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  • Khosla9.25.07

    1. … mostly convenient truths Vinod Khosla Khosla Ventures September 2007 from a technology optimist
    2. Agenda <ul><li>Why </li></ul><ul><li>Coal/CSP </li></ul><ul><li>Biofuels </li></ul>
    3. Why “ Green ”?
    4. Safe or Not ? Source: IPCC Hurricanes Fires, Floods Extinctions System Losses 600 M Displaced Flooding NY Flooded Catastrophe Planet Crash 450ppm 550ppm 650ppm
    5. Arctic Meltdown 24 Years Later
    6. Roger Braithwaite, University of Manchester Greenland Meltdown
    7. Increasing Melt Area on Greenland All melt records were exceeded in 2005. Waleed Abdalati, Goddard Space Flight Center Greenland Meltdown
    8. Greenland Takes Out FL, NJ, NYC Greenland is 22 Feet of Ocean Height
    9. East Coast Underwater
    10. Louisiana: 20’ Water Rise
    11. Florida: 20’ Water Rise
    12. Which Florida do we want? Modern Florida Greenland Ice Sheet Melts West Antarctic Ice Sheet Melts East Antarctic Ice Sheet Melts
    13. Florida: 2007 vs. 2107 With a 5 meter rise in sea levels… Source: New Scientist, Jeremy Price and Jonathon Overpeck, University of Arizona
    14. 2004
    15. 2005
    16. It’s Happening Now <ul><li>Within Our Lifetimes </li></ul><ul><li>RUNAWAY Within Our Kids’ Lifetimes </li></ul><ul><li>Models appear too conservative </li></ul>NASA NOAA SSEC
    17. IPCC
    18. <ul><li>Fox News, 2/2007 poll suggests that 82% of Americans believe global warming is real (74% of Republicans and 91% of Democrats) </li></ul><ul><li>CNN, 1/2007 : 75% responded in favor of increased regulation and restrictions on cars/power plants/factories “to reduce the effect of global warming” </li></ul><ul><li>WSJ 1/2007 poll offered 5 choices – immediate action, some action, more research, concern unwarranted, and unsure – 64% were in favor of some action (up from 51% in 1999), and only 8% responded that concern was unwarranted </li></ul>Public Opinion … public opinion favors action
    19. <ul><li>A GAO report notes that “Using computer-based catastrophe models, many major private insurers are incorporating some near-term elements of climate change into their risk management practices. One consequence is that, as these insurers seek to limit their own catastrophic risk exposure, they are transferring some of it to policyholders and to the public sector.” </li></ul><ul><li>“ Climate Change May Increase Losses by Altering the Frequency or Severity of Weather-Related Events” </li></ul><ul><li>“ Insured Weather- Related Losses Have Been Sizeable, and Federal Insurers’ Exposure Has Grown Significantly” </li></ul><ul><li>“ Claims Paid on Weather- Related Losses Totaled More Than $320 Billion between 1980 and 2005” </li></ul>Climate Change Changing Insurance Models Insurers are insuring themselves! Shouldn’t you?
    20. <ul><li>A 2006 DOE report notes that wind can generate electricity at 5.58 cents per KW/hr, as opposed to 5.25, 5.31, and 5.93 (for natural gas, coal, and nuclear respectively) – without taking environmental impact into account </li></ul><ul><li>CSP can generate electricity at 9-12 cents per KW/hr right now without subsidies! </li></ul><ul><li>A recent study by the California Biomass Collaborative (government/industry group) noted that there are 80M tons of plant material (in CA) that could be diverted to biomass use – 30M are “practically available”, and could be converted to 2,500 MW of electricity (equivalent to 5 natural gas plants, and 1.3 billion galls of transportation fuels) </li></ul><ul><li>The chief economist of the US DOA estimates ethanol can be produces for $1.60 per gallon today </li></ul>“ The New Math Of Alternative Energy” WSJ, Feb 12, 2007 … economics of “ green ” are changing? and Change = Opportunity
    21. Our Current Course 450 ppm CO 2 Biosphere
    22. Defeatism or Action ? We insure our homes Why not our planet?
    23. Good News Assertions <ul><li>Technical solutions exist </li></ul><ul><ul><ul><li>Oil Replacement </li></ul></ul></ul><ul><ul><ul><li>Coal Power replacement </li></ul></ul></ul><ul><li>Laser Focus: Scaling & Economics </li></ul><ul><ul><ul><li>Feedstock scale </li></ul></ul></ul><ul><ul><ul><li>Proof for capital markets </li></ul></ul></ul><ul><li>Policy not Technology Problem </li></ul>
    24. <ul><li>“ First they ignore you, then they laugh at you, then they fight you, then you win.” </li></ul><ul><li>Mahatma Gandhi </li></ul>We are here
    25. Often what the Majority Believes is Wrong! <ul><li>PR campaigns from “interested parties” </li></ul><ul><ul><ul><li>Hybrids vs. corn ethanol (Toyota vs. API) </li></ul></ul></ul><ul><ul><ul><li>IGCC+CCS vs. Solar Thermal </li></ul></ul></ul><ul><ul><ul><li>Ethanol Myths </li></ul></ul></ul><ul><li>Environmentalists vs. Pragmentalists </li></ul><ul><ul><ul><li>Scheer Nonsense: too much of a good thing is bad </li></ul></ul></ul><ul><ul><ul><li>Biodiesel: land efficiency & economic sustainability </li></ul></ul></ul><ul><ul><ul><li>PUG Power: Wind & Solar Photovoltaics </li></ul></ul></ul>
    26. Conventional Wisdom is Wrong <ul><li>Oil Dependence </li></ul><ul><ul><ul><li>Food vs Fuel </li></ul></ul></ul><ul><ul><ul><li>CAFÉ is costly </li></ul></ul></ul><ul><li>Electric Power : Coal is the only option </li></ul><ul><li>Green means Lower Economic Growth </li></ul><ul><ul><ul><li>Higher cost than fossil </li></ul></ul></ul><ul><ul><ul><li>Lower economic growth, fewer jobs </li></ul></ul></ul>
    27. Un-Conventional Wisdom <ul><li>Oil: Replaceable with cheaper alternatives </li></ul><ul><li>Coal: Uneconomic risk adjusted bet </li></ul><ul><li>Efficiency: Need business models </li></ul><ul><li>Lower Cost, More Jobs, More Googles </li></ul>
    28. Scale of Resistance <ul><li>Saudi Arabia: $1 trillion for each $4bbl </li></ul><ul><li>Exxon, Chevron, Shell, BP… </li></ul><ul><li>Coal: Peabody </li></ul>
    29. Cardinal Rules <ul><li>Land efficiency! </li></ul><ul><li>Cost (plug-ins, hydrogen) </li></ul><ul><li>Pragmatics: PUG power vs Greenies </li></ul><ul><li>Regulation permanent & Subsidies transient </li></ul><ul><li>Economics & Capital Formation: Business </li></ul>
    30. Renewable Energy USA! Source: NREL, USDA, NRCS, EIA West, SouthWest have solar… Texas has wind & solar … Southeast has biomass! Rockies have geothermal! Midwest has corn/wheat belt!
    31. Regional Co-operation! Source: NREL, USDA, NRCS, EIA Solar Wind Biomass Geothermal We need a power grid from California to Florida
    32. Which Gamble ? <ul><li>… . higher startup costs, lower eventual costs? </li></ul><ul><li>… . more jobs, more Googles or more of the same? </li></ul><ul><li>… . competition for energy or safe oil monopoly? </li></ul><ul><li>… . lower power costs or lower healthcare costs? </li></ul><ul><li>… . planet insurance or catastropic relocations? </li></ul><ul><li>… . terrorism avoidance or military expenses? </li></ul><ul><li>… . energy insurance or Mideast dependence? </li></ul>
    33. What Can We Do? <ul><li>“ Top Down” Policy </li></ul><ul><ul><ul><li>State cap & trade (CA AB32) </li></ul></ul></ul><ul><ul><ul><li>Low Carbon Fuel & Power Standards </li></ul></ul></ul><ul><li>Promote Biofuels & E85 </li></ul><ul><ul><ul><li>Pumps “volume” mandate & FFV car mandate </li></ul></ul></ul><ul><ul><ul><li>Cellulosic RFS: “all you can supply at reasonable cost” </li></ul></ul></ul><ul><ul><ul><li>Feedstock: “million ton biomass centers” </li></ul></ul></ul><ul><li>Renewable Power </li></ul><ul><ul><ul><li>Regional Transmission : renewables first transmission </li></ul></ul></ul><ul><ul><ul><li>RPS or Feed-in tariffs </li></ul></ul></ul><ul><ul><ul><li>Health, Carbon & other costs </li></ul></ul></ul><ul><li>Regional Collaboration </li></ul>
    34. Societal Cost of Hydrocarbons <ul><li>US Related Data: </li></ul><ul><li>Air, water, and soil pollution from electric generation cost $14.8-90.3 billion – each year! </li></ul><ul><li>1 gallon of spilled oil can contaminate 1 million gallons of water! </li></ul><ul><li>Oil pollution from automobiles causes $4.6 billion in damages to crops, rivers, forests, lakes etc </li></ul>Source: Coghill Capital Management
    35. <ul><li>Military Costs: </li></ul><ul><li>Strategic Military Bases ($49bn) </li></ul><ul><li>Oil and Gas supply route security ($20bn) </li></ul><ul><li>Strategic Petroleum Reserves ($30bn) </li></ul><ul><li>Iraq ($1 trillion! – or $275mn per day!) </li></ul>Source: Coghill Capital Management Societal Cost of Hydrocarbons (Continued)
    36. <ul><li>Health Costs: </li></ul><ul><li>760,000 Chinese die each year due to air and water pollution ($99bn)! </li></ul><ul><li>Lung disease and asthma caused by pollution ($16.1bn)! </li></ul><ul><li>Lead, Mercury, and Arsenic poisoning from coal plants is linked to mental retardation, learning disabilities, premature mortality, and to some autism cases ($88-640bn) </li></ul>Source: Coghill Capital Management Societal Cost of Hydrocarbons (Continued)
    37. What Are Fossil Fuels’ Externalities? Source: Coghill Capital Management High Medium Low Fossil Fuel Costs (Billions $USD) $640.30 $365.00 $88.10 Total Fossil Fuel Costs $450.00 $237.00 $24.03 Healthcare Treatment and Mortality from Pollution $93.30 $53.00 $14.80 Environmental Monitoring and Clean Up $100.00 $75.00 $49.00 Military Base and Supply Route Security
    38. What Are Fossil Fuels’ Externalities? (continued) <ul><li>Mid-Range societal cost increases (generation costs only – no distribution or retail included) </li></ul><ul><li>Coal fired electric generation goes from $0.026/kWh to $0.0714/kWh </li></ul><ul><li>Natural gas electric generation goes from $0.0615/kWh to $0.0851kWh </li></ul><ul><li>Regular gallon of unleaded gasoline goes from $3.46 to $5.01 per gallon </li></ul>Source: Coghill Capital Management Natural Gas (mmcf) Crude Oil (Barrel) Coal (Short ton) The Effect on Consumers $6.80 $60 $20.49 2006 Ave. Cost $2.74 $26.68 $93.83 Mid-Societal Cost $9.54 $86.68 $114.32 Total Cost/ Unit $0.0235 c/kWh $1.54 per gallon $0.0454 c/kWh Consumer Increase
    39. … or get to work
    40. a renewable universe …
    41. Khosla’s “ solutions ” Rules <ul><li>Attack manageable but material problems </li></ul><ul><li>Technologies that can achieve unsubsidized market competitiveness in 5-7 years </li></ul><ul><li>Technologies that scale - If it isn’t cheaper it doesn’t scale </li></ul><ul><li>Technologies that have manageable startup costs and short innovation cycles </li></ul><ul><li>Technologies that have declining cost with scale – trajectory matters </li></ul>
