of other states, EPA will consider amending and strengthening their regulations.

5. Oil prices will likely hover around present levels in the short term. But assuming modest economic growth in the U.S.(2-2.5 percent gnp) and Asia as well as renewed tension in the middle east associated with difficulties in securing a final agreement with Iran on its nuclear program and an agreement between Palestinians and Israelis, oil and gas prices will again trend upward around mid-2014.

6. The gap between natural gas and oil prices when converted to fuel-gasoline, ethanol and methanol, at the pump, will increase but only slightly.  Put another way, the price of oil during the latter part of the year will increase a bit faster than the price of natural gas.

7. Electric cars will continue to reflect modest growth and increased market penetration.  But the scale up will be relatively small. EV’s will constitute approximately 1.5 to 2 percent of the new car market by the end of next year.

Hopefully, by year’s end, electric car makers will have extended the miles per charge based on modified lithium batteries or a newly designed battery with alternative chemistry.  Tesla joined by the larger auto companies will increase the range and lower the overall costs of electrically powered vehicles.

Hydrogen fueled cars will likely not register concerning market penetration.  Hybrids of one form or another will secure a larger market share than electric vehicles.

8. Detroit will increase its production of flex fuel automobiles, but the number compared to the total number of cars produced will be relatively modest.  Detroit’s wariness to clearly make customers aware of the advantages of flex fuel cars concerning choice of alternative fuels will limit the ability to easily expand consumer options at the pump.

9. Conversion of existing cars to flex fuel vehicles using relatively inexpensive conversion kits will increase this year.  But the anticipated number of conversions related to the total number of older cars will not generate sufficient competition with gasoline to lower its price, reduce ghg and other pollutant emissions.  What will be required to stimulate use of alternative fuels in older cars, and may come this next year, will be federal government certification of more than one conversion kit.  Approval of a number of kits will reduce the price considerably and expand consumer fuel choices. Eliminating oil company restrictions that impede the sale of alternative fuels at most gas stations  will probably take more time and require concerted advocacy by consumers, business , natural gas and environmental groups, and government. Maybe we will see progress by the end of 2014.

2015 is just around the corner.  Invite me back next year to do 2016?    Predictions of what likely will be can help us, if we understand at least some of the variables involved, think through what can be done, even if limited by our own actions as citizens, by the organizations we respect and work with, and by our government to influence outcomes.

Happy New Year! May the projections of your life be only good ones!  May you and yours build some wonderful memories in 2014!

oldblog-Dec-hydrocars

Are Hydrogen Cars the Future – Again?

The hydrogen car may be on the road to another comeback – again.  At the annual auto show in Los Angeles last week, both Honda and Hyundai unveiled “concept cars” of hydrogen models they expect to be available by 2015.  As a result, the automobile press has been filled with stories its revived prospects.

“For a long time, hydrogen fuel-cell vehicles were seen as a tantalizing technology to help reduce society’s reliance on oil,” Brad Plumer wrote in the Washington Post. “But the vehicles themselves were seen as forbiddingly expensive. Not the pendulum may be swinging back.”

“Toyota made a decagon – the fuel-cell car is going to be a big part of our future,” wrote Bradley Berman in The New York Times, quoting Toyota spokesman John Hanson.  “Today Toyota is not alone,” he continued. “Four other carmakers – General Motors, Hyundai, Honda and Mercedes-Benz – are also promising fuel-cell cars in the next few years.”

The prospect of an automobile running on hydrogen is indeed perpetually attractive.  Hydrogen is the most common element in the universe.  When combined with free oxygen in the atmosphere it “combusts” to produce H2O – water.  There are no other “exhausts”. Thus hydrogen promises transportation absolutely clean of any air pollution.  No global warming, either.

But it isn’t quite that simple.  The question that always presents itself is, “Where do you get the hydrogen?” Although hydrogen may be the most common element on earth, all of it is tied up in chemical compounds, mostly methane and water.  Accessing this hydrogen means freeing it up, which requires energy.

Most of our commercial hydrogen is made by “reforming” natural gas, which splits the carbon and hydrogen in methane to produce carbon dioxide and free hydrogen. That doesn’t help much with global warming.  Another method is to split water through electrolysis. That is a much cleaner process but requires a considerable amount of electricity. Depending on what power source is used, this can produce zero or ample emissions. If it’s coal, the problem is made much worse. If it’s clean sources such as solar or nuclear, then there can be a strong advantage. In the 1930s, John Haldane proposed giant wind and solar farms that would generate hydrogen that could fuel all of society. Such facilities generating hydrogen for transportation would be a step toward such a utopia.

