Week of September 7

The age of intractable technologies…recent purported breakthroughs in cellulosic ethanol…New Earth Renewable Energy, Inc….New Generation Biofuels Holdings…stock market crash and alternative fuels….

I am a creature of the twentieth century. I spent most of my life within its chronological boundaries and that will remain the case given my advanced age at this new century's commencement.

The nineteenth century ended in the summer of 1914 with the onset of the First World War. I believe that the twentieth century ended pretty much on schedule, however. By 2001 it was evident that the certainties and certitudes of the previous century were no more, and that, even more importantly, a certain momentum in material and intellectual culture which had characterized the twentieth century was nearly spent.

The twentieth century was at once marvelous and nightmarish, with material progress manifested in unimaginably high standards of living for the fortunate fourth of mankind and in wars without mercy which occurred intermittently and which visited their horrors upon the prosperous and impecunious alike.

I never endured those wars directly, and, coming into this world precisely at the inception of the Age of Affluence, I grew up with the notion that ultimate mastery of the physical universe was possible and indeed more than likely.

So many seeming breakthroughs occurred in the Postwar period: in the field of medicine, the polio vaccines, the elimination of small pox, and later organ transplants; in transportation, the coming of the jet age; and, in the area of core technologies, the invention of the laser and integrated circuits with all that they portended; and, more apropos of what we cover in this periodical, the development of nuclear power with the promise of electricity that would be too cheap to meter. Then the summit of it all, the first moon landing a mere decade after America had launched a serious space project.

Then at some well nigh indiscernible point, the breakthroughs stopped coming though people still expected them. Supersonic passenger jets or SSTs arrived stillborn in the nineteen seventies and were never adopted for mass transport. Nuclear fusion reactors, the "safe" form of nuclear power, remained unrealized after decades of research and tens of billions of dollars spent. The Fifth Generation initiative to endow computers with human-like intelligence, undertaken in the eighties, foundered and was forgotten after the Japanese electronics industry had staked its future on it. In medicine cancers and heart circulatory diseases remained as deadly as before, and modern medicine proved powerless against the AIDS pandemic and against the horrific rise in the instance of Alzheimer's disease, once a medical curiosity.

True, one had the extraordinary developments characterizing electronic communications, all made possible by continuing improvements in component density within integrated circuits, but such circuits themselves were invented in 1958 by the late Jack Kilby at Texas Instruments. The intervening 50 years saw countless innovators ringing the changes upon a mid century technology. And the basic digital circuits that serve as building blocks for practically all microprocessors have not changed at all in decades. The breakthroughs that led to the development of such circuits occurred long ago.

The overall business of alternative energy and the alternative fuels sector both await breakthroughs that may never occur. Renewable energy sources generally may never be cost competitive with fossil fuels at current prices. Prices for photovoltaic panels may never fall sufficiently for the latter to become ubiquitous. Battery technology may never advance to the point where 100 mile per hour plus cruising ranges are possible in electric vehicles. Fuel cells may never be cost effective in automotive applications. Fast breeder reactors may never be perfected. Coal gasification combined with carbon capture may never prove cost effective. Cellulosic ethanol production may never prove out economically. And large scale sustainable projects for raising biomass for fuel may not prove feasible.

Since I have been covering alternative energy regularly, beginning in the year 2001, I have seen no fully validated development within this entire space that could truly be deemed a technological breakthrough. Incremental improvements aplenty have occurred within various technologies, but real breakthroughs, improvements that would rapidly and decisively change the nature of markets, have not been in evidence.

Breakthroughs may indeed have occurred—certainly many have been claimed—but they have not been validated by third party confirmation and/or market acceptance.

How could this be?

Much of the current inanition arises from very technological fecundity of the twentieth century. Such was the extent and the rapidity of progress that the possibilities of literally thousands of technologies were, if not exhausted, explored to the extent that most of the more obvious design options were attempted. Options that were readily susceptible to further development and refinement were taken while less promising avenues were abandoned.

The implication here is that the energy problems confronting us today must be addressed with existing technologies. We can't rely upon further breakthroughs.

Nevertheless, we will continue to report upon individuals and organizations claiming such breakthroughs.

We give you the following:

Breakthroughs?

