I hope you don't think I'm against looking for fuel alternatives for the internal combustion engine, or other carbon fueled applications, because I'm not. What I am against is junk science and wasteful political paybacks, including laundering huge political contributions, by supporting alternative fuel source proclaimers who have no intention (or ever hoped to have) of succeeding. I am against ignoring the basic data that proves they are nothing more than clever shells to cover spending tax dollars, we don't have to spend, in the name of improving the environment. This article speaks clearly of another such company, in what I'm sure will be a long line, since the Solyndra failure was exposed.
The
biofuels bust continues. The latest failure: Range Fuels.
Last week, the company defaulted on a
government-guaranteed
$80 million loan that it had used to build an ethanol plant in Georgia. AgSouth
Farm Credit, the servicer of the loan, will begin a foreclosure sale on the
plant in January. The foreclosure provides yet another indictment of the Obama
administration’s energy policies.
Twenty-one months ago, the Department of Agriculture trumpeted its $80
million loan guarantee to Range — which claimed it could produce millions of
gallons of ethanol from wood chips — by saying it demonstrates the
administration’s “goal to make the United States a leader in renewable energy
production.” That loan guarantee followed a $76 million grant given to Range by
the Department of Energy in 2007.
Last Thursday, David Aldous, the CEO of Range, responded to a request for
comment with an e-mail that said the company “has no immediate plans to declare
bankruptcy.” He also claimed that Range was “working towards a new business
model which would spin off” the Georgia plant. But he refused to elaborate on
how the company could spin off a plant that will soon belong to someone
else.
Aldous said that Range has spent $38 million of the $80 million loan and
“about half the grant” from the Department of Energy, but refused to be more
specific. Fine. Using Aldous’s numbers, federal taxpayers are now on the hook
for something like $76 million. How many employees are still on the company’s
payroll? Aldous refused to say. In fact, he refused to answer any specific
questions.
Spokesmen at the departments of Agriculture and Energy did not respond to
e-mailed questions about Range.
The key financial backer and political mover behind Range: Vinod Khosla, a
wealthy California venture capitalist who has been among America’s biggest
biofuel boosters. In 2006, Khosla claimed that making ethanol from cellulosic
material was “
brain-dead simple
to do” and that commercial production of cellulosic ethanol was “just around the
corner.” A few months later, Kholsa was again hyping cellulosic ethanol, saying
that biofuels could completely replace oil for transportation and that
cellulosic ethanol would be cost-competitive with corn ethanol by 2009. Khosla —
who says
on his
website that he is “passionate about alternative energy, petroleum
independence, and the environment” — did not respond to repeated requests for
comment.
There’s ample reason for outrage here. Range had claimed it could make
ethanol at efficiencies far greater than those being achieved by corn-based
ethanol producers. Tad Patzek, chair of the petroleum and geosystems engineering
department at the University of Texas at Austin and a
veteran critic of the
biofuel craze, told me that Range’s failure “was easily predictable based on the
thermodynamic inefficiencies of the refineries. But no one in the Department of
Energy paid any attention.”
Instead, federal bureaucrats were once again gulled by extravagant claims
from people like Khosla and a cadre of high-profile national-security types, who
continue to claim that ethanol and other biofuels will somehow save America from
the evils of foreign oil. And the federal bureaucrats were convinced even though
a small dose of sixth-grade math would have shown that large-scale development
of wood-based biofuels was little more than a pipe dream.
Proving that statement is simple. Let’s assume the U.S. wanted to replace
just 10 percent of its oil needs with wood-based biofuels.
Here’s the math: The U.S. consumes now consumes about
19.1 million barrels — about 802 million gallons — of oil per day. Ten
percent of that volume would be 80 million gallons. In 2007, Range was claiming
that its new plant in Georgia would require 1,200
tons of wood per day while producing 40 million gallons of ethanol and 9
million gallons of methanol (which is more corrosive and has lower heat content
than ethanol) per year, or about 134,000 gallons of fuel per day. But ethanol
contains only about two-thirds of the heat energy of gasoline. Therefore, the
plant’s output would equal about 88,000 gallons of gasoline.
Thus, to replace just 10 percent of America’s oil needs with wood-based
biofuels would require about 900 ethanol plants like the one in Georgia that’s
now in foreclosure. Those plants would require about 1 million tons of wood per
day. That’s about 50 percent more wood than all of America currently consumes
(about 236.4
million tons per year or 647,000 tons per day). Even if the U.S. were
somehow able to more than double its wood production in order to feed all those
new ethanol plants, the logistical challenge of moving that huge volume of
material would be enormous and would undoubtedly require the burning of millions
of gallons of diesel fuel. And yet, President Obama and his Nobel Prize–winning
secretary of energy, Steve Chu, continue to claim that biofuels are the
future.
Patzek says the Range fiasco is, in some ways, worse than Solyndra: “At
least Solyndra was producing solar panels. Their panels were too expensive, but
at least they had a product. Range never produced anything. The biofuels
business was insane five years ago, and it’s still insane today.”
Alas, the insanity will continue. During his State of the Union speech in
January, President Obama declared that “we can break our dependence
on oil with biofuels.” Since then, the administration has committed hundreds
of millions of dollars to new biofuel projects, including up to $510
million for the Defense Department. Just last month, the administration
finalized a $50 million grant and a $54.5 million loan guarantee to a company
that plans to produce biofuel
from algae. The company building the plant, Sapphire Energy, is putting up
just $30 million toward the $135 million project. Taxpayers are on the hook for
the rest.
Like the failure of Solyndra, the collapse of Range Fuels shows that the
Obama administration has let wishful thinking, not hard-nosed technical analysis
— or even simple mathematics — determine its energy policies. And unfortunately,
taxpayers are being stuck with the losses.
— Robert Bryce is a senior fellow at the Manhattan
Institute. His latest book is Power
Hungry: The Myths of “Green” Energy and the Real Fuels of the Future.