Even then, however, there are problems.  Hydrogen is the smallest molecule and leaks out of everything.  It is very difficult to transport.  Joseph Romm, a disciple of alternative energy guru Amory Lovins, was appointed head of hydrogen car development program under President Bill Clinton and worked for two years on its development.  In the end, he became very disillusioned and wrote a book entitled The Hype About Hydrogen, in which he argued that the idea really wasn’t practical. Romm is now one of the country’s premier global warming alarmists on ClimateProgress.org.

What has apparently brought hyfrohgen cars back to the forefront has been the substitution for platinum as the principal catalyst in the fuel cell process.

A fuel cell produces an electric current by stripping the electron off a hydrogen atom and running it around a barrier that is otherwise permeable to a naked proton.  The proton and electron are reunited on the other side of the barrier, where they combine with free oxygen to form water.  Until recently, platinum was the only substance that could fill this barrier function. This made fuel cells very expensive and raised the question of whether there was enough platinum in the world to manufacture fuel cells in mass production.  But several platinum substitutes have now been found, making fuel cells considerably cheaper and more accessible.

Estimates are now that next year’s Hyundai and Honda FCVs will sell for about $34,000, which puts them in the range of electric vehicles such as the Nissan Leaf and the Toyota Prius.  (The Tesla, a luxury car, is  priced in a much higher range,)  The problem then becomes fueling.  The FCV offers considerable advantages over the EV in that it has a range of 300 miles, comparing favorable to gasoline vehicles.  It can also be refilled in a matter of minutes, like gasoline cars, whereas recharging  an EVs can take anywhere from  20 minutes to three hours. But hydrogen refueling stations have not materialized, despite former governor Arnold Schwarzenegger’s promise of a “hydrogen highway.” At last count there were 1,350 EV recharging stations around the country but only ten hydrogen stations, eight of them In Southern California.

All this suggests that neither hydrogen cars or electric vehicles will be sweeping the country any time soon.  Neither the Chevy Volt nor the Nissan Leaf have sold well and are not expected to do much better next year.  If you read the press stories carefully, you soon realize that the reason the automakers are constantly cycling back and forth between electric and hydrogen cars is that they are trying to meet California’s requirements for low-emissions vehicles that will allow them to continue selling in the state. The problem, as always, is consumer resistance..  The automakers can manufacture all the hydrogen and electric cars they want but consumers are not always going to buy them, especially at their elevated price.  So the manufacturers will end up dumping them on car rental agencies where they will sit on the back lots, as did the first generation of EVs.

There is, however, one type of alternative that succeeded handsomely in California and had widespread consumer acceptance, although it is completely forgotten today.  That is methanol.  In 2003, California had 15,000 cars running on blends of up to 85 percent methanol.  Consumers were extremely happy and did not have to be dragooned into buying them.  Refueling was easy since liquid methanol slots right into our current gas stations. Cars that run on methanol can be manufactured for the same price as cars that run on gasoline.

The experiment only ended because natural gas, the main feedstock for methanol, had become too expensive.  In 2003, natural gas was selling as high as $11 per mBTU, making it more expensive than gasoline.  That was before the fracking revolution.  Today natural gas sells for less than $4 per mBTU and the industry is coping with a glut.  Methanol, which is already produced in industrial quantities, could sell for $1 less than motorists are now paying for energy equivalent in gasoline.  Moreover, methanol can be made from garbage and crop wastes and a variety of other sources that would reduce it’s carbon footprint.

Hydrogen and electric cars each have a future and it is good to see the auto companies keep experimenting with them.  But each has impediments that are going to be difficult to overcome. Methanol, on the other hand, is a technology that could be implemented today at a price that not require subsidies.  Even if it is only perceived as a “bridge” to some more favorable, low-carbon future, it is worth pursuing now.

