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When it comes to navigating a way out of the nation's energy crisis, you have to wonder whether the fix is already in.

The government has picked the winner--even as senior policy makers issue bland pronouncements about finding new technologies to help break our energy dependence on foreign oil. Between now and 2012, biofuel subsidies will total more than $92 billion, according to a recent report conducted under the auspices of the Global Subsidiaries Initiative.

The timing is coincidental, but the report came out just as Senate and House leaders were weighing a plan which would leave renewable energy out of the next congressional energy bill.

I'm sure there's some larger logic to explain that omission. But it might have a little something to do with the political muscle of the farm interests, a powerful lobby that knows its way around the corridors of power.

The 2007 farm bill features strong support for biofuel subsidies--even with crude oil prices hovering over $90 a barrel.

I've read a number of expert studies questioning the environmental impact of biofuels--especially the production of corn ethanol. Yet few policy makers of any national significance are stepping forward to question whether our national bet on biofuels makes good sense. That hasn't stopped Washington and various state capitols from lavishing billions of dollars on agribusiness' pet project. Most of the $92 billion I mentioned earlier will go to ethanol production.

All this is giving the cynics a field day. Each dollar spent on biofuel subsidies is a dollar not getting invested in other, possibly cleaner technologies. But the only people squawking seem to be the folks involved from those particular fields. I'm not advocating dumping ethanol research and production, but the selling of biofuels as the all-American favorite has been a marketing tour de force. That doesn't necessarily mean it's smart decision-making.

There's a lot of room between E10 and E85, says Alexander Karsner.

Karsner, the assistant secretary of energy efficiency and renewable energy at the Department of Energy, says that there needs to be a greater variety of gas-ethanol blends. E10 has only 10 percent ethanol, and in some states E10 contains only 2 percent to 3 percent ethanol, he said during a meeting with reporters at the Dow Jones Alternative Energy Innovations conference taking place in Redwood City, Calif.

In his State of the Union address in January, President Bush called for more research into alternative fuels. A month later, he took time for a photo op with this ethanol racecar at a North Carolina biotech company.

(Credit: White House photo by Paul Morse)

On the other end of the spectrum there is E85. E85, however, is sold in only one-third of 1 percent of gas stations nationwide. (E10 can fit into conventional pumps.) If forced to carry more E85, gas stations would figure out how to adjust their supply chains to handle it, but it might be easier to concoct new blends.

In Brazil, for instance, the lowest blend is E22, which contains 22 percent ethanol. E15 can be inserted, and pumped out of, conventional gas pumps in the U.S.

"Can you grow that market more with intermediate blends?" Karsner asked rhetorically. He then stated: "It is not going to be just E10 and E85."

Other notes from Karsner:

The administration is going to lay out more details on a long-term energy proposal on November 5. One idea will be "National Interest Corridors" or "clean energy superhighways." In these, large sections of the Midwest could become wind farms that supply power for distant metropolises. It will take a lot of work, particularly in making better and less expensive transmission lines. Property owners are tough, too.

"We are always fighting NIMBY (the "not in my back yard" state of mind)," he said.

He's a big supporter of geothermal, but doesn't believe it can provide 20 percent of the United States' electrical power, as some have asserted.

The DOE labs will focus a lot of energy in the future on energy storage (for instance, batteries) and solid state lighting. In the relatively near future, the department will show off a solid-state light that surpasses the efficiency of compact fluorescent lights.

For those of you who have clean-tech business plans, the DOE has loans for you too. The agency has committed to freeing up $13 billion, or half of its budget, to loans for businesses with low-carbon and carbon-free products or operations.

Cellulosic ethanol, a car fuel made out of forest scraps and prairie grasses, is coming, but there still are a lot of hurdles to overcome, said Bruce Jamerson, CEO of Mascoma in an interview with News.com.