    42. Mascoma Verenium Range Coskata Altra Cilion Hawaii Bio Ethos Tools Solar Natural Gas Mechanical Efficiency Electrical Efficiency Cellulosic Future Fuels Plastics Water Materials Nanostellar Codon Praj Quos NanoH2o Segetis eChromics Calera Stion Ausra Altarock Infinia Coal Efficiency Oil Transonic Streamline Living Homes GIV Seeo Newco1 Great Point Energy Corn/ Sugar Fuels Wind Building Materials Geothermal LS9 Gevo Amyris LanzaTech Khosla Ventures Renewable Portfolio
    43. Corn/Sugar Fuels: <ul><li>Altra: Altra intends to become an integrated biofuels company in the U.S., producing ethanol and biodiesel from a variety of feedstocks </li></ul><ul><li>Cilion: Cilion is building destination ethanol plants, promising to be the cheapest and greenest ethanol from initially corn and incorporating cellulosic technologies as they come online. </li></ul><ul><li>Hawaii Bio: Hawai‘i Bioenergy’s mission is to determine the feasibility and viability of locating and operating integrated ethanol bio-refinery plants in the Hawaiian Islands. </li></ul><ul><li>Ethos: Ethos is developing sugar cane and cellulosic biofuels in Latin America (excluding Brazil). </li></ul>
    44. Cellulosic Fuels: <ul><li>Range Fuels: Range is building the first commercial cellulosic ethanol plant in the US using a proprietary anaerobic conversion and heterogeneous catalyst technology. </li></ul><ul><li>Mascoma: Mascoma Corporation is leading the development of proprietary bioprocess technologies for cost-effective conversion of cellulosic biomass to ethanol, drastically reducing the need for external enzymes. </li></ul><ul><li>Coskata: Coskata is commercializing a fermentation technology for the production of fuel-grade ethanol from syngas. </li></ul><ul><li>Verenium: Verenium is a developer of biofuels derived from low-cost, abundant biomass and the developer of specialty enzyme products. </li></ul>
    45. Future Fuels: <ul><li>LS9 : LS9, Inc., the Renewable Petroleum Company TM , is combining synthetic biology and cellulosic feedstocks to make petroleum replacements from bacteria using fermentation. </li></ul><ul><li>Gevo : Gevo is developing technologies for the bacterial production of biobutanol from sugars and cellulose. </li></ul><ul><li>Amyris : Amyris Biotechnologies is translating the promise of synthetic biology into industrial production of fermentation diesel and higher alcohols from sugars and cellulose. </li></ul><ul><li>Lanzatech : LanzaTech is developing a proprietary fermentation technology to convert industrial flue gas from steel mills as a resource for biofuels production. </li></ul>
    46. Efficiency: <ul><li>Transonic: Transonic is using proprietary fuel injection technology to increase the efficiency of gasoline engines. </li></ul><ul><li>Streamline : Streamline is an engineering research and development firm using fluid dynamics modeled on natural systems to improve efficiency. </li></ul><ul><li>Living Homes: Living Homes builds greener, cheaper, LEEDS qualified homes using a modular system. </li></ul><ul><li>Group IV Semiconductor: Group IV Semiconductor is an experiment in solid state lighting. </li></ul><ul><li>Seeo: Seeo, an early stage company is developing polymers that allow them to develop batteries with high energy density and high cyclability. </li></ul>
    47. Solar/Wind/Geothermal/Natural Gas: <ul><li>Ausra: Ausra is developing Concentrating Solar Power (CSP) power stations, which uses the heat of the sun to drive steam turbine power stations, and produce renewable power at low cost. </li></ul><ul><li>Altarock: Altarock develops and commercializes enhanced geothermal technology (EGS) for producing 100% clean, renewable baseload power. </li></ul><ul><li>Stion: Stion is a 4 th generation photovoltaic company developing high-efficiency, low cost thin-film modules. </li></ul><ul><li>Great Point Energy: GreatPoint Energy is commercializing a process for converting coal and biomass into high value clean, pipeline quality natural gas. </li></ul><ul><li>Infinia: Infinia is developing proprietary stirling-engine technology for concentrated solar power and other applications. </li></ul>
    48. Tools: <ul><li>Nanostellar: Nanostellar's Rational Catalyst Design methodology unites two disciplines – computational nano-science and advanced synthetic chemistry – to speed the pace of development for nanoscaled catalytic materials for diesel emissions control. </li></ul><ul><li>Codon Devices: Codon Devices is focused on enabling commercial applications of synthetic biology. </li></ul><ul><li>Praj: PRAJ, a public company based in India, has built over 300 plants in 30 countries and has global scale execution capability. It is working to provide technology and design engineering for ethanol plants across the world. </li></ul>
    49. Water: <ul><li>Quos: Quos is developing a proprietary process for water desalinization which shows many advantages over reverse osmosis. </li></ul><ul><li>NanoH20: NanoH20 is developing proprietary membranes for existing reverse osmosis desalination plants which will increase flow and reduce energy usage while reducing the cost of water. </li></ul>
    50. Materials: <ul><li>eChromics: eChromics is developing a new, switchable electrochromic glass technology that will be utilized for highly energy efficient windows. </li></ul><ul><li>Calera: Calera is developing new, environmentally-friendlier cement for use in construction. </li></ul><ul><li>Segetis: Segetis is developing a variety of bio-based plastics using renewable agricultural and forestry feedstocks. </li></ul>
    51. Solar Flare ? Coal Clampdown ?
    52. Electricity = biggest and fastest growing carbon problem IEA WEO 2004 Courtesy Steve Koonin, BP 1971 2002 2030
    53. Energy use grows with development <ul><ul><li>Source: UN and DOE EIA </li></ul></ul>US Australia Russia Brazil China India S. Korea Mexico Ireland Greece France UK Japan Malaysia energy demand and GDP per capita (1980-2002) Smallest per capita use, Fastest growing, Largest Population
    54. Demographic Transformations source: United Nations 6.3 billion 8.9 billion Oceania Africa N-America S-America Europe Asia Oceania Africa N-America S-America Europe Asia Largest Segment Population 2003 Population 2050
    55. Annual primary energy demand 1971-2003 <ul><li>Source IEA, 2004 (Exclude biomass) </li></ul>Fastest Growing
    56. Our Current Course 450 ppm CO 2 Biosphere
    57. Solution : Phase Out Coal Biosphere 450 ppm CO 2
    58. Capital Markets & Governments Changing <ul><li>Duke Energy head Paul Anderson has noted that if capital markets believed that limits on carbon emissions were inexorable, and that those who continued to emit would pay for the carbon emissions they put out, that financial priorities would shift even in the absence of any concrete Congressional action. </li></ul><ul><li>The first announcement by the private-equity group taking over TXU was a cancellation of 8 of the 11 planned coal power plants </li></ul><ul><li>Then the State of North Carolina forced Duke power to cancel 50% of its proposed coal expansion at Cliffside. In New Mexico, $85 million in proposed tax breaks for the Desert Rock coal plant were killed. </li></ul><ul><li>An appeals court in Missouri ruled that the State Public service Commission had run roughshod over the public review process to approve a giant coal plant proposed by Kansas City Power and Light, reopening the Sierra Club's legal challenge to the plant </li></ul><ul><li>Fortune reports: “These are troubling times for any company trying to build a coal-fired power plants - and more than 150 of them are being planned across America. Opposition is mounting to coal plants because they contribute to global warming. The plants are getting harder to build because activist groups try to stop them, causing delays that raise operating costs. And investors are paying attention. Federal regulation of carbon emissions, which is being actively considered by Congress, could also make burning coal more expensive.” </li></ul>How much coal and carbon risk will the market bear?
    59. The TXU Story <ul><li>“ TXU, the largest energy provider in Texas, agreed last night to a $45 billion buyout ….. The buyers have promised environmental groups they would cancel a slew of coal-fired power plants on the firm's drawing boards.” </li></ul><ul><li>“ The environmental agreement was the idea of the private-equity firms Texas Pacific Group and Kohlberg Kravis Roberts, which made it a condition of the acquisition” </li></ul><ul><li>“ TXU would back federal legislation that would require reductions in carbon dioxide emissions through a cap-and-trade system. It would shelve plans for eight of 11 coal-fired plants that current TXU executives had proposed for Texas and would drop plans to build new coal plants in Pennsylvania and Virginia. The company would also double its spending to promote energy efficiency, to $80 million a year, for five years.” </li></ul><ul><li>“ The buyout firms also promised to cut TXU's emissions of carbon dioxide, the most prevalent of greenhouse gases scientists blame for global warming, to 1990 levels by 2020. This matches the targets contained in legislation passed last year in California but exceeds anything TXU is obligated to achieve. When the three new coal plants are on line, the company's emissions are projected to be nearly 20 percent higher than they were in 1990.” </li></ul><ul><li>‘ &quot;Anyone doing an energy investment in today's situation has got to be sensitive of the change in the attitudes of the culture and the change in the attitudes of the country, and particularly the attitudes of Congress,&quot; said a person involved in the negotiations who spoke on condition of anonymity because the deal had not yet been announced.’ </li></ul><ul><li>“ But there are financial advantages to the environmental agreement, as well. When they acquire companies, private-equity firms typically try to cut costs rather than expand operations. TXU had estimated that the ambitious coal plant expansion would cost at least $10 billion; others suggested that with soaring construction costs, the ultimate price tag could be much higher.” </li></ul>Washington Post – Feb 26, 2007 Today’s unthinkable or tomorrow’s conventional wisdom?