 

oldblog-Dec-drill

Drill Baby Drill and Increase US Exports of Oil: A Conundrum

Over the last year or so, many in the media have commented on the Saudization of America. Readers and viewers have been told that drilling for tight oil will lead to reduced imports and energy “independence.” Luck, or perhaps because of good ole American ingenuity in developing fracking technology, America, the Saudization folks indicate, will no longer be tethered to Middle East petroleum. “Amen” said a chorus of readers and viewers to the “drill baby drill crowd” during recent previous Presidential elections. What good red-blooded American could be against accessing America’s apparent ample supply of oil from dense rock formations or shale? Another popular win for “manifest destiny,” particularly when promises are made by the oil industry and believed by consumers that we will soon be blessed with oil independence as well as stable and ultimately lower gas prices. Who could ask for anything more?

I do not want to get into the “drill baby drill” debate– at least at this juncture. Nor, for the purposes of this piece, do I want to dwell on the opportunities and yes the problems related to fracking.  What I do want to focus on is the impact of the so-called Saudization of America on consumer prices for gasoline.

Since for most of us, gas is an inelastic good and, although we express anger or dismay at its costs, we will pay the price. No doubt, you, your wife, or significant other must get gas to get to work, to shop, to take kids to school or play, to go to a doctor, and to vacation. For folks with low and moderate incomes, the costs of fuel often constrains the purchase of basic goods and services and even job choices and access to decent housing because of limited transportation budgets. Happily, Americans are getting some relief from recently sky rocketing fuel prices during this holiday season.

But think about it: Even at today’s “low” national average price of “only” about $3.25 (I paid $3.63 for regular gas this morning), the price remains relatively high. Further, the recent drop in prices probably had relatively little to do with increased production. More important in setting prices were likely lower demand, the continued slow growth of the U.S. economy, the reduction of tension in the Middle East, wall street banker and speculative behavior, monopolistic type conditions limiting consumer choices at the pump set by the oil industry as well as oil company decisions concerning market management. (It would be interesting if some independent qualified think tank or government agency undertook an in-depth factor analysis concerning variables affecting gas prices.)

Increased oil production and refinement in America likely will not have a major impact on price or price stability. Despite being produced here, oil is traded globally. Understandably and legitimately from their perspective, the behavior of producers, refiners and investors is not governed by patriotism or security interests but by return on investment (ROI). Their voices often seem bi polar. They argue for more drilling here to benefit U.S. consumers, but they often, less than transparently, translate drilling and new production into dollars stimulated by new exports or relaxation of export regulations into pleas for new drilling.

Clearly, a good share of the oil produced in the U.S. — unlike Las Vegas stories– will not stay in the U.S. It will be sold to other nations. While the oil export train (or in this case the boat) has not yet left the station, political pressure from the oil industry and its friends is beginning to generate a Washington buzz that current federal restrictions on oil exports, in place since the Arab Boycott, soon will be reduced significantly. When big oil speaks, many in Washington listen! Yet, right now production per year meets only about 50 percent of demand in the nation–

According to CNBC, “oil companies are securing licenses to export U.S. crude at the fastest rate since records began, as the shale boom leads to swelling supplies along the Gulf of Mexico. The U.S. government granted 103 licenses to ship crude oil abroad in the latest fiscal year, up by more than half from the 66 approved in fiscal 2012 and the highest since at least 2006…”

Bloomberg News notes that the surge in U.S. oil production has made the nation the world’s largest fuel exporter. Exports to Brazil grew by almost 60 percent and Venezuelan imports from the U.S. grew by more than 55 percent; So much for the cold war between the U.S. and Venezuela.  As Bloomberg reports, U.S. exports of refined productions, such as gasoline and diesel, have reached new highs and increased by 130 percent since 2007.

Interestingly, Canada, despite the fact that it is the largest exporter of oil to the U. S. and has ample shale oil resources, has been the primary beneficiary of increased licenses for exports in the U.S.  Less expensive U.S. gulf oil crude is a good deal for Canadians, particularly from eastern Canada. It’s cheaper than the Canadian alternative.

So despite all the noise, we still have a long way to go before we reach oil independence, a truism in part because U.S. oil will soon constitute a relatively and historically a large share of the global oil market.

Clearly, a less exuberant goal than achieving oil independence would be reducing oil dependency. Advocates of alternative fuels like natural gas and natural gas based ethanol and methanol have a strong case. Do you remember when Ronald Reagan strongly urged Mikhail Gorbachev to tear down the Berlin wall?  President Obama, paraphrasing Reagan, should urge oil companies to tear down the barriers to competition at the pump and allow in alternative, safe and environmentally sound alternative fuels. Unlike other Presidents before him, the President, courageously, has already asked the nation to wean itself off of oil.

