Weekly Blog Roundup

This week in the blogosphere, attention students, according to the blog, smartplanet

“Did you know there’s an ongoing federal grant program for U.S. college and university students that are working on so-called “P3″ ideas? P3 stands for “People, Prosperity and the Planet,” which are concerns fundamental to ideas of sustainability.

“The money is given out by the U.S. Environmental Protection Agency and seeks to help support research and development projects that involve the overall sustainability of human society. The projects must have these mutual goals in mind: economic prosperity, protection of the planet and improved quality of life. There are approximately 40 $10,000 grants given out in Phase I, which is sort of a proof phase. After each of those teams works on their project for eight to a year; the projects are judged and about a half-dozen receive another $75,000 for another two years.””

Then CleanTechies has this to say about innovation,

“In the September issue of Harvard Business Review, authors Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami provide a framework for adopting sustainable practices to bring about technological and organizational innovations that will ultimately yield top-line and bottom-line returns, providing a competitive advantage when the recession ends. They feel that sustainable companies will emerge from the recession ahead of their competitors, who will face difficulties trying to catch up.
The authors argue that sustainability is not the drag on the bottom line that many executives perceive it to be, and that it can actually lower costs, and increase revenues. This is an indicator that business leaders will have to rethink business models, processes, technologies, and products.”

Then, on NanoWerk What does the American public think about nanotechnology and synthetic biology? Well,

“The poll, which was conducted by the same firm that produces the well-known NBC News/Wall Street Journal polls, revealed that the proportion of adults who say they have heard a lot or some about synthetic biology more than doubled in the past year (from 9 percent to 22 percent). Awareness of nanotechnology (30 percent have heard a lot or some) increased slightly since last year, putting it back at the same level measured in 2006. “Public awareness of nanotechnology has barely moved a nanometer in over four years of our project’s polling, despite billions of dollars of investment in research and the existence of over 1,000 nano-enabled products in the marketplace,” said Andrew Maynard, chief science advisor for PEN. “Clearly, the message about this new and important technology is not reaching the public.””

Biofuels Digest is writing about algae this week,

““We need real commercial learning to be able to develop the production system and all the systems around that,” said Bill Barclay, chief intellectual property officer at Martek Biosciences, in a report in Sign On San Diego. “We’ve got to be careful not to over-promise success.”
“Filling your vehicle’s tank with fuel made from algae is still as much as a decade away,” led the Reuters report on ABO, “as the emerging industry faces a series of hurdles to find an economical way to make the biofuel commercially.”

The leaders of the industry are concerned about the flip side of the hype cycle – and why not? The daily beatings given to corn ethanol by a witch-burning coalition right out of Monty Python and the Holy Grail should give any renewable energy developer a big case of the willies.

They’re concerned about money, too, or the lack thereof. Biofuels project lenders are generally underwater after loaning up to $1.25 per gallon of capacity to corn ethanol plants and seeing the Valero deal revalue that capacity at $0.65 per gallon, putting every loan underwater. VC funds are tight, angels can’t afford the later equity rounds, and private equity is sitting out on biofuels until carbon policy is stabilized. To make matters worse, Curt Rich of Van Ness Feldman added bluntly, “there is virtually no chance that a biofuels project can qualify for federal loan guarantees based on the DOE’s current framework.” ””

Finally the Neighborhood Toxicologist writes about the recent article in the New Yorker about synthetic biology,

“There was an interesting article on Synthetic Biology in the New Yorker a few weeks ago. I was able to skim through before relinquishing it to my husband who was heading off to Seattle and needed reading material. I didn’t have time to read the ending – but the basics stuck with and intrigued me. Synthetic Biology strives to one day treat biological systems like a system of Lego blocks. According to SyntheticBiology.Org their goals begin with identification of the parts that “have well-defined performance characteristics and can be used (and re-used) to build biological systems” and end with “reverse engineer and re-design a ‘simple’ natural bacterium.”

That’s it for this week!

