The True Brew – Answers to your "Biofuels Fact or Fiction" questions

Today, we’ll reach into the mailbag and voicemail box and shed some light on topics both important and bizarre, in our occasional “Biofuels Fact or Fiction” series.

Q. Will the USDA really issue new loan guarantees to biofuels projects before year end?

A: Likely – we hear positive rumblings on the jungle drums. There are still four projects in the running for conditional loan guarantees issued under the section 9003 program, covering “new & unique” technologies, and we’ve heard from USDA that they conditional loan agreements are imminent.

Driving the pressure train? Secretary Tom Vilsack, determined to place a message in front of Congress – which last week attempted to swipe billions out of the USDA’s Farm Bill financing – that the USDA is creating jobs with a program that is operating as it was set up by Congress to do. If true, it would be five months from the beginning of this round of applications – versus the nearly five years that we have seen, uh, nothing out of DOE.

Q: Can Congress swipe money away from conditional loan guarantees before they close?

A: DOE and USDA disagree. For sure, the US House will make an attempt, under new management, to take unspent funds away from loan guarantee programs. Unlikely that a Democratic Senate or President Obama would go along.

Q: Does the Nissan Leaf burn more BTUs of coal than a Jetta TDI burns in diesel – can a plug-in electric really be a backward step in reducing fossil fuel usage?

A: Well, not so fast, but there’s something to that. The Jetta TDI burns 172,500 BTUs per 100 kilometers of diesel with its 50 mile per gallon rating. With drop-in renewable diesel, that would be the same.

By contrast, the Leaf burns 288,260 BTUs per 100 kilometers – based on its rated 34 Kwh per 100 kilometer rating, and a conversion/transmission efficiency of 25.16 percent to account for the difference between coal BTUs burned at the power station compared to watts delivered to your plug. The catch here is that not every watt is produced by coal – there’s natural gas, and some renewables in there. Depending on your location and time of day, it’s true. Especially when charging up the car during off-pear periods.

Q: Does the Vatican produce as much ethanol as the US state of Florida?

A: Technically, Florida is ahead, by a few gallons to zero. The Vatican does produce about 2000 litres of ethanol in the form of wine for its Communion services. Florida, well according to American Biofuels Now, the state exports $23.3 billion per year to buy gasoline, diesel, and ethanol from other states, and has virtually no refined production of any of the three. No wonder real estate prices and the job market are so lousy there.

Q. Speaking of wine, does Prince Charles really convert leftover wines into fuel ethanol?

A: Yes, the Prince of Wales has fueled his Aston Martin D86 with ethanol made from wine. The prince’s collection of Jaguars, and his Audi and Range Rover run on waste oil biodiesel, part of a $1 million investment by the Prince in converting his fuel and heating systems to eco-friendly sources.

Q: Are there really $44 billion in federal spending, subsidies and/or tax breaks that directly benefit oil companies?

A: Yes, according to a report at icta.org – the total ranges from $44 billion to $126 billion – excluding the costs allocated to safeguard the world’s petroleum resources. Here’s the breakdown – but keep in mind that some of these are standard deductions that all business enjoys access to.

• Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year)
• Nonconventional Fuel Production Credit ($769 to $900 million)
• Immediate expensing of exploration and development costs ($200 to $255 million)
• Enhanced Oil Recovery Credit ($26.3 to 100 million)
• Foreign tax credits ($1.11 to $3.4 billion)
• Foreign income deferrals ($183 to $318 million)
• Accelerated depreciation allowances ($1.0 to $4.5 billion)
• Extraction, production and use ($38 to $114.6 billion)
• Research and development ($200 to $220 million)
• Export financing ($308.5 to $311.9 million)
• Army Corps of Engineers ($253.2 to $270 million)
• Department of Interior’s Oil Resources Management Programs ($97 to $227 million)
• Government expenditures on regulatory oversight, pollution cleanup, and liability costs ($1.1 to $1.6 billion)
• U.S. Defense Department spending allocated to safeguard the world’s petroleum resources ($55 to $96.3 billion)
• The Strategic Petroleum Reserve ($5.7 billion)
• Protection services from the U.S. Coast Guard and Department of Transportation’s Maritime Administration ($566.3 million)

Q. Why would anyone buy Amyris stock when Amyris makes $6 per gallon fuel?

A. Well, Amyris hasn’t released precise figures of late – the latest view on costs comes from last spring’s S-1. That’s en empire of time in a fast-moving synthetic biology company. Suffice to say that there’s always a risk that they will not hit their yield targets from yeast fermentation, but if they do, Amyris has the potential at scale to make cost-competitive fuel. Meanwhile, the stock is up 68 percent since its September IPO. Those Digest readers who agreed with our “Winner” assessment in July, have made a killing – good for you!

On the other hand, maybe $6 isn’t such a bad target. Former Shell President John Hofmeister appeared on the CBS Early Show yesterday, predicting $5 per gallon gasoline by 2012. “In the U.S. we use 20 million barrels a day. We produce about 7. We’re not drilling, we’re gonna produce about 6  a year, a year and a half from now. That means we have to import more oil while the whole rest of the world is also importing oil,” Hofmeister told CBS.

Q: Is grease theft gone away?

A: No, one of the world’s fastest-growing crime opportunities is still growing strong. There were 31 grease theft cases last year in California alone, according to Render Magazine. It became so lucrative that, a while back, a police sergeant in Folsom, CA was arrested on grease theft charges. And let’s not forget the plastic surgeon who converted his patient’s excess liposuction fat into biodiesel. Eeew.

Q: Cellulosic ethanol – five years away, five years away, five years away – will it ever arrive at commercial scale?

A: POET’s Project Liberty, debuting at 20 million gallons in 2012, is expected to be the first commercial-scale project completed.

Q: Are there really plans to develop biofuels for space travel?

A: Yep. Last August, we covered a group at NASA’s Ames Research Center who are working to convert space-based plant residues, from plants grown by astronauts to provide food and breathing air for long-period space travel, into sources of fuel, chemicals and food.

In March, jatropha seeds went into orbit on the space shuttle, where a research project looked at growth rates. Perhaps somewhere in outer space, NASA can find a banker ready to lend money for a commercial-stage progress.

Meanwhile,  construction is underway on the $198 million Spaceport America, a vertical launching pad and runway facility in Truth or Consequences that will be home to the Virgin Galatic spacecraft offering commercial space tourism flights for $200,000. Sir Richard Branson’s Virgin Fuels is developing biofuels that can be used to power both the mothership Eve that will launch the spacecraft from the stratosphere, while the SpaceShipTwo spacecraft will itself be designed to run on biobutanol. Branson is an investor in Gevo, a development-stage company making butanol from cellulosic feedstocks.