Energy Probe

Tom Adams
June 12, 2003

Californian Sam Leach knew that hydrogen was a winner. Near the time of the first Middle East Oil crisis in the early 1970s, Leach convinced gullible American investors to give him US$1-million on the strength of his claim that he had built a car that used ordinary water as a fuel. His "invention" used electrolysis assisted by his secret catalyst. He claimed to be able to decompose water into oxygen and hydrogen, and then use the hydrogen as a fuel to run the engine and generate more electricity than he started with. The claims turned out to be false, but by then Leach and the money had moved on.

Since Leach’s time, hydrogen technology has advanced – it provides power on the Space Shuttle – but the dream of hydrogen as an economical consumer fuel is as remote as ever.

Ballard Power Systems Inc., the Canadian West Coast darling of the hydrogen world, had teamed up with Coleman, the venerable U.S. camping products company, to produce a portable hydrogen fuel cell generator called Airgen, suited for residential and commercial consumers. Coleman lost heart and earlier this week another American firm, MGE UPS Systems, took its place.

Coleman unplugged from the space age after checking into the cost. Listed at $8,181 for a generator rated at 1 kilowatt, the Ballard Airgen costs 10 to 20 times as much as small conventional gasoline-powered portable generators. Solar power, in the form of photovoltaic systems, is substantially cheaper.

Considering only the cost of fuel per kilowatt-hour produced – that is, ignoring the cost of purchasing the Airgen device, plus its installation, insurance, maintenance, equipment to handle the pressure from industrial-grade high-pressure cylinders, and rental costs for fuel cylinders – the price is $13.26 per kilowatt-hour. Ordinary households, without industrial grade systems to safely store high-pressure cylinders, would see higher costs still for a low-pressure alternative. By comparison, conventional portable generators typically burn fuel at a rate in the order of 10¢ to 15¢ per kilowatt-hour, and grid power is available to households across Canada at rates from 6¢ to 11¢ per kilowatt-hour.

Fuel cells are new technologies where rapidly developing know-how can be expected to drive down equipment costs over the next decade or so. Hydrogen, on the other hand, has been produced industrially for over 100 years. Today, it is primarily made from natural gas or by using electricity, mostly through on-site processors designed for just-in-time delivery to avoid the need for expensive storage. Big breakthroughs in bottled hydrogen costs, a very, very mature product, are not likely.

Although it is an essential industrial feedstock, hydrogen, even if it would be produced cheaply, makes a poor fuel. Hydrogen is corrosive to metals. The amount of energy in a cubic meter of hydrogen is lower than that in other gaseous fuels. To store usable amounts of hydrogen, enormous pressures and specialized containers are required. On top of that, hydrogen is explosive.

Hydrogen, like electricity, is not an energy source but a fuel form. Both can carry energy from some ultimate source to some other usage. Converting energy from one form to another necessarily results in efficiency losses, which imposes a particularly heavy burden when hydrogen is produced from electricity, which is in turn produced from another ultimate source.

In theory, cheap, clean electricity could be used to make hydrogen if we didn’t have anything better to do with the electricity. In practice, the best thing to do with cheap, clean power is to displace the expensive, dirty power North Americans now rely on.

Notwithstanding the costs and other practical barriers that have limited hydrogen’s development for 100 years, hydrogen hype hit the political big leagues when President George W. Bush announced C$1.6-billion in his Freedom Fuel initiative in his State of the Union address last January. Earlier this week, the U.S. Senate pledged another C$1.5-billion, this time for a dedicated hydrogen-producing nuclear reactor in Idaho. Given the track record of U.S. government nuclear power production projects, many of which failed to produce much usable energy at all, the cost of hydrogen from this latest initiative may hit new highs.

Canada’s Federal Environment Minister David Anderson, appearing before a parliamentary committee on Tuesday, said that the government will announce details of its Kyoto implementation plan in the next weeks. He’s expected to earmark at least $80-million for hydrogen-powered fuel cell industry.

As Sam Leach used to tell us, hydrogen is the most common element in the universe. Now we hear the same line from Ballard and our politicians. Someone should tell them that electrons are even more common than hydrogen atoms, yet nobody expects the availability of electrons to lead to limitless quantities of inexpensive power.

