The fuel of the future ? Say 'cheese'  

The Fond Du Lac Reporter has an article on a Wisconsin farmer turning cheese manufacturing waste into biofuel.

What will the fuel of the future look like and where will it come from?

Prepare for a variety of fuels from many sources, says Wisconsin entrepreneur Joe Van Groll whose start-up renewable energy company produces both ethanol and bio-diesel without a single corn kernel or soybean in sight. The Grand Meadow Energy LLC near Stratford trucks in waste from surrounding cheese plants and raw canola oil from a nearby farm. "There is no one silver bullet," Van Groll said in a press release. "The silver bullets are already out there — taking waste streams and turning them into profit centers."

Van Groll bought the Grand Meadow Coop cheese plant when it closed more than three years ago, converted it and with $29,000 from the state's Agricultural Development and Diversification grant program, began testing what is now a trade secret. Today, customers buy a license to use the yeast-based technology he developed with help from the grant.

As concerns about the environmental and societal impact of corn-based ethanol rise, he lists the advantages of his method. "I don't use energy; I put it back on the grid. I don't slurp up water; I purify and recycle it. I don't push up food costs; I dispose of waste," he said.

Van Groll is a 13-year veteran of the state's cheese industry, and his process focuses on permeate, a by-product of cheese making. But Van Groll says the technology can be used on a variety of waste streams and he sees no end in sight to its application. His technology now turns what he refers to as "a messy problem" into a profit center for cheese plants. He buys permeate, blends it with a customized yeast culture, and produces pure alcohol ethanol. He does so at about a quarter of the cost of producing corn-based ethanol.

Two months ago, he began blending the ethanol with raw canola oil to make biodiesel. He uses the biodiesel to power a generator that produces electricity for his plant and plans to sell excess energy back to the power company. Producing two renewable fuels gives him the option of choosing which market is offering the best return. He also sells dried yeast, a byproduct of the process, for livestock feed.

The Age has an interesting article by Paul Cleary on the resource curse (or "Dutch disease") and how it is impacting Austrlia - "Mining boom could bust us: The Paradox Of Plenty".

The long-term challenge facing Australia is variously called the "resource curse", the "paradox of plenty" or the "Dutch disease". This is when an influx of income from resource wealth drives up the exchange rate and inflates the domestic economy, making the country less internationally competitive and thereby crippling its long-term prosperity.

The opening of the fiscal floodgates by the Howard Government in recent years, and by both major parties in this election, follows the resource curse script to the letter. This has led to higher inflation and interest rates, in turn driving up the exchange rate and making the country less competitive. And the fiscal stimulus rolled out in this campaign can be expected to do more of the same.

The resource curse is usually found in developing countries, but as former US Federal Reserve Board chairman Alan Greenspan explained in his recent book, The Age of Turbulence, the phenomenon was first identified in Holland, when revenue from North Sea oil flooded into the country.

"How is it possible that a super-abundance of natural resources — oil, gas, copper, iron ore — would not significantly add to a nation's production and wealth? Paradoxically, most analysts conclude that, particularly in developing countries, natural resource bonanzas tend to reduce rather than enhance living standards," he writes. "[It] takes the form of an economic affliction nicknamed the 'Dutch disease'. Dutch disease strikes when foreign demand for an export drives up the exchange value of the exporting country's currency."

Despite Australia having such an abundance of natural resources, few policy analysts or private sector economists have sought to draw attention to the resource curse, which has hampered Australia's development from the very beginning. The Federal Treasury, for example, does not attempt to measure the stock of Australia's natural resources subject to development plans — which could in fact be measured — when putting together the national balance sheet.

The absence of any policy response to the resource curse is all the more surprising when there are practical models that have been implemented in other countries, most notably Norway, which in 1995 established a "Petroleum Fund" (now known as the Government Pension Fund). More recently, East Timor adopted the model in full — with some additional transparency measures — for the management of its revenue from the Timor Sea. In Norway's case, all the tax revenue from its North Sea oil resources flows directly into the offshore fund which invests in government bonds and blue-chip equities. The government then draws on the fund.

Essentially, the country can spend the real interest on its natural resources long after the oil resources have been exhausted. The fund is designed so that Norway can transform a non-renewable resource into a financial asset that will last forever. Importantly, Norway avoids the pitfalls of natural resource wealth by parking the money offshore. Instead of driving up the exchange rate and making the country less competitive, the revenue simply drives up the value of the fund.

Former prime minister Paul Keating recently referred to the floating exchange rate as the "shock absorber" for the economy; a sudden inflow of export earnings was absorbed by the exchange rate rather than flooding the domestic economy. But Norway has taken a quantum leap forward; its shock absorber is the petroleum fund and it reaps the benefit of oil wealth by increasing the nation's assets rather than diminishing competitiveness. After launching in 1995, Norway's fund is now worth 1800 billion krone ($A363 billion), and expected to double by 2010.

