If I were half as smart as Richard Branson and just half as richhell, a tenth as richI'd have a Gulfstream in my hangar instead of a J-3. Branson, whose Virgin Atlantic is one of the world's high-profile airlines, has a flair for showmanship and perhaps a talent for greenwashing, too.
At least that's what I thought when this week's story on his plan to begin fueling his airliners with an alternative fuel made from the effluent of steel and power plants appeared. Recall that previously, Branson got involved with a proposed bio-fuel project using palm oil as the feedstock. He even flew one of this 747s on a blend of such fuel. Here's a quote from the story that deserves further parsing.
"With oil running out, it is important that new fuel solutions are sustainable
this new technology is scalable, sustainable and can be commercially produced at a cost comparable to conventional jet fuel." Such statements are quite maddening because they lack credibility and people as smart as Branson should know better. Bio-fuel and alternative-fuel initiatives have emerged and died like flies one after the other because the claims for them, if not overstated, are flat out wrong. In case you haven't noticed, it's a chore to fill up your fancy Flex-Fuel SUV with E85 because there are so few E85 stations. And even if you could, you probably wouldn't because it would cost more. Bio-diesel has made some nice gains, but still only accounts for a paltry 2 percent of world production.
The overwhelming reason that this is true is because Branson's "with oil running out" statement is complete hogwash. Most people in the energy industry know this but only the radical fringe in the alternative fuels industry continue to push the idea that "peak oil" is upon us. They have been saying this for 120 years and have been consistently wrong.
In his new book, The Quest: Energy, Security, And the Remaking of the Modern World, author Daniel Yergin points out that there have been five great eras predicting the demise of oil. The first was in 1885, after oil was discovered in northwestern Pennsylvania. No less than the state geologist predicted that oil was "a vanishing phenomenon" that would soon run out. After World War I and again in the 1920s, as Ford cranked out cars in thousands, oil supplies were seen as soon depleting. In fact, Henry Ford put Charles Kettering to work developing a fuel alternative, one of which was to be ethanol. By the 1960s and 1970s, the work of M. King Hubbert came to the fore. A geologist, Hubbert developed a depletion curve that bears his name. It's sometimes called the Hubbert Pimple.
But in his predictions, Hubbert and subsequent peak oilers failed to consider two things, says Yergin: The advance of technology and price effect on demand and production. Price has shown to substantially impact oil usage and is subject to forces that are impossible to predict, what Yergin calls "above ground" factors. But just as big a driver is the advance of technology in finding and producing vast volumes of oil heretofore unreachable. That mess that BP made with the Macondo well in the Gulf last year poked a hole in one of the richest offshore finds yet. The more oil we use, the more we seem to find. Price has one other effect: When oil prices are high, oil companies get busy investing in new exploration and technology. Thus far, such investments have paid off.
Says Yergin, by 2010, oil production was four times higher than Hubbert's models predicted. At the end of 2009, proven oil reserves were, at 1.5 trillion barrels, slightly higher than they were at the beginning of the year. That means discoveries and additions in existing fields were more than enough to replace what was used. This pattern has proven true in many years. And I haven't even touched on the revolution going on natural gas and gas to liquids projects, such as Shell's Pearl GTL.
This is diametrically opposed to Branson's "with oil running out" comment and is at the heart of why bio and alternative fuel proposals always seem like such pie in the sky and why so many fail. When their supporters claim these projects are "scalable and sustainable" I suspect they do what Hubbert did. They view oil resources as static and finite, despite 150 years of history showing just the opposite. Further, oil and gas exploration respond dramatically to technological innovations.
This may be true on the bio-fuels side, but the economics just don't seem to be catching up to petroleum. Enzyme-based processes look particularly promising, but there's no there there just yet. Predictions about scalability have widely missed the mark because of over optimistic assumptions.
In this article, the CEO of LanzaTech, the company whose technology Branson was touting, said the technology was "close to being able to make ethanol without subsidies." This is a little silly on its face and rather like saying we're just about to turn the corner on making coal from compressed sea weed. Ethanol has proven itself to be a marginal fuel at best, although it's a valuable chemical for other purposes. LanzaTech's technology, by the way, uses organisms to eat the gas effluent from steel mills. Its larger value may be to reduce emissions while producing a saleable byproduct that, even if more expensive than oil-derived fuel, still has value.
None of the foregoing is to suggest bio-fuels are hopeless and research on them should stop. Quite the contrary. Even in the oil industry, it's generally accepted that alternatives will be part of the energy mix, although if proven oil reserves keep expanding, they'll struggle to make inroads, such are the overwhelmingly favorable economics of oil.
As pilots and aircraft operators, we use gobs of fuel and electric airplanes, diesels and other advances aren't going to change that. So we need to keep an eye on alternative fuel ideas. My larger point is that as readers, we ought to be informed enough to recognize when we're being fed a line or at least when claims don't seem to add up. A good place to start, by the way, would be Yergin's book.