Tom Adams is executive director of Energy Probe, a Toronto-based think tank. E-mail: TomAdams@nextcity.com.

BACKGROUND SOURCES

Readers respond

Published in the National Post, Thursday, June 19, 2003

At last! An informed and coherent commentary dispelling the myths of hydrogen as an alternate energy source and/or the pollution-free fuel of the future (Hydrogen: Running Energy Policy on Hype, Tom Adams, June 12). Will such facts dissuade the federal government from throwing "at least $80 million" at the hydrogen fuel cell industry as part of its Chrétien-legacy implementation plan? Probably not. – David Cottle, Niagara Falls, Ont.

Mr. Adams makes several technically true but misleading claims. He correctly points out that hydrogen is not an "energy source but a fuel form." Electricity is required to separate water into hydrogen and oxygen. Hydrogen can then be used to store energy until a later time. And he’s correct there is energy loss as electricity is converted to hydrogen and back.

What I take issue with is his implication that individual homes would need industrial grade systems to store hydrogen. This isn’t true anymore than saying we each need to process our own crude oil for gas. Honda and Toyota are doing research into fuel-cell vehicles. These new cars would be dramatically different to your mechanic, but most of us would still drive down the street to the Quik-E-Mart to fill up at a pump.

Mr. Adams also claims "the amount of energy in a cubic metre of hydrogen is lower than that in other gaseous fuels." If you’re planning on burning hydrogen in the same way you might burn natural gas, then you’re going to waste a lot of hydrogen. That’s why we use fuel cells. They recombine the hydrogen and oxygen to make water reclaiming much of the electricity in the process.

Hydrogen is an energy storage medium only. It is preferable to run the electricity, however it’s generated, directly to you. However, cars need mobile and refillable fuel sources. Eventually oil and gas will run low and change will be forced on us. Better to make the change on our terms. – Douglas Wise, Washington, D.C.

Tom Adams responds:
How would you like gasoline at $30 per litre? That is what the industrial price of bottled hydrogen in Toronto – what Mr. Wise is proposing – works out to for the same amount of energy in a liter of gasoline, taking into account the efficiency advantage of the Ballard Airgen fuel cell device relative to a normal car engine.

This article reprinted in May/June 03 issue of Maricopa Green Party Newsletter.

Lawrence Solomon

November 26, 2003

While governments have diddled for decades in the energy marketplace, subsidizing a 500-megawatt nuclear plant here, a 5,000-kilometre Arctic pipeline there, the big energy gains have come via pint-sized innovations in conservation and energy-efficiency. This decade, the biggest little gainers on the planet are LEDs, or light-emitting diodes, those gizmos that first entered the public consciousness in the 1970s through calculators and digital watches.

LEDs are fabulously efficient devices that often can save upwards of 90% of the energy required by conventional lighting methods. Their latest accomplishment: They have just about taken over the market for exit signs in commercial buildings, where they now have an 80% market share. Not impressed? The electricity savings from this one tiny segment of the North American marketplace amounted to about 7.5 terrawatt hours in 2002, and once LEDs have fully penetrated the exit sign market, the North American power grid will no longer need the output of closer to 10 terrawatt hours. That’s equivalent to the power produced by almost three Pickering-sized nuclear reactors.

LEDs will soon dominate the North American traffic light market, too, in the process eliminating about five terrawatt hours a year, or one-and-a half nuclear reactors. It has just started in on billboards and other commercial signs (another two reactors), and Christmas lights (just one-half reactor, because the holiday season is so short).

LED products like these eliminate the need for electric power plants. Other LED products reduce the need for oil wells and tar sand plants. The biggest potential here lies in lights for cars, trucks and buses, into which LEDs have just begun to make inroads. More than 1.5 billion gallons of gasoline a year, and 1.2 billion gallons of diesel fuel, would be saved once LEDs take over. That’s enough fuel to drive all the continent’s cars for four days a year, and all its buses and trucks for 12 days a year.