Although you may not be familiar with his name, Jamerson is a major figure in the ethanol world. Between 2003 and 2007, he served as president of VeraSun Energy, which makes corn ethanol. The company's stock shot up 29 percent on the first day of trading after its IPO in 2006, but then came back down to earth asrcorn prices rose.

As CEO of Mascoma, he's now the public face of one of the more notable cellulosic companies. Mascoma has nabbed millions in VC funding and laid plans for demonstration plants in New York and Tennessee and a large-scale production facility in Michigan. It has also received grants from these states and the federal government.

Cellulosic ethanol initially will be a bit costly. "We plan to be very competitive with corn ethanol, but that may not happen in the first year on this," he said.

Still, the advantages will develop as production volumes increase. The energy balance--or the ratio of the amount of fuel consumed in manufacturing to fuel actually produced--for corn ethanol is around 1.5, he said. For cellulosic ethanol, it's 5.5 or higher, meaning companies can produce far more cellulosic ethanol with the same production input. Cellulosic ethanol also puts less carbon dioxide in the atmosphere than gas or corn ethanol.

But now the hard part:

First, the actual process of converting vegetable matter to fuel needs to be refined, he said. The basic process breaks down into three stages: cellulose is extracted from vegetable matter, it is then converted to sugar, which is then converted to alcohol.

Mascoma's ultimate strategy is to exploit microorganisms that can perform both the cellulose-to-sugar and sugar-to-alcohol conversions. Combining the two stages will cut costs and speed up production.

However, in its New York and Tennessee plants, these two stages will still be separate for the next few years.

"There are several species of (so-called) superbugs that we are working on. That is the ultimate game changer," he said. "But it will be several years before that is perfected."

Second, Mascoma's cellulosic ethanol will likely be made from wood chips at first. The company's New York pilot facility, which will be capable of churning out 500,000 gallons of fuel a year, will likely start producing fuel in the first quarter of 2008 and become fully operational in the second quarter. It will rely on wood chips.

The company is also building a facility in Tennessee that will be capable of producing 5 million gallons a year. While this plant will ultimately make ethanol out of switchgrass, a fast-growing grass that needs little irrigation, there isn't a lot of switchgrass in Tennessee at the moment. The state has created an $8 million program to encourage farmers to grow the stuff, but it will take two to three years to get the first crops. Since Mascoma wants to open the plant in late 2008, it will have to start with wood chips.

Third, cellulosic companies are trying to figure out what to do with the solids that are left over after ethanol is produced. Roughly 30 to 40 percent of the plant material that gets fed into the system remains at the end.

"We want to use that as biofuel," Jamerson said. The material could be used to run the plant, or to generate electricity that could be sold over the grid, depending on how much is produced. It could also be palletized and sold to owners of biomass furnaces.

Solid-material recycling is one of the issues the company is working on while planning its Michigan facility.

Finally, building these facilities will take money. New York granted the company $14.8 million so it could build the facility there and Tennessee will jointly fund the facility in that state. Officials from the state of Michigan have said that the state and the company might put up to $150 million for the facilities being slated for the northern part of the state.

But jobs will be created, noted Jamerson. States like Michigan have lost jobs in recent years due to foreign competition in the pulp and paper industry. Michigan State University could benefit as well: forestry and automotive technologies are two of its specialties.

For a start-up, Mascoma certainly has a lot of refineries in the works.

The cellulosic ethanol specialist already has plans for a demonstration plant in upstate New York capable of churning out 500,000 gallons a year, plus a plant in Michigan capable of 5 million gallons annually.

Just last week, it announced a deal with the University of Tennessee to open another 5-million-gallon plant in that state. Construction will begin in 2007 and become operational in 2009. (The New York and Michigan plants are supposed to go live in late 2007/early 2008 and 2008, respectively.)

That's three manufacturing facilities in three states for a company that's not actually producing anything right now. These plants will also represent a drop in the bucket of America's fuel consumption. The U.S. consumes about 400 million gallons of liquid fuel a day. Mascoma's annual output from these plants is thus equal to about 40 minutes of the national daily fuel budget.