Researchers at the Tokyo Institute of Technology claim to have produced a solid carbon based catalyst for rendering cellulose into glucose which would then be fermented to produce ethanol. Purportedly this will be much cheaper than industrial enzymes currently available for the same purpose or the industrial acids that are used in the older acid hydrolysis techniques. Rice straw was the source of cellulose in these experiments.

Researchers at Penn State University claim to have identified a fungus that can breakdown cellulose found in the gut of the Asian longhorned beetle, which happens to feed on wood. Funguses of similar properties have also been found in the digestive tracts of Indian elephants who munch tree branches and termites which munch the frames of tract houses. Big news? Maybe, but this isn't the first time that fungi have been advanced as prime candidate for cellulosic ethanol processes.

New Earth Renewable Energy

New Earth Renewable Energy Inc. announced the introduction of a biomass based coal substitute last week. Few details were provided in their press release or on their Website as to what is unique and proprietary to their process but they do indicate that it is a species of torrefaction, which is to say high temperature carbonization, the same basic process used to produce charcoal. It is a form of incomplete combustion. Charcoal has been produced for thousands of years and the discovery of the art of producing it was central in the rise of civilization. How ironic that its reappearance now should be hailed as a technology breakthrough. New Earth also produces a kind of bio-crude.

New Generation Biofuels Holdings

New Generation Biofuels Holdings announced the development of diesel and kerosene substitutes recently. These involve the combination of additives of an undisclosed nature with lipid oils of the sort used in biodiesel production. There are a number of processes for converting lipids into hydrocarbons including methods developed by Neste Oil and UOP, but I have yet to hear of anyone producing a kerosene middle distillate.

The Crash and Alternative Fuels

Finally, a word on the dismal news emanating from the financial markets and on what it might portend for the alternative fuels business.

I'm not sure that the present calamities will immediately reduce the amount of venture capital in play, but of course the collapse of major investment banks does change the nature of the investment game because these are the firms that take startups public. Unlike the dot coms, very few alternative energy startups have gone public, and fewer still have seen remarkable stock price appreciations subsequently.

But if we beyond startups at things like coal-to-liquids projects, then the implications are dire. These require massive infusions of capital and the investment banks have been the traditional source of money in such amounts. The losses such banks are incurring, which are entirely unprecedented, will ensure that new projects do not go forward, at least not for the span of years.

In the past I assumed that investment banks would always forgo investment in new energy technology in order take public the next FaceBook, but now I'm not sure that particular set of conditions any longer obtains. A bet on a Google or a Utube would appear to depend upon a fairly ebullient stock market. In the parlance of the nineties such companies are basically about eyeballs, and ultimately about the exposure the new medium is going to provide for advertisers. But if economic conditions become sufficiently bad, I'm not sure exposure is enough. In November of 1929 when the great stock market crash occurred, radio was the hot new medium, and radio stocks were roaring and soaring. Radio was of course an advertising medium without parallel at the time, and was being used to sell the ever increasing variety of consumer goods which were then pouring out of American factories, everything from deodorant to automobiles. But by late 1930 when an economic collapse had begun in the wake of the market collapse, ad revenues plunged and with them radio equipment manufacturers' and broadcasters' stock valuations.

None of this changes the need for new ways of producing energy, but it does mean that projects will have to prove themselves on a small scale and quickly become self sufficient. No one is out there with a sack of cash looking for an outside-the-box business plan scribbled on the back of an envelope. Not anymore.

Back in the year 2000 in the last year of the last century, I ran into entrepreneur at an optical networking trade show who had just closed a round of funding. He was young—just thirty, brilliant, and charismatic, and he owned a company devoted to bringing to market an optical router, a device that would increase Internet speeds a thousand fold and revolutionize the Web. I'd met him once before and he impressed me, both by virtue of his talents and his irrepressible optimism. That day he seemed crestfallen. I recalled that he had gone into a second funding round. "What's wrong, Gerald?" I asked. "You didn't get the money?

"I got a pittance," he answered bitterly. "Eighty million. That's an insult, a slap in the face. But what can you do. I think we're looking at tight money from now on."

Oh, for the days when eighty million dollars was a pittance. We won't see them back very quickly.