Alternative Energy- Part V

Alternative Energy – Updated Research and Company Profiles
A Sleuth Whitepaper Report
By Greg Guenthner

Alternative Energy: Part V- Reader Comments

So far, I’ve heard from ethanol advocates, the anti-ethanol/biofuels crowd and some very inquisitive (and maybe brilliant) skeptics. So without further adieu, I’m going to jump into the mailbag headfirst to help answer some of your questions and talk about some companies involved in the ethanol business:

“Please note that ethanol made from corn is anything but ‘green.’ the pesticides and oil-based substances used to grow corn are draining [the] south and killing the Gulf. Corn is a disaster.”
— Anonymous

As I mentioned last week, ethanol proponents will argue the “true cost” of a gallon of conventional gasoline, which could even include the soldier protecting the oil field. And on the other hand, what additional costs are involved in corn-based ethanol production? Pesticides and fertilizers, to name a couple…

Here is an excerpt from an article posted by the Sustainable Products Corporation: “But what’s missing in this debate is a real understanding of the true environmental costs of how we manufacture products of all kinds. Take ethanol, for example. Closer examination of ethanol production reveals that the manufacture of pesticides, herbicides and fertilizers used to grow conventional corn to make ethanol create almost as much pollution as the MTBE it replaces. In other words, the things that go into making a ‘clean’ product can be horribly polluting.”

But for every problem, there could eventually be a solution, or at least a compromise…

“The company I am writing about is indirectly related to ethanol production. The company name is Startech Environmental Corp. (OTC:STHK) and its primary technology is a plasma converter system that was developed to essentially rip hazardous waste apart down to the elemental level. It is able to handle such things as: medical waste, outdated pharmaceuticals, PCBs, chemical agents, hazardous incinerator ash, various biological wastes, sludge, paints and solvents, electronic industry waste, contaminated soils, asbestos, etc. It doesn’t break things down beyond the atomic level, so it is not a solution for radioactive waste.

“You are probably wondering what this has to do with ethanol. Using the plasma converter system to destroy unwanted waste produces large amounts of hydrogen as a byproduct. In fact, enough is produced that this process produces more energy than is consumed. This hydrogen can be used as is for fuel cells or can be converted to methanol, ethanol, etc. for use in internal combustion engines. The company has completed the research phase on its technology; it is my understanding that they are now moving forward to begin construction. They have contracts with several other corporations for installation of plasma converters. I believe as they move forward, we will find that this provides a solution for several problems at the same time.” — David

I think something like this could solve Anonymous’ problem with pesticides and corn. When people say “waste to energy,” you probably think of those nasty incinerators that burn your town’s garbage when the landfills become full. Basically, it’s a system that solves one problem (too much trash) with another (air pollution).

But this plasma converter seems to bring the basic idea of waste to energy to the next level. And a system that can create ethanol without using sugarcane, beets, corn or any other plant may be a more viable source of energy with fewer “hidden costs” like pesticides and land use.

Also, there’s an interesting explanation (complete with diagrams) on how the plasma waste converter works on Startech’s site.

“In response to your article regarding alternative energy companies, perhaps a back door play on ethanol can be found in Illovo Sugar (trades on the pink sheets as JNB:ILV).”
— Anonymous

We’re seeing the price of sugar rise along with the popularity of ethanol…and this is no coincidence.

Here is an excerpt from a Jon Markman column on MSN Money: “The great thing about sugar cane as an energy source is that it is incredibly efficient. Many ethanol feed stocks — such as corn, wheat and beets, which are widely grown in the United States — require as much energy to grow and refine as they actually produce in energy. But sugar cane production actually results in a huge net positive energy gain — about 8:1 energy output to energy input. That’s especially so when it’s grown in the country in which it is used, so there is no energy or cost expended in transportation across oceans.”

Brazil has benefited from its multiple growing seasons and sugar production and has successfully converted to ethanol fuels. About 40% of all the fuel sold in Brazil is ethanol.

And yes, sugar is way up, but it is nowhere near its all-time high. Illovo Sugar, the largest African sugar producer, could be a cheap, smart sugar play. It trades on the Johannesburg exchange, and like Anonymous said, you can get your hands on shares via the Pink Sheets.