Australia's much vaunted Future Fund cannot be compared with the Norway fund, although it could be transformed to help Australia deal with the "curse". At present the Future Fund is only designed to address future liabilities from unfunded public service pensions. Its recent annual report shows that about half of its new investment went into Australian shares. In effect, the Future Fund is also helping to bid up the exchange rate.

The Future Fund should be collecting the proceeds of the resources boom and putting this money offshore. This could be achieved by imposing a levy on all resource projects which would be deducted from the tax already paid by resource companies.

But if Australia was really serious, all resource-based taxation would be paid into the fund and then drawn down by the Government at a sustainable rate. This way, Australia could truly benefit from the resource boom without crippling the rest of the economy and undermining its long-term prosperity.

CNN has a report on the CEO's of ConocoPhilips and BP hinting that the peak oil point is approaching - "Big Oil CEOs Point To Constraints On Supply Growth".

Pointing to a variety of political and technological constraints on energy investment, chief executives at two oil giants Thursday highlighted systemic limitations on the growth of the supply of oil, implying that there will be high oil prices for at least the medium term.

ConocoPhillips (COP) Chief Executive James Mulva had earlier told a New York financial conference that he doubted that world oil producers would be able to meet forecast long-term energy demand growth. The International Energy Agency, the energy watchdog for western economies, has projected 2030 world oil demand of 116 million barrels a day. But *Mulva said he doesn't believe oil supply will ever exceed 100 million barrels a day*. He didn't offer a price forecast. "Demand will be going up, but it will be constrained by supply," Mulva said. " I don't think we are going to see the supply going over 100 million barrels a day and the reason is: Where is all that going to come from?"

BP's Hayward, by contrast, spotlighted improved recovery rates as a possible source of significant new production growth. "We are very very early" in developing and applying new technologies to improve recovery from existing oil fields, he said. BP has been able to boost recovery at some Alaska oil fields 60% by employing sophisticated drilling and production methods. Overall, Hayward said "about half" the world's oil has been recovered, but he implied that significant improvement is possible on a broader scale. "The biggest source of new oil will come from increasing recovery," he said.

Jerome a Paris at The Oil Drum has more on this and on an FT interview with the IEA's chief economist - "Peak oil: BP, Conoco CEOs say it's here - also IEA's Fatih Birol really freaks out".

After the CEO of Total (the French oil major) last week, two more CEOs of an oil major came out this Thursday to give stark warnings that mean that peak oil is happening right now. In addition, the chief economist of the International Energy Agency (the IEA), one of the main cheerleaders of the "there's more than enough oil" camp until now, is giving an extraordinarily pessimistic interview in the Financial Times, following the recent publication of their latest World Energy Outlook. ...

But moving on to CEO n°2, that of BP, the British oil giant:

[BP plc (BP) Chief Executive Tony] Hayward said "about half" the world's oil has been recovered, but he implied that significant improvement is possible on a broader scale. "The biggest source of new oil will come from increasing recovery," he said. Although BP has increased the oil price it uses to test whether energy investments are economical, Hayward rejected the idea that oil prices have shifted permanently into a higher trading range - along with the notion that the world has hit peak oil production.

Despite "rejecting the notion" of a peak in production, he is nevertheless the first senior oil executive, to my knowledge, to say that "half the oil" being gone - something which is usually considered to happen at pretty much the same time as peak production (although the two are not necessarily simultaneous). Even with enhanced recovery techniques, no country has been able to increase its maximum production once the peak had been reached - starting with the US and the North Sea region, where oil companies have had all the liberty to use all the most sophisticated techniques.

So yes, it is a pretty huge deal that the BP CEO says that half the oil is gone.

But, in a way, this is almost small beer compared to the various bombs dropped by IEA chief economist Fatih Birol in his interview with the FT. The interview is very long, but well worth reading in its entirety. I'm providing a few quotes below, but for those of you that arre finding this diary long already, here's the quick summary:

* we are beyond peak oil in the non-OPEC world;
* OPEC officially has lots of reserves - but we don't really know;
* even if they make all the investment plans announced are made and are on time, we'll still have a gap of 12.5mb/d (more than 10% of overall demand) by 2015; we now officially need to beg OPEC to invest more;
* oh, and by the way, that's the smaller of the two energy-related problems we have: climate change is a lot worse.