    60. Coal: Ready for Updating…
    61. PUG Power (utility grade power) <ul><li>Cost Effective in $/kwhr </li></ul><ul><li>Reliable power : high uptime & predictable…not just when wind is blowing </li></ul><ul><li>Dispatchable power : available when customers demand power </li></ul><ul><li>Peak & Base load power : base power at base price; peak load power at peak price (12pm-8pm); no power at low load (12am-6am?) </li></ul><ul><li>Capacity factor : (ideally 60%); predictable operation time daily </li></ul>
    62. … alternatives? <ul><li>… photovoltaic : expensive & not dispatchable </li></ul><ul><li>… wind : not utility grade </li></ul><ul><li>… geothermal : not enough hydrothermal (EGS?) </li></ul><ul><li>… nuclear : who will bear risk? </li></ul><ul><li>… clean coal : far away & too uncertain </li></ul><ul><ul><ul><ul><li>Where should Duke Energy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>commit $10b in 2007-08? </li></ul></ul></ul></ul>
    63. Standard and Poor’s Assessment Source: Jim Harding Capital Costs: Costs of constructing the plant Direct Generation Cost: Costs of generating electricity Cost W/CCS: Direct Generation Cost + cost of Carbon Capture and Storage – total cost of electricity generation with CCS Cost w/ CO2 Credits ($10-$30 per ton): Direct Generation Cost + cost of CO2 credits - – total cost of electricity generation with Carbon Credits CCS vs. Carbon Credits Cost w/CO2 Credits ($10-$30 per ton) Cost W/CCS (cents/kWh) Direct Generation Cost (cents/kWh) Capital Cost ($/kW) 6.2-7.9 12.0 5.8 2438 Pulverized Coal 7-7.7 9.6 6.8 700 Gas (CCCT) 7.1-8.7 10.2 6.8 2795 Eastern IGCC 7.1 7.1 7.1 1700 Wind 8.9-9.8 8.9-9.8 8.9 4000 Nuclear
    64. Photovoltaic Solar <ul><li>Expensive but declining </li></ul><ul><li>Available when sun shines </li></ul><ul><ul><ul><li>(not “dispatchable” for utility needs) </li></ul></ul></ul><ul><li>Cost $.20-40kwh </li></ul><ul><ul><ul><li>(2-4x more expensive than coal) </li></ul></ul></ul><ul><li>Economical as Distributed Power Today </li></ul>
    65. Nuclear Plants Are Expensive! Koomey, Jonathan, and Nate Hultman. 2007. “A Reactor-Level Analysis of Busbar Costs for US nuclear plants,” 1970-2005, forthcoming in Energy Policy Source: Jim Harding
    66. Wind Doesn’t Match Utility Demand Utilities want to buy power when customers need it Not when the wind blows or the sun shines! Stored power is key to increasing value of wind kwh Wind Random vs. Load Lots of power at 2am Lots of Daily Variability (30%+)
    67. Untrustworthy Predictions: Natural Gas AEO projected natural gas prices versus actual wellhead prices Source: Lawrence Berkeley National Laboratory 2006
    68. US Electric Power: Coal Is Back Natural Gas Price “ As natural-gas supplies and prices have become a problem, the power industry is shifting to coal in a big way, with plans to build more than 100 coal-fired power plants in coming years at a potential cost of more than $100 billion” As Utilities Seek More Coal, Railroads Struggle to Deliver “ Wall Street Journal - March 15, 2006
    69. Coal Prices Peak 1975: $50.92 2005: $21.51
    70. Coal Issues <ul><li>Availability </li></ul><ul><li>Cost </li></ul><ul><li>Transportation </li></ul><ul><li>Emissions Costs </li></ul>
    71. PRB Coal Supply Bottlenecks Exist (Star Tribune 1/16/2006) <ul><li>“ Compliance Coal” price 2004 - $5/ton; $7/ton 2005; $22/ton “spot price” in 2006 plus “emission adder” </li></ul><ul><li>Emission credit price $1600/t </li></ul><ul><li>Utilities signing $25/t contracts for PRB Coal </li></ul><ul><li>US EPA CAIR rules (Aug 2005) restricts SO2 in 28 states </li></ul><ul><li>Plant modifications costs are rising </li></ul>
    72. Coal Transport <ul><li>70% of railroad traffic is coal </li></ul><ul><li>Coal Rail Problems cost $3B in 2005 </li></ul><ul><li>Spot price doubled </li></ul>Wall Street Journal 3/15/2006 As Utilities Seek More Coal, Railroads Struggle to Deliver Testimony of David Wilks, President Energy Supply Xcel Energy, Senate Committee on Energy and Natural Resources, 5/25/2006
    73. Coal Transportation Erratic (WSJ, Mar 15, 2006) <ul><li>“ as contracts expire …. utilities are forced to pay 20-100% more” </li></ul><ul><li>“ railroads have put the electric industry… in a potential crisis situation ” </li></ul><ul><li>Arkansas Electric costs up 21% because of coal delivery </li></ul><ul><li>Congress to hold hearings on coal delivery </li></ul>Should we transport coal or power? Ethanol or coal?
    74. Coal - transport <ul><li>Nearly ½ of railroad use to transport coal </li></ul><ul><li>150 new coal plants (proposed) would equal line of 10-ton coal trucks circling the Earth 3 times each year </li></ul>
    75. Carbon Pricing Hurts Coal <ul><li>One ton of coal produces 3 tons of Carbon Dioxide </li></ul><ul><li>Effective cost of coal = 3-6 X greater </li></ul>Steve Clemmer, Union of Concerned Scientists, “Gambling with Coal”, 9/06
    76. Coal Risks: Coal plant costs have continued to rise! (NPR, Jan 17, 2007) <ul><ul><ul><li>Westar Energy VP: When we started the process, an 800 megawatt coal plant cost approximately $1 billion… today, the cost is closer to $1.4 billion </li></ul></ul></ul><ul><ul><ul><li>Westar VP “That’s a very rapid run-up in the cost of building a new coal plant” ( 40% in 18 months ) </li></ul></ul></ul><ul><ul><ul><li>Black and Veatch is advising clients to assume there will be an additional cost associated with Carbon emissions – to build now without considering the future would be a “risky proposition” </li></ul></ul></ul>
    77. Plant Costs Continue to Rise! <ul><li>“ the price of a coal-fired power plant has risen 25 percent to 30 percent.” </li></ul>Source: NY Times
    78. Coal Capital Costs
    79. Projections Are More Conservative Than Reality Source: Projections – Black and Veatch, Cost estimates from UCS, NyTimes, Other news sources $2,333 Cancelled Kansas (Westar) - PC $3,000 Approval granted in 2007 Cliffside (Duke Energy) – PC $3,500+ Commence ops in 2012 West Virginia (AEP)– IGCC $3,593 Review on hold Mesaba (Excelsior) – IGCC $2,168 Construction starts mid-2008 Big Stone II, South Dakota (Otter) - PC $2,500 Springfield, IL - PC 2,840 2020 B&V Projected - Coal - IGCC 2,750 2005 B&V Projected - Coal - IGCC 2,840 2010 B&V Projected - Coal - IGCC 2,240 2020 B&V Projected - New Coal (SC) $6,000+ Commence ops in 2012 at earliest FutureGen – near zero emission demonstration plant 2,180 2010 B&V Projected - New Coal (SC) 2,120 2005 B&V Projected - New Coal (SC) Capital Cost ($/kW) – 2006$ Install Date Type
    80. Is Carbon (CO 2 ) risk being ignored?
    81. Implications of Carbon Costs Source:
    82. What is the cost of future CO 2 limits in the US? Source: Synapse Energy Economics, Climate Change and Power: Carbon Dioxide Emissions Costs and Electricity Resource Planning , May 2006.
    83. Carbon Dioxide prices Pulverized Coal Uneconomic Source: EIA, “NEMS EMM Factors for AEO06,” spreadsheet, 2006, and Synapse, 2006. The costs are representative of a new coal plant built in the Midwest in 2015. High $30/t, $77/mwh Mid $19/t, $66/mwh Low $8/t, $55/mwh 20 40 60 80 100 10 20 30 40 50 Cost of CO2 ($/ton) Levelized Cost $/mwh
    84. Is coal an effective way to avoid carbon? a sample projection Assume 85% capacity factor for all technologies. Source: : “IGCC: Next Step on the Path to Gasification-Based Energy from Coal,” Robert H. Williams, 2004. Cost estimates similar to estimates in “The Cost of Carbon Capture,” by Jeremy David and Howard Herzog (2000) and “Evaluation of Fossil Fuel Power Plants with CO_2 Recovery,” NETL (2002). Compilation: Sylvia Smullin
    85. The Cost of CCS <ul><li>“ When CO2 capture is considered, the cost of electricity produced by IGCC would be increased by 30 to 50% over that of supercritical PC without capture, or 25 to 40% over that of IGCC without capture (Table 3.7). However, for supercritical PC with CO2 capture, the cost of electricity is expected to increase by 60 to 85% over the cost for supercritical PC without capture.” </li></ul><ul><li>“ Coal plants will not be cheap to retrofit for CO2 capture. Our analysis confirms that the cost to retrofit an air-driven SCPC plant for significant CO2 capture, say 90%, will be greater than the cost to retrofit an IGCC plant.” </li></ul>Source: MIT Study -
    86. The Problems with CCS <ul><li>The “Wedge Theory” from Princeton professors Stephen Pacala and Robert Socolow suggests that burrying 1b tons of Carbon by 2050 could provide approximately 1/7 th of the total emissions we need in the period </li></ul><ul><li>1B Tons of Carbon = 3.6B Tons of CO 2 (greater than 2X the total CO 2 emissions from coal plants today) </li></ul><ul><li>“ Lynn Orr, a petroleum engineer who directs the Global Climate and Energy Project at Stanford University, estimates that to store a billion tons of carbon underground, the total inflow of CO2 would be roughly equal to the total outflow of oil and gas today.” </li></ul><ul><li>“ A new study from MIT estimates that deploying carbon capture and storage will raise the wholesale price of electricity from new coal plants by 50 percent (this may be a conservative estimate--other studies have put the price nearly twice as high ).” </li></ul><ul><li>“ It would cost $4 billion to eliminate the carbon dioxide generated by power plants in the Carolinas ” (The News Observer, March 27, 2007) </li></ul>If we can’t sequestrate carbon where it is produced, how for do we transport? Carbon volume = oil volume!
