July 2007 Archives

Environmental Effects of Growing Energy Crops

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News this week that the dead zone in the Gulf of Mexico, caused by agricultural run-off from the mid-west, is again this year going to be quite large.

There is some disagreement about exactly how large.  A article from Minnesota Public Radio leads off with: "A scientist with the National Oceanic and Atmospheric Administration, NOAA, says this summer's dead zone could be as large as 8500 square miles. That's 77 percent larger than the average size of the dead zone over the last two decades."

The article continues:

The issue of nitrogen is especially important this year because it's the main fertilizer used on the nation's corn crop.

U.S. farmers this spring planted one of their largest corn crops ever, up almost 20 percent from a year ago. Much of the increase will go to meet the demands of the ethanol industry.

Runoff from farm fields carries nitrogen into streams and rivers and eventually the Gulf of Mexico. NOAA's David Whitall says the corn-biofuels-dead zone link is one area researchers will examine as they search for answers.

...One federal study says if ethanol production continues to expand, nitrogen loads to the Gulf could increase another 30 percent.

At CNN, on the other hand, the size of the dead zone is portrayed somewhat differently:

The oxygen-poor "dead zone" off the Louisiana and Texas coasts isn't quite as big as predicted this year, but it is still the third-largest ever mapped, a scientist said Saturday.

...The 7,900-square-mile area with almost no oxygen, a condition called hypoxia, is about the size of Connecticut and Delaware together. The Louisiana-Texas dead zone is the world's second-largest hypoxic area, she said.

This year's is about 7.5 percent smaller than [had been] predicted, judging by nitrogen content in the Mississippi River watershed.

[Previous predictions were] about 8,540 square miles, which would have made it the largest measured in at least 22 years. More storms than normal may have reduced hypoxia by keeping the waters roiled.

No mention at CNN of any role any role in the dead zone of biofuels.  The difference between the numbers cited by the two sources is less than 5%, which probably isn't a big deal, especially give then fact that neither article cites error bars.  But there is a difference in focus.  On the one hand, the dead zone is bigger than ever, on the other, not so bad.  Corn acres are certainly up in the U.S., and the effects of the consequent increase in irrigation and fertilizer use is something to keep an eye on.

Biology Leads Headlines at the New York Times

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It can't last for more than few minutes, but I just noticed that the top four stories in the "U.S. National News" section at the NYT are all about biology.  It's healthcare, environment, food, and biosecurity: Welcome to the bio-economy.

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LS9 - "The Renewable Petroleum Company" - in the News

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LS9, "The Renewable Petroleum" Company, has just hired a former oil executive as its new CEO.  The promise of direct microbial fuel production is so great that this news even made The Huffington Post.  Why all the sudden buzz?  The answer is that this technology is really quite new, but is making great strides.  Moreover, as I wrote about a couple of weeks ago (see "The Need for Fuels Produced Using Synthetic Biology"), the economics of producing fuels from microbes is so radically different from what we are used to that it will upend our notions industrial infrastructure.  That said, it will still take some time before all the impacts are fully appreciated.

Last Thursday, I did a short interview for the series Questions for the Future, produced by CNBC Europe/Asia in association with Shell, during which the host was somewhat perplexed about why there was not yet more widespread discussion of this technology.  At The Huffington Post, David Roberts starts his post with a note of skepticism:

Picture a liquid fuel that is derived from the same feedstocks as cellulosic ethanol (switchgrass, sugar cane, corn stover) but contains 50% more energetic content and is made via a process that uses 65% less energy.

Unlike cellulosic ethanol, this fuel can be distributed via existing oil pipelines rather than gas-hogging trucks and trains, dispensed through existing gas stations rather than specialized pumps, and used in existing engines rather than modified "flex-fuel" engines.

In short, it is a biofuel that can be substituted directly and immediately for gas or diesel, on a gallon-for-gallon basis.

Sounds pretty good, eh? Too good to be true?

Which illustrates one reason why this topic isn't so much in the news.  It does sound too good to be true.  But it is quite real, with Amyris Biotechnologies on track to produce jet fuel from microbes by 2011 at an equivalent cost of US$ 40 per barrel.

Another interesting thread to this discussion is the potential internal conflict generated in "Greens" by the notion of reducing carbon emissions ("Good!") using genetically modified organisms ("Bad!").  I've been working this idea into an essay about laying the foundations for a bio-economy, but Roberts makes it explicit in his post; "I know there are greens who feel creepy about genetic engineering, and they probably won't like the fact that LS9 is trying to patent a life form. But I don't really share those concerns, so I'll just skip them."  No worries.  Just like that.  I am not so certain Greenpeace et al. will follow along so quietly.

