The Low Carbon Coast

May 8, 2019 |

Recently, the eyes of the world have turned to Olympia, where a battle is underway between the past and the future that ought to settle the future of clean fuels on the US West Coast and in the state of Washington in particular.

You see, Washington state is working on a low carbon fuel standard that would have it join itself to the standards already enacted in California, Oregon and British Columbia and under development now for the whole of Canada.

The establishment of a clear and steady signal on carbon, which has to be through public policy since the price of pollution is not otherwise included in the cost of transport fuel, has been proven to be the pivotal factor not only in the establishment of a market for low carbon fuels, but also for the deploying of advanced technology in support of it. Numerous refineries of low carbon fuels, using waste resources, are on the planning books for Washington state, representing well over $1 billion in new capital investment, and good paying clean energy jobs, and all are awaiting. The REG project in Ferndale, a large project planned for the ports of the Columbia river west of Vancouver, Washington — and more.

Up to the present day, the state of Washington has always been a leader in energy and transport innovation; ironically, in the past it was state Republicans who often were the leaders on the sustainable use of resources and keeping the state clean and pristine.

Carbon policy, prices and outcomes

How is the market right now? First, let’s look at the US biofuels market. On the left, you see what was intended with the Renewable Fuel Standard — lots of corn ethanol, lots of cellulosic ethanol and a fraction of advanced biofuels. What we see on the right is what happened. Corn ethanol worked out as expected and so have advanced biofuels — what’s missing is cellulosic ethanol.

Here we see carbon prices, which have failed to bring stability to a vulnerable technology wave. It looks like a violently unstable commodity market instead of a support scheme. That’s been the development environment — chaotic, rocky and terrifying.

By contrast, let’s look at California where a Low Carbon Fuel Standard was put in place. In the bottom chart we see a far more stable carbon credit price. In the upper right, we see the market responding with steadily rising production across all technologies. And we see on the chart on the left all of these technologies now offer substantial and improving carbon benefits compared to fossil fuels.

Back to the national market, here is a chart of the returns from ethanol production — red marks the profit and the black line the investment payback. You can see why investors are skittish. Over in biodiesel, not much better. Lower investment requirements, but much lower returns and very volatile.

By contrast, let’s look at renewable diesel and sustainable aviation fuels, usually made at the same time because refining processes from waste resources usually produce both kerosene-range and diesel-range fuels.

In the top story we reported on a technology that NREL thinks can deliver fuel at $1.76 per gallon, and below we report that the market price is over $7 per gallon in California. Accordingly, and not surprisingly, there’s a surge in global production. Ten years ago there was hardly a drop produced around the world. Today, worldwide capacity is near to 2 billion gallons, and could double over the next 3 years.

We’ve Been Here Before

We’ve been here before, at a tipping point in the advancement of energy and transportation with Washington state at the center of it, though you may not know it.

You might not know that the ties between forestry and aviation, which are becoming more obvious these days when we are making aviation biofuels from forest slash, thinnings and sawmill residues.

You might not know it, but Bill Boeing himself was in the forestry business, the money for Boeing came from his timber operations, and if you’ve ever been to see the striking Pacific Ocean rollers at Ocean Shores, Washington — you’ve been in the area where the Boeings made their first fortune in forestry.

Until in 1909, when Bill Boeing saw this airship gliding about the Alaska-Yukon-Pacific exposition, and he was hooked on aviation forever. The airship was the first powered flight ever demonstrated in Seattle, and it mesmerized the exposition goers, Boeing among them.

What Boeing didn’t know, the hydrogen that filled that airship was a low-cost waste byproduct of fertilizer production. Agriculture and fuels have been partnered from the start.

What about fuel conversion? You may not know it, but the founding CEO of the world’s largest oil company, Saudi Aramco, got his start in the port of Seattle selling conversions from coal to oil for the Seattle Mosquito Fleet that carried passengers all around the Puget Sound in the years before automobiles and modern roads.

What about fueling infrastructure? The world’s first gas station was built on Seattle’s Pier 32.

What about transport infrastructure, and big, technological undertakings to open up the Pacific Northwest to new opportunities in global trade? Perhaps the most daunting technological feat of its time was the building of the rail tunnels that brought the Great Northern Railroad into Seattle.

Grand vision? It was a United Airlines CEO who thought up the Space Needle.

And, what about emotional connection with waste residues. The long-running #1 rated children’s show JP Patches was set at the city dump. In Washington state, a generation of children grew up knowing that exciting things were happening every morning at the landfill.

Yes, Washington state has been here before, and five generations of leaders have taken the state on a bold trip into the future; after all, the city of Seattle named its famous 1962 World’s Fair the Century 21 Exposition — and for decades the state has been looking intently at the 21st century, determined to find its place in the future.

The Climate Century

The 20th century was The American Century; by contrast, Century 21 is shaping up as the Climate Century – no matter what your position is on climate change, we sure are talking about climate policy everywhere around the globe, just as two generations ago everyone was talking about Americans.

The important thing to remember in any technology wave like the pivot towards renewable energy is this: you don’t have to believe in the science of climate change to benefit from the opportunities that advanced technology can bring. Not everyone who benefits from a Super Bowl coming to this one town, as opposed to another, is a football fan. For many, the future of the world depends on carbon policy; for everyone, technology, leadership and the benefits that flow from that will go to the cities and regions that participate in the clean energy movement most vigorously. It’s the biggest infrastructure play of the next 100 years.

And a slew of companies are stepping in.

For starters, farmers and forestry companies are generally for low carbon fuels, because they make the feedstocks. Oil companies like Shell, BP, Marathon, Indian Oil, Valero, Phillips 66, Exxon and others are showing where they stand by investing heavily in them. Meanwhile, consumers want less pollution and clean and natural alternatives, and they’ve seen that California’s economy hasn’t fallen off the rails with 10 years after the passage of the California Low Carbon Fuel Standard. British Columbia didn’t collapse, and Oregon did not fall into the sea. Now, Washington state is looking to join The Low Carbon Coast.

The story of energy innovation these past few years has focused on fracking, solar and wind. Now, it’s the biofuels hour.

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