Thoughts on Biofuels part 1

US corn-based ethanol receives a government subsidy of $.50 p/gallon, and is also protected by a $.50 p/gallon (anti-dumping) tariff against less expensive Brazilian sugar cane-based ethanol. Other problems with corn-based ethanol is a poor rate or return in terms of energy invested compared to energy produced. Another serious problems: cb ethanol corrodes pipelines (alcohol attacks water) and is usually shipped via land transport, trucks, trains, adding expense and restricting use to local and regional destinations. Finally, mass conversion of cropland to cb ethanol has proven to have major impact on global food prices.

Brazil is doing great things with sugar-based ethanol. The rule of thumb for synthetic fuels is that the natural resource from which it is derived accounts for most (up to 90%) of the cost of production. Sugar cane ethanol is much cheaper to produce because it is the sugar that is fermented to make alcohol, and obviously sugar cane has a higher sugar content than corn. My sources tell me many Brazilian drivers are using up to 50% mix of ethanol to gasoline. Problem: the product face the economic disadvantage of a tariff and domestic corn subsidies, equalling a $1 p/gallon on a $3 dollar p/ gallon product.

In otherwords, if it weren't for our government and the farm lobby, the Brazilian product could immediately drop our gasoline prices by $1 p/gallon.

You may know that the high flying companies in cb ethanol, like Pacific Ethanol, once the darling of Bill Gates and others, went bankrupt in the depth of the recession.

There are lots of exciting experiments with start up companies and universities developing new ethanol sources from waste wood products. Most are working on using microbes for fermentation, with one of the most promising private companies located in Emeryville. My guess is we've still got some years before a scalable product can be developed. The signal will be when many of these small start-ups go public.

I'm much higher, no pun intended, on bio-diesel products that can be produced from a variety of inexpensive vegetative sources that can be grown on marginal land. Hemp will be key to this delivery.

Service Economy

A Service Economy is one where instead of goods and services being sold to consumers, they are leased. I am over simplifying for the sake of getting the point across. Currently we buy tires for our car, we buy our car, home appliances, computers, etc., etc. The list of things that we buy that in reality are beyond our capacity to fully deal with in terms of getting rid of at the end of their life cycle is HUGE.

In a Service Economy the responsibility for their full life cycle falls on the manufacturer. For instance, you buy a dishwasher and after 7 years of service it craps out and the cost to repair is hardly less than the purchase of a new machine. If the manufacturer has leased the machine to you, knowing full well that at the end of its life or if it needs to be upgraded or repaired, this responsibility is on them to take care of it. This has a profound effect, then on the way things are made and the materials used in there manufacturing. If the manufacturer knows it is responsible in this way, a shift in perception of the product (or in this new case the service) value occurs. And by doing so, the service item would be made to offer the best quality, utility, and performance. This also creates a closed manufacturing loop and instills a level of stewardship on the part of the manufacturer to create services with the least toxic and most recyclable materials.

From Wikipedia...
In some countries, such as Germany, law requires attention to the comprehensive outcome of the whole extraction, production, distribution, use and waste of a product, and holds those profiting from these legally responsible for any outcome along the way. This is also the trend in the UK and EU generally. In the United States, there have been many class action suits that are effectively product stewardship liability - holding companies responsible for things the product does which it was never advertised to do.

Rather than let liability for these problems be taken up by the public sector or be haphazardly assigned one issue at a time to companies via lawsuits, many accounting reform efforts focus on achieving full cost accounting. This is the financial reflection of the comprehensive outcome - noting the gains and losses to all parties involved, not just those investing or purchasing. Such moves have made moral purchasing more attractive, as it avoids liability and future lawsuits.

I think that if the US govt. attempted to create a law like that in Germany (Which I would agree with) it would probably alienate and polarize the topic in ways that would not benefit the end user, specifically us, the customers. Perhaps instead consumers should demand such a service by the manufactures. Speak with your wallet.