The French nuclear power industry keeps a close eye on uranium suppliers - not to mention those who write about nuclear power and uranium mining - hi guys. This is somewhat understandable in view of how dependent France's energy security is on uranium suppliers, but no doubt has implications for those uranium suppliers in terms of the resulting temptation for the French to meddle with their internal affairs (though hopefully they won't ever try to take this to the level the US has in Iraq). TreeHugger has a post on Canadian uranium exports and the potential for some of these to be diverted for internal use - processing the Alberta Tar Sands (something I've long criticised but which will no doubt go ahead anyway). From "France Recolonizing Northern Canada For Uranium".

The potential irony of this story lies in the fact that France gets most of its electricity from nuclear plants. That historic and ongoing circumstance allowed France to label itself a 'low carbon society'. Viewed from a life cycle perspective, starting with uranium extraction, benefaction, and processing, the green nuclear dream loses some of the appeal, however.

For most of the last 20 years the price of uranium has hovered between $10 and $20 per pound. But beginning in 2004, driven by demand around the globe for new nuclear power plants, it has risen dramatically, peaking at $136 per pound in June 2007. By August, it was back to $90, still high enough to encourage at least 20 companies to spend more than $30-million this year exploring about 40 properties in the North.

Port Radium, Vancouver-based Alberta Star is searching in what’s known as the Hornby Bay basin, one of the North’s two hotspots. The other is the Thelon basin between Baker Lake, Nunavut and the NWT border. (There’s a little exploration going on in the Yukon, too, in the Wernecke Mountains 200 kilometres north of Keno.)

The most advanced uranium project in the North is in the Thelon basin, and belongs to Areva Resources Canada, a subsidiary of France’s state-owned nuclear giant Areva Group. The Kiggavik-Sissons project, about 80 kilometres west of Baker Lake is a deposit that has been explored since the 1970s. A proposed mine was stopped by popular protest in the early 1990s.

But Areva opened a full-time office in Baker Lake last year and would appear to be winning the war for public support.

Here is the link to the Areva Canada statement about C02 emissions reductions stemming from uranium mining.

Existing nuclear plants [in Canada] avoid the emission of 100 million tonnes of carbon dioxide each year, emissions that would occur if fossil fuelled plants had produced the same electricity." Eighteen nuclear power plants provide about 15 percent of Canada's electricity and make a significant contribution to reducing greenhouse gas and other emissions.

It seems from this statement that Canadian mined uranium will fuel Canadian nuclear power plants. Given that "Canada is the world's largest producer of uranium," however, it would seem likely that there will be export to European and other customers. But that may be a temporary thing. Enter the Alberta Tar Sands.

The future encompasses includes this fact (bold font is our addition):

From about 2003 various proposals have been made to use nuclear power to produce steam for extraction of oil from Alberta's northern oils and (tar sand) deposits and electricity also for the major infrastructure involved. At present a lot of natural gas is used - up to 30 cubic metres per barrel of oil. With projections of three million barrels per day by 2016, a great deal of gas is used and the cost exposure is increasing dramatically. In fact, Canadian natural gas is inadequate to supply the anticipated expansion in oil sands output and its use has major CO2 implications which are creating public concern - about 20% of the energy in the oil is required to produce it and about 80kg of CO2 per barrel is released.

This seems to be the status of Nuclear Powered Tar Sands Oil Extraction in Canada as of 2007:

In March 2007 the House of Commons Standing Committee on Natural Resources recommended that no decision should be taken on the use of nuclear energy for Canada's oil sands until the "repercussions of this process are fully known and understood". Their report estimated that a reactor of some 600 MW capacity could supply a processing plant producing 60,000 barrels of synthetic crude oil per day. Hence almost 20 such reactors would be needed to meet the production growth planned to 2015, when Canadian output from oil sands is forecast to reach three million barrels per day. Smaller reactors, with capacities of some 100 MW, could be more suitable for individual projects, given the limitations of supplying steam over more than 25 km.

Tom's latest Dispatch on our resource wars for oil is out - "William Astore, If We Lose Iraq, You're to Blame".

You know there's trouble ahead when Iraq, in its present state, is the good news story for Bush administration policy. While various civilian and military officials from the President on down have been talking up "success" in Iraq and beating the rhetorical war drums vis-à-vis Iran, much of the remainder of the administration's foreign policy in what the neocons used to call "the arc of instability" began to thoroughly unravel.

In the Horn of Africa, U.S.-backed Ethiopian troops are bogged down in a disastrous occupation of the Somalian capital, harried by a growing Islamist insurgency. Despite endless shuttle diplomacy by Secretary of State Condoleezza Rice, the administration's Middle East peace conference, to be held at Annapolis, is already being dismissed as a failure before the first official invitations are issued. Meanwhile, the Turks are driving the administration to distraction by threatening to invade and destabilize the only moderately successful part of the new Iraq, its Kurdish region (while the Iraqi government in Baghdad calls on Iran for help in the crisis).

Russian President Vladimir Putin recently landed in Tehran and brazenly indicated that any U.S. attack on Iran would be considered an attack on Russia. He then convened a local "mini-summit" and formed a regional Caspian Sea-based alliance with Iran and three energy-rich former SSRs of the departed Soviet Union implicitly directed against the United States and its local allies. On the day Secretary of State Rice announced new, tough sanctions against the Iranians, Putin commented pointedly: "Why worsen the situation by threatening sanctions and bring it to a dead end? It's not the best way to resolve the situation by running around like a madman with a razor blade in his hand."

Meanwhile, one country to the east, the resurgent Taliban has, against all predictions, just captured a third district in Western Afghanistan near the Iranian border -- and, as the most recent devastating suicide bomb indicates, attacks are spreading north. And then, of course, there's the President's greatest ally in the Muslim world, Pakistan's ruler Pervez Musharraf.

Remember Bush's nightmare scenario, the one that guaranteed a surefire "preventive" attack from his administration: an autocratic and oppressive ruler with weapons of mass destruction, especially nuclear ones, presiding over a country that functionally offers a safe haven for terrorists? Well, that's now Pakistan, whose security forces are busily jailing hundreds of lawyers, while the Taliban, al-Qaeda, and extremist Islamists, well armed and backed by their own radio stations broadcasting calls for jihad, are moving out of safe havens in the tribal areas along the Afghan border and into Pakistan proper to fight. And there's essentially nothing the administration can do, except mouth platitudes and look the other way. As Paul Woodward of the War in Context website has pointed out: When it comes to nuclear Iran and nuclear Pakistan, we have been living in "a Through-the-Looking-Glass world where nuclear weapons that do exist are less dangerous than those that can be imagined." Now, not much imagination is needed at all.

Strangely, from Ethiopia to Pakistan, despite all the signs, all the predictions, the Bush administration, as far as we can tell, expected none of the above. How often can it be caught off guard by the consequences of its own decisions and actions? Eternally, it seems.

The possible collapse of the President's foreign policy across the entire arc of instability was first written about by the always prescient Juan Cole at Salon.com. He commented that, "like a drunken millionaire gambling away a fortune at a Las Vegas casino, the Bush administration squandered all the assets it began with by invading Iraq and unleashing chaos in the Gulf." And he ventured a prediction: "The thunder of the bomb [that blew up as former Pakistani Prime Minister Benazir Bhutto returned home] in Karachi and the Turkish shells in Iraqi Kurdistan may well be the sound of Bush losing his ‘war on terror.'" Over at TPM Café, Todd Gitlin was the first to offer a wry, if grim, suggestion, as he considered Bush's "failure to crush the Taliban & Co." from Tora Bora 2001 on. "Talk about dominos," he wrote. "How about this for a Democratic slogan: Who Lost Pakistan?"

With the price of crude oil threatening to hit $100 a barrel and prices at the pump surging over $3 a gallon domestically -- while, on the nightly news, experts mutter about oil at $150 a barrel and gas at $4 a gallon by next summer -- a meltdown might be in the works. Invaded and occupied Iraq, like some festering sore, remains at the heart of this spreading disaster, the end of which is nowhere in sight. The U.S. military, the sole instrument with which Bush's top officials and his neocon followers imagined they could launch their "expeditionary" sorties around the globe, as if they were so many nineteenth-century British imperialists, has proved incapable of responding to such an essentially political situation. The President might as well be using a hammer to ward off gnats. No wonder, as retired Air Force Lieutenant Colonel and historian of early twentieth century Germany William Astore makes clear, the military and right-wing politicians are already preparing their own exit strategies in the form of stab-in-the-back explanations of what happened. ...

Links:

* WorldChanging - Costa Rica and New Zealand on Path to Carbon Neutrality
* Grist - Wind power installations set to soar 63 percent in US this year
* WSJ Energy Roundup - Blowing in the Wind
* WSJ Energy Roundup - Ask a Wind-Power Lawyer
* Grist - Strip Tease: On power strips
* Cape Argus - South African cities need to change lanes as oil runs dry
* IHT - Indonesia's blames western nations for deforestation, demands compensation
* Huffington Post - News Alert: If You Love Renewable Energy, It's Time to Freak Out. Never expect too little from the jellyfish.
* WorldChanging - From State-Based Sovereignty Towards Bright Green Governance.
* Dave Roberts - Did you know the word 'gullible' isn't in the dictionary?
* Cryptogon - Vaccine Causes AIDS/HIV Related Infection that Spreads Through the Body via Common Cold Virus