In the press release from LS9, new CEO Robert Walsh says:

After years of leadership roles in the traditional petroleum industry and responsibility over all aspects of the hydrocarbon supply chain, I can see clearly how LS9's products will fit into existing infrastructure and deliver significant value to partners and consumers compared with other biofuel alternatives.  LS9 has the opportunity to fundamentally change the transportation fuel equation, which makes me incredibly excited to join this talented team.

While it's true that these engineered synthetic fuels will likely find first use within existing distribution channels, it is the potential for distributed manufacturing that truly changes the game.  It will be interesting to see how long it takes for this part of the story to work its way into the broader conversation.

Finally, here is additional coverage of the LS9 announcement at GreenCarCongress.

European Biofuels Travelblog

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Instead of "Cellular Lipo-Sculpting Eye Gel", this time the transcontinental party favor was "Relaxing Yuan Zhi Pulse Point Balm".  Thank you British Airways.  The chocolate mousse was mighty tasty, though.  Almost as good as on Air France.  Almost.

Thankfully, the continental leg of the trip was canceled.  Due to security at Heathrow and intense weather across the U.K., I can't say I was disappointed.  Audiences in London and Edinburgh were at least as attentive as those we presented to in Asia, and I suspect this due in part to real concerns about carbon emissions throughout Europe.  In Asia, biofuels seemed to be thought of as more a business opportunity, with carbon emissions as a complication.  In the U.K., in addition to the basic economic concerns, the questions about carbon were more along the lines of trying to understand which fuels and which technologies actually reduce emissions.

Crazy moment of the trip: who should we bump into in the lobby of our hotel in London but John Melo, CEO of Amyris Biotechnologies.  Small world.

China and Future Resource Demands

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It isn't news that China has a huge and still growing population, nor that the economy is growing rapidly in the context of an enormous trade surplus.  But looking at what China is today importing, and extending a few trends out into the future a decade or two, gives an interesting slant to food and energy markets that everyone should be thinking about.

I've been digging into these issues as part of Bio-era's consulting practices on biofuels and emerging biotechnologies.  What follows are some notes on trends to watch.

Arable Land:  China is actively moving farmers off the land in an attempt to slow desertification:

The relocation program is part of a larger plan to rein in China's expanding deserts, which now cover one-third of the country and continue to grow because of overgrazing, deforestation, urban sprawl and droughts.

The shifting sands have swallowed thousands of Chinese villages along the fabled Silk Road and sparked a sharp increase in sandstorms; dust from China clouds the skies of South Korea and has been linked to respiratory problems in California.

Since 2001, China has spent nearly US$9 billion planting billions of trees, converting marginal farmland to forest and grasslands and enforcing logging and grazing bans.

The policy is driven in part by concerns over food, as farmland yields not only to the deserts but also to pollution and economic development. China has less than 7 percent of the world's arable land with which to feed 1.3 billion people -- more than 20 percent of the world's population. By comparison, the United States has 20 percent of the world's arable land to feed 5 percent of the population.

...The battle against deserts is playing out across much of western China. Desertification has caused as much as US$7 billion in annual economic losses, the China Daily reported.

Over the past decade, Chinese deserts expanded at a rate of 950 square miles (2,460 square kilometers) a year, according to Wang Tao of the Chinese Academy of Sciences in Lanzhou.

...Global warming also threatens to make a huge dent in grain production, which has already slipped from 432 million tons in 1998 to 422 million tons in 2006 because of desertification. At the same time, grain consumption has risen about 4.4 million tons a year to 418 million tons, in part because of rising demand for beef, chicken and pork.

The production declines have forced China to draw down its grain stocks, and eventually it will need to buy a massive 30-50 million tons a year on the world market, Brown said.

Fresh Water Supplies:  According to an article at Yellow River Conservancy Commission, evidently a Chinese government endeavor:

China has been a production marvel when it comes to labor costs, but not for water costs. To produce a unit of GDP, China uses approximately six times more water than the Republic of Korea and ten times more than Japan, according to Zhai Haohui, vice minister of water resources.

...The water shortage nationwide will reach 50 billion cubic meters by 2030 -- up from the current 6 billion cubic meters, according to the Ministry of Water Resources.