    87. The Problems with CCS … <ul><li>The Australian program “Catalyst” had an apt description of what liquefaction and subsequent sequestration means: </li></ul><ul><li>“ Well this drum holds 200 liters. Imagine a pile of these drums that runs for 10 kilometers that way, 5 kilometers that way, and stacks up 10 drums high. More than 1300 million of them. That’s how much CO2 pours out of our 24 coal power stations. Not every year, that’s just in one day. Now the gas has to be compressed into a liquid to inject it underground. But even that leaves a huge volume to process. It squashes down into a lake of drums 1 kilometre square. And remember, that’s’ every day.” </li></ul>
    88. No Sequestration in the Carolinas <ul><li>A US DOE report found that certain areas of the US where coal is produced (such as the Carolinas) “lack the proper geology to trap the gas” </li></ul><ul><li>Instead, they require the construction of a pipeline network to transport the gas all the way to Kentucky, West Virginia, and other offshore sites. The cost of this network (for just the Carolina plants) is roughly $4 billion, on top of all the other costs associated with sequestration. The problem this poses is significant – even if we could overcome the higher costs and still-large carbon emissions associated with many coal plants, the geographies of some of the nation’s largest coal-producing regions makes sequestration an unlikely possibility. </li></ul>If we can’t sequestrate coal where it is produced, how much space do we really need?
    89. The Problems with CCS (Safety) <ul><li>Carbon leakage remains a potential problem </li></ul><ul><li>“ Even tiny leaks undermine the value of burying carbon; some experts estimate that an annual leakage rate of 1 percent could add $850 billion per year to overall costs by 2095.” </li></ul><ul><li>Who bears the liability for CO 2 leakage into the atmosphere? </li></ul>Who bears the liability!
    90. IGCC+CCS= Risk, risk & more risk! <ul><li>Cost of IGCC & PC plant construction </li></ul><ul><li>Technology risk </li></ul><ul><li>PC & IGCC: Cost of coal & pollution regulations </li></ul><ul><ul><ul><li>Coast of coal </li></ul></ul></ul><ul><ul><ul><li>Cost of transportation </li></ul></ul></ul><ul><ul><ul><li>Cost of carbon dioxide </li></ul></ul></ul><ul><li>IGCC+CCS </li></ul><ul><ul><ul><li>Cost of transporting liquid/high pressure carbon dioxide </li></ul></ul></ul><ul><ul><ul><li>Cost of sequestration </li></ul></ul></ul><ul><ul><ul><li>Who will provide insurance against release? </li></ul></ul></ul><ul><li>Coal Externalities </li></ul><ul><ul><ul><li>health care liability </li></ul></ul></ul><ul><ul><ul><li>Sludge & mercury liability </li></ul></ul></ul><ul><ul><ul><li>Carbon dioxide liability (per Supreme court decision) </li></ul></ul></ul>
    91. Who wants to be a millionaire? Knowing each plant =600,000 cars of liability (Starting with $150 billion) Whose $150 billion?
    92. COAL = FAST FOOD <ul><li>CHEAP, PLENTIFUL, ACCESSIBLE </li></ul><ul><ul><li>It provides about 50% of the electricity in the US </li></ul></ul><ul><ul><li>The vast majority of reserves are mined within the US </li></ul></ul><ul><ul><li>Has the potential to supply our electrical needs for at least 100 years (though the number may vary) </li></ul></ul><ul><li>HAZARDOUS TO HEALTH </li></ul><ul><ul><li>Significant environmental problems </li></ul></ul><ul><ul><li>Damage to land from mining, water from various sources (acid runoff, heavy metals), and air (single largest contributor to greenhouse gas emissions) </li></ul></ul>
    93. We’re using the atmosphere as our sewer
    94. The Face (Externalities?) of Coal Source: “ Concentrated Solar Power Potential in China”, Deepak Boggavarapu PhD China GDP growth = China environmental damage? & health care costs?
    95. Environmental impacts of coal power: pollution <ul><li>Typical Coal Plant: </li></ul><ul><ul><li>3,700,000 tons of Carbon Dioxide </li></ul></ul><ul><ul><li>10,200 tons of nitrogen oxide (NOx), </li></ul></ul><ul><ul><li>10,000 tons of sulfur dioxide </li></ul></ul><ul><ul><li>720 tons of carbon monoxide </li></ul></ul><ul><ul><li>220 tons of hydrocarbons, volatile organic compounds (VOC) </li></ul></ul><ul><ul><li>225 pounds of arsenic </li></ul></ul><ul><ul><li>170 pounds of mercury </li></ul></ul><ul><ul><li>114 pounds of lead </li></ul></ul><ul><ul><li>Up to 2.6 tons of uranium and 6.4 tons of thorium </li></ul></ul>
    96. The Effects of Coal: Raw Numbers <ul><li>Typical 500-MW coal plant: more than 125,000 tons of ash and 193,000 tons of sludge </li></ul><ul><li>Toxic waste -- including arsenic, mercury, chromium, and cadmium </li></ul><ul><li>A 1,000 MW coal-fired plant : 5.2 tons of per year of Uranium and 12.8 tons per year of Thorium </li></ul><ul><li>3X as much sludge as all municipal waste in US </li></ul>Source: ORNL, UCS Coal is an environmental menace!
    97. Air pollution from power plants causes health problems : <ul><li>Coal pollution can cause and exacerbate heart disease , lung cancer , and other respiratory ailments </li></ul><ul><li>Average of 14 years-lost for those who die prematurely from exposure to particulates </li></ul><ul><li>Power plant pollution is the cause of 38,200 non-fatal heart attacks and over 24,000 premature deaths in the US each year </li></ul>Source: Clean Air Task Force, June 2004. … the next asbestos? … the Supreme Court ruled carbon dioxide a pollutant
    98. Air pollution from power plants causes deaths Source: Clean Air Task Force, June 2004. Deaths per 100,000 adults range from <1 (blue) to >30 (pink) … guess where all the coal power plants are?
    99. Health Costs of Pollution from Power Plants Source: Robert H. Williams, 2004. “ Pulverized coal” plant incurs high health costs Mean cost for 2004 BACT coal = 2.3 cent/kWh. This means that coal-generated electricity in the US annually incurs $46 bill in health costs
    100. Coal’s World is Changing <ul><li>7 of 12 utilities considered carbon risk </li></ul><ul><li>10 of 12 plans will consider in next round </li></ul><ul><li>Calif. PUC requires utilities to include “adder </li></ul><ul><ul><ul><li>Initially $8 /ton </li></ul></ul></ul><ul><ul><ul><li>+5% per year ($27/ton by 2030) </li></ul></ul></ul>Source: Union of Concerned Scientists
    101. Growing support for Regulation <ul><li>Six of nation’s top 10 power companies support federal CO 2 cap-and-trade legislation </li></ul><ul><li>2004 Survey: 50% of power executives expected CO 2 laws within 5 years </li></ul><ul><li>CO 2 limit support: Wal-Mart, GE, Ford, Google, PG&E </li></ul><ul><li>US Climate Action Partnership: “as quickly as possible” </li></ul><ul><ul><li>seeks 10-30% emission cuts within 15 years and 60-80% by 2050 </li></ul></ul>Emissions regulation is an inevitability!
    102. “ Nobody in their right mind should be building a coal plant” <ul><li>&quot;It's the definition of financial insanity to invest in a new coal plant,&quot; agrees Marc Brammer, head of research for consulting firm Innovest Strategic Value Advisors. </li></ul><ul><li>&quot;It's very likely the investment decisions many are making, to build long-lived high-carbon-dioxide-emitting power plants, are decisions we'll all live to regret,&quot; warns Vice-President Gary Serio of Entergy Corp. (ETR ), which owns several coal plants. </li></ul><ul><li>Those companies &quot;could be really jeopardizing their stockholders' investment,&quot; warns one utility executive. </li></ul><ul><li>“ Sue us so I can do my job,” pleaded a high-ranking EPA official . “My boss doesn’t believe that enforcing the Clean Air Act is a priority,” </li></ul>Source: Business Week Coal Plants are not economically logical given the risks!
    103. Coal An Expensive Mistake! Florida Capitol News, April 18, 2007 <ul><li>“ The power company could face between $120 million and $400 million in annual penalties for emitting carbon dioxide under a raft of proposals floating through Congress that are aimed at combating global warming, said David Schlissel, a senior consultant for Synapse Energy and Economics.” </li></ul><ul><li>‘ ''It's prudent to expect that a policy to regulate climate change will be put into effect in a way that should concern utilities that are building coal power plants,'' Schlissel said.’ </li></ul>Coal investments are dangerous bets!