Corn Growers Try to Understand Indirect Land Use Change

The National Corn Growers Association’s recent “Land Use: Carbon Impacts of Corn Based Ethanol 2009” conference highlighted the confusion the issue of indirect land use change has engendered for farmers. Chuck Zimmerman of AgWired summed it up in a report from the conference:

Do you understand things like indirect land use when it comes to regulations via departments like the EPA due to the RFS? Me either. And I’ve sat in on conferences and discussions and interviews on the subject for a while now. That’s because an issue like indirect land use involves predicting the future based on certain assumptions that may or may not be valid, especially if they’re based on out of date data and information.”

Conference chairman Jamey Cline, NCGA Director Biofuels and Business Development, indicated to Zimmerman

that these issues are extremely important to agribusiness and corn growers in particular because if the CARB regs hold up, by 2012 they will effectively shut off that market to ethanol. Additionally, one presenter said that due to the proposed climate change bill and RFS, approximately 27.1 million acres would be taken out of production across the Unites States. That would have a huge impact on our economy, especially in rural areas.”

Jeanne Bernick of Farm Journal also reported from the conference:

Even the leading ag economists of our day are scratching their heads on this issue (read Land Use Change Tricky to Measure). They claim it is simply impossible to verify why land use changes occur.

“‘We are trying to measure the unmeasurable,’ says Bruce Babcock, ag economist with Iowa State University’s Center for Agriculture and Rural Development (CARD). ‘We would never really be able to verify why those acres changed production plans. Annual agricultural land use is flux, and largely variable.’

“Interpretation: No one really knows what influences land use change. Farmers make planting decisions in the U.S. and around the world based on a multitude of factors (weather, markets, weed and insect pressure), not just one factor like increased biofuels production in the U.S.”

Mike Wilson of Wallace’s Farmer astutely noted several questions raised by the conference:

Why are we setting U.S. policy based on something that may or may not take place in other countries? As speaker and Texas A&M ag economist Bruce McCarl says, ‘If we want to get out of this indirect land use debate, we simply need to have Brazil institute some greenhouse gas emissions penalty for when it develops its land.’

“What role does politics play in this? Clearly politics is the 800-pound gorilla in the room. President Obama has his people in place and a mandate from voters; he wants to get something passed regardless of the flawed logic that is now floating around in EPA’s regulatory proposal.

“Is this an Obama-driven apology to the rest of the world for eight years of George Bush unilateralism?

“Is this punishment for not agreeing to the Kyoto Protocol so many years ago?”

During the August Congressional recess, Sen. Chuck Grassley (R-Iowa) invited EPA officials Gina McCarthy, who is Assistant Administrator for the Office of Air and Radiation, and Margo Oge, who heads the Office of Transportation and Air Quality, to tour Iowa State University’s BioCentury Research Farm near Boone and the Renewable Energy Group’s 30-million gallon biodiesel plant at Newton.

Dan Looker, Business Editor of Agriculture.com, reported:

Dermot Hayes, an economist with ISU’s Center for Agriculture and Rural Development, shared research by a graduate student, Jerome Dumortier, that shows the effects of technology as crop prices rise due to demand for biofuels. Farmers are more likely to spend more on biotechnology that speeds up yield gains, Hayes said. If this effect is just 1% more than the trendline in yields [1.6% is used in EPA calculations] over 10 years, it brings the gain [carbon debt] from ethanol from 166 years to just over 30. If it’s just 2% higher, the gain from producing ethanol instead of using gasoline is immediate. In essence, there is no indirect land use effect.

After the recess, at a Senate Agriculture, Nutrition, and Forestry Committee Hearing on Sept. 3, Senators heard from Bill Couser, a fourth-generation farmer from Nevada, Iowa:

As a seed corn grower for Monsanto I have witnessed firsthand the wonderful improvements in corn and soybean genetics over the last few years. The simple fact is that yields are not only increasing, they are increasing at an increasing rate. Coupled with improved farming practices, I have no trouble believing Monsanto’s national average projection of 300 bushels per acre corn by 2030. Iowa will likely hit that mark much sooner. And we will do it with fewer inputs and less impact on soil and water than today.”