Eventually, the plants will be expanded. Plans call for the Tennessee facility to grow to 10 times the 5-million-gallon level and the same applies to Michigan. Still, why build in different locations?

The reason is that the company wants to experiment with different feedstocks, according to a spokesperson. The Michigan plant will concentrate on making ethanol from wood chips leftover from timber operations, while the Tennessee plant will experiment with making it out of switchgrass. Switchgrass requires little fertilizer or water. The plant in that state will be capable of consuming 170 million tons of switchgrass a day.

The company is also looking at the "economic climates" of various areas of the U.S., factors such as state stimuli and subsidies. Tennessee will dedicate $8 million to encourage switchgrass production in the state. The state and the company will jointly build and operate the 5-million-gallon plant.

The total investment from Michigan and Mascoma in the facilities there could top $150 million, said Michael Shore, a spokesman from the Michigan Economic Development Corporation, a state agency in July.

"The state of Michigan will be putting some significant dollars on the line. We certainly believe there's a race to be first and we want to be in it," Shore said then. Michigan has also wooed other green tech businesses to the state.

New York, meanwhile, gave the company $14.8 million in grants to erect the development plant.

Cellulosic ethanol involves making ethanol, an alcohol that can be used to power cars, from stalks, wood chips and other "waste" vegetable matter. It takes three stages. First, plant matter has to be broken up into, among other substances, cellulose and lignin. The cellulose is then converted to sugars, and the sugars are then converted to alcohol.

Mascoma, which grew out of research at Dartmouth College, has tapped microbial processes that can perform the cellulose-to-sugar and sugar-to-alcohol conversions with little external energy or cost. Several companies are also looking at ways to exploit lignin, a potential high source of energy.

The company's primary organism is Thermoanaerobacterium saccharolyticum, which breaks down plant material in a warm environment.

Bob Lutz

(Credit: Ray Wert)

Love him or hate him, Bob Lutz is somewhat of a celebrity in the automotive world. From GM to BMW to Ford and back again, Lutz has seen firsthand the growth, as well as the trials and tribulations, of the automotive industry over a span of more than four decades. Oh, and in his early days, he flew fighter planes in the Marine Corps.

When I told some of my colleagues I was invited along with a small group of bloggers to have dinner with "Maximum" Bob, some beamed in envy, others snarled in skepticism. After all, GM has had its share of bad publicity over the years. But Bob and company claim those days are over. General Motors is hoping to please the entire customer spectrum, from eco-minded conservationists to speed-loving gearheads.

On the "green" side of the scale, GM seems to realize what alternative-fuel experts have been saying for a long time: No single fuel can fully replace our dependency on petroleum-based oil. Fuel diversification--using different ways to power the various cars on the road--eases both ecological and economic strain on our resources. During the first half of our meeting, GM carted us over to Universal Studios and outlined some of the technologies they're either testing or currently employing:

Hybrid systems. GM is introducing two types of hybrid powertrains: a two-mode hybrid system that will soon be available on the Chevy Tahoe and GMC Yukon (as discussed in a previous post) and a "mild" hybrid system that will be incorporated into smaller cars like the Chevy Malibu. And yes, it looks like that two-mode hybrid Escalade will make its way onto the market in the next year or so.

Flex fuel. Several vehicles, including trucks and SUVs, have been modified to run on up to 85 percent ethanol (E85). Although not yet widely available to the public, GM uses lots of these cars internally; they're often transport vehicles during promotions and press events. Of course, vehicle availability is only part of the equation, as E85 fueling stations are hard to come by in many areas. California, for example, only has four E85 pump locations in the entire state.

Hydrogen fuel cells. Real-world testing will soon begin on fuel cell-powered Chevrolet Equinoxes in Los Angeles and New York. It will be the largest market test ever of electric vehicles powered by hydrogen. Cars will be driven by consumers, although no specific details are available yet.