    104. Pressure from Investors <ul><li>Investor Network on Climate Risk </li></ul><ul><ul><ul><li>manages $3 trillion in assets </li></ul></ul></ul><ul><ul><ul><li>5 times bigger than in 2003 </li></ul></ul></ul><ul><li>Carbon Disclosure Project (international) </li></ul><ul><ul><ul><li>manages $31 trillion in assets </li></ul></ul></ul><ul><li>Major banks firms analyzing CO 2 risk, trying to reduce exposure </li></ul><ul><li>Banks under pressure to avoid financing new coal plants </li></ul>
    105. Shareholders versus ratepayers <ul><li>Two lines of case law suggest shareholders should bear risk for investment mistakes </li></ul><ul><ul><li>Prudent investment: was the decision to invest -- and to keep investing when circumstances changed -- prudent when made? If not, no rate recovery </li></ul></ul><ul><ul><li>Shared costs: even if the decision was prudent, shareholders should bear some of the costs of the unsuccessful investment </li></ul></ul><ul><li>Focus on creating ongoing incentive to reevaluate investment decision </li></ul>
    106. Western US Coal Plants Current Planned
    107. Conventional Wisdom :“250 Years of Coal” <ul><li>50% US 2005 Coal from Powder River Basin </li></ul><ul><li>136 Gtons (109 Gt remaining) </li></ul><ul><li>Using 1 Gt/ yr </li></ul>USGS, Evaluation of Economically Extractable Coal Resources in the Gillette Coal Field, Powder River Basin, Wyoming 02-180 2002
    108. Peak Coal? <ul><ul><li>“ the data quality is very unreliable,” </li></ul></ul><ul><ul><li>China’s last update = 1992; 20% consumed since, though no update in its figures! </li></ul></ul><ul><ul><li>since 1986: all nations with significant coal resources (excepting India and Australia) that updated reserves estimates have reported substantial downward resource revisions . </li></ul></ul><ul><ul><li>Conclusion: “the present and past experience does not support the common argument that reserves are increasing over time as new areas are explored and prices rise.” </li></ul></ul><ul><ul><li>World’s in-situ resources of coal: 60 percent downward revision in 25 years. </li></ul></ul>How much coal do we really have left? From The Energy Watch Group report, “Coal: Resources and Future Production,”
    109. *Projected development assuming states achieve annual renewable energy targets. **If achieved, IA, IL, and ME goals would support an additional 4,400 MW by 2020. HI CA NV IA & WI NJ CT & RI MA ME MN AZ & NM NY TX New renewable energy supported: - 46,270 MW by 2020** Equivalent to: - 17.7 million less cars MD CO & MT PA DC & DE WA Renewable Energy from State Standards* BIG MARKET: BIG CARROT
    110. <ul><li>Twenty One States </li></ul>“ No Choice” on renewable power BIG STICK Renewable Electricity Standards NV: 20% by 2015 HI: 20% by 2020 TX: 5,880 MW (~5.5%) by 2015 CA: 20% by 2010 CO: 16.1% by 2020 NM: 16.2% by 2020 AZ: 15% by 2025 IA: 2% by 1999* MN: 27.4% by 2025* WI: 10% by 2015 NY: 24% by 2013 ME: 30% by 2000 MA: 4% by 2009 CT: 10% by 2010 RI: 16% by 2019 PA: 8% by 2020 NJ: 22.5% by 2020 MD: 7.5% by 2019 *MN has a 30% by 2020 standard for Xcel Energy, and a 25% by 2025 standard for all other utilities. CO and NM have a 20% by 2020 standard for investor-owned utilities, and a 10% by 2020 standard for other utilities. ** In addition to their requirements, IA has a 1,000 MW (~10%) by 2010 goal, and ME has a 10% new resources by 2017 goal. IL has a renewable energy goal, with no specific enforcement measures. D.C: 11% by 2022 MT: 15% by 2015 DE: 10% by 2019 IL: 8% by 2013** Washington: 15% by 2020 <ul><li>21 States + D.C. </li></ul>Standard Standard and Goal Goal
    111. Good news on Alternatives Solar Thermal
    112. … solar thermal (CSP)
    113. We have NO SHORTAGE OF ENERGY
    114. 100,000 Terawatts Humans will use 15 in 2050 8 inch deep layer of oil annually
    115. A Technology Crisis …not a Resource Crisis ! <ul><li>Scalability </li></ul><ul><li>Cycle Time to Use </li></ul><ul><li>Cost Competitiveness </li></ul>
    116. Scalability : Land For All Electricity Carlo Rubbia, SolarPACES2006 All Worldwide Electricity
    117. USA… Looking Good Creating a U.S. Market for Solar Energy, by Rhone Resch, President of the Solar Energy Industries Association. Germany: 57% world PV US: 7% world PV
    118. Area requirements to power the USA (150 km) 2 of Nevada covered with 15% efficient solar cells could provide the USA with electricity J.A. Turner, Science 285 1999, p. 687. ½ as much land with 30% efficient turbines
    119. How Much California Land? 2005 Load: 52 GW 2020 Load: 69 GW Google Earth California Energy Commission NREL All New Load Through 2020: 17 GW (15x15mi) Shut All The Coal Plants Close All Non-Hydro
    120. Technologies <ul><li>Thin films with straightforward processing </li></ul><ul><li>Readily available, low cost and environmentally benign </li></ul><ul><li>Fully integrated </li></ul><ul><li>Sputtered or evaporated reactive compounds </li></ul><ul><li>Complex, esoteric and hazardous </li></ul><ul><li>PECVD deposited </li></ul><ul><li>Silicon multi-junction thin films on flexible or rigid substrates </li></ul><ul><li>Crystalline ingots, wafers </li></ul><ul><li>Diffused and screen printed unit cells </li></ul><ul><li>Assembled modules </li></ul>Stion Shell, Honda, Daystar, First Solar, Nanosolar, Miasole, Heliovolt Schott Solar, EPV, Fuji Electric, Unisolar Sharp, Q-Cells, Kyocera, Sanyo, Mitsubishi, SunPower [15- 18%] Si 1 st Generation [25- 30%] [10-12%] [7-9%] MOS CdTe, CIGS a-Si, 4 th Generation 3 rd Generation 2 nd Generation
    121. Source: Sunpower
    122. Source: Applied Materials
    123. Photovoltaic Cost Trajectory <ul><li>Module Prices Falling </li></ul><ul><li>System Share Of Cost Is Growing </li></ul><ul><li>With zero cost modules Systems at $2/Wp </li></ul><ul><li>Annual capacity equals China’s weekly needs </li></ul>IEA
    124. Costs Including Storage <ul><li>PV @ $3-5/Wp </li></ul><ul><li>Total ≈$30/Wp for a 60% capacity factor </li></ul><ul><li>Thermal CSP $3-7/W for 60% CF </li></ul><ul><li>PV @ 22.4 cents kW/h </li></ul><ul><li>Current Thermal CSP at 16 cents kW/h </li></ul><ul><ul><li>A 700MW plant means 7.1 cents kW/h! </li></ul></ul>PV cost reduced from , other reports PV storage: ½ reported battery cost CSP: Black & Veatch, CA study 4/06 Solar thermal is the key to turning of coal
    125. We Need To Work On <ul><li>Higher Efficiency Cells! </li></ul><ul><ul><ul><li>Leverage Systems/BOP Cost </li></ul></ul></ul><ul><li>Manufacturing Scaleup!! </li></ul><ul><li>Batteries and Storage </li></ul><ul><ul><ul><li>Beyond Vanadium Flow Cells, Li-Polymer, Beyond Lead-Acid, $/kWh – need 5x </li></ul></ul></ul><ul><li>Not Concentrators? </li></ul><ul><ul><ul><li>Adding BOP cost, reducing cell cost </li></ul></ul></ul>
    126. Cycle Time to Use <ul><li>Oil & Coal – millions of years </li></ul><ul><li>Gas & Clathrates –100,000’s? </li></ul><ul><li>Biomass – 1 -10 years </li></ul><ul><li>Thermal Solar – ? </li></ul><ul><li>Photovoltaic Solar - instantaneous </li></ul>
    127. <ul><ul><li>Residential: </li></ul></ul><ul><ul><ul><li>$.20+/kWh average </li></ul></ul></ul><ul><ul><ul><li>Maximum scale limited to 10% </li></ul></ul></ul><ul><ul><ul><li>Subsidy dependent </li></ul></ul></ul><ul><ul><li>Centralized: </li></ul></ul><ul><ul><ul><li>Gas Peaking $.16/kWh </li></ul></ul></ul><ul><ul><ul><li>Gas CC $.10/kWh </li></ul></ul></ul><ul><ul><ul><li>Coal $.06 /kWh </li></ul></ul></ul><ul><ul><ul><li>Cost sensitive to carbon price </li></ul></ul></ul>How Soon Is Solar Competitive? How Long Is Coal Competitive?
    128. California CSP : better than “next best” <ul><li>CSP: lower cost power than combined cycle gas plants </li></ul><ul><li>CSP creates 2-7X more jobs than gas plants </li></ul><ul><li>Per GW CSP reduces CO2 by ~2mt/yr worth $38m/yr </li></ul><ul><li>CSP provides hedge against fluctuating commodity prices </li></ul>Source: NREL subcontract report by Black & Veatch, April 2006
    129. Three Gorges Dam ~18 GW generating capacity >25 years planning and construction ~1.3 million people displaced ~630 sq km reservoir >$50B estimated actual construction cost CSP would generate 1.7 times the power in same land area at significantly lower capital cost and faster construction time. Source: “ Concentrated Solar Power Potential in China”, Deepak Boggavarapu PhD
    130. Hoover CLFR plant with same annual power Output as Hoover Dam
    131. Ausra CSP vs Hydro <ul><li>Glen Canyon </li></ul><ul><li>Built 1956, $300M </li></ul><ul><li>$2.222B in 2006 $ </li></ul><ul><li>3,208,591 MWh ’05 </li></ul><ul><li>$693/MWha </li></ul><ul><li>Ausra CSP in US SW </li></ul><ul><li>500MW with storage </li></ul><ul><li>$1.802B in 2006 $ </li></ul><ul><li>3,209,038 MWh/yr </li></ul><ul><li>$562/MWha </li></ul>
    132. Operating Status of SEGS Parabolic Trough Plants 13 TWhe Solar Thermal Power since 1986
    133. The CSP Technologies Towers Troughs Dishes
    134. Dish-Engine
    135. Power Towers Solar Two, 10MW, Barstow, CA
    136. Parabolic Troughs Solar Electric Generating Stations, 354MW, Boron and Harper Lake, CA
    137. CLFR
    138. A 5MWt CLFR collector 100’ x 1000’
    139. Ausra CLFR <ul><li>Benefits of CLFR: </li></ul><ul><li>Sturdy, low cost construction </li></ul><ul><li>Primary components steel, glass, water </li></ul><ul><li>Efficient use of land </li></ul><ul><li>Air cooled; minimal water use </li></ul><ul><li>No toxic materials </li></ul><ul><li>Easily protected from hail and dust storms </li></ul><ul><li>Can by hybridized with fossil fuel plants </li></ul>
    140. Liddell Project
    141. Solar Thermal Power Plant Copyright © Ausra, Inc. 2007 280C 50bar Up to 20 hours energy storage Increase capacity factor by building larger solar field. Basic 180MW plant is 640 acres
    142. Solar Correlates with the Load Solar Highly Correlated with CA loads Timeshifted a few hours Very predictable and steady (10%) Demand Generation Larger Solar Array “ Clipped” At Max Output Power More Hours of Peak Load Served
    143. Time-Of-Day Pricing <ul><li>PG&E (Northern CA) Summer </li></ul><ul><ul><ul><li>Noon – 8pm : 1.95x “nameplate” $/kWh </li></ul></ul></ul><ul><li>Coal, Wind get “nameplate” average price </li></ul><ul><li>Solar gets 1.2x “nameplate” price </li></ul><ul><li>Solar With Storage can get 1.5x </li></ul>
