Weekly Clean Energy Roundup:November 2, 2006

News and Events

• DOE Awards $100 Million for Hydrogen Fuel Cell Research
• DOE Awards $8.6 Million for Alternative Fuel Projects
• EPA Encourages the Use of Biofuels to Transport Freight
• DOE Offers $17 Million for New Cellulose-Fermenting Organisms
• Partnerships Indicate Growing Interest in Cellulosic Ethanol
• U.S. Wind Power Industry Tempers its 2006 Forecast Slightly

Energy Connections

• Oil Companies Increase Investment in Canadian Oil Sands

News and Events

DOE Awards $100 Million for Hydrogen Fuel Cell Research

DOE announced last week that it is providing $100 million for 25 hydrogen research and development projects. The cost of the projects will total approximately $127 million, with the additional $27 million covered by the applicants. Fuel cells use hydrogen and oxygen to create electricity and effectively produce zero emissions, with only water and heat as byproducts. They can be used in various applications, from portable devices to buildings to vehicles. The new projects will focus on fuel cell membranes; water transport within the stack; advanced cathode catalysts and supports; cell hardware; innovative fuel cell concepts; the effects of impurities on fuel cell performance and durability; and fuel cell demonstration projects to build international and intergovernmental partnerships. These projects will directly address the goals of the President’s Hydrogen Fuel Initiative, which seeks to make fuel cell vehicles practical and cost-effective by 2020. States with organizations that have received awards include Alabama, California, Connecticut, Illinois, Massachusetts, Minnesota, New Mexico, New York, Ohio, Pennsylvania, South Carolina, Tennessee, and Washington. See the DOE press release and the President’s Hydrogen Fuel Initiative.

DOE Awards $8.6 Million for Alternative Fuel Projects

DOE announced last week that it has awarded $8.6 million for 16 projects to expand the use of alternative transportation fuels. With the participants’ contributions, the total investment in the projects will exceed $25 million. The Clean Cities program is providing the grants, which cover three topic areas: improving the refueling infrastructure for alternative fuels and E85 (a blend of 85 percent ethanol and 15 percent gasoline), funding the incremental cost of alternative fuel vehicles, and providing idle reduction training and awareness for school districts.

Thirteen projects will address the refueling infrastructure for E85 and other alternative fuels. These projects will focus on installing new facilities or making improvements to existing sites that dispense alternative fuels in 25 states and the District of Columbia. The projects as a whole will install about 180 E85 stations, 55 biodiesel stations, five new or expanded compressed natural gas stations, and one liquefied natural gas refueling station. The projects will also add one E85 fuel rack and 10 biodiesel blending facilities to wholesale fuel terminals. The infrastructure projects are expected to reduce the consumption of petroleum-based fuels by up to 30 million gallons per year.

The one project selected to address the incremental cost for alternative fuel vehicles will assist California-based Paramount Scaffold, Inc. in replacing 44 diesel-powered trucks with 44 liquid- propane-powered trucks. In addition, two projects in Utah and Oklahoma will focus on delivering training and awareness programs to reduce vehicle idling in school districts. See the DOE press release and the Clean Cities Web site.

EPA Encourages the Use of Biofuels to Transport Freight

The U.S. Environmental Protection Agency (EPA) is encouraging the freight-hauling members of its SmartWay Transport Partnership to commit to using renewable fuels. EPA launched its new SmartWay Grow & Go program last week with the goal of having one quarter of its SmartWay Transport partners using renewable fuels by 2012, and half of them using renewable fuels by 2020. There are currently 481 SmartWay Transport partners, including major truck and rail carriers as well as shipping and logistics companies. Among the current partners are H-E-B and Meijer, which are expanding the sale of renewable fuels at their retail pumps, and Coca-Cola Enterprises, which is expanding the use of ethanol and biodiesel in its light- and heavy-duty fleets. See the EPA press release and the SmartWay Grow & Go Web page.

The EPA plays a crucial role in the growth of the renewable fuels industry, since the agency is setting the rules for a national program requiring increasing levels of renewable fuels production over the next six years. The Renewable Fuels Standard (RFS) Program, authorized by the Energy Policy Act of 2005, requires 4.7 billion gallons of biofuels production in 2007, increasing gradually to 7.5 billion gallons in 2012. And although EPA announced the proposed rules on September 7th, the rules weren’t actually published in the Federal Register until later that month. See the official text of the proposed rules.

DOE Offers $17 Million for New Cellulose-Fermenting Organisms

DOE is offering about $17 million for the development of highly efficient organisms that can convert cellulosic biomass into ethanol. DOE’s Funding Opportunity Announcement, issued on October 19th, seeks com
panies to develop fermentative organisms, such as yeasts and bacteria, that are genetically stable and can survive a wide range of environmental conditions. Because the goal is to build a high-volume cellulosic ethanol industry, the organisms should thrive on forms of biomass that could be available in sustainable quantities exceeding 100 million tons per year. Participating companies must be willing and able to commercialize the organisms they develop and must have a sound business strategy to license and market the organisms. DOE expects to have about $17 million for this effort this fiscal year and expects an additional $10 million in fiscal years 2008 and 2009, subject to congressional appropriations. Interested parties need to submit a letter of intent by November 16th and the full application by January 4th, 2007. See the DOE Funding Opportunity Announcement.