“I understand how ethanol can work if you can make it from sugarcane, or switch grass, or manure, or other waste, but how can it work in commercial agriculture growing crops that are traditional in the U.S.? The farmer has fossil fuel delivered to his farm at a cost, he prepares the field with fossil fuel, he plants using fossil fuel, cultivates with the same, fertilizes with, harvests with, and delivers with, then the crop is processed into ethanol with fossil fuel, and then it must be delivered into a marketplace with fossil fuel. After all that, there is still a positive gain in BTUs? I would sure like to hear the definitive truth on this issue.” — Ken

Well, Ken, Ethanol Across America, a non-profit education campaign of the Clean Fuels Foundation, has published just such a study to examine the energy balance of ethanol.

Here’s EAA’s take: Ethanol is unfairly criticized, like when all the energy attributed to grow a bushel of corn and process it is counted. The report calls ethanol a co-product of corn, and that means that the corn should only be charged with the energy that was used to turn it into ethanol. After all, corn is a commodity, and it’s probably not grown for a specific purpose — so it is grown due to overall demand and sold into broad markets.

And here’s another argument EAA takes on to battle the “balance of energy” argument: Assume a pile of coal has a latent heat value of 1 million BTUs, but it can be converted into a liquid fuel that can produce 500,000 BTUs. The liquid fuel becomes more valuable because you can fill your tank with it to make your car go. Unfortunately, the same cannot be said for coal.

The report goes on to say that if you limit the debate strictly to BTU’s — then the argument that ethanol production is inefficient is bunk. For instance, electric power plants using coal are only 35% efficient. Basically, any type of energy conversion results in a negative energy balance.

The age of cheap oil is over, and whatever “hidden costs” are mentioned to try and debunk whatever the new alternative fuel is, people will still need to get around, food will still need to be delivered to grocery stores, and planes will still need to circle the globe. Our best stab at the definitive truth is this: The age of cheap oil is over, and something(s) will need to come along and supplement and/or replace it.

“You might want to look at STKL. I primarily invested in this company because of its organic food. They are starting to get noticed because of their cellulosic ethanol technology… With the technology they have they don’t need corn to create ethanol, which solves one of the problems you brought up.” — Ron

Nice find, Ron. SunOpta Inc. (STKL: NASDAQ) basically deals in biomass conversion. They have a steam explosion machine that can process all kinds if wastes and vegetable matter including wood chips, sugarcane, cereal straws, and waste paper.

“In their natural state, these materials are not easily separated into their component parts. By processing with the addition of high-pressure steam, the StakeTech Steam Explosion System breaks the chemical and physical bonds that exist between the components of these materials, allowing their subsequent separation and processing into products and components that potentially have wide and diverse applications,” according to the company’s website.

The company is focusing its efforts on the pre-treatment of biomass for the production of ethanol, which has made it a hot commodity on Wall Street. In the beginning of January, the $472 million company traded for around $5.25. Now the price is up to around $8.30 thanks to some heavy volume.

“I have spent the last year intensely studying both ethanol and biodiesel. The reality is that both fuels will be needed to wean this country off our petroleum dependence.  But I think the case for biodiesel as a better fuel can be made.  Europe, India, and now China are putting major efforts to switching to biodiesel.  Here’s why. Biodiesel can be made out of any fat or vegetable food or non-food oil. The list is endless, and includes recycled and waste oils from various processes. Where ethanol grows only in the middle of the country, a company called Fry-O-Diesel is researching how to use the unlimited supply of trap grease and waste cooking oil.  California has 88,000 restaurants in its trade organization and that represents about 75 million gallons of waste oils. Biodiesel plants so far have primarily been soybean oil based so far but that will change over the next 5 years as these new technologies get perfected that can use whatever fats and oils are available.” — Kari, Biodiesel Council of California

In the long run, I think both ethanol and biodiesel will find their respective places in the market. But for the time being, ethanol has a greater chance of growing because the country is more prepared for it. A regular gas-burning car can run on the lower-concentration ethanol blends. So it’s a good start without having to go out and buy new hardware, so to speak. And flex-fuel vehicles that can run on higher concentrations of ethanol in gasoline are also carving out their niche.

Kari continues: “To truly deal with the reality of global warming we must lower our use of petroleum in all vehicles, heavy and light, and get the absolute best fuel mileage possible. Diesel-Hybrid technology has been used on trains for decades, it is just now being crossed over to vehicles in both the heavy and light classes.”


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