Offering consumers more choices than gasoline at “gas” stations will help reduce and stabilize fuel prices for consumers.  A double win for the nation and its residents: reduced dependency and stable as well as lower costs– Happy New Year!

Ilana

Fuel Freedom Foundation Appoints Ilana Meirovitch as Chief Operations Officer

Ilana Meirovitch Joins Fuel Freedom Foundation’s National Effort to Give Americans Choice at the Pump

Fuel Freedom Foundation, a nonpartisan, nonprofit organization working to reduce the cost of driving your existing car or truck by opening the market to cheaper fuel choices at the pump, has announced that Ilana Meirovitch will be its new Chief Operating Officer.

Meirovitch comes to Fuel Freedom with over 20 years of operational leadership experience with Deloitte, one of the world’s leading consulting organizations. Her experience at Deloitte spanned all disciplines of the organization and her high-level strategic operational experience, combined with her down-to-earth practical business skills, will help drive the foundation toward its goal of creating open competition in the transportation fuel market.

“Ilana’s exceptional experience, great character and enormous enthusiasm for our mission will be instrumental in our efforts to promote the development of cheaper, cleaner, American-made fuels,” said Joseph Cannon, CEO of Fuel Freedom Foundation. “Her reputation for executing complex projects and delivering sustainable results, while gaining alignment among multiple stakeholders, will be an asset to the Fuel Freedom Foundation.”

Fuel Freedom Foundation is working to open the fuel market to competition by providing choice at the pump. Achieving fuel freedom means accelerated economic growth, greater energy security, reduced air pollution, lower greenhouse gas emissions and improved health for Americans. The introduction of replacement fuels will provide a big financial break for people, without increased government spending.

Meirovitch began her career as a tax advisor in the Orange County practice at Deloitte and, over the years, supported firm leadership in various national roles such as Chief of Staff to the regional managing partner, Director of Finance and ultimately the National Director of Operations in the firm’s US Talent (HR) organization. While there, she led teams both in the U.S. and India, overseeing the organization’s budget, business processes, technology solutions and the development of its off-shoring activities. Meirovitch has an MBA degree from the University of California in Los Angeles.

“Creating choice at the pump will usher in an era of economic growth fueled by innovation in the transportation sector, areas that are very near and dear to me,” said Meirovitch. “By removing barriers to competition, we can see ethanol, methanol, natural gas, electricity and gasoline compete on equal footing at the pump. I am excited to be a part of the movement to help Americans choose cheaper, cleaner and American made fuels.”

About Fuel Freedom: The Fuel Freedom Foundation is a nonpartisan, nonprofit organization dedicated to breaking our oil addiction by enabling the transportation fuels market to open so our cars and trucks can run on cheaper, cleaner, healthier American replacement fuels. The Fuel Freedom campaign aims to remove barriers to competition so that natural gas, methanol, ethanol and electricity can compete on equal footing with gasoline at the pump and at the dealership. Achieving Fuel Freedom will lower fuel prices, create jobs, spur economic growth, reduce pollution, and improve national and global security. For more information visit us at www.fuelfreedom.org.

oldblog-Dec-iceland

What Do Iceland and Israel Have in Common?

In New York City politics they used to talk about the “three I’s” – the Irish, the Italians and the Israelis, which formed the major voting blocs. Today we can talk about the “two I’s” –two countries that are making significant progress in methanol as an alternative fuel – Iceland and Israel.

Iceland is by far the leader.  The Icelanders are blessed with a string of volcanoes that bristle with geothermal energy. Tapping these vents, they are able to get 25 percent of their electricity from this natural, renewable source – the highest proportion of geothermal in the world. Drawing the other 75 percent from the island’s ample hydroelectric resources, you have a grid running entirely without fossil fuels.

But that’s just the beginning. Blessed with this amplitude of natural resources, the Icelanders have decided to turn it into an auto fuel as well. In 2011 a Reykjavik-based company called Carbon Recycling International set up a unique operation that will capture the small amounts of carbon dioxide and carbon monoxide emitted from geothermal vents and transforming that into an auto fuel as well.