Partnerships Indicate Growing Interest in Cellulosic Ethanol

With rapid growth in the corn-to-ethanol industry, a growing number of companies and organizations are showing interest in developing the next-generation ethanol fuel, which will be derived from cellulosic biomass sources such as grasses and residues from forest and agricultural industries. That interest has been expressed publicly in the form of partnerships, as research groups attempt to combine their strengths to solve the puzzle of unlocking carbohydrates from cellulose. One example is Chevron Corporation, which announced a five-year, $25 million partnership with the University of California, Davis, in late September, and then announced another five-year partnership with DOE’s National Renewable Energy Laboratory (NREL) in early October. See the Chevron press releases about the partnerships with UC Davis and NREL.

About the same time, Broin Companies, an ethanol producer, teamed up with DuPont on cellulosic ethanol. Last week, Broin announced that it is also teaming up with Novozymes, a developer of enzymes for ethanol production. All three companies have been involved with DOE and NREL in extended research programs to advance ethanol production technologies. The latest partnership was announced on Monday, as biofuels producer Abengoa Bioenergy teamed up with Dyadic International, Inc., another producer of enzymes. See the press releases from Broin about its partnerships with DuPont (PDF 17 KB) and Novozymes (PDF 36 KB), as well as the Dyadic press release. Download Adobe Reader.

U.S. Wind Power Industry Tempers its 2006 Forecast Slightly

The American Wind Energy Association (AWEA) announced last week that the U.S. wind energy industry remains on track to set a record for wind power installations this year, with U.S. wind generating capacity increasing by 2,750 megawatts (MW). That forecast is actually down somewhat from the 3,000-MW growth predicted by AWEA earlier this year, because some of the projects that companies meant to complete this year will be delayed until 2007. However, the lags in this year’s projects, combined with an expected rush on projects next year to beat the expiration of the production tax credit, should cause 2007 to shatter all records. AWEA currently anticipates the installation of up to 3,500 MW of new U.S. wind power capacity in 2007. See the AWEA press release.

A critical factor for the growth of new wind power is the availability of transmission lines to deliver the wind power to consumers, an issue that several western states are currently addressing. In Texas, Governor Rick Perry has secured $10 billion in funding commitments from private companies to build the transmission facilities needed to support the state’s burgeoning wind power industry. The state’s Public Utility Commission will direct the construction of the new transmission lines. In Montana, Governor Brian Schweitzer announced last week that TransCanada is moving forward with its $2-billion NorthernLights Transmission project, a high-voltage direct-current line that will deliver Montana’s wind power to the Southwest. And in California, the Independent System Operator (ISO), which operates the power grid, plans to petition the Federal Energy Regulatory Commission to allow investors to build transmission lines into renewable resource areas and to gradually recover their costs from renewable energy generators. Currently, the first renewable project in an area needs to shoulder the cost of the transmission line, creating a financial barrier for small renewable energy companies. See press releases from Governor Perry, Governor Schweitzer, and the California ISO (PDF 117 KB).

National Grid, which operates transmission systems in the Northeast, issued a white paper in late September that urges changes in transmission policies to remove such obstacles for renewable energy generators. The report calls for comprehensive regional planning; a fair cost allocation for transmission system improvements; federal and state cooperation on siting and cost recovery; and policies that address the unique characteristics of renewable power generation. See the National Grid press release and report (PDF 1.2 MB).

Energy Connections

Oil Companies Increase Investment in Canadian Oil Sands

Oil companies are aiming to increase the production of heavy oil from Canadian oil sands in coming years. In early October, EnCana Corporation and ConocoPhillips announced a partnership to create an integrated heavy oil business with the goal of produ
cing 400,000 barrels per day of heavy oil by 2015. EnCana owns the development rights to sufficient resources to produce an estimated 6.5 billion barrels of heavy oil, but currently produces only 50,000 barrels per day. Last week, a Chevron Corporation subsidiary announced its participation in a $10 billion project to expand heavy oil production at the Athabasca Oil Sand Project, a joint effort of oil companies that is currently producing about 155,000 barrels per day of heavy oil. The expansion project aims to increase production to more than 255,000 barrels per day of heavy oil by 2010. See the press releases from EnCana and Chevron, and for background, see the March 8th article from this newsletter.

According to Canada’s Pembina Institute, under a business-as-usual scenario the Canadian oil sands industry will contribute 47 percent of the nation’s growth in greenhouse gas emissions between 2003 and 2010. Pembina, an environmental policy research and education organization, claims that the industry could be carbon neutral for as little as $2.50 extra per barrel of oil. The Pembina report suggests improving energy efficiency, switching to less carbon-intensive fuels, capturing and storing carbon emissions, and buying carbon credits. See the Pembina Institute press release and their Web page featuring the report and a related fact sheet.

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