tag:www.energy.madisonforum.org,2007://21 2007-07-12T20:13:05Z Movable Type 3.33 tag:www.energy.madisonforum.org,2007://21.173 2007-07-12T20:08:26Z 2007-07-12T20:13:05Z

By Craig Kootsillas After a recent visit abroad, President Bush took time to thank those that had turned out to greet him overseas - particularly "those that used all five fingers to wave". We're not very well liked by our...

By Craig Kootsillas After a recent visit abroad, President Bush took time to thank those that had turned out to greet him overseas - particularly "those that used all five fingers to wave". We're not very well liked by our unruly neighbors. Much of the animosity directed our way from south of our border stems from their feeling that "we don't do enough" for them - in spite of our relatively open borders and "catch and release" policy towards those illegals we happen to stumble across. They may dislike us, but they come because being at the bottom of our wage scale puts them on the top of their own. They will continue to come until there no longer is a reason to do so. For generations and with few notable exceptions our neighbors to the south have struggled. Their tropical climate makes growing food crops a challenge and there are no widespread deposits of resources of interest to any potential trading partners. Centuries ago, sugar cane was a very profitable export for the region - but not for the enslaved natives. Eventually, the sugar cane market collapsed with major improvements in the cultivation and refinement of the sugar beet. The sugar beet can be adapted to any climate while sugar cane requires a tropical climate. At the confluence of dwindling petroleum supplies, skyrocketing demand for it and new technology brought to market by Brazil lies a land of opportunity that could change the balance of world power. A Land of Opportunity During the Arab Oil Embargo in the mid-70's, the Brazilian economy was growing at a rate of more than 10 percent - the fastest in the world at that time. The embargo brought oil shortages and price hikes, which hit at the same time that dropping world sugar prices where wreaking havoc on the Brazilian economy which relied upon sugar exports. Determined to be more energy independent and searching for additional markets for sugar cane; the Brazilian government worked with scientists, entrepreneurs and farmers to create an industry producing ethanol from sugar cane. Brazil now stands on the brink of energy independence (being able to meet all energy demand domestically) and is the global leader in ethanol production. Unfortunately, Brazil has not found dominance of the world ethanol market to be a Rosetta stone solution to their economic challenges. Although their economy has grown phenomenally in the past few decades it has begun to stagnate and there is much pressure to get past the last few ethanol-related technological hurdles in which they lack internal expertise. The Brazilians are taking a very innovative approach. A Capitalist Approach Emerging economies such as China and India are starved for energy, but are reluctant to make long-term commitments to ethanol because it is not yet seen as a reliable source of energy given the relative small number of producers. In light of this obstacle, and putting faith in a basic tenet of capitalism that competition breeds innovation, Brazil is actively seeking global partners in ethanol production. Specifically, Brazilian policy seeks to partner with their tropical neighbors by "facilitating technology transfer and technical assistance to other countries in the region to create new production capability and allow others to benefit from Brazilian know-how". As partners, Brazil has helped Columbia, Costa Rica and El Salvador create ethanol industries that in a few short years have grown to the point where 5 percent of demand for gasoline has been met with domestically produced ethanol. According to Luis Alberto Moreno, the former Brazilian Minister of Agriculture now President of the Inter-American Development Bank and Co-Chair of its Inter-American Ethanol Commission, ethanol is a "transformative opportunity for Latin America and the Caribbean". It has the potential to "change civilization" and already is "changing the way of life" of Brazilians. The production of ethanol from sugar cane can revitalize the poorest regions of the world and create new sources of energy where, according to Moreno, "we grow in 6 months what we consume in 12." Many obstacles to this transformation exist. Education is an obstacle. Third world farmers grow what they're able to cultivate and sell. Tropical sugar cane farmers currently grow cane to produce sugar and end up competing against sugar beet farmers and lose due to transportation and refining costs. Millions of acres of sugar cane fields are moving to the cultivation of agave, from which tequila is made. Corruption is an obstacle. Unfortunately, Latin machismo does not extend to workers' attitudes to their governments. Illegal aliens work long, hard hours at low wages to send money home to their families where 30% is stolen by the local kleptocracy. One only need to watch old reruns of Zorro to understand this has been going on for quite some time. American trade and energy policy is an obstacle. At a recent conference of the Inter-American Development Bank, former Florida Governor (and First Brother) Jeb Bush derided current US energy policy as being nothing more than an agricultural policy. Bush currently serves as the Bank's Ethanol Commission co-chair along with former Brazilian Agriculture Minister Moreno mentioned above. Bush refers to the fact that US energy policy features a subsidy of approximately $6 billion to producers of ethanol from corn. (See my previous column entitled Inconvenient Truths About Ethanol ) This subsidy includes a 54 cents per gallon tariff on imported ethanol in spite of the fact that corn is a very inefficient feedstock for ethanol production and use of it causes major upheavals in the US food supply. Grassroots momentum that killed recent immigration legislation should now be directed towards a solution. Every illegal immigrant being made to feel like the criminal they are should be made to understand that it is only their own weakness that prevents them from building a legitimate economy within their own country. Instead of sneaking across the border under cover of darkness to work for pennies while being subjected to the abuse they so richly deserve, they should demand justice in their own land and work to move from third world status. Tariffs on imported ethanol should be abandoned. We benefit from prosperous and stable neighbors with which we trade, and people with jobs stay home. Latin American and Caribbean economies producing ethanol are producing a product in high demand and should be rewarded by the free market. Subsidies to the ethanol-from-corn industry should be diverted to cellulosic ethanol technology. This is a technology from which American farmers will directly profit without endangering our food supply. There is no challenge in being opposed to illegal immigration. The airwaves are filled with a cacophony of horror stories and outrages. For every wall and fence there is a ladder or tunnel. It is time to speak of real solutions. ]]> tag:www.energy.madisonforum.org,2007://21.140 2007-06-01T17:05:32Z 2007-06-01T17:06:31Z