The target ingredient is methanol, the simplest alcohol, made up of a single carbon, three hydrogens and a hydroxyl ion. Methanol is a liquid at room temperature and can be easily funneled into our existing gas-station infrastructure. Methanol burns with about 50 percent of the energy content of gasoline but has a higher octane rating so the real effect is about 66 percent. Methanol functions similarly to the corn ethanol that currently constitutes 10 percent of our gasoline.

Through a simple procedure, CRI takes the carbon dioxide exhaust from the 75 MW Orka geothermal plant and combines it with hydrogen to produce methanol. The hydrogen is obtained through the electrolysis of water, using electricity from the power plant. The outcome is 5 million gallons of methanol per year. In the United States, the Environmental Protection Agency has not yet approved methanol as a gasoline additive but Iceland allows it to be mixed at a rate of 3 percent (although they also have some Fords running on 50 percent). Cars would actually run on 85 or 100 percent methanol – the Indianapolis 500 cars have done it since the 1960s – but government regulators in both countries are reluctant to give it a try (It would require replacing a few elements in the fuel line to avoid corrosion).

Iceland’s experiment has been so successful that the country has now decided to export the product to Europe. This year CRI has begun to send its “green methanol” to the continent to add to Europe’s gas tanks. The Icelanders advertise that the product adds no additional carbon dioxide to the atmosphere. This is because the carbon dioxide that is captured was already headed for the atmosphere. Instead it is burned in gasoline engines, also ending up in the atmosphere, but along the way it has replaced an equal amount of gasoline that would have produced its own carbon emissions.

Icelanders proclaim they are putting into effect what Nobel Prize Winning chemist George Olah called the “methanol economy.”  In his 2009 book, Beyond Oil and Gas: The Methanol Economy  

Olah and his co-authors outline how methanol from a variety of sources – natural gas, coal and any biological material – could serve as the basis of an economy much less dependent on fossil fuels. At the Orka carbon recycling and geothermal plant, they appear to be doing just that.

At the same time, Olah is finding recognition in Israel as well. This month Olah and his University of Southern California colleague G.K. Surya Prakash became the first recipients of the Eric and Sheila Samson Prime Minister’s Prize for Innovation in Alternative Fuels for Transportation, with Prime Minister Benjamin Netanyahu bestowing the first-ever award. The Israelis are also looking for alternatives to gasoline in order to reach their proclaimed goal of reducing dependence on oil by 60 percent by 2025. With the discovery of new gas supplies in the eastern Mediterranean they are in a good position to apply Olah’s proposed technology in transforming natural gas into methanol for transportation.

Nor is Olah standing still. In an October op-ed contribution to the Wall Street Journalhe announced that he has developed a new technology that will allow large quantities of carbon dioxide from power plants to be transmuted into methanol so that carbon exhausts can be “recycled” just as the they are at Orka. The plan could make use of carbon exhausts in the U.S., perhaps rescuing the fading coal industry.

Iceland and Israel are already taking steps toward the vision of a methanol economy. Will Iowa and Illinois be next?

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A Thanksgiving Feast of Alternatives

Over the river and through the wood

To grandmother’s house we go.

The horse knows the way to carry the sleigh\

Through white and drifted snow.”

Thanksgiving has come and gone, Christmas is coming, and that makes me think of alternative fuels and finding something to replace gasoline in our engines.

What, after all, was the horse and sleight except an old-fashioned means of transportation?  It had served humanity since the Bronze Age.  It has often been said that Julius Caesar and George Washington used essentially the  same transportation technology in pursuing their wars

All this held through the early days of the 20th century. There is a famous scene Jules Verne’s The Mysterious Island, written in 1875, where the adventurers go to investigate a mysterious submarine – in a horse and carriage!  When people started assembling on the New York docks in 1913 to hear reports of the missing Titanic, half of them arrived in horses and carriages.

We eventually made the energy transformation to the “horseless carriage” of automobiles but it wasn’t easy. People were afraid of the new invention.  They didn’t know how to work it. They fretted over the extraordinary speeds that could be reached – 30 miles an hour!  They did not like the nasty exhausts that some new technologies produced.