Electric cars. The all-electric Chevy Volt concept was unveiled at the Detroit auto show in January of this year. The Volt uses lithium-ion batteries, which are less toxic than nickel-metal hydride. GM folks say they're getting closer to a production car, but, they say, the battery technology still needs to get better before these cars hit dealerships.

On the other end of the spectrum, Lutz admits there's a horsepower race going on between car manufacturers. He says, for example, that a new version of the Corvette will most likely be faster and more powerful than the C6 and Z06 models on the market today. And although such muscle cars might seem the antithesis to gas-saving Saturns, Bob said not to rule out the possibility of any fuel-saving technologies on those vehicles in the future, either, should regulations so require. Electric-powered 500 hp sports car, anyone?

DAVIS, Calif.--Reporters who covered software in the '90s will remember Karl Jacob. Microsoft bought his company, Dimension X, in 1997. He was chatty. Occasionally, some reporters referred to him as "sources close to the company."

After leaving the big M, he went off to Keen, Benchmark Capital and a few other things. And now, he's the world record holder of the standing mile speed record.

This Viper runs on ethanol.

(Credit: Michael Kanellos/CNET News.com)

In July, Jacob cranked up his modified Dodge Viper from a standstill to finishing a mile in 27.41 seconds. He hit 220.7 miles an hour during the sprint, a record. The old top speed for the standing mile was just under 218 miles an hour. He did eight runs on the day.

Jacob didn't drive the car on the record run. Instead, it was driven by Ron Misjak of Super Viper, which modified the car. In any event, Jacob did pay for it, has driven the car and says it's a kick. That puts him ahead of Alcibiades, who won a first in chariot racing at the ancient Olympics without getting behind the reins. (It was a common practice among the nobles.)

We spoke at the green car pavilion at the GoingGreen conference in Davis. Karl and Ian Wright of Wrightspeed showed off their performance cars. Others were showing off low-speed electric vehicles.

Jacob and a team of mechanics had to tinker quite a bit with the Viper. They boosted the horsepower from 500 to 1,200, for one thing. Additionally, they switched it from running regular gas to running E85 ethanol. E85 comes with an octane rating of 105, higher than regular gas.

The engine

(Credit: Michael Kanellos/CNET News.com)

"It is not common knowledge that you can convert these cars (Vipers) to E85," he said. But apparently, it's pretty easy. All you have to do is upgrade the fuel lines, change the engine's computer and alter the timing.

More than doubling the horsepower probably had a big effect on the performance of the car, but the extra octane can't hurt. Ethanol also cuts down on the greenhouse gases from the tailpipe. Fast clean cars are sort of a fad. Earlier this year, a 1965 biodiesel-burning Impala that beat a Lamborghini in a drag race. Electric sports cars, meanwhile, are coming to market.

Overall, the Viper and its modifications cost about $200,000. Good thing Jacob worked at Microsoft.

Making fuel out of algae is one of those ideas that everyone loves. An acre of algae can produce 50 times more oil than an acre of soy, estimates John Sheehan, now vice president of strategy and sustainable development at LiveFuels.

"It can produce a lot of oil," he said in an interview on Wednesday.

The oil can be used to make biodiesel or synthetic forms of petroleum or both. Many hope that algae-based fuel can sell for around $40 to $50 a barrel, or a lot less than crude.

Algae facilities can also suck significant amounts of carbon dioxide out of the atmosphere. The fumes coming out of utility smokestacks can be piped into algae growing facilities. And to top it off, algae's not a massive food crop at the moment, so you aren't using a valuable food crop to gas cars.

Sheehan's not new to the field. He oversaw biomass, ethanol and algae programs at National Renewable Energy Labs. An NREL paper on algae--along with research from some of the national labs--forms the basis of a lot of the thinking around algae.