    144. Storage is Essential <ul><li>24 hour power vs. 5 hour peak sunlight </li></ul><ul><li>Batteries, Flow Cells, Compressed Air, Pumped Hydro, SMES: $300-1000/kWh </li></ul><ul><li>Thermal Storage: $15/kWh demonstrated </li></ul>
    145. Storage For Time-shifting <ul><li>8 hour peak load vs. 5 hour peak sunlight </li></ul><ul><li>6 hours of storage increases revenue 50% </li></ul><ul><li>Shift Output To Peak Hours </li></ul>Time of Day Plant Output 6 AM 9 AM 12 PM 3 PM 6 PM 9 PM To Storage Direct Solar From Storage Direct Solar Direct Solar From Storage
    146. CA Electric Power Black and Veatch, Economic, Environmental, and Energy Benefits of Concentrating Solar Power in California, April 2006; PV DPT Luz2 250. 200. 25% 0 1 PV, 2006 45.0 45.0 65% n/a 1500 Pulverized Coal, BASE 120 107 25.0% 0 150 Luz2 DPT 150MW 134.0 120.0 40.4% 6 150 Parabolic Trough 2011 173.0 154.0 28.4% 0 100 Parabolic Trough 104.0 104.0 40.0% n/a 500 Combined Cycle Gas, INTERMEDIATE 168.0 168.0 10.0% n/a 85 Simple Cycle Gas, PEAKING Nom LEC, 10%ITC Nom LEC, 30%ITC Capacity Factor Storage, hours Capacity, MW  
    147. Solar Baseload Pricing Solar Peaking Pricing
    148. Solar Baseload Pricing Solar Peaking Pricing Trough 2007 DPT 2007 Trough 2011 DPT 2011 VK 2011
    149. Net Impact of Time-Of-Day (Including Thermal Storage) Trough 2007 Trough 2011 Solar Baseload Pricing Solar Peaking Pricing DPT 2007 DPT 2011 VK 2011
    150. Key Issues for Thermal CSP <ul><li>Back End Power Block </li></ul><ul><ul><ul><li>Turbine/Engine Efficiency </li></ul></ul></ul><ul><li>Concentrator and Receiver </li></ul><ul><ul><ul><li>Mirror $ / m 2 dominates total system cost </li></ul></ul></ul>
    151. Poised for Breakaway Growth ? <ul><li>Crossing Gas Prices </li></ul><ul><li>Meeting IGCC Prices (2008-09) </li></ul><ul><li>Meeting Pulverized Coal Prices (2008-09) </li></ul><ul><li>Large Capital Flows Will Follow Costs </li></ul>
    152. Policy Needs? <ul><li>Stable ITC </li></ul><ul><li>Level tax playing field </li></ul><ul><li>Transmission Priority and Grid Upgrades </li></ul><ul><li>Startup loan guaranteed for initial plants </li></ul>
    153. Power to the Nation: HVDC
    154. A New Federal Subsidy Program <ul><li>Farm Subsidies 2006: $26 B </li></ul><ul><ul><li>Stabilization, Preservation of Farms, Non-Production </li></ul></ul><ul><li>Total Coal Revenues: $12 B </li></ul><ul><ul><li>Profits $1.2B </li></ul></ul><ul><li>Let’s Subsidize COAL: $1.2 B </li></ul><ul><ul><li>Replace profits for NOT DIGGING COAL </li></ul></ul><ul><ul><li>Lowest Cost, Highest Reliability Sequestration </li></ul></ul>
    155. Renewable Energy Economics Benefits of a 20% by 2020 RES <ul><li>$72 billion in new capital investment </li></ul><ul><li>Benefits to rural America, including 30,000 jobs </li></ul><ul><li>$49 billion in lower electricity/natural gas bills </li></ul><ul><li>Estimated $10.2 billion increase in GDP </li></ul>
    156. … with positive local impact <ul><li>Each 100mw of CSP: 94 permanent jobs, </li></ul><ul><ul><ul><li>versus 56 for combined cycle gas plants </li></ul></ul></ul><ul><li>Each 100mw of CSP: $628 million gross state output </li></ul><ul><ul><ul><li>compared to $64m for the combined cycle plant </li></ul></ul></ul>Source: Black & Veatch, 3/06
    157. … and our greatest opportunity <ul><li>“ CSP power plants, constructed primarily of concrete, glass, and steel, can be quickly constructed and brought on line.” </li></ul><ul><li>“ With access to adequate transmission , CSP could provide inexpensive carbon-free electricity to the entire country .” </li></ul><ul><ul><ul><ul><li>US DOE Solar Technologies Program CSP 2009 Initiative </li></ul></ul></ul></ul>
    158. Geothermal Potential Source: Matthew Clyne, Black Mountain Technology, MIT 7,188,200 MWe 12¢ kW/hr 1,251,351 MWe 10¢ kW/hr Geothermal Potential in the United States
    159. EGS Technology How it works
    160. … or get to work
    161. Biofuels Think Outside the Barrel
    162. Implausible Assertions? <ul><li>We don’t need oil for cars & light trucks </li></ul><ul><li>We definitely don’t need hydrogen! </li></ul><ul><li>We don’t need new car/engine designs/distribution </li></ul><ul><li>Rapid changeover of automobiles is possible! </li></ul><ul><li>Little cost to consumers, automakers, government </li></ul>
    163. RISK: Oil vs. Hydrogen vs. Ethanol Source: Khosla High Low Low Low Low Med Low Low Low Low Low Med Med-High Very Low Very Low Very Low Very High Very High Very High Very High Very High Very High Med-Low High High ? - Energy Security Risk Cost per Mile Infrastructure Cost Technology Risk Environmental Cost Implementation Risk Interest Group Opposition Political Difficulty Time to Impact Low Med-Low Very High Low Very High Very Low Low High Very High Low High ? Low Very high - Med Very High Very Low Low Very High Very Low Low Med-High Med Low Low High Biofuels Hydrogen Oil
    164. OPEC’s Economic Effects Source: Coghill Capital Management
    165. <ul><ul><li>E85 is ten times larger than blending market </li></ul></ul><ul><ul><li>We must kick start the E85 market!! </li></ul></ul>E85 Market Additive Market
    166. What’s Possible Replace most of our imported oil in twenty years! 139.0 14.6 124.4 49 23.1 2027 39.4 14.6 24.8 19 12.5 2017 16.5 12.0 4.4 5 8.9 2012 Total Ethanol (billion gals) Corn Ethanol (billion gals) Cellulosic Ethanol (billion gals) Acres Planted (millions) Biomass Yield Tons/acre Year
    167. Area to replace GASOLINE in USA 50m Acres replaces all our gasoline!
    168. Why Now? Projected World Oil Prices (EIA) Source: EIA Reports Alternative Technology Viability Zone
    169. Energy Balance Not Your Father’s Ethanol Source: NRDC <ul><ul><li>Different corn ethanol production methods have different emissions </li></ul></ul><ul><ul><li>Cellulosic ethanol can achieve dramatic greenhouse gas reductions </li></ul></ul><ul><ul><li>… even negative emissions </li></ul></ul><ul><ul><li>Typical corn ethanol production reduces carbon emissions 20% </li></ul></ul>
    170. <ul><li>“ corn ethanol is providing important fossil fuel savings and greenhouse gas reductions” </li></ul><ul><li>“ very little petroleum is used in the production of ethanol …..shift from gasoline to ethanol will reduce our oil dependence” </li></ul><ul><li>“ cellulosic ethanol simply delivers profoundly more renewable energy than corn ethanol ” </li></ul>NRDC Report - “Ethanol: Energy Well Spent” <ul><ul><li>“ Don’t let the perfect be the enemy of the good” </li></ul></ul>
    171. Brazil sugar-cane/ethanol learning curve Liters of ethanol produced per hectacre since between 1975 to 2004 30,000??
    172. Technology Progression Corn Cellulosic Bioethanol Algae Synthetic Biorefinery Gasification Synthetic Biology Thermochemical Energy crops <ul><ul><li>Many companies, multiple solutions …all improving trajectory </li></ul></ul>Bioengineering Fuel Chemistry Plant Breeding Computational Modeling Systems Biology ?
    173. Energy Crops: Miscanthus 20 tons/acre? ( ) 10-30 tons/acre ( 1 years growth without replanting! <ul><ul><li>Little water, little fertilizer, no tillage, lots of biomass, </li></ul></ul><ul><ul><li>… .energy crops make it possible </li></ul></ul>
    174. Energy Crops: Sorghum 25 tons/acre (Prof. Holtzapple- Texas A&M)
    175. The perennial advantage <ul><li>Annual crops rely more heavily on human inputs. Humans can only respond to environmental changes on the scale of months or seasons and hectares or square kilometers. </li></ul>
    176. Biomass Will Make a Difference Turning South Dakota into… … a member of OPEC?! Farm acres Tons/acre Gallons/ton Thousand barrels/day Today Tomorrow 44 Million 5 60 857 44 Million 15 80 3,429 Iraq Kuwait Libya Nigeria Thousand barrels/day 1,700 2,600 1,650 2,200 Qatar Saudi Arabia UAE 800 9,400 2,500 South Dakota 3,429 Iran 3,900 Venezuela 2,500 Algeria 1,380 Indonesia 925 Source: Ceres Company Presentation
    177. Conservative Cellulosic (24tpy/108gpt) Sugar Cane + Baggasse (11 tpy/102gpt) Corn, Cellulose, Cane Today Large Improvements Are Visible Brazil Energy Cane Cellulosic (10tpy/100gpt) Biodiesel
    178. Myths Galore! <ul><li>Energy Balance – not your father’s ethanol </li></ul><ul><li>Not enough cropland – only if you try to make pigs fly! </li></ul><ul><li>Food prices or the best thing for poverty? </li></ul><ul><li>Lower energy content, lower mileage – in which engine? </li></ul><ul><li>More expensive or poorly managed? US oil or Saudi oil? </li></ul><ul><li>Existing infrastructure – for E85 or additive? Some or all pumps? </li></ul><ul><li>Dubious environmental benefits – as additive E20 or E85? </li></ul><ul><li>Cellulosic ethanol – real or not? </li></ul><ul><li>Free marketeers hell or level playing field? </li></ul>
    179. My Favorite FFV . . . SAAB 9-5 with E85 <ul><ul><li>Optimized for ethanol and gasoline both & mileage differences can be small! </li></ul></ul>
    180. A Darwinian IQ Test? <ul><li>Feed mid-east terrorism or mid-west farmers? </li></ul><ul><li>Import expensive gasoline or use cheaper ethanol? </li></ul><ul><li>Create farm jobs or mid-east oil tycoons? </li></ul><ul><li>Fossil fuels or green fuels? </li></ul><ul><li>ANWR oil rigs or “prairie grass” fields? </li></ul><ul><li>Gasoline cars or cars with fuel choices? </li></ul>
    181. DOE went looking for 3 projects…
    182. Lots of variability… 101 40 4.5 Thermo Range 78 18 10.5 Bio Iogen 112 31 6.1 Bio Broin 82 19 5.0 Bio Bluefire 55 14 5.6 Hybrid Alico 49 11 15.8 Bio Abengoa Yield/ton Capacity (MGPY) CapX/G ($) Tech Company
    183. “ The War on Oil” … weapons from the “innovation ecosystem”
    184. Biofuels Feedstocks & Pathways … Mixalco Process Glycerin Natural Oils BioDiesel (FAME or FAEE) Methanol/Ethanol Gasification Syngas Syngas Fermentation Ethanol BTL Diesel Mixed Higher Alcohol Methane Microbial cultures Dimethylfuran Gasoline, Diesel, Hydrocarbons Ethanol, Butanol, Renewable Petroleum FermDiesel Sugars/ Starch Fermentation Biogasoline ETG via catalysis C6, C5 Sugars Biomass Cellulose/ Hemicellulose Acid or Enzyme Hydrolysis Saccharification Fermentation Ethanol Algae + Sunlight – CO2 Cell Mass Hydrocracking Waste Fischer-Tropspch catalysis BioDiesel (FAME or FAEE) Catalytic Conversion Butanol Diesel Transesterification Catalysis and Aqueous phase Reforming
