Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Algae a Greener Biofuel Than Ethanol?

Companies / Renewable Energy Jul 03, 2008 - 02:09 PM GMT

By: Jennifer_Barry

Companies Best Financial Markets Analysis ArticleIn my May article, Food Shock , I mentioned that biofuel production was consuming many of the crops normally used for food. Riots have broken out over the sharp price rises of 37% last year, and 16% so far in 2008. Coffee, soybeans and wheat are increasingly diverted to biodiesel production, driving prices higher. Almost a quarter of America's corn crop was distilled into ethanol last year, and the percentage is expected to grow another 10% in 2008.


The U.S. has been heavily criticized for subsidizing corn ethanol while restricting the import of Brazilian sugar ethanol, as sugar is about six times as economical a fuel source as corn. Many experts agree that corn ethanol is not very efficient, but claim it's just a “bridge” to the development of cellulosic ethanol. This embryonic technology is touted as the missing link to America's energy independent future.

However, the 2005 U.S. Department of Energy/Department of Agriculture joint plan to produce 130 billion gallons of ethanol has many flawed assumptions. It presumes a 50% increase in grain crop yields while gathering most of the excess biomass left on the fields. This action would leave them vulnerable to erosion and severe soil depletion, which would decrease productivity. Higher grain production would further stress limited fresh water resources, and lead to increased deforestation as lands were cleared for planting.

Even if higher output was possible, more grain requires the use of much more fertilizer and pesticides. These chemicals are largely composed of petroleum which is the fuel we're trying to use less of!

The government's plan expects 55 million acres will be dedicated to energy crops like switchgrass in the future. However, only 70 million acres are planted with corn today. As there is a limit of arable land, cellulosic ethanol production would chase out much of current food and timber production.

Cellulosic ethanol will not be a cheap fuel. To reach the U.S. mandated 21 billion gallons of this ethanol by 2022, it's projected to require a hefty subsidy of $1.55 per gallon. In addition to the logistical nightmare of trucking a ton of biomass to be processed into 80 gallons of ethanol, capital expenditures at a cellulosic ethanol plant are projected to be two to three times that of grain ethanol plants.

In the alternative energy debate, it's important to question if ethanol is a good idea at all. It lowers fuel efficiency in cars by 30% over the same amount of gasoline. If you are using 10% ethanol gasoline as we must in Dallas, it shaves 3% off your mileage even if it doesn't negatively impact performance. If you switch to E85 fuel, your car will require about 1.5 times as much fuel per mile, and your fuel pump and injectors will have to be larger to allow an adequate amount of energy to reach the engine.

Senator Thune of South Dakota, a major ethanol producing state, claims that ethanol saves the consumer 50 cents per gallon. However, the lower fuel economy overrides that benefit. Ethanol can corrode steel and polymer engine parts that were designed for gasoline, so your repair costs may climb as well. U.S. taxpayers also have to shoulder the cost of ethanol subsidies, so government intervention is hardly free. If the subsidies disappear while mandates remain, the direct cost will jump substantially as well.

Ethanol creates new transportation and safety hassles as well. It can't be moved via pipeline, so it has to be shipped via ship, truck, or railcar. Transportation opens up opportunities for accidents and fires. Unfortunately, most fire departments lack the training and specialized supplies necessary to meet the unique challenges of ethanol blazes. Ethanol vapor is more flammable than gasoline, and its nearly invisible flame can't be extinguished with water.

So if ethanol is not the solution, are we stuck with burning fossil fuels in our cars? Sapphire Energy doesn't think so. Sapphire is a company founded to answer one question, "Why is the biofuel industry spending so much time and energy to manufacture ethanol - a fundamentally inferior fuel?"

Instead of trying to fix problems with ethanol, the founders of Sapphire Energy - a bioengineer, a chemist, and a biologist - set out a year ago to make transportation fuel from a renewable source. They chose a source that is not used to feed humans or livestock - algae. This plant-like organism has a lot of potential as species contain up to 50% oil. While corn can only produce about 20 gallons of oil per acre, algae could potentially yield 20,000 gallons.

