Week of July 20

New Biofuels association…biofuels exchanges…Toyota's new advanced battery division…a hydrogen breakthrough?

Two New Industry Groups

This week Archer Daniel Midland, Dow Chemical, and Montsanto announced the formation of a new biofuels association named the Alliance for Abundant Food and Energy. All of these firms are, needless to say, agribusiness giants, and quite evidently all are chagrined by the recent opposition from environmental and human rights groups to the expansion of biofuel manufacturing plants utilizing food crops for feedstocks. But I haven't interviewed a spokesperson yet so I've yet to determine the specific objectives of the organization.

ADM and Montsanto are already active in the Renewable Fuels Association, which, the name notwithstanding, is actually the lobby for the American grain based ethanol industry, and a very effective lobby it has been. It has not, however, been able to deflect the growing criticism directed against the ethanol industry here in the United States. It remains to be seen what strategy will be employed by this new group in that regard.

Regarding trade organizations, yet another biofuels association has surfaced, the Advanced Biofuels Coalition, not to be confused with Advanced Biofuels USA which we have written up previously. The Coalition, which formed in mid 2007, is headed by Michael McAdams, a former Washington lobbyist for the petroleum industry, and it is affiliated with Hart Energy which is a trade publishing and exhibitions organization focusing upon the petroleum and natural gas industries. I interviewed McAdams last week.

McAdams has successfully lobbied Congress for more inclusive definitions of alternative fuels which would provide for subsidies and certification of various advanced biofuels not yet on the market. He has also succeeded in signing up almost twenty firms, mostly well established firms with diversified energy operations along with a couple of well funded startups. It's an auspicious beginning, though it doesn't address the problem of an almost complete lack of supply chains and established markets for the fuels themselves.

Biofuels Exchanges

Concerning the latter, I have become aware of a number of efforts to establish bourses or exchanges that would permit real markets to develop for advanced alternative fuels. One such effort is headed by Diamond International, a Louisiana based firm which claims to be involved in oil and gas exploration but whose principal business appears to be online gambling (maybe the two activities aren't so different when you come right down to it.). Despite a number of press releases, the Diamond operation does not appear to be open for business. Another involves a Wisconsin venture capital firm (who knew there were any) called Clean Tech Partners and the Wisconsin Public Services Corporation. This undertaking is primarily intended to provide a marketplace for woody biomass—waste wood, for the most part—of which Wisconsin produces a very abundant supply. I interviewed two individuals associated with this effort, Brent English of Clean Tech Partners, and Robb Benninghoff of the Wisconsin Public Services Corporation, and Benninghoff sent me some documentation. Theirs appears to be a serious effort, though it's not that far along at present.

They're calling the enterprise the Wisconsin Timber Products Commodity Exchange, and they are attempting to commoditize wood waste for fuel production, which isn't so simple as it sounds. In the production of ethanol from cellulose, for instance, softwoods must be differentiated from hardwoods because many of the processes won't work with softwoods. Moreover, moisture content and BTUs per unit of mass are apt to be highly variable across samples. So how does one grade and classify woody biomass intended for fuel production. That's not an easy question to answer.

I would add that the Timber Products Commodity Exchange is strictly supply side, and is not intended to provide buyers for the products of biofuels producers. That would presumably require another exchange operating more or less autonomously.

I myself have been convinced of the necessity of some sort of alternative fuels bourse for some time, but I think it could start with a simple directory of resources, something I'm eager to construct. Presently, I lack the time and resources to complete such a project though.

Toyota's Advanced Battery Efforts

Toyota announced that is has set up a battery research department to develop advanced batteries for hybrids and electric cars. Toyota's position is that rechargeable air cathode batteries are the technology to pursue due to their much higher energy density than large format lithium ion types and because of their greater safety. I happen to agree, and some months ago I profiled a very interesting Norwegian company named ReVolt which appears to be on the verge of real breakthrough in the design of secondary zinc-air batteries. Refer to the article for an explanation of how such batteries operate.

A new type of air cathode battery was announced by the University of Massachusetts at Boston using vanadium boride for the anode or positive element. The team developing the device claims order of magnitude increases in energy density over lithium ion. Energy density alone does not make for a successful battery technology, however. Air-lithium batteries, for instance, offer extremely impressive energy densities, but are so temperature sensitive as to be completely impractical in the field. And, for that matter, zinc air secondary batteries have exhibited stubborn limitations in operating life that have prevented their acceptance in the marketplace to date. We shall see whether either the Toyota products or the new technology from the University of Massachusetts will prove successful.

A New Hydrogen Electrolyzer

Finally, a Texas firm named Global Hydrogen, Inc. announced the introduction of a new type of electrolyzer for which they claim 90% energy efficiency, and which would purportedly permit the production of hydrogen at a cost of under $2.50 per kilogram (a kilogram of hydrogen has roughly the energy content of a gallon of gasoline). They also claim to be planning the introduction of small residential models that would permit individuals owning hydrogen conversion vehicles to refuel at home.

If these figures are true, this is a very significant development. Normally, the cheapest way to produce hydrogen is from natural gas, and there the costs generally exceed $3 per kilogram, and rising all the time because natural gas has been subject to relentless price appreciation. So sourcing low cost hydrogen from water is highly desirable.

Does this mean that the stalled hydrogen economy can now go forward? Not necessarily, indeed probably not. Significant problem in storing and transporting hydrogen remain, and will militate against its use in vehicles.

The only marginally practical means of storing hydrogen in a vehicle is in a cryogenic tank, and you still end up with tank that is four times volume of gas tank containing equivalent energy content. That's hardly encouraging.

I must point out, however, that recent substantial improvements have been made in such tanks by BMW, the chief proponent of this approach, improvements which reduce the boil off and leakage problems inherent in this approach. Moreover, the energy requirements for liquefying hydrogen have also been reduced with new technologies.

Still that $2.50 figure quoted by Global Hydrogen represents the cost of producing the gas prior to either liquefaction or pressurization. Either process will result in a double digit percentage increase in cost.

Nevertheless, I'd be willing to argue that the economics of a hydrogen burning internal combustion engine running on liquid hydrogen produced by such means might be good enough to pose a real challenge to the pure electric car. Apart from the very high cost of hydrogen purchased at any of the handful of filling stations here in California, a BMW with a hydrogen capable engine is a more practical vehicle than any pure electric car I've seen to date. Bring down the price of hydrogen substantially, and the game begins to change. A week ago I'd have been prepared to say that electric cars were probably poised for dominance in the long term. Now I'm not so sure.

This also could have huge implications for the wind industry. The only way to achieve a wind anchored electrical grid is to mirror the wind portion with base load generators running on hydrogen produced from wind generated electricity. In the past that was impractical. Now that may no longer be the case.