By Craig Kootsillas We’re entering an interesting era where energy independence is becoming a technological possibility but achievement of that goal could rely upon which direction the heavy hand of the government pushes the market. Much attention is being focused...

By Craig Kootsillas We’re entering an interesting era where energy independence is becoming a technological possibility but achievement of that goal could rely upon which direction the heavy hand of the government pushes the market. Much attention is being focused Brazil's success, which may achieve energy independence this year. But those using Brazil as a poster child for the US ethanol industry ignore a rather inconvenient truth – Brazilian ethanol is produced from sugar cane (which can only be grown in tropical climates) while ethanol produced in the US is corn-based. Simply put, ethanol is booze – the distilled product of the fermentation of sugar. Having natural sugars in the form of sucrose, sugar cane produces more ethanol by volume than corn. To make ethanol from corn the starch in the corn must first be converted to sugar – an additional process that requires a significant amount of energy. The amount of energy required to produce energy from a substance can be measured and is called the Energy Returned On Energy Invested (EROEI) ratio. For example, an EROEI of 1.5 indicates that for every unit of energy invested, a 50% gain is realized. Corn has an EROEI of 1.5, while sugar cane has an EROEI of 7. That’s a 50% return versus a 700% return. We’re talking apples to oranges here. In spite of the fact that corn is a rather inefficient source for ethanol production, the ethanol from corn market is booming. In 2005, 16 new distillation plants were under construction – this year close to 80 are beginning construction. Is the market moving here, or is it being guided by a 51-cent per gallon federal subsidy on production or a 2.5 percent ad valorum tariff on imports combined with a 54-cent per gallon import duty? The total subsidy (including tax credits/exemptions, growing and production subsidies) for the ethanol-from-corn industry is estimated to be between $5.1 and $6.8 billion. This boom is helping corn producers by doubling the price of corn in the past year causing spot shortages to the point where distillers are seeking to import corn to keep refineries operating at profitable levels and tortilla riots are occurring in Mexico. Ethanol may prove to be the weapon by which we win energy independence, but it won’t be soon and probably will come from the production of ethanol from plant cellulose. This technology is not yet commercially viable and includes the need to create genetically altered materials (algae is a likely target) to convert cellulose to usable sugar. Cellulosic ethanol (ethanol created from plant cellulose) as a renewable fuel source is attractive because cellulose is present in all plants – including the stems and leaves left over from plants already harvested and processed for food. Another inconvenient truth normally ignored by ethanol-from-corn proponents is the impact on the food supply and the amount of corn required to have an impact on our daily fuel requirements. Using today’s figures (not accounting for future increases), if all US cars ran on 100% domestically produced corn ethanol – 97% of the land mass of the USA would have to be planted with corn. Cellulosic ethanol research includes the identification and study of the cultivation of plants that can be grown in less than optimal conditions, require little or no fertilizer and would not crowd out current crops. The hemp lobby is active in this research, and “switch grass”, a hardy perennial weed also has been identified as a viable source. Last month, the US Department of Energy announced their decision to get involved in the cellulosic ethanol market in the form of a $386 million investment (by RFP) in 6 cellulosic ethanol plants with the goal being the production of 130 million gallons of cellulosic ethanol per year. The private sector partners in this venture will be matching that with a $814 million investment. For comparison, cellulosic ethanol has a ROEI of 4 (300% return) to sugar cane’s 8 (700% return) and corn’s 1.5 (50% return). It is projected that the cellulosic ethanol ROEI will be increased to 6 with improvements in the technology. Not on par with sugar cane, which only grows in tropical climates, but better than corn by an order of magnitude. Unfortunately, the 130 million gallons won’t put much of a dent in our consumption; it’s about 5 days worth of fuel. It does, however, fund the science and prove the technology. Should the government be involved in the private sector? Some argue against it. I argue against a $5 billion annual subsidy for corn ethanol which creates an inferior product, a closed market and a lasting corporate entitlement program. Ethanol from corn makes no sense. I don’t argue against all government involvement. From our space program we got GPS, Velcro, Tang, pens that write upside down and extremely cool screen savers. When the government gets involved in a market, it picks a winner – and we’re on the wrong team right now in the energy industry. ]]> tag:www.energy.madisonforum.org,2007://21.132 2007-05-06T00:48:00Z 2007-05-06T00:50:36Z

