The Future of Transportation Fuels

March 27, 2012

Michael Crumbliss for RedOrbit.com

The annual MIT Energy Conference has grown to be the premier energy conference of its kind, drawing participants from around the world to discuss the current and future state of energy production, use, and technology. The conference in its seventh year still entirely planned, managed, and led by students from the college. In my opinion the students´ direct involvement keeps the conference honest, progressive, and productive. Every talk or panel I attended was at full capacity with young inventors, entrepreneurs, and college freshman sitting beside CEO´s of multinational corporations and industry veterans of all types.

This panel met to discuss the future of fuel use, production, and pollution in transportation. The need to find alternatives to fossil fuels is paramount, if only because the supply of fossil fuels is finite and being consumed at an ever increasing rate. We are going to run out. Not tomorrow, but it will happen. And concerns about pollution from use and drilling and mining run high. The panel was made up of a wide variety of representatives from the US Air Force, Ford Motor Company, makers of ethanol, Chevron, the FAA, and  a venture capitalist investing in alternative fuels.

The transportation sector in the US and around the world is heavily, sometimes exclusively, dependent on the burning of petroleum. Alternatives to gasoline and standard diesel fuel have been developed from multiple sources including algae, waste cooking oil, and compressed natural gas.

The panel discussed the challenges of implementing alternative fuels in their various industries. The panel agrees that since this is a trillion dollar market the motivation is abundant to find alternative fuels. Most think natural gas is the most obvious alternative. Railroads and over-the-road freight trucks are already switching to natural gas from diesel in large numbers. It is much cheaper.

The speaker from Ford Motor Company presented an unexpected viewpoint. He says that “Ford is not actually the user of the fuel.” They produce the machine that uses it. The customer who buys the car uses the fuel. This seemed a hair-splitting point at the time, but he went on to explain.

Ford calculates that by increasing efficiencies in design, decreasing weight, hybridization, and using smaller, more efficient engines they can reduce fuel use by about 30% before they run out of options. Hydrocarbon fuel is not easily replaced for now.  Biofuels are a possibility and are already used in the form of ethanol.

He said that Ford is a company that makes cars, not fuel, and that they will engineer backward for demand for commonly available fuels. If people want ethanol, electric, natural gas, or natural gas, then Ford is glad to design for these fuels.  But they won´t ruin their customer base by creating limited vehicles.  These fuels have to be present at regular stations, like gas stations now. The new fuel must be standardized and available for customers at frequent and convenient intervals. Switch the stations and they will switch the engines.

The US Air Force speaker says that the USAF uses 10% off all jet fuel in the US, and spends about 8 billion dollars a year. They would very much like to cut that expense, and for security reasons would like to have better control over the fuel supply that keeps them in the air. Thus the USAF has long been a leader in alternative fuel research.  They are are working with partners globally to test biofuels and alcohol-based fuels,

The speaker from Chevron spoke to the difficulty of integrating biofuels into the supply chain as required by the US government. 10% of standard gasoline today is made from ethanol. While Chevron is working with multiple joint ventures to increase biofuel use, the speaker said emphatically that it is impossible to meet the mandates.

The ethanol representative had an entirely different take.  Ethanol capacity is large and growing. In fact it is the fastest growing industry in the country according to the Department of Labor. Ethanol replaces 350 billion barrels of oil per year. In 2005 the US was 60% dependent on foreign oil. Today the number is 45%, mostly from domestic ethanol production.

The entrepreneurial representative brought another viewpoint as well. He said venture capital groups are willing to take big, long-term risks in fuel because the market is in the trillions of dollars and growing fast. Any reasonable success can be translated into profit with the scale involved.

The panel agrees that this being a trillion dollar market that the motivation is abundant to find alternative fuels. Maybe natural gas is the most obvious alternative. Railroads and over-the road trucks are already switching to natural gas from diesel in large numbers. It is much cheaper.  Ford is waiting for the fuel stations to switch to natural gas before they shift designs.

Source: Michael Crumbliss for RedOrbit.com

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