    185. Mixalco Process Glycerin Natural Oils BioDiesel (FAME or FAEE) Methanol/Ethanol Gasification Syngas Syngas Fermentation Ethanol BTL Diesel Mixed Higher Alcohol Methane Microbial cultures Dimethylfuran Gasoline, Diesel, Hydrocarbons Ethanol, Butanol, Renewable Petroleum FermDiesel Sugars/ Starch Fermentation Biogasoline ETG via catalysis C6, C5 Sugars Biomass Cellulose/ Hemicellulose Acid or Enzyme Hydrolysis Saccharification Fermentation Ethanol Algae + Sunlight – CO2 Cell Mass Hydrocracking Waste Fischer-Tropspch catalysis BioDiesel (FAME or FAEE) Catalytic Conversion Butanol Diesel Catalysis and Aqueous phase Reforming Transesterification Increasing Technological Difficulty Feedstock Supply Volume Biofuels Feedstocks & Pathways … Feed Cost
    186. Vegetable oil Sugar/starch Algae <ul><li>Biomass </li></ul><ul><ul><li>Agricultural </li></ul></ul><ul><ul><li>Forestry </li></ul></ul>Fatty acid esters (biodiesel) Diesel Ethanol Butanol Diesel/gasoline “ Biocrude” “ Biocrude” Lipids Fatty acid esters Ethanol Ethanol Mixed alcohols Fuel oil/diesel Fuel oil Ethanol Ethanol transesterification hydrocracking dry mill yeast fermentation Ethanol ethlyacetate production/hydrocracking bacterial fermentation Synthetic biology/fermentation Aqueous phase reforming growth with CO2 and light/ transesterification of hydrocracking enzyme hydrolysis/fermentation gasification/catalysis or syngas fermentation biopile fermentation/catalysis Catalysis/pyrolysis acid hydrolysis/fermentation CO fermentation thermal depolymerization Diesel/gasoline Companies involved in feedstock improvement Monsanto DuPont Syngenta Allelyx CanaVialis Mendel Biotechnology Ceres Bical Energy Agrivida Edenspace Teri Praj <ul><li>Wastes </li></ul><ul><ul><li>Flue gases </li></ul></ul><ul><ul><li>Municipal waste </li></ul></ul><ul><ul><li>Municipal sewage </li></ul></ul><ul><ul><li>Recyclable plastics </li></ul></ul>LanzaTech Changing World Technologies Imperium Renewables, FutureFuel, etc. Cilion, Altra Verasun, Aventine, etc. Poet BP-DuPont Biofuels Gevo Advanced Biofuels Green Biologics Cobalt Amyris Biotechnologies LS9 GreenFuel Aurora Biofuels LiveFuels PetroSun Mascoma Verenium Iogen, Abengoa Bioenergy, Poet, SunEthanol, TMO BlueFire Ethanol RangeFuels Coskata BRI Energy Terrabon BIOeCON, FES Choren ZeaChem Virent Energy Systems
    187. The Near Future… Mixalco Process Glycerin Transesterification Natural Oils BioDiesel (FAME or FAEE) Methanol/Ethanol Gasification Syngas Syngas Fermentation Ethanol BTL Diesel Methane Microbial cultures Dimethylfuran Catalysis and Aqueous phase Reforming Gasoline, Diesel, Hydrocarbons Ethanol, Butanol, Renewable Petroleum FermDiesel Sugars/ Starch Fermentation Biogasoline ETG via catalysis C6, C5 Sugars Biomass Cellulose/ Hemicellulose Acid or Enzyme Hydrolysis Saccharification Fermentation Ethanol Algae + Sunlight – CO 2 Cell Mass Hydrocracking Waste Fischer-Tropspch catalysis BioDiesel (FAME or FAEE) Catalytic Conversion Increasing Technological Difficulty Feedstock Supply Volume Ethanol – Sugar Fermentation Ethanol – Cellulose Hydrolysis Fermentation Biodiesel, Ethanol – FT and Catalysis Ethanol – Syngas Fermentation Biodiesel Dimethylfuran –Catalysis Gasoline/Diesel – Aqueous Reforming Biodiesel - Algae Methane – Microbial Cultures Higher Alcohols – Mixalco Process Mixed Higher Alcohol Gevo Fermdiesel, Butanol Feed Cost
    188. Story Time … or news from the frontlines
    191. Trash… Or Treasure? Range is working to transform this into ethanol!
    192. Southeastern U.S. Potential <ul><li>≈ 13 Billion gpy Product Potential </li></ul><ul><ul><li>From unmerchantable timber & timber harvesting residues only </li></ul></ul>
    195. Potential of Synthetic Biology Synthetic Biology Recombinant Small Molecule Bio-Synthetic Pathway Gene 4 Gene 2 Gene 1 Gene 3 Gene 1 Artimisinin Source of genes Custom-Built Microbe Fermentation Diesel Synthetic Biology = Fermentation Diesel X Anti-Malarial
    196. Hydrocarbon Biosynthesis: Nature’s Energy Storage Designer Hydrocarbons Metabolic modeling + Synthetic biology Renewable Feedstock LS9 Designer Biofuels & Chemicals X X X X X X X X >90% Energetic Yield From Feedstock Hydrocarbons
    197. Butanol, the old fashioned way…
    198. CO 2 ethanol lactate acetone formate hydrogen . . . Biomass Hydrolysate BUTANOL A recombinant strains containing a butanol pathway produces butanol in addition to other products . Metabolic Engineering
    199. Biomass Hydrolysate X X X X X Classical and genetic techniques are used to improve butanol tolerance. BUTANOL X X X Metabolic Engineering
    200. <ul><li>DOE: Six “meritorious” biorefinery grants </li></ul><ul><li>Multiple demo plants under construction </li></ul><ul><li>Various technologies, feedstocks under test </li></ul><ul><li>A diversity of geographies – not just mid-west </li></ul><ul><li>Question is “not if” but “at what price” </li></ul>Cellulosic Biofuels Status President sets 35b gallon goal!
    201. … and this is just the beginning … imagine the map in 2017 ! Believe in the “innovation ecosystem” that brought you free long distance!
    202. A Potential Trajectory … … driven by the “innovation” ecosystem of scientists, technologists, entrepreneurs
    203. Biohol Trajectory
    204. Farmers Are Driven By Economics Per acre economics of dedicated biomass crops vs. traditional row crops Source: Ceres Company Presentation/ Khosla Ventures $66 $36 Amortized fixed costs $637 $525 Total revenue $35 $35 Biomass price ($/ton) 2 15 Biomass yield (tons) $3.50 N/A Grain price ($/bushel) 162 N/A Grain yield (bushel) $168 $84 Variable costs $403 $405 Net return Corn Biomass
    205. Biomass Yields? <ul><li>Miscanthus averaged 16.5 dry tonnes per acre per year, where sawgrass averaged 4.6 at 3 Illinois sites, with data taken over 3 years </li></ul><ul><li>Sugarcane experts in Brazil are breeding energy cane that will likely result in yields of 25 dry tones per acre per year of harvestable biomass </li></ul><ul><li>High yield sorghum can be grown in 35 US States and produce yields as high as 25 dry tones per acre per year </li></ul><ul><li>DOE estimates that collecting existing biomass with small change in agricultural practices could generate 1.3 billion tones of biomass in the US and still be able to meet all food, feed, and export demands. </li></ul><ul><li>Approximately 75 million acres of crop and pasture land in the US can easily be converted to cultivating energy crop without impacting domestic food production (CERES) </li></ul>… we could meet US gasoline demand on about 50m acres
    206. Miscanthus Farming vs. Corn/Soybean Miscanthus is far more profitable than a corn/soy rotation!
    207. Biomass, Geopolitics & Poverty Biomass & Poverty Belt
    208. Monoculture or Polyculture (Grass Cocktail) A study from the University of Minnesota suggests… <ul><li>that “mixtures of native prairie plants grown on marginal land are a good source of biomass for biofuel” and that “ethanol made from mixed prarier plans can provide more useable energy per acre than either corn ethanol or soybean biodiesel ” </li></ul><ul><li>Mixed prairie plans also have the benefit of being perennial (don’t have be replanted), as well as preventing soil erosion and removing carbon dioxide from the air . Additionally, they don’t require pesticides, herbicides, irrigation, while adding fertility to degraded lands . </li></ul><ul><li>… until cellulosic ethanol is viable, coal/natural gas plants could burn the prairie biomass – this would actually reduce net carbon dioxide emissions through reduce fossil fuel use and by storing carbon in prairie soils </li></ul>… sustainable and high yield strategies for low impact polyculture biomass exists … richer soils, less land, more biodiversity
    209. Ethanol Subsidies <ul><li>“ With the rise in today’s price of corn, exceeding the government’s “target prices”, these agricultural subsidies will dwindle to the range of $2 billion, and will recur unless and until the energy demand for crops disappears” </li></ul><ul><li>The market price for corn rising is effectively lowering subsidies – one set of subsidies off-sets another </li></ul>… declining “net” subsidies … right thing for the wrong reason: declining farm subsidies
    210. Simple Action Items <ul><li>Require 70% new cars to be Flex Fuel Vehicles </li></ul><ul><li>… require yellow gas caps on all FFV’s & provide incentives to automakers </li></ul><ul><li>Require E85 distribution for all high volume gas stations </li></ul><ul><li>… . for stations that pump more than 2 million gallons per year of fuels; </li></ul><ul><li>Make VEETC credit variable with oil price ($0.25-0.75) </li></ul><ul><li>… . with cellulosic multiplier and minimum carbon reduction standards </li></ul><ul><li>Make the cellulosic biofuels RFS = “all production till 2015” </li></ul><ul><li>… . With price caps on maximum cellulosic premium over the price of gasoline </li></ul><ul><li>Increase RFS to 35 billion gallons by 2022 </li></ul>...ensuring investors long term demand and oil price stability
    211. We can cut fuel consumption in half!
    212. The Possible at “NORMAL” Margins! June 2006, Aberdeen , South Dakota <ul><ul><li>Imagine $1.99 ethanol at every Walmart in America </li></ul></ul>
    213. Generic Approach <ul><li>take a big problem (challenge) </li></ul><ul><li>… add the best minds </li></ul><ul><li>… the power of ideas </li></ul><ul><li>… the fuel of entrepreneurial energy </li></ul><ul><li>… and a dash of greed </li></ul>
    214. … the chindia test only scalable if competitive unsubsidized
    215. … the scaling model brute force or exponential, distributed…
    216. … investments or climate solutions ? wind photovoltaics biodesel hybrids
    217. …” relevant scale ” solutions for <ul><li>…oil </li></ul><ul><li>…coal </li></ul><ul><li>…materials </li></ul><ul><li>…efficiency </li></ul>
    218. … pragmentalists vs idealists
    219. or… the lesser evil Which Risk for oil & coal ?