Apparently Sapphire has succeeded in converting algae to fuel. The company announced the production of 91-octane gasoline as well as jet fuel. To boost Sapphire's technical team, they hired Dr. Brian Goodall away from Imperium Renewables, as his team delivered algae biofuel for Virgin Atlantic's trans-Atlantic flight.

This start-up emphasizes that their product is not biodiesel or ethanol, as it can be used safely in gasoline engines without need for modifications. This “green crude” can be processed in our current oil refineries, without the need to build a new infrastructure.

Sapphire claims that their fuel is very environmentally friendly. When burned, it has virtually no emissions since it doesn't contain nitrogen or sulfur compounds. Production requires very little water unlike ethanol. In fact, the algae can be grown in brackish or salty water, even wastewater. Another advantage of this “green crude” is that the algae absorbs carbon dioxide from the atmosphere.

ARCH Venture Partners, and Venrock, two venture capital firms, and the Wellcome Trust, a British charity are enthusiastic about the potential. They have invested a total of USD $50 million in the company. ARCH is so confident in the technology that this firm declared their “checkbook is completely open.” With this solid funding in place, Sapphire expects to have a pilot project running in three years, and commercial production in five. The fuel is expected to be cost-competitive with petroleum.

Sapphire Energy isn't the only company researching algae-based fuel. Other start-ups include GreenFuels Technologies of Massachusetts, AquaFlow Bionomic of New Zealand, and Synthetic Genomics of California. Unfortunately, these companies are all in early stage development, and I don't know of any public companies in this area right now.

Even though the public can't invest, this field is definitely worth watching due to the potential for disrupting the energy marketplace. It will take years for “green crude” to enter commercial production even if one of the start-ups is successful, but the impact on ethanol would be enormous. Already there is mass public dissatisfaction in the U.S. with the ethanol mandate due to the rising food prices blamed on this fuel. If the law doesn't change by the time algae-based fuel arrives - which I find unlikely - the pressure would be tremendous. This would be even more true if the promise of cellulosic ethanol was unfulfilled.

Assuming the U.S. government was no longer artificially supporting the corn ethanol market and “green crude” was as powerful as advertised, I would expect a sharp drop in the agricultural markets. Corn ethanol would become functionally obsolete. Grain prices would fall as food would gradually be removed from the fuel production stream. As this disruption in commodities would ripple throughout the U.S. economy and effect my recommended asset list, I will stay alert for any change in the political winds in Washington.

by Jennifer Barry
Global Asset Strategist
http://www.globalassetstrategist.com

Copyright 2008 Jennifer Barry

Hello, I'm Jennifer Barry and I want to help you not only preserve your wealth, but add to your nest egg. How can I do this? I investigate the financial universe for undervalued assets you can invest in. Then I write about them in my monthly newsletter, Global Asset Strategist.

Disclaimer: Precious metals, commodity stocks, futures, and associated investments can be very volatile. Prices may rise and fall quickly and unpredictably. It may take months or years to see a significant profit. The owners and employees of Global Asset Strategist own some or all of the investments profiled in the newsletter, and will benefit from a price increase. We will disclose our ownership position when we recommend an asset and if we sell any investments previously recommended. We don't receive any compensation from companies for profiling any stock. Information published on this website and/or in the newsletter comes from sources thought to be reliable. This information may not be complete or correct. Global Asset Strategist does not employ licensed financial advisors, and does not give investment advice. Suggestions to buy or sell any asset listed are based on the opinions of Jennifer Barry only. Please conduct your own research before making any purchases, and don't spend more than you can afford. We recommend that you consult a trusted financial advisor who understands your individual situation before committing any capital.

Jennifer Barry Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Robert Gooden
06 Dec 08, 15:33
Bio-Fuel R&D firms

Ms Barry's article, "Algae a Greener Biofuel Than Ethanol?" was very informative. There is a young public company in this arena: OriginOil, Inc.

R.Gooden


J. Garton
09 Jul 09, 06:37
Algae biofuel

While the article claims that algae biofuel is 'environmentally friendly' and even absorbs CO2, it fails to note that when the biofuel is burned, all that CO2 is released back into the atmosphere. So algae might be a better biofuel source than corn, but it doesn't help us deal with reducing CO2 emissions.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules