[Vision2020] Re: Earth Policy News - The Coming Decline of Oil

[Ted Moffett]

Nils et. al.

I was discussing the proposed Wal-Mart Super Center in Moscow with a
Vision2020 list serve member, and I told them that the main reason I thought
the Supercenter a bad idea was not poor wages and benefits, traffic
problems, commercial blight, Wal-Mart dominating the local economy, the
cultural homogenization of society, etc., but that Wal-Mart's economic model
is premised on the continuation of abundant cheap fossil fuels, to bring
shoppers to their huge parking lots in fossil fuel powered vehicles, ship
all their goods from the cheap labor factories overseas, and to maintain
their huge fleet of diesel semis running 24/7 all over the USA.

Of course, if biofuels can be produced in large enough quantities cheaply
enough to run the whole production/distribution system with the fuel from
biofuels as well as supply numerous other needs, without hurting the
necessary agricultural production needed to feed the 10 billion people that
will inhabit the Earth in just a few years, or without other serious
negative environmental impacts, optimists will declare we can grow our way
out of the oil crisis.  However, sober number crunching from some energy
experts sheds serious doubt that we can grow ourselves via biofuels out of
the oil crisis without major negative impacts.

Brazil is situated rather well in regards to this crisis, with their limited
energy demands and much lower population (compared to the USA), year long
growing climate and large potential agricultural land mass resulting in the
possibility they could replace most if not all of their oil consumption with
biofuels from sugarcane.  Sugarcane, as far as I have gathered, is one of
the best crops for biofuel production, though technology is developing to
make biofuels from other kinds of biomass that are now not practical or
possible for this purpose:

http://www.earth-policy.org/Updates/2005/Update49.htm

>From site above:

Ethanol could quickly take off in sugarcane-producing tropical countries,
which have the advantage of year-round growing seasons, large labor
supplies, and low production costs. As fuel demand rises in these developing
nations, biofuel production could check oil imports while bolstering rural
economies. Brazil, for example, could produce enough ethanol to meet total
domestic fuel demand by increasing the area used to grow sugarcane for
alcohol from 6.6 million acres to 13.8 million acres (5.6 million hectares)
or by shifting all current sugarcane acreage to ethanol production.
Unfortunately, new fields may cut further into already shrinking
rainforests, making them a serious environmental liability.

-------
However, in the USA, the picture is not as promising for biofuels, according
to this analysis::

http://www.i-sis.org.uk/BFOA.php


ISIS Press Release 28/02/06
Biofuels for Oil Addicts Cure Worse than The Addiction

*Bioethanol and biodiesel from energy crops compete for land that grows food
and return less energy than the fossil fuel energy squandered in producing
them; they are also damaging to the environment and disastrous for the
economy. *Dr. Mae-Wan Ho <.m.w.ho at i-sis.org.uk>

A longer, fully referenced
version<http://www.i-sis.org.uk/full/BFOAFull.php>of this article is
posted on ISIS members' website. Details
here <http://www.i-sis.org.uk/membership.php>.

"We must break our addiction to oil", President George W. Bush said in his
State of the Union address; but he wasn't advising people to give up their
cars or to use less oil, say by improving the gas mileage of cars. Instead,
he launched the "Advanced Energy Initiative" that would increase federal
budget by 22 percent for research into clean fuel technologies; including
biofuels derived from plants as substitutes for oil (see Box) to power the
country's cars.

Successive US presidents have promoted ethanol from corn as a subsidised
fuel additive. President Bush said US scientists are now working out how to
make ethanol from wood chips, stalks, or switch grass "practical and
competitive within six years", which would replace more than 70 percent of
oil imports from "unstable parts of the world" - the Middle East - by 2025.
Currently 60 percent of the oil consumed in the US is imported, up from 53
percent since George W. Bush came to power.
What are biofuels?

Biofuels are fuels derived from crop plants, and include biomass that's
directly burned, biodiesel from plant seed-oil, and ethanol (or methanol)
from fermenting grain, grass, straw or wood. Biofuels have gained favour
with environmental groups as renewable energy sources that are "carbon
neutral", in that they do not add any greenhouse gas into the atmosphere;
burning them simply returns to the atmosphere the carbon dioxide that the
plants take out when they were growing in the field.

However, they take up valuable land that should be used for growing food,
especially in poor Third World countries. Realistic estimates show that
making biofuels from energy crops require more fossil fuel energy than they
yield, and do not substantially reduce greenhouse gas emissions when all the
inputs are accounted for. Furthermore, they cause irreparable damages to the
soil and the environment (see main text).

Biofuels can also be produced from wood chips, crop residues and other
agricultural and industrial wastes, which do not compete for land with food
crops, but the environmental impacts are still substantial.
Biofuels cannot substitute for current fossil fuel use

Biofuels from energy crops cannot substitute for current fossil fuel use.
The major constraints are land surface available for growing the crops, crop
yield, and energy conversion efficiency, although economics also plays a
large role.

Growing crops for burning – biomass - should be the cheapest kind of biofuel
both in energy and financial terms, as it requires minimum processing after
harvest.

Crop scientists at Virginia Tech, David Parrish and John Fike, reviewed the
biology and agronomy of switchgrass, the most researched and favoured
biofuel crop. Switchgrass is a perennial native to the USA, and has been
extensively grown for fodder soon after the Europeans arrived. It is
prolific, does not require much nitrogen fertilizer, and is considered the
most sustainable, or the least environmentally damaging biofuel crop. But
the review concluded that, "even at maximum output, such systems could not
provide the energy currently being derived from fossil fuels."

Substituting switchgrass for coal is estimated to reduce greenhouse gas
emissions by about 1.7 t CO2 per t switchgrass. The prices that growers must
receive for biomass, however, must be sufficiently favourable. Thus, about 8
m ha would be available if the price reached $ 33 per t at the farm gate,
increasing to about 17 m ha at  $44 per t. The market price paid for
woodchip biomass in Virginia in 2004 averaged about $33 per t *delivered*,
and the price for hay (all kinds) is about $95 per t.

One estimate placed the delivery costs of switchgrass at $63 per t. Adding
the costs of processing, such as pressing into pellets or cubes for handling
within a power plant, would bring the user's costs to about $83 per t. One t
of switchgrass produces 17-18 GJ of energy when burned, compared with 27-30
GJ for coal; and coal prices are $55 per t.

Switchgrass for energy is not at all economically competitive, unless
substantial subsidy is available. *The same applies, perforce, to other
energy crops.*

David Pimentel, a professor of crops science at Cornell University New York
and Tad Patzek, a professor of chemical engineering at University of
California Berkeley, reviewed the energy balance and economics of producing
biomass, ethanol or biodiesel from corn, switchgrass, wood, soybeans and
sunflower using the now generally accepted life-cycle analysis. Although
there is much controversy over the energy balance of ethanol and biodiesel,
the energy balance of biomass yield is generally less subject to dispute,
and is therefore a useful starting point.

It turns out that switchgrass has the most favourable output/input energy
ratio of 14.52, followed by wheat at 12.88, and oilseed rape at 9.21, if the
straw is included. Switchgrass is hence the most promising energy crop,
whether as biomass for burning or to make other fuels downstream, such as
ethanol.

A quick calculation showed that even if all the farmland in the United
States were converted to growing switchgrass, it would not produce enough
ethanol for the country's fossil fuel use. Switchgrass takes several years
to mature. The yield ranges from 0 for complete failure of the crop to take
hold to 20 t or more per ha, a lot depending on the rainfall. A yield of 15
t /ha is optimistic; and would provide some 250 GJ/ha of raw chemical energy
a year. If that energy could be converted with 70 percent efficiency into
electricity, ethanol, methanol etc., it would take about 460 m ha to produce
the 80EJ (ExaJoule = 10 18J) fossil fuel energy used in the USA each year.
The total farmland in the USA is 380 m ha, of which 175 m ha is harvested
cropland.

Clearly, energy crops are a bad option, and may become obsolete as ethanol
can now be made from wood chips, crop residues and other agricultural
wastes, and industrial wastes, though even that is not sustainable ("Ethanol
from wood biomass not sustainable", this series).
Do you get more energy out of biofuel than the fossil fuel energy you put
in?

There is a huge debate over the energy balance of making ethanol or
biodiesel out of energy crops, with David Pimentel and Tad Patzek presenting
negative energy balance for *all *crops based on current processing methods,
i.e., it takes more fossil energy input to produce the equivalent energy in
biofuel. Thus for each unit of energy spent in fossil fuel, the return is
0.778 unit of energy in maize ethanol, 0.688 unit in switchgrass ethanol,
0.636 unit in wood ethanol, and worst of all, 0.534 unit in soybean
biodiesel.

Their paper has provoked a strong riposte from several US government
departments, accusing Pimentel and Patzek of using obsolete figures, of not
counting the energy content of by-products such as the seedcake (residue
left after oil is extracted) that can be used as animal feed, and of
including energy used for building processing plants, farm machinery, and
labour, not usually included in such assessments.

For their part, Pimentel and Patzek, along with many other scientists like
me, are critical of estimates that produce positive energy balance precisely
because they leave out necessary energy investments. In fact, neither
Pimentel and Patzek nor their critics have included the costs of waste
treatment and disposal or the environmental impacts of intensive bioenergy
crop cultivation such as depletion of soil and environmental pollution from
fertilizers and pesticides.

To apportion processing-energy to coproducts according to their bulk
composition in the seed may appear unexceptionable. Only 18 percent of the
soybean is oil that makes biodiesel, while the rest is soybean cake used as
animal feed. However, as the seedcake is produced as soon as the oil is
extracted, it is simply creative accounting to attribute 82 percent of the
downstream processing energy for biodiesel - which is quite substantial - to
the animal feed.
Energy balance of ethanol from corn

Sure enough, a new study comparing six estimates of energy balance of corn
ethanol did find that "net energy calculations are most sensitive to
assumptions about coproduct allocation".

The new study, carried out by researchers at the University of California
Berkeley, published in the journal *Science*, evaluated six analyses of
corn-ethanol production, including those of Pimentel and Patzek. The
researchers developed a 'model' to allow them to compare the data and
assumptions across the analyses. Pimentel and Patzek's negative energy
balance stood out in including energy used for building processing plants,
farm machinery, and labour, and for not giving credit for co-products.
Removing those "incommensurate" factors nevertheless resulted in only a
modest positive energy balance of just over 3 MJ/litre to 8 MJ/litre ethanol
in the analyses that gave positive energy balance, which translates to 1.13to
1.34 for energy output/energy input (there being 23.4MJ in one litre of
ethanol), while the reduction in greenhouse gas emissions averaged about 13
percent.

The researchers have devised a way of presenting energy balance in terms of
"petroleum input" - expressed as MJ petrol/MJ ethanol – that puts a very
positive gloss on the figures and is very misleading. It essentially adds
one hundred percent energy credit to the ethanol because it assumes that the
ethanol substitutes 100 percent for fossil fuel use.

The researchers then used the "best data" from the six analyses to "create"
three cases with their model (hence all hypothetical): *Ethanol Today*, that
claims to include typical values for the current US corn ethanol industry; *
CO**2 Intensive*, based on plans to ship Nebraska corn to a lignite-powered
ethanol plant in North Dakota, and *Cellulosic*, which assumes that
production of ethanol from switchgrass cellulose becomes economic, an
admitted "preliminary estimate of a rapidly evolving technology".
he three cases, the researchers found a positive energy balance: a whopping
23 MJ/litre ethanol for *Cellulosic*, 5 MJ/litre for *Ethanol Today*, and
1.2 MJ/litre for *CO**2** Intensive *; the corresponding output/input energy
ratios are 1.98, 1.21, and 1.05 respectively. *Cellulosic* is the clear
winner in terms of energy balance, and also by a long shot in net greenhouse
gas emission saved, which is 89 percent; the corresponding values for *Ethanol
Today* and *CO**2** Intensive* are 17 percent and about 2 percent
respectively.

These analyses show that current production methods, represented by *Ethanol
Today* and *CO**2 Intensive*, offer but a small positive energy balance and
little if any savings in greenhouse gas emissions, *even with the most
favourable assumptions built in*.
Bad economics of ethanol from corn

Ethanol constitute 99 percent of all biofuels in the United States;
3.4billion gallons of ethanol were produced in 2004 and blended into
gasoline,
amounting to about 2 percent of all gasoline sold by volume and 1.3 percent
of its energy content.

Ethanol use is set to expand as the federal government has introduced
a 0.51tax credit per gallon of ethanol and issued a new mandate for
7.5 billion gallons of "renewable fuel" to be used in gasoline by 2012,
which is included in the recently passed Energy Policy Act (EPACT 2005).

Pimentel and Patzek have shown not only that the energy return is
substantially negative, the economics is worse. About 50 percent of the cost
of producing ethanol is for the corn feedstock itself ($0.28/litre). Ethanol
costs a lot more to produce than it is worth on the market, and without
federal and state subsidies amounting to some $3 billion per year, corn
ethanol production in the US would cease. Senator McCain reports that total
ethanol subsidies amount to $0.79/ litre; adding the production costs would
bring the cost to $1.24/litre. Ethanol has only 66 percent as much energy
per litre as gasoline; so corn ethanol costs $1.88 per litre- or $7.12 per
gallon- equivalent of gasoline, compared to the current cost of producing
gasoline, which is $.33/litre.

Federal and state subsidies for ethanol production that total $0.79/litre
mainly end up in the pocket of large corporations, with a maximum of $0.02
per bushel, or 0.2 cent/litre ethanol going to the farmer.

The total costs to the consumer in subsidizing ethanol and corn production
is estimated at $8.4 billion/yr, because producing the required corn
feedstock increases corn prices. One estimate is that ethanol production
adds more than $1 billion to the cost of beef production.

Clearly ethanol from corn is neither sustainable nor economical, and a lot
of effort has been devoted to finding alternative feedstock.
Worse energy yields as accounting gets more realistic

In a detailed rebuttal to the *Science* paper showing a positive energy
balance in ethanol production from corn, Patzek exposed the major flaws in
energy accounting used, which greatly inflated the energy return. These
include:

   - Failure to account for the energy in corn grains as energy input
   - Assuming an impossibly high yield of corn ethanol at variance with
   real data available
   - Assigning away undue energy costs in ethanol production, in
   particular, distillation, to coproducts such as fermentation residues that
   have nothing to do with ethanol production.

In addition, the ethanol industry routinely inflates the ethanol yield by
counting as ethanol the 5 percent of gasoline added to corn ethanol as
denaturant; by taking the amount of fermentable starch to be the total
extractable starch, although not all of the latter is fermentable; and by
taking the weight of wet corn (average 18 percent moisture) as dry corn.

When the energy accounting done by different authors is reanalysed on the
same set of realistic data, energy yields come out remarkably uniform. The
output/input ratio varies between 0.245 and 0.310. In other words, *the
energy balance is strongly negative: for every unit used in making corn
ethanol, one gets at most 0.3 unit of energy back*. *It takes at least 9
times more fossil fuel energy to produce ethanol from corn at the refinery
gate than gasoline or diesel fuel from crude oil *.

As Patzek points out, the 7.5 billion gallons of ethanol mandated by the
2005 Energy Bill by 2012 could be compensated by an increase of car mileage
by just one mile per gallon, excluding gas-guzzling SUVs and light trucks.

The economic consequences of excessive corn production have been
devastating. The price of corn in Iowa, the largest corn producer, declined
10-fold between 1949 and 2005 as corn yields have tripled. Today, Iowa
farmers earn a third for the corn they sell compared to 1949, while their
production costs increased manifold, because they burn methane and diesel to
produce corn. The price of methane has increased several-fold in the last
three years. "Corn crop subsidies supplemented the market corn price by up
to 50 percent between 1995 and 2004." Patzek writes, predicting more
concentration of industrial corn production in gigantic farms operated by
large agribusiness corporations, and real farmers will only rent the land.

An industrial raw material at rock-bottom price can now be processed into
ethanol at a significant profit, further enhanced by a federal subsidy of 50
cents per gallon ethanol, plus state and local community subsidies.
Patzek concludes: "the United States has already wasted a lot of time,
money, and natural resources…..pursuing a mirage of an energy scheme that
cannot possibly replace fossil fuels…The only real solution is to limit the
rate of use of these fossil fuels. Everything else will lead to an eventual
national disaster."

---------

Vision2020 Post by Ted Moffett

On 5/13/06, Nils Peterson <nils_peterson at wsu.edu > wrote:

> On 5/12/06 12:44 PM, "tom trail> wrote:
>
> > As it becomes clear that even a
> >> moderate cut in production may double world oil prices, the long-term
> >> value of their oil will become much clearer.
>
>
>
> Wouldn't it be nice to have the distinction of having the last WalMart
> Super
> Center built before they recognized that peak oil changed their business
> model. When it became a dark stork, it would be a tourist attraction
> bringing us great revenue (oh I forgot, tourism will change too).
>
>
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