Large-scale energy supply projects such as nuclear plants and Arctic pipelines leave behind large footprints that create a host of problems for society: They produce pollutants that need to be managed, they consume land that needs to be expropriated, and they require subsidies that need to be raised through taxes. Efficient devices like LEDs, in contrast, tend to solve societal problems instead of creating them by contracting the footprint.

Because LEDs convert more fuel into light than heat, they save on air conditioning costs. Because they produce little heat, they require less heat shielding and cause fewer fires. Because they need less energy to do the job, they produce less pollution. Because they last 10 times longer and are far more durable, they often pay for themselves in maintenance costs alone.

In automobile taillights, for example, these and other design features produce lights that will outlive the vehicle. No replacement costs. No warnings from policemen who otherwise pull you over to tell you you’re driving with a faulty light. No traffic accidents, and liability, caused by lights that fail to function. LEDs, in fact, are safer than conventional lights that function perfectly. LED headlights direct more of their light to the road surface, where it’s needed, less into the eyes of oncoming drivers. LED brake lights take 200 milliseconds less time to turn on: For a car travelling on the highway at about 100 kilometres per hour, that comes to about six metres — more than the length of most cars. To boot, because LEDs are compact, and don’t need access panels for their replacement, they give car designers more options and drivers more trunk space.

LED technology is still in its early days. Although it is present in hundreds of different consumer markets, all involve niche applications, generally where coloured light is required. It has yet to make a breakthrough in most white-light settings, such as street and residential lighting, but those days are fast approaching.

LED’s accomplishments have come chiefly through the efforts of companies like General Electric Co., an early innovator, and without subsidy. Governments have a role to play, though, if they want to speed the pace of LED development, and that of other energy-conserving products. They can stop subsidizing the nuclear plants, Arctic pipelines and other large-footprint projects that compete with the countless little innovations that ultimately make all the difference in the world.

Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institute, divisions of Energy Probe Research Foundation. E-mail: LawrenceSolomon@nextcity.com

Lawrence Solomon

National Post May 29/2004

Trinidad and Tobago, a tiny island nation with vast natural gas reserves that it can’t easily export, earlier this week inked a deal with aluminum giant Alcoa that points to progress for both parties, and for us.

Under the deal, Alcoa will build a US$1-billion aluminum smelter in Trinidad, to use cheap electricity generated by exploiting the potential in Trinidad’s natural gas fields. This is only the second smelter Alcoa, the world’s largest aluminum producer, has built in the last 20 years, the other being a nearly completed plant in Iceland, also an island nation with hard-to-export energy. Alcoa’s new power-guzzling aluminum smelters replace mothballed Alcoa smelters in the United States, which, unlike Trinidad, has higher value uses for its energy. Following U.S. electricity deregulation, power producers can now profitably transmit power to U.S. locales that can use it more intelligently than in low-grade uses, such as converting tons of bauxite into half as many tons of aluminum. The Pacific Northwest alone has seen eight of its 10 smelters shut down, the better to satisfy higher-paying power users such as the west coast’s high-tech and media industries.

This transition in the U.S. away from a commodity resource industry is good for a highly developed economy such as America’s. Even dynamic developing economies such as Russia’s and China’s, to conserve their electricity for higher grade uses, are relocating their electricity-intensive aluminum production to countries that can’t find more productive uses for their power. The list of countries slated for new aluminum production includes the likes of Brunei, Bahrain, Guinea . . . and Canada, whose politicized and over-regulated system directs electricity to crude uses, instead of freeing it up for the highest bidders, anywhere on the continent. To encourage Alcoa to expand in Quebec, for example, the provincial government last week offered it a US$100-million interest-free loan and subsidized electricity for the next 50 years.

Simply put, resource industries, among others that are electricity intensive, routinely lobby for, and obtain, large amounts of subsidized power from our provincially owned electricity monopolies. When Canada stops subsidizing its electricity guzzlers, as China has begun doing, the smelters will move to more sensible locations, simultaneously modernizing the economies of all concerned. Such a worldwide transformation is also underway in fertilizers, plastics, steel, and other energy-intensive industries. Instead of importing energy from developing countries, developed countries are increasingly importing energy-intensive products, to the benefit of all. In Trinidad’s case, the transformation is all the more sensible because natural gas, unlike oil, cannot be easily exported without first converting it into liquid form, an expensive and fuel-consuming process.