Don’t Worry, Be Happy

The EPA has released its long-awaited proposed rules for the Renewable Fuel Standard, including calculations of the lifecycle greenhouse gas emissions for various biofuels. Unlike California, the EPA is proposing to “discount” the greenhouse gas emissions of both biofuels and the baseline petroleum gasoline. The discount rate that EPA uses for most of the calculations it presents is 2 percent over 100 years, although it also proposes using a 0 percent discount rate and a 30-year time span and is taking comments on other combinations. Biofuel critics immediately decried the use of the 100-year timeframe because the resulting calculation produces a better outcome for biofuels.

Denver Post columnist Vincent Carroll writes:

But the mere fact that it would consider measuring ethanol’s carbon impact over 100 years — or should we say guessing at it? — is evidence enough of the ethanol lobby’s stature.”

And the Washington Post’s Juliet Eilperin and Steve Mufson report:

The EPA raised the possibility of computing greenhouse gas costs over a 100-year period instead of a 30-year period. The longer time frame would make the benefits of corn-based ethanol seem greater while discounting the initial costs, such as the loss of untilled land, over time. For example, the EPA said corn-based ethanol is 16 percent better than regular gasoline if its costs are calculated over 100 years, but 5 percent worse over 30 years.
‘EPA has left open the option that an exception to good science could be made in the case of a favored special interest,’ said Frank O’Donnell, who heads Clean Air Watch.”

Both biofuel supporters and detractors should be wary of these calculations and of the precedent they could set. It’s abundantly clear that few people understand what the numbers mean.

The timeframe being discussed is for application of a “foregone sequestration” penalty — the number of years that converted land is considered to be foregoing its preferred use for carbon sequestration as forest or grassland. This penalty is added over and above the initial assumed release of carbon from conversion of the land (and note that there is no comparable penalty for not leaving petroleum carbon “sequestered” underground). Under normal circumstances, industry would prefer a short timespan – fewer than 30 years. After this period, the land would be considered agricultural land rather than former forest and would no longer accumulate a carbon penalty.

The choice of a discount rate is intended to measure present day valuations of costs and benefits over time. So, what are the costs and benefits of reducing greenhouse gas emissions that EPA is discounting? In the analysis, it is the cost of converting forest and grassland to agricultural land in order to obtain the benefit of reducing greenhouse gas emissions from transportation in the future – the “payback”. What the EPA should have measured, though, is the cost of converting our petroleum-based system of transportation to a biomass-based one versus the benefits of reducing greenhouse gas emissions.

The results in the EPA’s proposed rule are skewed by two indefensible assumptions. First is the assumption that the baseline for greenhouse gas emissions from petroleum should be discounted. The law requires establishment of a baseline for gasoline in 2005. To apply a discount rate assumes that the baseline will improve by some rate of change over time. And since petroleum is not assessed a foregone sequestration penalty, the cost of taking carbon from well below ground and putting it into the air is essentially free.

A positive discount rate says that future reductions in greenhouse gas emissions are less important to Americans than the present day costs. Since EPA applies the discount to the petroleum baseline, it is in effect saying that Americans will care less and less about reducing greenhouse gas emissions over time if it means that they have to change their driving habits today. In other words, don’t worry, keep using petroleum and be happy.

Second is the assumption that biofuels are causing land conversion around the world and that the land conversion is always and everywhere accomplished by burning the ground cover and immediately releasing massive amounts of carbon. This unfounded and unproven assumption skews the results of the analysis to the point that the application of a highly unfavorable discount rate appears to benefit the industry and draws the wrath of environmental advocates.

But the reaction from O’Donnell and Carroll shows that biofuel opponents will decry any outcome as politics trumping science — unless it’s their politics that trump science.

