Jericho: The Death of Biodiesel

The long time readers of this blog know that Max and I are techno-buffs and futurists. I think it's a pretty easy call to make - we both are of the school that technology has the potential to make our lives better.

As most of you are aware, I'm out of work. The job market is pretty scary right now and I'm looking down a long, dark tunnel of unemployment. It could be a while before I find something.

The last few weeks I have been going over my options. I might be able to get some training paid for by the government. If you can cut through all the red tape and BS of not only the state & federal bureaucracy but also the bureaucracy of the school I want to attend.

If I can pull it off, that would be great - but do I want to go back into the IT industry? The last eight years qualifies as "once bitten" and I am surely "twice shy!"

There is starting my own business. This is never easy, but it's made harder by the state of the economy combined with my lack of experience. Further, I don't want to just make money. If I had the opportunity, I'd like to do something that actually made the world better. Making the world better and getting rich in the process would be excellent!

No! I never set the bar too high! Not ever!!

More than two years ago, I put up a post about Alternative Fuels and James Woolsey ... at about that point, gas was pretty expensive. So, I really started thinking about alt fuels and biodiesel. Time after time I've come back to thinking about biodiesel. How is it made? Could I make it? Could I sell it? Could I make a business out of it?

When I start dreaming, I instantly go big! Really big! I always have.

So, of course, I dive into the internet and start looking for anything I can find on biodiesel. I've learned this from Max. Max can research anything to death and I envy his search engine mad skillz. There's a lot of info out there, even early on. (Way more has shown up in the last two years!) Almost immediately, I'm onto something good about algae.

You see, we have to find alt fuels. We're going to run out of oil. Besides, oil is already expensive and not secure. Every time there's a mention of a war, the price of a barrel of oil doubles. Would people panic about oil if their transportation fuel of choice was grown in this country and shipped to the rest of the world? Nope!

So, in looking for alt fuels, people have gravitated to the original fuel: food. Corn is made into Ethanol. Soy and Palm oil are made into Biodiesel. (Actually, any fat can be made into Biodiesel.) There are problems with this. We have 6.6 billion people on the planet - talk of 9 billion before 2050. Food is not exactly plentiful in all regions. Food is plentiful here in the US - but many environmentalists are horrified by how it's grown. (For one, I think we have bigger problems!) Food prices have risen drastically the last decade. Partially from the rise in fuel costs. The other part - because we are turning food, like corn, into fuel. Environmentalists are concerned that larger and larger parts of forests are being burned and cultivated to grow trees for palm oil to be used in biodiesel. As you can see, this is problematic.

Now, what if there was a way to grow a substance that wasn't part of the food system? What if we could use non-arable land, that way we are not converting agricultural land into fuel land? What if the fuel made from this substance would be better for the environment than fuels currently on the market? Shouldn't someone research that?

They did. Your tax dollars paid for a DOE study into micro-algae. The study was aimed at sequestering CO2 emissions from coal fired electrical plants. The study was a success. They found micro-algae that were 50% oil; all they needed were sun, water, simple (read: cheap) nutrients and the CO2 from the plant. But, the study stopped there. No further study was done on what to do with the algae nor was there a further push to make this part of coal electrical plant operations to cut CO2 pollution. Carbon dioxide is a major green house gas and is contributing significantly to climate change.

So, we have a plant that is 50% oil. It wouldn't be hard to squeeze out that oil. Then you have vegetable oil - from which you could make biodiesel. The DOE study used open ponds as the current agricultural algae growers do, they figured 2000 gallons of algae per acre per month. If you have 100 acres, that's 200,000 gallons of biodiesel a month. When diesel fuel was nearly $5 a gallon and the Federal government had a program giving a biodiesel producer a $1 a gallon - all of the sudden this starts looking like serious money!

The best part is that this would be a short cycle CO2. In other words, when you burn gas or diesel or any other petro-chemical fuel, you are digging up carbon that is already in the ground and putting it back into the air. (And there are people that don't think this pollution will cause some kind of climate change ... global warming deniers. Think before you speak! Go sit with the holocaust deniers and the freaks that overestimate our government by thinking they could convincingly fake a moon landing!) But, with bio-diesel, you are pulling CO2 out of the air, then putting it back - you are not adding extra.

As I'm investigating this, I run across a company that produces a closed loop algae process.



Well, that was the beginning of the end for me! My dreams start getting huge. Before I know it, I'm looking at huge plots of land, hundreds of acres of desert in Texas, New Mexico and Nevada. Plus, this VAT product claims to get higher yields than open ponds, into the 100,000 gallon per acre per year range. Well, I'm gonna be rich! And helping the environment. And making the world a better place! I'm a god-damned hero and I haven't yet done anything!

I give myself a reality check and start trying to think smaller. Again, you can make biodiesel out of any fat. There are reasonably priced biodiesel processors out there. There are companies from whom one can buy yellow grease, the industry name for used vegetable oil - old fryer fat. I could purchase a few processors, get some WVO (waste vegetable oil) and get to work. At $5 a gallon, I could have made a lot of diesel and made a lot of money from it!

Now, the above represents my thought process, on and off as it was, for the last two years. I can go back through my email and find this biodiesel soaked trail that leads off into several dead-end paths. My life got busy and I put it onto the shelf next to all the other ideas and projects I have left undone.

I've come full circle. I'm back to thinking about these things. With unemployment dragging on and my responsibilities to my family limited really to myself, I have room for a lot of risk. But, as you will see, there is risk and then there is suicide.

Two years is a long time and a lot has changed. In that time, fuel prices have dropped quite a bit. The current national average price of a gallon of Diesel is $2.50. While this has happened, a great deal of people have jumped on the Biodiesel band-wagon and quite a few of them have gone out of business. Two years ago, soy bean oil was regarded as a by-product and it was quite cheap. Today, according to a study I read from a major university, a gallon of soy bean oil - just the oil, goes for about $2.50. That same study had a theoretical soy oil biodiesel plant producing a gallon of biodiesel for about $2.80. That's break even, no associated profit in that number.

I found a site that sells yellow grease. They are selling for $.41 cents a pound. There are eight pounds in a gallon, thus a gallon would be $3.28. They offered biodiesel as well at $6.00 a gallon.

So, the small scale, "make biodiesel at home for fun & profit" concept is pretty much out the window. I'm back to looking at 300 acres of land in Nevada for $80k and building green houses and trying to produce algae oil for as cheap as possible. Let someone else make the fuel - at this point if I can find a way to make algae at a dollar or so a gallon, I'll be rich.

Yeah! Sure.