A recent article in the Independent claims that glaciers in the Tibetan plateau, which provide freshwater to much of the country, are now melting at 7% annually.  I've seen that number as high as 13% elsewhere.

Commodities Imports:  The USDA simply says, "China's Demand for Commodities Outpacing Supply".  Demand for corn has exceeded supply in recent years, and I've read that this is the first year they might wind up importing corn.  China already imports enormous amounts of soy; just before I went to Asia in June, the quarterly Chinese buying trip to the U.S. purchased four times as much soy as markets were expecting, $3 billion in one week. 

Meat Consumption: A recent report from the UN FAO, "Livestock's Long Shadow", points out the repercussions from increasing meat consumption around the world: inefficient use of grains, massive consumption of fresh water, increased pollution and greenhouse gas emissions.  Here is a summary from the FAO magazine, carrying the title "Livestock impacts on the environment", which has a link to the full report at the bottom of the page.

Among the most remarkable tidbits from the report, and a key part of the analysis Bio-era is giving to investors in Asia, the U.S., and Europe about the future of commodities usage in regards to biofuels, is related to future Chinese meat consumption.  If China maintains the historical relationship between per capita income and meat consumption (See figure 1.4, page 9 of the FAO report.), by the time it reaches average European income levels supplying all that meat will require 40% of world grain supplies.  40%. 

This is one of those numbers that makes you wonder where and when the current system will break down.  China today has ~15% of world population, and will probably max out at about 18%, with only ~7% of the globe's arable land.  And yet supplying them with mean could consume 40% of the world's production of grain.  Either very strong cultural practices related to meat consumption will have to change (a hard thing to do), or China will be importing a huge fraction of the world's commodities.  Is that the future use of China's massive foreign currency holdings?

Fuel Mix:  According to the USDA FIA "China Bio-Fuels Annual 2007" (PDF), diesel dominates the fuel market in China.  In 2006, 120,000,000 MT of diesel and 40,000,000 MT of gasoline were used across the country (see figure on pg. 8).  Gasoline consumption appears to have leveled off, while gasohol usage has jumped considerably over the last 4 years.

Biofuel Use: The government has put a moratorium on using corn to make ethanol, and may in fact ban that use of corn altogether, but the USDA predicts, "China Fuel Ethanol Production Projected to Increase 12% in 2007":

A report from the US Department of Agriculture Foreign Agricultural Services (USDA FAS) estimates that the production of fuel ethanol in China will reach 1.45 million tonnes (484 million gallons US) in 2007, up 12% from 1.3 million tonnes in 2006. Official production of fuel ethanol in China began in 2004.

...Now, according to the FAS report, plans are to increase ethanol feedstocks from non-arable lands making the use of tuber crops and sweet sorghum. Given the new constraints, a realistic 2010 target appears to be between 3 and 4 million tonnes (1 billion and 1.33 billion gallons US).

...Diesel is the primary fuel used in China. In 2006, China consumed 120 million tonnes of diesel and 40 million tonnes of unblended gasoline. A rise in the use of E10 has caused gasoline consumption to plateau over the last four years. During this time, automobile use in China has increased on average 11.8% annually.

A story at Green Car Congress speculates that, compared the US, cellulose to ethanol may move faster in China because of labor costs.  It's interesting as well that, "China Oil and Food Corporation (COFCO), the country’s largest oil and food importer and exporter, is partnering with Novozymes on the production of cellulosic ethanol."

Offshore Land Deals:  Early this year, Chinese companies signed deals worth US$ 4.9 billion to secure growing rights on 1.2 million hectares (~3 million acres) (Here's the version from Bloomberg, via the IHT).  A similar deal was signed between China National Offshore Oil Corp (CNOOC) and Indonesia, to the tune of US$ 5.5 billion for land to grow crops for ethanol and biodiesel and for processing plants (U of Alberta China InstituteBiopact).

Finally, China recently announced an increase of planned biofuels use to 20 MMT by 2020.  This is absolutely enormous, as a story at Biopact notes:

The total production of biomass energy from non-grain crops will grow to 500 million tons of coal equivalent, worth some 3 trillion yuan [€290/$385 billion], which will account for 24 percent of the nation's total energy consumption.

In the end, given the shortage of water, the decrease in land suitable for crops, the increase in meat consumption, etc., it just isn't clear where all the biomass is going to come from.  Clearly a great deal of it will be imported, and we can now see where some of China's foreign currency reserves are going to go over the next couple of decades.  Commodities markets are going to get tighter worldwide as a result.

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