Nor was it ever certain which means of propulsion for the new “automobiles” would prevail. There were three contenders – the electric car, the steam car and the internal combustion engine running on any number of fuels.  Gasoline was not the foremost possibility. When Henry Ford built his first model in 1895, called the “quadricycle,” he designed it to run on corn ethanol, which seemed like a reasonable alternative.

The steam car set speed records of 200 miles per hour and the electric showed great promise as a gadabout town car. But the internal combustion eventually prevailed. Why?  The steam car, running on coal, took too long to warm up – about 20 minutes.  The electric car had a very short range, as it still does today. The internal combustion engine was awkward because it required the driver to hand-crank the engine from the front.  There was also a question of whether there would be enough fuel available to run large numbers of cars.  At the time, oil was still a relatively rare commodity, marketed mainly for the “lamps of China.”  But when Spindletop gushed forth in 1901, questions about the oil supply faded.  And when Charles Kettering invented the electric starter in 1912, the battle was over.

Still, Henry Ford didn’t particularly like gasoline and never gave up on the idea that ethanol was a better alternative.  Gasoline had a lower octane rating, was much more toxic (particularly when blended with tetra-ethyl lead to raise its octane rating) and emitted more pollutants. It was also more explosive and required complex refining, whereas ethanol was relatively easy to produce. Ford had roots in farm country and as late as 1925, with the farm belt in a chronic recession, he argued that farmers should be growing their own fuel. “The fuel of the future is going to come from fruit like that sumac out by the road, or from apples, weeds, sawdust — almost anything,” he told The New York Times. “There is fuel in every bit of vegetable matter that can be fermented. There’s enough alcohol in one year’s yield of an acre of potatoes to drive the machinery necessary to cultivate the fields for a hundred years.”

These ideas still resonate today.  Making auto fuel from crops has become a reality since we add 10 percent corn ethanol to our gasoline supplies, cutting our dependence on foreign oil.  There is still talk about using the much larger portions of “crop wastes” to produce cellulosic ethanol, although the technology to do this economically has not emerged yet.  Electric cars are getting another run as battery life and range are extended.  And there is a range of other alternatives – compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen fuel cells and methanol derived from natural gas, coal or any number of organic sources, including garbage, crops and crop wastes.  We have a regular Thanksgiving feast of options before us.  It’s just a question of finding out what works best.

So remember, no technology is forever.  The holiday revelers sleighing toward grandmother’s house for Thanksgiving never dreamed they might one day be making the same trip across 300 miles of countryside at speeds of 60 miles an hour. And today when you’re speeding down the Interstate in a car powered by gasoline from Saudi Arabia, you may not dream that in ten years you could be driving a car running on switchgrass grown on the scrubland of South Dakota or natural gas pumped from the Marcellus in Pennsylvania.  Yet stranger things have happened.  You never know where that path over the river and through the woods is going to lead.

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The Principal Impediment to Alternative Fuels Is – Government Regulation?

In their path-breaking study, “Fuel Choice for American Prosperity,” the Energy Security Council carefully outlines the dilemma that our complete dependence on oil for transportation has created.

“It’s not the oil we import, it’s the price,” was the way they summarized it. As I outlined in a previous post the authors show how OPEC still controls the bulk of the world’s oil reserves and has not increased its output since the 1970s. As a result, even though we have increased domestic production dramatically and cut down on consumption, we are actually paying more for our oil imports than we were ten years ago. Why?  Because, OPEC is still able to manipulate the price to keep it at $100 a barrel. It’s not the black stuff we import that crimps our economy, it’s the price of oil we must accept from a monopolistic cartel.

So what to do?  Do we set up protests outside OPEC’s corporate offices in Vienna?  Do we bring an anti-trust suit in some world forum? People have actually tried such things and gotten nowhere. No, the only way to extricate ourselves from this market is to break the monopoly that oil has on our transportation system. If oil had competitors, it will start acting like any other commodity and respond to supply and demand. The key to breaking the OPEC monopoly, says USESC, is to develop alternative fuels.

