DOE Spending on Alternate Energy Drops Drastically

The United States is even more dependent on crude oil and natural gas than it was almost 30 years ago but total budget authority for energy R&D at the U.S. Department of Energy (DOE) dropped by over 85 percent (in real terms) from 1978 to 2005, peaking in the late 1970s but falling sharply when oil prices returned to lower levels in the mid-1980s, a government watchdog agency finds.

"DOE’s R&D efforts have resulted in steady incremental progress in reducing costs for renewable energy technologies, reducing harmful emissions of coal-fired power plants, and improving safety and efficiency for nuclear power plants," the Government Accountability Office (GAO) says in a new report. GAO is the nonpartisan investigative arm of Congress.

Further development and deployment of advanced renewable, fossil, and nuclear energy technologies face several key challenges, GAO says.

Challenges for renewable technologies include developing (1) cost-effective technologies to
produce ethanol using agricultural residues and other biomass materials as well as the infrastructure for distributing ethanol, (2) new wind technologies to expand into low wind and offshore locations, and (3) improved solar technologies that can better compete with conventional technologies.

Challenges for fossil technologies are primarily associated with developing advanced coal gasification technologies to further reduce harmful emissions and reducing their high capital costs, GAO says. Challenges for advanced nuclear technologies include uncertainty about the Nuclear Regulatory Commission’s revised licensing process, investor concerns about high
capital costs, and the disposal of a legacy of spent nuclear fuel, the agency says.

GAO suggests that Congress consider further stimulating the development and deployment of a
diversified energy portfolio by focusing R&D funding on advanced energy technologies. President Bush and Congress have expressed an interest to focus more on alternative clean energy sources to reduce U.S. dependence on foreign oil and to deal with the issue of global climate change.


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Climate Change Regulation Coming As Business Gets Into the Act

U.S. government regulation on the emissions blamed for climate change may be only a matter of time as industry further gets on the climate change bandwagon.

A Democrat, or Sen. John McCain, a Republican who has moved to deal with climate change issues, may well be president once a new occupant is sworn into the White House. Such a move bolsters chances of further federal regulation of carbon emissions, according to David Sandalow, environment scholar at The Brookings Institution in Washington.

"So one way to think about this is if we have either a Democrat or John McCain as president starting in 2009, we will have a president ready to sign legislation on this issue and I think the odds in Vegas on either a Democrat or John McCain being president are not bad, and I think this is happening," says Sandalow, previously assistant secretary for oceans, environment, and science at the U.S. State Department and senior director for environmental affairs at the National Security Council.

Carbon emissions from the burning of fossil fuels is thought to be affecting Earth's climate in an increasingly severe way.

Controlling emissions and dealing with climate change is increasingly becoming a public policy issue. U.S. industry once resisted carbon regulation but a growing number of companies are addressing climate change.

Sandalow cites industrial titan General Electric and retail giant Wal-Mart as two examples of firms taking on climate change.

"General Electric, which I believe is the largest company in the world in terms of market capitalization, has announced major initiatives in this area," Sandalow says. "Jeffrey Immelt, the CEO, sees his company making lots of money by the move toward clean energy over the course of the next several decades."

Wal-Mart is taking very aggressive steps to save energy and cut costs, he adds.

"As a result of doing that, they have had Al Gore down in Arkansas to talk to all of the Wal-Mart employees around the country," Sandalow says. "So I think this is happening and I believe federal legislation is coming, a lot of the business community knows this, and the only question is how and when."

Former vice president Gore has long been a champion of dealing with climate change and recently raised the profile of climate change further with his documentary film, An Inconvenient Truth.

Meanwhile, Caterpillar Inc. (NYSE: CAT) Chairman and CEO Jim Owens joined a diverse group of businesses and environmental organizations to call on U.S. policymakers to establish a mandatory emissions reduction program to address climate change. Along with Caterpillar, members of the alliance -- known as the U.S. Climate Action Partnership (USCAP) -- include market leaders Alcoa, BP America, Duke Energy, DuPont, General Electric, PG&E, PNM Resources and four leading non-governmental organizations - Environmental Defense, Natural Resources Defense Council, Pew Center on Global Climate Change and World Resources Institute.

At a news conference Monday at the National Press Club in Washington, USCAP released a set of principles and recommendations as the basis to develop a market-driven policy framework on climate change.

"Caterpillar believes in the need for a market-based approach to the aggressive development of current and future clean technologies that reduce emissions and sustain the environment," Owens says. "As a global manufacturer, we're committed to being part of the process of finding policy solutions that meet the needs of our customers, including those currently involved in energy production. Achieving energy independence for our country will require innovation that leads to new energy sources but also new technologies to improve the use of existing abundant resources such as coal."

With 2005 sales and revenues of $36.34 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines.

"Clean coal, clean diesel and combined heat and power applications are just a few examples of critical technologies that must be a part of any climate change policy. These technologies, coupled with incentives for the development of new, breakthrough approaches will yield increased sustainability and economic opportunity," Owens adds.

Caterpillar supports a U. S. federal-level approach that is well integrated into a harmonized global system of greenhouse gas reduction initiatives, in particular one that avoids local or regional development of separate paths -- requiring separate technology -- in achieving emissions targets. Proposed solutions also must factor in the broad economic impact as well as the impact on existing energy sectors.