Comparing Energy Sources

Stanford University Professor Mark Z. Jacobson recently published a new paper in the journal Energy & Environmental Science, “Review of solutions to global warming, air pollution, and energy security.” According to Stanford News Writer Louis Bergeron,

Jacobson has conducted the first quantitative, scientific evaluation of the proposed, major, energy-related solutions by assessing not only their potential for delivering energy for electricity and vehicles, but also their impacts on global warming, human health, energy security, water supply, space requirements, wildlife, water pollution, reliability and sustainability.”

The paper claims to demonstrate that wind and solar power are preferable options to nuclear power and biofuels. Of course, Professor Jacobson makes all the best-case assumptions in favor of wind and solar power and all the worst-case assumptions about biofuels and nuclear power, saying, for example, that there is a limit of 30 percent market share for biofuels but no limit to other technologies. In his words, wind and solar power “could theoretically power the entire US onroad vehicle fleet.” He takes this assumption despite the significant hurdle and cost to consumers of replacing that entire internal combustion fleet with electric vehicles.

The comparison of fuels is skewed, to say the least.

More interesting though is Jacobson’s views on how costs and benefits should be weighed when considering investment in technology to address climate change. His views are relevant to the discussion of discount rates that the EPA is currently considering in its ANPR on Regulating Greenhouse Gas Reductions Under the Clean Air Act and the delayed NOPR on the Renewable Fuel Standard. (See earlier post on the growing debate of discount rates.)

Jacobson offers reasoning that makes a case against the application of a discount rate in the NOPR:

Costs are not examined since policy decisions should be based on the ability of a technology to address a problem rather than costs (e.g., the U.S. Clean Air Act Amendments of 1970 prohibit the use of cost as a basis for determining regulations required to meet air pollution standards) and because costs of new technologies will change over time, particularly as they are used on a large scale. Similarly, costs of existing fossil fuels are generally increasing, making it difficult to estimate the competitiveness of new technologies in the short or long term.”

In other words, the benefits of implementing a technology now should not be discounted because its costs can be expected to fall while oil’s costs rise. Further on, he makes a statement that seemingly belies his analysis that solar and wind for electric vehicles are preferred to biofuels:

The investment in an energy technology with a long time between planning and operation increases carbon dioxide and air pollutant emissions relative to a technology with a short time between planning and operation. This occurs because the delay permits the longer operation of higher-carbon emitting existing power generation, such as natural gas peaker plants or coal-fired power plants, until their replacement occurs. In other words, the delay results in an opportunity cost in terms of climate- and air-pollution-relevant emissions. In the future, the power mix will likely become cleaner; thus, the opportunity-cost emissions will probably decrease over the long term.”

Biofuels are available today and can immediately reduce greenhouse gas emissions from fossil fuels. Solar- and wind-fueled electric vehicles will take time to implement, representing what Jacobson clearly considers an opportunity cost.

According to the EPA’s arguments, a positive discount rate should be applied to greenhouse gas reduction technologies, such as biofuels, because investing in them today represents an opportunity cost to save that money and invest in cleaner technologies at a later date. Further, because there will be only small benefits today compared to increased benefits in the future, their value to the current generation is less.

It will be interesting to see how the incoming Obama administration treats the discount rate issue. Clearly they accept that greenhouse gas emissions are an immediate challenge requiring a variety of technologies, each representing part of the solution. That should say that it is inappropriate to discount the value of any technology that can be implemented immediately.

Yes, Virginia

One of the most strikingly circular arguments put forward to support inclusion of current estimates of indirect land use change emissions in both California’s Low Carbon Fuel Standard and the EPA’s Renewable Fuel Standard Life Cycle Assessment is that these estimates are so large. The University of California Berkeley Letter to EPA from Michael O’Hare et al. and the previous letter to California’s Air Resources Board by the same group (Mark Delucchi et al.) are examples of the argument:

The salience of this requirement lies in the size of current estimates of these indirect emissions: added to typical direct emissions values, they indicate that substituting certain biofuels, especially corn ethanol, for gasoline will actually increase the global warming (GW) intensity of motor fuel, or decrease it so little (depending on how it is calculated) that these biofuels would fail to meet EISA required GHG reductions.”