When it comes to asking why we have not made more progress in developing alternative fuels, however, USESC has a surprising answer: government regulation. Government regulation? How can that be? I thought the government was doing everything it could to foster alternatives and try to lower our oil imports. Well, as usually happens when the government gets involved in manipulating a market, things quickly get complicated and murky. Here’s what has happened:

CAFE standards. When Congress first started setting corporate fleet average standards, responsibility was given to the Environmental Protection Agency. In retrospect, this was an odd choice, since EPA is more concerned with air pollution than reducing oil consumption. The Department of Energy would have been a more logical choice. This didn’t become visible in the 1980s when pollution concerns centered on the combustion products of sulfur and nitrogen. But now that carbon dioxide and global warming have become the principal concerns, the EPA has subtly changed its emphasis. As USESC points out; “CAFE’s initial energy security centric vision has been blurred by the desire to use the law to promote greenhouse gas emission reduction goals.”

In its latest regulatory effort, for example, the EPA will reward auto companies for introducing alternative fuels by applying a “multiplier” to their corporate fleet average beginning in 2017. Every electric and hydrogen fuel cell vehicles will count as two vehicles in the denominator of the corporate average, phasing down to 1.5 by 2021. For plug-in hybrid electric vehicles (PHEVs) and compressed natural gas vehicles (CNG), the multiplier will be 1.6, phasing down to 1.3.

All this seems fair enough. EVs and FCVs use no gasoline and plug-in hybrids are only partially dependent on oil. The real problem, however, is that flexible-fuel vehicles – cars that are designed to burn ethanol, methanol or gasoline – have only been given credit based on how much E-85 they burn in real-world driving. The auto manufacturers have used this to avoid making improvements in car efficiency. This is regrettable because flexible fuel engines burning either ethanol from homegrown corn or methanol derived from natural gas would be the best say to cut down on imported oil. Both methanol and ethanol are liquids and fit right into our current gas station delivery system. Compressed natural gas and electricity, on the other hand, require a whole new replenishing system. Yet the EPA remains wary of both ethanol and methanol because they produce carbon exhausts. CNG also produces carbon exhausts, of course, and EVs drawing power from coal or natural gas will produce exhausts at the power plant. The EPA has tried to compensate for this by adding upstream carbon releases for EVs and other alternative fuels but it does not do the same for gasoline!  In short, the whole multiplier system is a mess. The EPA would do much better just trying to reduce oil dependence rather than bringing carbon emissions into the equation.

Costs of converting to alternative fuels: One of the most important steps in developing alternative fuels is converting existing gasoline vehicles to run on other fuels.

In general, there are three types of conversions – switching a gasoline or diesel car to run solely on another fuel (dedicated), changing a vehicles to run on higher alcohol blends (flex fuel), or installing an additional fuel tank so that the vehicles can burn the competing fuel as well (bi-fuel). In American, however, onerous regulations and staggering costs of conversion has deterred consumers.

The study points out that installing a CNG tank in an American car costs $10,000 while the same tank in Europe can be installed for $3,800. The difference is the strength of the tank as dictated by the EPA. Of course we don’t want to be in a situation such as Pakistan where CNG cars are exploding due to poor tank quality.  But even in comparison to other developed countries, U.S. regulatory requirements are excessive. 

Taxing by volume instead of by energy content: The federal and state governments places taxes on gasoline and any other product used to propel trucks and automobiles. The logic here is that the money goes into special highway trusts that maintain the roads. But the tax is imposed by the gallon rather than by energy content. USESC maintains that this is discriminatory because methanol, ethanol and other non-gasoline products have less energy density and therefore require more volume for the same amount of energy. This is a fine point and might be disputed by the oil industry, which would say if ethanol and methanol have less energy content, that is simply their tough luck. Ethanol, on the other hand, has been exempted from the federal highway tax and most state gas taxes, which is what makes it economical to add to gasoline.

The ban on methanol: Finally, although the USESC report does not even mention it, the biggest regulatory impediment to alternative fuels is the EPA’s failure to authorize the use of methanol in gas tanks. Putting anything in your gas tank requires permission from the EPA because of air pollution considerations. Although methanol actually produces less nitrous oxides and less particulate matter than gasoline, the EPA has never given it an OK. Although methanol made from natural gas might be the best alternative for replacing gasoline, it is does not yet have EPA approval.

Changing any and all of these regulations would require a huge concerted effort by some constituency that had a strong material interest in pushing it through Congress. Unfortunately, there is no such group. The natural gas industry is not yet organized around the issue and is more concerned about defending fracking and opening up natural gas exports. T. Boone Pickens is pushing CNG for trucks through his Clean Energy Fuels but there is no similar effort to promote the use of natural gas in cars. The entire farm bloc is behind corn ethanol, of course, which is why it has been so successful. But there is no similar interest promoting methanol, which may be just as good an alternative or better.

