Dave's Energy

Friday, October 19, 2007

The Best Alternative Fuel

Whenever people ask me about the "best" alternative fuels, I always start by reminding them that the first distinction to be made is "alternative to WHAT"? Do you mean an alternative to crude oil and its derivatives in the transportation segment, or are you talking about alternatives to coal used for 50% of our power production? So, as a start to today's discussion, I will point out that I am discussing alternatives to crude oil, or more specifically to gasoline and petro-diesel. At the end of this post, I will tell you which alternative fuel I believe to be the "best".

The next thing we remind ourselves of are the reasons WHY we are seeking alternatives to crude oil. Depending on who you are talking to and what their goals are, the answer as to "best" alternatives may change. Unfortunately, none of these goals are mutually exclusive and I like to think about our four key goals as interconnected in this manner:

"Growth": to provide needed energy for growing economies around the world
"Price": to keep the growth in energy demand from increasing prices to the point where they hurt the economy
"Emissions": to reduce NOx, SOx, Mercury, Particulates, and CO2
"Dependence": to reduce our crude oil imports for reasons of security and geopolitics

Focusing on all goals in the aggregate helps in determining an optimal alternative strategy. So when we consider certain alternatives to crude oil and gasoline in light of each of these goals, here's how they stack up:

is good on the dependence goal but fails to deliver the ability to grow beyond a certain level (unless we can overcome the significant barriers to cellulosic ethanol). Ethanol also may ultimately be difficult on the price issue, as cost of inputs (e.g.: corn) increases dramatically with scale. From an emissions standpoint, ethanol may be Co2 neutral, but it gets less mileage than gasoline and may increase other emissions on a per-mile-driven basis.

Biodiesel: Same issues as ethanol when you try to scale this larger, as there are not enough feedstocks (including used veggie oil, soy oil, palm oil, etc) to provide any meaningful amount of fuel relative to our usage. Algae may provide some help on feedstocks, but that is many years away. Biodiesel's advantage over ethanol is that is works better in existing infrastructure and it gets significantly better mileage than ethanol (diesel engines get better mileage as they run at higher compression rates, thereby better utilizing the fuel). Biodiesel also may get slightly better mileage than what it replaces (petroleum based diesel), unlike ethanol vs. gasoline. So compared to ethanol, it's a better fuel, and it's used in a better engine.

Fischer-Tropsch Diesel: Using syngas and a Fischer-Tropsch reactor to make diesel from coal, natural gas, or biomass is superior to ethanol and biodiesel because it scales very nicely - there is lots of coal for feedstock purposes. It is cheaper than oil at current prices, and it is wholly U.S. based, so it helps the dependency goal. From an emission standpoint, it is partly better than ethanol because, again, it is used in a diesel engine and therefore can get twice the mileage. So while each gallon may have greater emissions than ethanol, that impact is reduced by the way each gallon is efficiently used. F-T diesel is significantly lower than it's petro-diesel counterpart on most emissions, but both ethanol and F-T diesel emit CO2 at the tailpipe. Of course, ethanol has a lower CO2 footprint due to biomass feedstock, but both F-T diesel and ethanol emit lots of CO2 at the plant production level. Importantly, in both cases, the CO2 comes off the plants in a pure form that can be gathered and sent into a pipeline for sequestration or use in industrial applications or in enhanced oil recovery.

This is not an exhaustive list, but you get the idea. So which is the best alternative?...

EFFICIENCY!: By using less in the first place, we reduce dependency, put less upward pressure on price, allow room for growth, and reduce emissions. My view is that our energy policy should not be pushing new fuels, but looking for ways to use less of what fuels we have. The simplest way to do that right now is by deploying smaller, more efficient engines, using more high-efficiency diesel engines, and by electrifying the car to a greater degree. The best way to use electricity in a car is with a Plug-In Hybrid Electric car. This allows most efficient use of a battery along with the convenient and ubiquitous nature of a gasoline or diesel engine. Using battery power with electricity sourced from the grid allows us to move the energy generation to larger-scale, highly efficient power plants, using nuclear (20% of U.S. electricity), high efficiency combined-cycle natural gas plants (another 20% of our electric mix), solar, wind, and coal.

Some people argue that using coal-based electricity to power cars merely moves the tailpipe emissions to another location. This isn't the case, since the generation efficiency of large-scale plants is significantly better than in a car engine. Secondly, an electric engine in a car is more efficient at turning power into motion. This EPRI study: "Environmental Assessment of Plug-In Hybrid Electric Vehicles" shows that using a PHEV, even backed by the least efficient old coal plants for electric generation, results in better well-to-wheels efficiency and greenhouse gas emissions than our traditional auto fleet. And if we use lower Co2 electricity generation over time (nuclear, Combined Cycle gas plants, etc), it gets even better.

Efficiency via the use of diesel engines and PHEV's therefore satisfy all the goals we sought out to reach. This, in my humble opinion, represents our "best" alternative fuel.

If you want to know more about PHEVs, a very smart Analyst named Saurin Shah wrote some comprehensive research on the topic for Alliance Bernstein in 2006. The report is available online and is titled: "The Emergence of Hybrid Vehicles"

And since I am plugging publications, I will also note an interesting book by Judy and Curtis Anderson entitled "Electric and Hybrid Cars, A History".

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