And again:

The best methods currently available for estimating market-mediated effects are economic models such as partial and general equilibrium models. Several groups are currently employing these models to estimate indirect LUC, and despite considerable uncertainty, none has concluded that zero grams of CO2 per megajoule is the best estimate of the effect. Ignoring an effect that may be large simply because it is uncertain is unjustifiable.”

And once again:

So far no models, in particular no peer-reviewed models, have been advanced that come up with values for iLUC that are significantly lower than those in the Searchinger et al paper.”

So in the spirit of the holiday season, I’d like to offer a similar argument. This year, 2008, will be the 50th anniversary of the North American Aerospace Defense Command’s (NORAD) tradition of tracking Santa’s flight from the North Pole around the world. The tradition began in 1955, but NORAD inherited it in 1958. Fifty-plus years of scientific modeling and measurement of the phenomenon ought to be considered proof positive that Santa Claus exists.

Happy Holidays everyone.

Midnight Rule

The EPA apparently missed the statutory deadline (Dec. 19) to publish the Notice of Proposed Rulemaking for the Renewable Fuel Standard. The Bush administration last summer announced that it would not promulgate new rules during its final 30 days, in order to stay away from “midnight rulemaking.” That self-imposed deadline (Dec. 20) also passed.

The rule is said to be a victim of lobbying on the part of the biofuel industry and environmental groups. Marianne Lavelle, a former reporter with U.S. News & World Report now with The Center for Public Integrity, analyzes the activities of both sides, saying, “In the waning days of the Bush administration, a lobbying frenzy is now underway over the indirect impact this homegrown energy solution may have on land use around the world.” Lavelle reports that the dispute is over how to properly measure the theoretical impact of U.S.-produced biofuels on land use around the world. As she summarizes it, “‘Previous accountings of emissions for biofuels haven’t adequately considered that land is a scarce resource,’ said Jeremy Martin, of the Union of Concerned Scientists, one of the experts who met with OMB.”

According to TIME magazine’s Michael Grunwald, the dispute is over whether the EPA will use a “strong” or a “weak” test: “The EPA is now devising a “life-cycle” test designed to measure whether various biofuels really reduce overall carbon emissions from the field to the tank; the farm lobby is already pushing for a weak test, because a strict one could halt the biofuel revolution.” Grunwald, of course, is already convinced that biofuels are worse for the environment that gasoline. (See earlier post here.)

Grunwald’s article represents the problem with the EPA’s announcement of numerical calculations: neither the industry nor the environmental groups would be willing to accept them as accurate. Many environmental groups would like to convince the American public that biofuels are either worse than gasoline or that the reduction of greenhouse gas emissions is so small that it wouldn’t be worth it. That task might not be very difficult in the current economic climate.

With daily drops in the price of oil, biofuels now are assumed to be unable to compete on price with gasoline. Susan Wilson, a writer at Tech.Blorge, poses the question “Are biofuels still economically feasible?” She writes:

While the abundance of fuel and decrease in gas prices has been a welcome relief to most people in this awful economy, it has also lowered the perceived need for immediate fossil fuel replacements.
“Improving our air quality is a marvelous goal as long as it doesn’t inconvenience people too badly or cost too much. When gas prices were high, switching to cleaner cars and fuels was not only seen as good for the environment but patriotic. Now, it costs too much for people reeling from the collapse of our economy, massive job losses, and uncertainty over what lies ahead.”

If Americans are really wondering why this year’s recession occurred, the first place to look would be the $100-a-barrel swing in oil prices. Perhaps TIME should have considered the barrel of oil for its Man of the Year.

Discounting the Future of Biofuels

It appears that global leaders’ faith in energy technologies that can reduce greenhouse gas emissions compared to oil is waning, particularly for biofuels, as reported in GreenInc. Respondents to the survey, which included 1,000 environmental experts, ranked energy conservation and efficiency technologies as having the greatest potential impact, both short- and long-term.