Under these circumstances, the best alternative is to persuade the auto manufacturers to produce flex-fuel vehicles that can run on any fuel – natural gas, hydrogen, biodiesel, E85 (85% ethanol) or M85 (85% methanol). The adjustment would not add significantly to the price of a new car and would open up the field to all the competitors attempting to replace gasoline.

Let the best fuel win.

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Ford Leads the Way

The Ford Motor Company stepped front-and-center in the effort to fine alternatives to high-priced imported oil last week with the announcement that it will offer compressed natural gas (CNG) tank as an option in the F-150 pickup truck, its most popular brand that currently sells 700,000 models a year.

Now it won’t come cheap. There’s a $250-$350 charge for the vehicle to come “prepped” from the factory. That means putting hardened valves, valve seats, piston and rings into the V6 engine. But after that, there’s a $7-9000 charge for installing the CNG tank in the cargo bay – made considerably more expensive than in Europe because safety standards are interpreted in a way that makes them much more expensive. This lifts the showroom price from $24,000 to around $32,000. That’s a big chunk but Ford swears you’ll make it back in three years by substituting fuels.

With the price of gas at around $3.80 per gallon and the oil-equivalent of natural gas at around $1.20, those savings should add up fast.  Of course all this assumes that the price differential won’t narrow to its traditional level, but that doesn’t seem very likely now. Electrical plants have shown a tendency to move quickly back to cheaper coal if the price of gas rises, but the difference between the crack spread and the spark spread seems to have separated permanently, much to natural gas’s advantage.

All this is good news for those looking to substitute some of our abundant natural gas for foreign oil in our transport sector.  In fact, there’s a lot of progress being made right now:

Clean Energy Fuels of Newport Beach, CA already has a network of 360 natural gas fueling stations at truck stops along Interstate highways and is trying to build a complete national infrastructure.  NGV stations cost $750,000 a pop but Clean Energy is looking at the long term.  The ready availability of filling stations will help spur the conversion of giant 18-wheel diesel haulers, which most people see as the ripest target for conversion.

Heavy-duty fleet vehicles are making rapid progress.  Buses and garbage trucks are in the forefront. Eight out of ten new vehicles bought in 2012 by Waste Management, the leader in the field, were powered by natural gas.

There are now 120,000 gas vehicles on the road in the United States, according to Natural Gas Vehicles of America, the trade group.  Unfortunately, this constitutes only a tiny fraction of the 15.2 million NGVs worldwide. Iran, Pakistan and Argentina, improbably, are the leaders. We’re behind in making the transition, but there’s plenty of room to catch up.

In a report issued in June, Citi Research estimated that one-quarter of the world’s present consumption of oil could be replaced by natural gas under present conditions. More than 9 million barrels per day could be replaced in truck transport, 2 million of these in the US. Another 3 million b/d could be opted out in marine transport and 200,000 b/d in railroad locomotives.

All this would be fairly easy to transact since it involves large commercial organizations with centralized decision-making.  Sooner or later, however, this approach is likely to run up against limits.  The stumbling block will be the vastly more decentralized system of private automobiles, which still consumes 60 percent of our oil and involves a car in every garage and a gas station on every other corner. Here the problem of building an infrastructure and achieving widespread distribution is much more difficult.

The problem comes because reformers are viewing natural gas as a fuel instead of a feedstock. Compressed natural gas (CNG) and liquefied natural gas (LNG) are the most readily available options – and both are legal – but in the end they are going to have their limits. It will make much more sense to use methane as a feedstock for the manufacture of liquids, methanol in particular.  These will be much easier to transport and will substitute for gasoline in current car engines with only minimum adjustment – nothing like the $8000 required for the F-150. Valero has just opted to build a $700 million methanol manufacturing plant in St. Charles, Louisiana in anticipation of this demand. All depends on whether the Environmental Protection Agency decides to give a go-ahead to use methanol in car engines. The matter is pending.

So the effort to use our abundant natural gas resources to reduce our dependence on expensive, unpredictable and unreliable foreign sources of oil is making headway. Ford’s decision to equip the F-150 with CNG is a beginning. But there’s more to come.