Right now, though, no one is producing it commercially. Companies such as LiveFuels, GreenFuel Technologies and Solazyme hope to start seeing algae oil get into the fuel markets in a substantial way over the next few years, but it's still mostly experimental. GreenFuel recently hit some snags and changed CEOs.

One challenge is removing the water. It's not uncommon to have 1 gram of usable algae in every liter of water. "That's 1,000 parts of water for every part of algae," he said.

The industry is also in the midst of a few religious wars. One is controlled versus open ponds. In controlled facilities, engineers can regulate the growth of organisms and control what kinds of species grow in the environment. These facilities cost quite a bit. Controlling the rate of growth can also be a problem.

"Open ponds are the cheapest, simplest solution," he said. "But it is much harder to maintain consistency."

Then there is the question of using biologically enhanced organisms or a mixture of naturally occurring species. Enhanced organisms can produce more oil per cell. However, they may not thrive if foreign species enter the pond.

LiveFuels is an open pond/multispecies company, by the way.

"The issue is: is it doable?" he said. "The question is: can we get the costs down to where it can compete" with fossil fuels?

Ethanol from coal? If it works, it could solve three major problems for the energy industry.

Researchers at Louisiana State University, along with colleagues from Clemson University and Oak Ridge National Laboratories, are trying to develop catalysts and processes that would allow energy companies to convert coal into a mix of carbon monoxide and hydrogen, and then convert those gases into ethanol.

The ethanol could then be used as a liquid fuel additive or, alternatively, shipped as a liquid and then be converted into hydrogen for hydrogen fuel cells, said LSU's James Spivey, who is heading up the project.

Right now, ethanol is primarily made out of corn or sugarcane. It's expensive and time-consuming to make, a problem. A gallon of ethanol derived from plant matter also only has around two-thirds of the energy content of a gallon of gas. A gallon of ethanol derived from coal-created synthetic gases could provide more energy.

"You could avoid an energy penalty" with coal ethanol, Spivey said.

The U.S. is also sitting on massive reserves of coal that dwarf even the oil reserves of Saudi Arabia. Coal-fired power plants, however, are a major source of pollution. Using coal (in tightly controlled factory situations) to make ethanol would solve the issue of how to exploit the domestic coal supply in a way that doesn't harm the environment drastically, problem number two.

Problem number three, of course, is the hydrogen transportation problem. Hydrogen corrodes pipelines and the extremely small size of hydrogen molecules makes it tough to come up with pipelines that don't leak. Transporting it as a liquid helps solve that.

Now they just have to find the catalysts.

The Department of Energy and ConocoPhillips are underwriting the $2.9 million cost of the project.

Meanwhile, others such as Silverado Green Fuel, are looking at ways of making liquid fuels with coal particles.

PALO ALTO, Calif.--This is sort of like the "two, two, two mints in one" solution for the clean-tech set.

Australia's Terra Fuel Technologies has come up with a device that, when added to a diesel car, bus or truck, lets the vehicle also run partly on ethanol. You need to add a second gas tank on the vehicle to hold ethanol, but in the end, it's an ethanol-diesel car. The device, a black box, controls the flow of ethanol into the engine.

The company has tested it and will start selling it in the United States.

Who in their right mind would want this? Adding ethanol to a diesel engine actually improves performance of the vehicle by about 10 percent while reducing emissions, said Alexander Daniel, vice president of Business Strategies International, which is trying to help Terra Fuel get traction in the States.

Running a diesel engine on vegetable oil, a clean alternative, can degrade performance a little, even according to biodiesel fans.

Diesel drivers, of course, can reduce emissions by running their cars on a mix of regular diesel and biodiesel. But biodiesel is made from oil, Alexander and others at BSI noted, and a lot of countries don't have a lot of spare vegetable oil. Australia, for instance, grows sugarcane, which can be turned into ethanol.

So who knows?

The company presented its objectives at the AlwaysOn Stanford Summit here Wednesday.