With the Alcoa plant, Trinidad will obtain a large workforce – its smelter will employ 1,000 workers during its construction and 575 permanent workers. More importantly, Trinidad’s economy will have an opportunity to diversify away from oil, gas and petrochemicals, which account for more than one-quarter of its GDP: The aluminum smelter, its first, will also support downstream aluminum manufacturing.

Perhaps most important, the island would be tempering its dependence on Liquified Natural Gas exports – a rapidly expanding sector that already supplies North America with two-thirds of its LNG imports. At the same time, because it would be supplying us with the products we would have used the LNG imports to produce, Trinidad would be helping us temper our own growing dependence. Keeping an even keel in LNG is all the more important because, for rich and poor countries alike, the mushrooming LNG industry could blow up at any time.

LNG’s boosters quite rightly boast that LNG, one of the most dangerous products on earth, has had an excellent safety record for 60 years. Sixty years ago, in 1944, an LNG accident incinerated one square mile of downtown Cleveland and miraculously killed only 128 people. After that accident, public horror shut down the industry for 20 years, much as the explosion of the Hindenburg shut down air travel by hydrogen balloon. A lesser LNG explosion earlier this month at a Halliburton Company facility in Algeria, thought to be caused by LNG escaping from a pipe break, led to 27 deaths and US$1-billion in damage.

These are as nothing compared to the potential for catastrophe that comes of cooling some 20 billion gallons of natural gas to minus 260 degrees Fahrenheit, then compressing it 600-fold to allow 33 million U.S. gallons to be squeezed into a single tanker. One nightmare scenario involves LNG coming into contact with water, causing it to boil rapidly and release of a cloud of liquid and gaseous natural gas. If the cloud ignites before it has a chance to spread, the worst-case damage would be limited to an immense explosion, releasing the energy of 50 Hiroshima bombs. If the ignition occurs after the cloud has had a chance to spread downwind, to populated areas within 16 kilometres of an LNG tanker, the human toll from the blanket of fire that could befall a city could run to the tens of thousands. For this reason, in the hours after the Sept. 11 attacks, Richard Clarke, then America’s top counterterrorism official, told the U.S. Coast Guard to close Boston Harbor, fearing Al Qaeda might attack an LNG tanker as it glided past downtown buildings. "Had one of the giant tankers blown up . . . it would have wiped out downtown Boston," Clarke said in his book Against All Enemies.

Should a serious LNG explosion occur by accident or by design, the LNG industry might well be shut down, devastating the economy of LNG-dependent exporters such as Trinidad. The devastation that developed nations such as Canada and the U.S. face should be no less sobering. In Canada, LNG tankers are slated to sail down the St. Lawrence to Levis, opposite Quebec City, if energy companies such as Enbridge have their way; LNG facilities are also proposed for Saint John, New Brunswick, and Cape Breton in Nova Scotia. Along with the risk we are asked to bear comes interferences in the marketplace: To make the LNG industry profitable, companies like Enbridge seek new regulatory protections from competition as well as depending on regulators to continue to channel Canadian energy supplies for the benefit of the few in the resource economy, and for the disbenefit of the many in the greater economy.

Lawrence Solomon
National Post
October 8, 2004

In a pinch, Canada could meet 100% of its electricity needs with wind power, numerous studies indicate. A report released last week by the authoritative General Accounting Office in the United States shows just how attainable a 100% wind power society would be.

The United States, with a smaller land mass than Canada, already meets the needs of two million households through wind power and is adding to that total by putting the equivalent of about 500,000 additional homes on wind power each year. If those windmills were in Canada instead, we would be meeting the needs of about 2.5 million Canadian households through wind by the end of the year. That 2.5 million represents about one-fifth of Canada’s households.