"Reducing greenhouse gas emissions can -- and should -- provide more economic opportunities than risks for industry and the economy," says Owens. "The goals of reduced emissions and economic growth are not mutually exclusive. As the world's largest maker of construction and mining equipment and a technology leader, one of the reasons that Caterpillar is pleased to have a seat at this table is to focus on market-based solutions to issues that impact manufacturers and key customer groups, especially coal."


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MIT Ethanol Analysis Confirms Benefits of Biofuels

Controversy over the benefits of using corn-based ethanol in vehicles has been fueled by studies showing that converting corn into ethanol may use more fossil energy than the energy contained in the ethanol produced. Now a new MIT analysis shows that the energy balance is actually so close that several factors can easily change whether ethanol ends up a net energy winner or loser.

Regardless of the energy balance, replacing gasoline with corn-based ethanol does significantly reduce oil consumption because the biomass production and conversion process requires little petroleum. And further MIT analyses show that making ethanol from cellulosic sources such as switchgrass has far greater potential to reduce fossil energy use and greenhouse gas emissions.
The Bush administration is pushing the use of ethanol as a domestically available, non-petroleum alternative to gasoline. But most U.S. ethanol is now made from corn, and growing corn and converting the kernels into ethanol consume a lot of energy--comparable to what is contained in the ethanol produced. Making ethanol from corn stalks, other agricultural wastes and wild grasses would consume less energy, but the technology for converting them to ethanol may not be economically viable for another five or so years.

Does using corn-based ethanol in place of gasoline actually make energy consumption and emissions go up, as some researchers claim? Why do others reach the opposite conclusion? And how much better would ethanol from "cellulosic" feedstocks such as switchgrass be?
To answer those questions, Tiffany Groode, a graduate student in MIT's Department of Mechanical Engineering, performed her own study, supervised by John B. Heywood, Sun Jae Professor of Mechanical Engineering.

Using a technique called life cycle analysis, she looked at energy consumption and greenhouse gas emissions associated with all the steps in making and using ethanol, from growing the crop to converting it into ethanol. She limited energy sources to fossil fuels. Finally, she accounted for the different energy contents of gasoline and ethanol. Pure ethanol carries 30 percent less energy per gallon, so more is needed to travel a given distance.

While most studies follow those guidelines, Groode added one more feature: She incorporated the uncertainty associated with the values of many of the inputs. Following a methodology developed by recent MIT graduate Jeremy Johnson, she used not just one value for each key variable (such as the amount of fertilizer required), but rather a range of values along with the probability that each of those values would occur. In a single analysis, her model runs thousands of times with varying input values, generating a range of results, some more probable than others.

Based on her "most likely" outcomes, she concluded that traveling a kilometer using ethanol does indeed consume more energy than traveling the same distance using gasoline. However, further analyses showed that several factors can easily change the outcome, rendering corn-based ethanol a "greener" fuel.

One such factor is the much-debated co-product credit. When corn is converted into ethanol, the material that remains is a high-protein animal feed. One assumption is that the availability of that feed will enable traditional feed manufacturers to produce less, saving energy; ethanol producers should therefore get to subtract those energy savings from their energy consumption. When Groode put co-product credits into her calculations, ethanol's life-cycle energy use became lower than gasoline's.

Another factor that influences the outcome is which energy-using factors of production are included and excluded--the so-called system boundary. A study performed by Professor David Pimentel of Cornell University in 2003 includes energy-consuming inputs that other studies do not, one example being the manufacture of farm machinery. His analysis concludes that using corn-based ethanol yields a significant net energy loss. Other studies conclude the opposite.
To determine the importance of the system boundary, Groode compared her own analysis, the study by Pimentel and three other reputable studies, considering the same energy-consuming inputs and no co-product credits in each case.

"The results show that everybody is basically correct," she says. "The energy balance is so close that the outcome depends on exactly how you define the problem." The results also serve to validate her methodology: Results from the other studies fall within the range of her more probable results.

Growing more corn may not be the best route to expanding ethanol production. Other options include using corn stover (the plants and husks that are left on the field), or growing an "energy crop" such as switchgrass. While corn kernels are mostly starch, corn stover and switchgrass are primarily cellulose. Commercial technologies to make ethanol from cellulose are not yet available, but laboratory and pilot-scale tests are generating useful data on processing techniques. So how do cellulosic sources measure up in terms of saving energy and reducing greenhouse gas emissions?

Using her methodology, Groode performed an initial analysis of switchgrass and, drawing again on Johnson's work, corn stover. She found that fossil energy consumption is far lower with these two cellulosic sources than for the corn kernels.

Farming corn stover requires energy only for harvesting and transporting the material. (Fertilizer and other inputs are assumed to be associated with growing the kernels.) Growing switchgrass is even less energy intensive. It requires minimal fertilizer, its life cycle is about 10 years, so it need not be replanted each year, and it can be grown almost anywhere, so transport costs can be minimized.

Groode and Heywood now view the three ethanol sources as a continuum. In the future, cellulosic sources such as corn stover and ultimately switchgrass can provide large quantities of ethanol for widespread use as a transportation fuel. In the meantime, ethanol made from corn can provide some immediate benefits.

"I view corn-based ethanol as a stepping-stone," says Groode. "People can buy flexible-fuel vehicles right now and get used to the idea that ethanol or E85 works in their car. If ethanol is produced from a more environmentally friendly source in the future, we'll be ready for it."

The research was supported by BP America.


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