    220. or… Solutions (they exist) Denial to Despair ?
    221. …biases <ul><li>…hybrids good </li></ul><ul><li>…corn ethanol bad </li></ul><ul><li>…biodiesel good </li></ul><ul><li>…nuclear bad </li></ul>
    222. Subsidies: Oil or Ethanol? <ul><li>Ethanol receives: </li></ul><ul><ul><li>a $0.54 per gallon producers credit, as well as additional state-specific subsidies </li></ul></ul><ul><li>Oil receives: </li></ul><ul><ul><li>Excess of Percentage over cost depletion” worth $82 billion dollar subsidy </li></ul></ul><ul><ul><li>Expensing of exploration and development cost - $42 billion subsidy. </li></ul></ul><ul><ul><li>Add on alternative fuel production credit (read oil shales, tar sands etc). </li></ul></ul><ul><ul><li>Oil and gas exception from passive loss limitation </li></ul></ul><ul><ul><li>Credit for enhanced oil recovery costs </li></ul></ul><ul><ul><li>Expensing of tertiary injectants </li></ul></ul><ul><ul><li>$7 billion in Katrina relief! </li></ul></ul>Oil subsidies dwarf those of ethanol!
    223. Hybrids or Ethanol? Ethanol is a far cheaper and more scalable solution! 20-30% Oil reduction High Impact to automakers Battery breakthrough Scalability $5000 Cost 20-30% Carbon reduction Hybrid 90% Low Cellulosic Breakthrough $50 20-30% Corn Ethanol
    224. Hybrid or FFV? FFV’s offer a more-effective solution! 157 Gasoline Savings (11000 m/yr; 14mpg) $3000 Cost Hybrid 477 $30 FFV
    225. Biodiesel vs. Ethanol vs. Cellulosic Diesel Trajectory Matters! High 2010 Production Cost Poor Sustainability (2030) Poor Technology High (@ $45 oil price) Unsubsidized 10 yr market competitiveness Poor Product Quality 600-900 Scalability (2030 Gallons/acre) 80% Carbon reduction – 2010 80% Carbon reduction - 2006 “ Classic” Biodiesel Med-Low High Improving Excellent (@ $45 oil price) Good 2500 (cellulosic) 80% 20-30% Ethanol Med-Low High Nascent Excellent (@ $45 oil price) Good 2500 (cellulosic) 80% Not Available Cellulosic Diesel
    226. <ul><li>The Mexican Tortilla Story …. </li></ul><ul><li>Nearly all Mexican tortillas are made of home-grown white maize, rather than the yellow variety that is more common in the United States. The growing popularity of subsidised ethanol across the border has prompted the price of yellow corn, quoted in Chicago, to rise by over 50% since October. So industrial users of imported yellow corn in Mexico (for animal feed and syrup) started buying white maize instead. The government was slow to react . The tariff on imported maize is not due to disappear under the North American Free Trade Agreement until next year. But the government could have blunted the price rise by waiving the tariff or moving quickly to expand the tariff-free quota, says Luis de la Calle, a former trade official. Mr Calderón did raise import quotas on January 18th, and agreed a voluntary price-cap with the biggest tortilla makers. But the political damage had already been done, and the price cap does not cover the small-scale tortilla makers patronised by many poorer Mexicans. A previous government withdrew the subsidy on tortillas because it was indiscriminate. Officials point out that the higher price is good news for the rural poor, who grow maize . Mexico's Federal Competition Commission is investigating the import and distribution of maize. But Eduardo Pérez Motta, the commission's president, says he thinks that import quotas rather than monopolies are to blame for the price spike. In other words, contrary to Mr López Obrador's claims, Mexicans would benefit from free trade in maize. </li></ul><ul><li>Economist, 2007 </li></ul>Is There a Food vs. Fuel Issue? … real issue or oil industry PR campaign? … why have developing countries been pushing for lower farm subsides?
    228. BioPlastics – the next cycle?
    229. Applications of BioPlastics
    230. Competitive Landscape Source: Sustainable chemicals Report – Chevreux
    231. Plenty of Markets! Source: Sustainable chemicals Report – Chevreux
    232. Plenty of Upside! Source: Sustainable chemicals Report – Chevreux
    233. ...replaced all 300 Billion lbs of plastics ? …how much land would it take?
    234. Oil Refinery Concept
    235. Bio-Refinery Concept
    236. Twelve Platform Chemicals Succinic Acid FDCA 3-HP Aspartic Acid Glucanic Acid Glutamic Acid Itaconic Acid Levulinic Acid 3-HDL Glycerol Sorbitol Xylitol
    237. Hieroglyphic Writings… A specimen of an Egyptian language writing ca. 530 B.C. ca. 2000 A.D. A version of graphic representation of “ Top 12 DOE platform chemicals from glucose” letters  syllables  words  poems
    238. Enabling Renewable Value Chains for Sustainable Chemical Industry Renewable Feedstocks (crops & forestry) Industrial Bioproducts New Industrial Bioproducts Triglycerides (vegetable oils) Soybean, Linseed, Corn, Canola Carbohydrates Starch Sucrose Cellulose/Wood Bioplastics Specialty polymers Polymer additives Performance Surfactants Adhesives Coalescent Solvents Other Biodiesel Compound set A Compound set B Fuel ethanol Compound C Other Products Technologies: Synergy of Renewable Feedstocks
    239. …bottled water renewable???
    240. 3-hydroxypropionic acid 1,3-propanediol EEP acrylamide acrylic acid malonic acid poly(hydroxypropionate) dehydration oxidation hydrogenation
    241. 3-HP Derivatives
    242. Succinic Acid as a Platform Succinic Acid Sources: MBI, Zeikus, 1999; Sado,, 1980; Dake, 1987 THF 1,4-Butanediol Polyurethanes Aliphatic Polyesters Polycarbonates PBT Polycarbonate/PBT Blends Solvents New TPE’s Salt Replacements Crop Growth Promoters N-Methyl Pyrolidone Adipic Acid Hexanediamine Nylon
    243. Succinic Acid Derivatives
    244. Lactic Acid As a Platform Lactic Acid PLA Propylene Glycol Acrylic Acid Lactate Esters Solvents Polyacrylic Acid Polyurethanes Polyesters Polycarbonates Propylene Oxide Epoxides Chiral Synthons New Amino Acids Pharmaceutical Precursors High Performance Materials TPE’s Resins Food Additives
    245. PLA Derivatives
    246. Levulinic Acid Derivatives
    247. DuPont Sorona DuPont Sorona DuPont Sonona DuPont Sorona polymer; part of polymer is 1,3-propanediol from fermentation
    248. <ul><li>● Enzymes </li></ul><ul><li>● Organisms </li></ul><ul><li>● Selective catalysts </li></ul><ul><li>Heavy Metals </li></ul><ul><li>Organic </li></ul><ul><li>Petroleum </li></ul><ul><li>● Environment </li></ul><ul><li>● People </li></ul><ul><li>Higher inherent risk </li></ul><ul><li>● Pressure </li></ul><ul><li>● Temperature </li></ul><ul><li>Petroleum based </li></ul><ul><li>Rigid discipline silos </li></ul><ul><li>Who cares? </li></ul>A Change of Paradigm Old New Catalyst Solvent System Raw Material Source Harmful Impacts Production Risk Energy _ Sustainability Water Renewable Low to no negative impacts Lower inherent risk Renewable energy Cross discipline team A new attribute
    249. Societal Cost of Hydrocarbons <ul><li>US Related Data: </li></ul><ul><li>Air, water, and soil pollution from electric generation cost $14.8-90.3 billion – each year! </li></ul><ul><li>1 gallon of spilled oil can contaminate 1 million gallons of water! </li></ul><ul><li>Oil pollution from automobiles causes $4.6 billion in damages to crops, rivers, forests, lakes etc </li></ul>Source: Coghill Capital Management
    250. <ul><li>Military Costs: </li></ul><ul><li>Strategic Military Bases ($49bn) </li></ul><ul><li>Oil and Gas supply route security ($20bn) </li></ul><ul><li>Strategic Petroleum Reserves ($30bn) </li></ul><ul><li>Iraq ($1 trillion! – or $275mn per day!) </li></ul>Source: Coghill Capital Management Societal Cost of Hydrocarbons (Continued)
    251. <ul><li>Health Costs: </li></ul><ul><li>760,000 Chinese die each year due to air and water pollution ($99bn)! </li></ul><ul><li>Lung disease and asthma caused by pollution ($16.1bn)! </li></ul><ul><li>Lead, Mercury, and Arsenic poisoning from coal plants is linked to mental retardation, learning disabilities, premature mortality, and to some autism cases ($88-640bn) </li></ul>Source: Coghill Capital Management Societal Cost of Hydrocarbons (Continued)
    252. What Are Fossil Fuels’ Externalities? Source: Coghill Capital Management High Medium Low Fossil Fuel Costs (Billions $USD) $640.30 $365.00 $88.10 Total Fossil Fuel Costs $450.00 $237.00 $24.03 Healthcare Treatment and Mortality from Pollution $93.30 $53.00 $14.80 Environmental Monitoring and Clean Up $100.00 $75.00 $49.00 Military Base and Supply Route Security
    253. What Are Fossil Fuels’ Externalities? (continued) <ul><li>Mid-Range societal cost increases (generation costs only – no distribution or retail included) </li></ul><ul><li>Coal fired electric generation goes from $0.026/kWh to $0.0714/kWh </li></ul><ul><li>Natural gas electric generation goes from $0.0615/kWh to $0.0851kWh </li></ul><ul><li>Regular gallon of unleaded gasoline goes from $3.46 to $5.01 per gallon </li></ul>Source: Coghill Capital Management Natural Gas (mmcf) Crude Oil (Barrel) Coal (Short ton) The Effect on Consumers $6.80 $60 $20.49 2006 Ave. Cost $2.74 $26.68 $93.83 Mid-Societal Cost $9.54 $86.68 $114.32 Total Cost/ Unit $0.0235 c/kWh $1.54 per gallon $0.0454 c/kWh Consumer Increase