Germany, with an area one-thirtieth that of Canada, blows even stronger, having built more than twice as much wind capacity as the United States. If Germany’s windmills were in Canada, we could now be meeting the needs of about five million households with wind power – more than 40% of all Canadian households. The land mass of just two and a half Germanies, in other words, would be enough to meet all of Canada’s household needs, using existing wind technologies.

Wind technologies haven’t been standing pat, however. Year after year for more than two decades now, this fabled but long-ignored technology has been getting more and more efficient, relentlessly driving down costs. In the 1980s, power from wind often cost US30 cents a kilowatt-hour. Today, says the U.S. Department of Energy, the cost is between US3 cents and US6 cents, allowing it to out-compete many conventional technologies on both sides of the border. In Alberta, for example, the cost of wind power being built by TransAlta is about 5 cents to 6 cents a kilowatt-hour, well below the 9 cents-plus the governments of Manitoba and Ontario may spend to bring power to market from Conawapa, a proposed new mega-dam on Manitoba’s Nelson River. Wind has long been cheaper than nuclear power and at today’s fossil fuel prices, wind power competes well against both oil and gas.

Even before the recent run-up in oil and gas prices, wind power was sweeping the world, with a five-fold increase in capacity since 1997. In the United States, wind power has been increasing at a 28%-per-year clip, far exceeding U.S. government expectations, and there’s no let-up in sight. As it is, 90% of U.S. wind power is generated in just 10 states, more than 50% in just three states. According to a U.S. Department of Energy study, three states alone – North Dakota, Texas and Kansas – could meet the entire energy needs of the United States.

Wind power, of course, currently meets an insignificant part of the power needs of most Western countries. The reason? For almost a century, wind power has suffered a great curse called Public Power. In the early decades of the 20th century, before governments landed hard on the electricity business, windmills were ubiquitous in many farming regions of Canada and the United States, generally to pump water. Because electricity could not be economically brought to rural areas from city power plants, entrepreneurs successfully adapted windmills to small-scale farm use. By the mid-1920s, such companies as Parris-Dunn and Jacobs Wind-electric were electrifying farms throughout the rural areas of the Midwestern prairies, first by providing lighting and charging batteries for crystal radio sets, then, as the technologies advanced, by powering refrigerators, freezers, washing machines, power tools and other appliances. The future seemed bright for windmills; they were the most economical source of power for much of rural North America.

Public Power then blew on to the scene, in the form of rural electrification programs that offered farmers power at deep discounts if they switched from windmill-generated electricity to power from a centralized grid, brought to rural areas at great expense. The windmill entrepreneurs, unable to compete against the government-mandated subsidies, were snuffed out, ending their innovations and replacing their renewable-energy technology with power from remote power utilities that typically relied on burning coal. Wind technology remained extinguished for decades, until the environmental movement resurrected it in the late 1970s. Now wind technology is roaring back, logging the fastest growth of any energy technology in the world.

Wind has many selling points, apart from its availability. It doesn’t pollute, it doesn’t run out. And unlike most of its competitors, its cost keeps falling. Yet despite these attractions, a crash program to switch us to wind would be a mistake. Other energy forms also have their attractions, and they, too, are plentiful. Canada’s tar sands have enough petroleum to run our power plants indefinitely. Our natural gas is also endless for all practical purposes, as are our uranium, our coal and our solar-energy resources. The availability of energy is not at issue, only the cost, cleanliness and safety of our energy choices.

In all these areas, governments have spoiled the electricity marketplace by subsidizing all energy forms – oil and gas, wind and solar, coal and nuclear. The subsidies have enabled dirty fuels, such as coal, to compete and dangerous ones, such as nuclear, to exempt themselves from legal liability. The subsidies have turned reality inside out, making the implausible seem normal and the normal seem impossible.

Without subsidies, windmills would be a commonplace that dotted our countryside and perhaps our cities, too, while nuclear power would be a rarity, mostly limited to the university and government research labs that could afford them. Without subsidies, we would consume less natural gas and oil, and be much more efficient in our use of power, using perhaps half as much as we do today to enjoy the same standard of living.

Without subsidies, we would have assured energy supplies. Instead, we subsidize energy and suffer periodic shortages. All because our politicians have no principles to guide them, and go whichever way the wind blows.

Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institute, divisions of Toronto-based Energy Probe Research Foundation. www.Urban-Renaissance.org

Tom Adams
Globe and Mail
December 2, 2005

Letter to the Editor
Globe and Mail
December 2, 2005

Re: Biofuel Revolution ‘beginning to happen now’ (December 1)

While ordinary Canadian have some excellent biofuel options for home heating using pelletized forestry and agricultural fuels, ethanol from starch crops like corn and biodiesel from oil crops like canola are not environmentally attractive. Leading ecology researchers, such as Cornell University’s David Pimentel, have demonstrated that road fuels derived from starch-based ethanol and biodiesel consume more fossil energy during their production than they yield. The more ethanol and biodiesel we use, the worse our energy and environmental problems get.

Tom Adams, Executive Director, Energy Probe

Biofuel revolution ‘beginning to happen now’

by Michael Vaughan, Globe and Mail, December 1, 2005

Biofuels produced from plant and animal feedstocks are growing by an estimated 10 per cent a year. Last week, for example, New York Governor George Pataki announced an initiative to increase the production of biofuels in New York State, part of a plan to help reduce the state’s dependence on foreign energy sources.

Under the executive order, state agencies will be required to purchase biofuels for use in heating and cooling plants and in their motor vehicle fleets. The order mandates that by 2012, at least 5 per cent of the heating fuel used in state buildings will be bio-diesel. By 2007, at least 2 per cent of fuels used in the state fleet must be biodiesel, with this percentage rising to 10 per cent in 2012.

The state government believes there’s about 800,000 hectares of underutilized farmland in New York State that could be put into productive use growing energy crops.

However, if biofuels are ever to supply more than a small percentage of transportation fuels, new technology and more efficient production methods will be needed, some of which are being developed in Canada.

Gord Surgeoner was born and raised in Southern Ontario and received his agricultural education at the University of Guelph and Michigan State University.

He was a professor in the Department of Environmental Biology, and then the Department of Plant Agriculture at the University of Guelph until his retirement in January, 2004. Since 1999, he has been the president of Ontario Agri-Food Technologies, a non-profit organization consisting of members from farm associations, universities, industry and governments. He recently received the Order of Ontario.

Vaughan: I’d prefer to buy my automotive fuel from an Ontario farmer than a multinational oil company. Is there any chance that that’s going to be possible?

Surgeoner: It’s beginning to happen now.

We have 10-per-cent ethanol blends but they’re still sold by the major oil companies. You’re not going to create a whole separate retail channel out there. You’re going to have the Essos, the Shells and the Sunocos and so on. But if you drive in today to a Sunoco station you may be filling up your tank on a 10-per-cent ethanol blend, and the ethanol would have probably come out of Chatham, Ont., or from Commercial Alcohols Inc. and a large percentage of the corn that created the ethanol came from Ontario farmers.

Right now, the United States of America is by far the world’s largest supplier of corn. The No. 1 use for corn is animal feed, but ethanol has become the No. 2 use.

The day is coming rapidly when we will have what we call E-85 blends, in which 85 per cent of the fuel will be ethanol. Ford has announced that 250,000 of its vehicles will be flex-fuel. In other words, you can have 85-per-cent ethanol blends providing the fuel for that car. As we replace fossil fuels there will be an increased demand for what we produce in agriculture.

Vaughan: So is that it – is that as far as we can take the trend toward agri-fuels?

Surgeoner: Well, there’s biodiesel as well. In the province of Ontario, we have a 5-per-cent ethanol standard in gasoline, and I think we will see a similar standard for biodiesel in diesel fuel.

What I love about biodiesel is that we have some great Canadian technology that came out of the University of Toronto. Biox Corp. is building a 90-million-litre-a-year biodiesel plant in Hamilton right now. Rothsay, a division of Maple Leaf Foods Inc., is about to bring a 30-million litre plant on stream in Montreal.

The feedstock for these plants is an agricultural product but it’s a waste product; it’s grease that’s been used to cook French fries and chicken and so forth. It’s restaurant grease, and it’s also rendered animal material.

