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Eye on the Market | November 21, 2011 J.P Morgan Topic: The quixotic search for energy solutions Question #3: What if the world ends up relying on coal forthe next 100 Question #4: What would be the reduction in gasoline needs if the entire U.S. years, and seeks to prevent further increases in carbon emissions. How cornharvest not already used for ethanol were repurposed for more ethanol? large an undertaking is it to bury 15% of all CO2 emissions? 160,000,000 US corn harvest, tonnes, 2010, not already used for ethanol 33.2 billion tonnes of CO2 emissions (2010) 159,667,200,000 US corn harvest, kg, not already used for ethanol 5.0 Sequestration target, billions of tonnes 0.40 Conversion ratio, liters of ethanol per kg Now Iet’s shrink the CO 2 by compressing it before burying it... 63,866,880,000 Liters of converted ethanol 0.80 Compressed gas density, tonnes per cubic meter 67% Energy density of ethanol relative to gasoline 6.2 Volume of compressed CO, to bury, billions of cubic meters 42,699,571,200 Effective gasoline-equivalent savings (liters) f/; 3.9 Amount of global crude oil extraction, billions of tonnes (2010) 521,845,394,389 Liters of total US gasoline consumption in 2010 0.85 Density of crude oil, tonnes per cubic meter 8% Reduction in gasoline needs by repurposing entire corn harvest 4.6 Volume of global crude oil extracted, bn cubic meters (2010) _. ; ; . Implication: Benefits of corn ethanol appear to be close to their maximum Implication: Capturing a small portion of CO. emissions requires a production level. There is of course the issue of ethanol's "energy return on compression/transportation/storage industry whose throughput is greater investment” (EROI), for which estimates range from 0.8:1 to 1.6:1. Charles Hall than the one used for oil extraction; and without the benefit that oil provides at SUNY ESF (originator of the EROI concept in the 1970's) published recent as an energy input. Coal-fired plant capital costs could rise 40%-75% (as EROls for oil (10-20); Tar sands and Shale Oil (3-5); Nuclear (5-15) and Wind per IPCC), and their electricity consumption could rise by 30%-40% for CCS (15-20, but that excludes the cost of back-up peaking plants). In that context, particulate removal and flue gas desulfurization. Unlikely in time to prevent the EROI for corn ethanol, which excludes the various layers of subsidies a further rise in COz emissions; unexplored legal and NIMBY issues as well. involved, is well below the fully loaded economic benefits of other fuel sources. Question #5: What about cellulosic ethanol? And what about using spent Question #6: How much area would be needed for a quarter of US coffee grounds? electricity generation to come from wind? 225,000,000 Tonnes of US corn stover, annual 2.3% Wind as a % of electricity generation 224,532,000,000 kg of US corn stover (using conversion factors from #4) 10 Growth factor 40% Amount that can be removed without destroying soil 23% Target wind generation 89,812,800,000 Stover removed 95,000,000 Existing wind generation, MWh, 2010 30% Efficiency losses (evaporation, transportation, etc) 950,000,000 Target MWh 62,868,960,000 Remaining dry stover of uniform condition for conversion 28% Wind capacity factor 0.34 Theoretical conversion ratio, liters of ethanol per kg of stover 387,312 Required incremental MW of wind 21,375,446,400 Liters of ethanol produced from stover 2 watts per meter squared required for wind farms 14,291,012,736 Gasoline-equivalent ethanol from stover (see #4) 193,656 square km of required area 2.74% Percent of gasoline needs reduced from conversion of stover § And on the need for expensive HVDC transmission lines... And another fun fact..... 30,099,000 US population living in prime wind and/or solar states 0.16% Percent of global diesel fuel production offset by somehow [AZ, OK, NE, WY, CO, ND, SD, KS, IA, MT, NM + Northern TX] gathering all of the world's spent coffee grounds and then 309,350,000 US population sensetting them inte biodiess! Implication: 194 thousand square km is about the entire area of Nebraska. It Implication: Apart from Brazilian sugarcane, which grows 365 days a year would be a massive undertaking which requires, as stated earlier, hundreds of and needs no irrigation or fertilizer (it self-fertilizes), biofuels are challenged billions of dollars for new transmission lines. To be clear, land under wind due to the cost of aggregation, low energy densities and high energy turbines still have many practical economic uses. The larger issues are extraction costs. For alaae limitati te 3. transmission and intermittency, as described below. As for wind, let’s put aside concerns about space requirements and transmission lines. Let’s also put aside problems of wind’s reliance on rare earths like neodymium for its turbine magnets (neodymium prices quadrupled this year, and that’s with wind still making up /ess than 3% of global electricity generation). Let’s also put aside debris (from birds/insects), ice storms and other natural elements that reduce wind farm efficiency. The reason to put them aside: if wind were more reliable, like hydropower, it could justify a lot more expense and effort. Unfortunately, wind is not that reliable. The first chart is the “Mona Lisa” of wind unreliability, measured at one of California’s largest wind farms. The second is from the California Independent System Operator, showing how wind power tends to be low when power demand is high (and vice-versa). Day-to-day variability in wind generation in April 2005 California energy demand vs. total wind - summer 2006 Megawatts Megawatts Megawatts 700 > Each dayis a different color 38.000 California energy 600 - Day 29 , demand (LHS) - 1,000 500 4 = SO ee et eee CiC'4,000 - 800 a \ sy ry - Bey as 400 7 Naas. \ ec - 600 TeheAcay2\ R ie ARES 30,000 300 - 5h \ Oe le fe Ne an . - 400 en Total wind (RHS) 200 - ; - 200 100 22,000 0 0 1234567 8 9 101112131415161718192021222324 123456 7 8 9 10111213 14 15 16 17 18 19 20 21 22 23 24 a. Hours ; Hours Source: Califomia Independent System Operator , Integration of Source: Electric Power Research Institute. As measured in Tehachapi, CA Renewable Resources, November 2007. a HOUSE_OVERSIGHT_030816