Some 44 percent of respondents also said they expect that the current economic crisis will hinder progress toward an effective international climate agreement. Katherine Sierra, World Bank Vice President for Sustainable Development, noted, “The development challenge is to accelerate or maintain robust economic growth in poorer countries while also dealing with the impacts of climate change. The financial situation is no justification for postponing action on climate change. Climate change is not waiting, so we cannot wait either.”

These sentiments appear to be relevant to a rather arcane debate about the application of a discount rate to greenhouse gas reductions. The debate over the discount rate may become a more prominent issue, since it is a feature of the EPA’s Advanced Notice of Proposed Rulemaking on Regulating Greenhouse Gas Emissions under the Clean Air Act. It also appears that the EPA would apply a discount rate to greenhouse gas emission reductions in the life cycle assessments of biofuels, under the RFS.

A discount rate is used in cost-benefit analyses as a way to measure current costs against the value of future benefits. In applying the theory to reductions in greenhouse gas emissions, the idea is that the benefits are for future generations and on a worldwide scale, while the costs of deploying reduction technologies are paid by specific individuals today. Further, there is uncertainty about which technologies will provide the greatest benefit and investing in one may come at the expense of investing in others.

Gary Becker, the noted economist and University Professor at the University of Chicago, explains it by saying,

Future generations would be better off if the present generation, instead of investing the $800 billion in greenhouse gas-reducing technologies, invested the same amount in capital that would be available to future generations.
“Common sense also dictates that one recognizes that technologies will be much improved in the future, including technologies related to improving health, income, and the environment. A positive and non-negligible discount rate is the formal way to recognize the importance of these and related considerations.”

But environmentalists have traditionally opposed the use of a discount rate for environmental benefits. Lisa Heinzerling, a law professor at Georgetown University, responded to the use of the discount rate in EPA’s ANPR on her own blog page, saying, “Discounting is a technique used to reflect the idea that events occurring in the future are not as important as events occurring now. By using a fairly low discount rate, EPA avoided the severe trivialization of the future that often attends use of discounting.”

Elsewhere, though, she took issue with the use of any discount rate for environmental benefits:

We have said that the federal government places too low a value on human life; that it devalues the future through discounting; that it fixates on the costs and dismisses the benefits of environmental protection; that it slights the worth of effects that cannot be counted.
“Cost-benefit analysis is a deeply flawed device that has never been the environmentalist’s friend. It impedes rather than aids understanding of the concrete consequences of regulations. It would behoove the next president — and all who value environmental protection — to do more than fiddle around the margins of old debates, and to question whether a decision-making framework that can stare environmental catastrophe in the face and declare it ‘efficient’ is really the best we can do.”

Even proponents of including international land use change calculations in the EPA’s life cycle assessment of biofuels may take issue with the application of a discount rate to the calculation, or at least a high rate. Mark Delucchi is a research scientist at the Institute of Transportation Studies at UC Davis and developer of the Lifecycle Emissions Model. He notes that in the context of indirect land use for biofuels, “the discount rate determines the value of the reversal of the initial change: a zero discount rate gives it a value equal to that of the initial change; a high discount rate gives it no value.” And, “If the discount rate is very large, then we don’t care at all about the future reversion of land use and reversal of the initial change in emissions; we care only about initial change in land use and emissions.” In other words, using the discount rate in this context assumes that the carbon debt attributed to biofuels due to land use change is never paid back, which would be incorrect. Delucchi argues that a positive discount rate applied to the life cycle analysis should be reduced to reach zero over time.

However the debate on discount rate plays out in policies on greenhouse gas reductions and the Renewable Fuel Standard, the theory does seem to reflect the preferences of environmental leaders – that we not use biofuels today but wait for a better technology to come along in the future. The risk for them is that everyone’s faith in the ability to produce clean energy and reduce greenhouse gas emissions will start to fall.