By Craig Kootsillas The first political event I attended in Cobb County was a Madison Forum meeting chaired by Richard Castellucis. It was a very special meeting. Bill Byrne spoke at the meeting. At the time, he was serving as...

By Craig Kootsillas The first political event I attended in Cobb County was a Madison Forum meeting chaired by Richard Castellucis. It was a very special meeting. Bill Byrne spoke at the meeting. At the time, he was serving as Chairman of the Cobb County Board of Commissioners. He chose that meeting of this group to announce his gubernatorial race. At the time I thought it strange that an announcement of such import be made at what appeared to be a rather informal meeting of political gadflies where the questions took longer to state than answer by an order of magnitude. In the intervening years, though, I met the other attendees of that meeting and have come to realize that major legislation and political movements have their roots in meetings such as these. There is something very special about Cobb County. Among its current sons and daughters are a former Speaker of the US House, a Governor, a Senator, a state party legal counsel, and a soon to be state party chair. Among its political activists – most being Madison Forum members -- an intellectual spark arose that eventually became the Republican Revolution encapsulated within Speaker Gingrich’s Contract With America. The Madison Forum is evolving. Its current President, Michael Opitz, is moving it in a new and very interesting direction – transitioning from speaker’s bureau to think tank. Given the history of political thought in Cobb County, I’m excited to be part of this venture. Many friends have inquired about the possibility of a revival of The Majority Builder, a column I wrote while active in the Cobb GOP and I never have had a good answer. I’ve always had a thirst for knowledge and an itch to write, but learned that party politics isn’t a good match for me. In the new Madison Forum, I feel I’ve found a home. I’ll be researching and writing about emerging sources of energy. We’ll explore renewable sources of energy such as ethanol, bio-diesel, fuel cells, hydrogen and distinguish between hype and fact. We’ll learn about the current state of technology and discover what the future may hold. Recent technological breakthroughs have made alternatives to fossil fuels economically viable and public policy has yet to catch up. For this column, I intend to do the research to present facts giving members of the Madison Forum opportunities to be involved in policy decisions as they have in the past. I invite comments, suggestions and questions via email at craig@sysDevGroup.com. ]]>