However, if we have a bad year for soybeans and the quality of the crop isn’t good for human feed or even animal feed, we can make biodiesel from soybeans, too.

Canola is the same. If you look at Europe today, the number one use of crops is biodiesel. All the rape seed in Europe, including all those yellow fields you see in England, those are diesel crops.

In Europe most of the biodiesel – and it’s a very large volume – is being created from crops, but it’s on what I call European economics, which is heavily subsidized.

Vaughan: So is it just subsidies that prevent Ontario farmers from getting into more of the fuel-producing crops?

Surgeoner: In Canada we have not historically spent a lot of time breeding our crops for new end-use purposes.

If we look at our soybeans, for example, we breed for high levels of protein. That makes great tofu and all kinds of foods, but to do so you sacrifice some of the oil in the crop.

But what happens if we bred soybeans not for food but for diesel? We would be at the start of what I call the innovation curve. We would make great gains early, I would think. We know some of the genetics that would make higher oil, and we have studies that say if we can get the oil content up in soybeans to this level, then it makes a lot of sense in biodiesel plants.

Vaughan: And will we pay a lot extra for these biofuels because we feel good about it?

Surgeoner: Actually, it depends what the price of oil is. At the current prices of oil, no you won’t pay extra. If a barrel of oil went back down to $10 a barrel, yes you would.

But what the consumer pays for biofuels at the end of the day is based on its functionality against the competition, which is fossil fuel. But we would eventually get into the classic supply and demand balance.

I guess that the point that I would make is that the more that we can replace fossil fuel – and we are never going to totally replace it in my lifetime – the more demand we put on agricultural products to make up the difference. But indirectly, in many ways, you will pay less for it.

I’m not sure of the exact number, but we have 30 or 40 smog alert days a year in Toronto. What we’re really doing is we are buying cleaner air.

If I sit in a hot August afternoon on Toronto’s Don Valley Parkway, then clean air suddenly becomes very important to me. On smog alert days we can see the increase in emergency room treatments.

So it’s about removing some of the demand for fossil fuel. It’s about cleaner air; it’s about better health; and it’s about rural development.

Vaughan: Okay, so let’s talk about rural development. Has the movement toward bio-fuels raised farm incomes and improved the viability of agriculture?

Surgeoner: In Ontario at this point I would unfortunately have to say, not yet.

The main reason is international trade issues. U.S. farmers are heavily subsidized. In my opinion, our farmers can compete with most people in the world on a level playing field, farmer to farmer. But if I have to compete against the U.S. Treasury or the European Union Treasury, that’s a pretty tough deal.

But our farmers’ advantage is, if you are near the ethanol plants, then you have lower transportation costs. And you don’t have border-crossing issues, which probably saves 10 to 15 cents a bushel. But that’s the max right now.

Still, if we didn’t have those markets today for ethanol, we would be so awash in corn that the price would be even lower. So the short answer about improving the viability of agriculture, again, is not yet.

Michael Vaughan is co-host with Jeremy Cato of Car/Business, which appears Fridays at 8:30 p.m. on Report on Business Television and Saturdays at 2 p.m. on CTV.

More on the subject . . .

What about CO2?

Re: Clean Coal: What About C02?, Letter, National Post, Jane Forbes, Nov. 19.

Ms. Forbes, of OISE/U of T, should know more about combined-cycle clean coal technology before she criticizes it.

In a nutshell, the process entails the combustion of coal in a self-contained oxygen-deficient environment, and in stages results first in CO plus other gasses and then CO2, N2, NOx and H2. All gasses are captured, so that the CO2 can be sequestered and the H2 separated. In addition to heat, the H2 byproduct has energy value.

We had an excellent presentation by the Clean Coal Power Coalition at our CIM branch in Winnipeg about two years ago, and the industry estimate then was that electricity prices in the order of 8 cents per kWh were required. The current marginal cost of producing additional power from natural gas- driven co-generation likely exceeds that price at current natural gas prices, so here we are in the future.

Credit is due to a committed environmentalist like Tom Adams for being prepared to discuss appropriate use of coal within the discipline of a scientific framework.