The Next Step: Evolution of Power and Sichuans Role

Media organizations continue to feed us down-turning economic news. That’s fine for now, but why isn’t anyone talking about the problems we will encounter as the global economy starts to strengthen and recover?

Economists and energy traders are increasingly coming to the same conclusion: When the economy begins to get back on its feet again, there will be an immediate ceiling of resistance due to high energy prices which will once again crash the markets. This recurring cycle will continue until world population begins to decline, the economy permanently contracts to keep step with falling oil supply, or we develop energy alternatives and environmental solutions. Of these choices, developing alternatives is better than standing in a soup line during a prolonged worldwide depression and fighting wars for the world’s remaining energy reserves.

Biofuels

We need substitutes for liquid fossil fuel and it looks as if the current options will have to be combined as a multi-solution approach with each part contributing to the whole. Biofuels are part of the solution.

We have all witnessed dramatic food price increases as our world first produced biofuel using corn, sugar cane, sorghum, canola and palm oil instead of putting that on our plates. Plus, many of these crops could only be harvested twice or three times a year. This led most governments to quickly realize that non-edible feedstock crops were needed on non-arable lands. Second-generation biofuels included jatropha, castor beans and Chinese tallow. Those products have important limitations: multi-year long “seed to harvest” growth times, high transportation costs and the need for additional seed treatment to get refined product.

Problem is, by next year when there are 80 million more mouths to feed on our planet, the availability of farm grown biofuel will diminish even further. The market for fuel is growing with our growing population. But so is the demand for food.

Now we have entered the third generation of biofuel. Algae bio-crude is stepping out in front as a real contender to make a difference as energy demand continues to increase. According to one authority, “In the beginning, there were algae, but there was no oil. Then, from algae came oil. Now, the algae are still there, but oil is fast depleting. In the future, there will be no oil, but there will still be algae.” We argue that common sense dictates that algae biodiesel will become one of the most important biofuels.

Profitability

Alternative methods are great in theory, but in our world “profit is king”. Projects must show a return so investors will seed the investment. Until the solution itself is profitable there will be no change-over. In this area, algae have important advantages. It has multiple product revenue streams from the bio-crude and associated by-products, and it qualifies for carbon tax credits.

As worldwide energy reserves dwindle, the Chinese government has had a serious wake up call and is now aggressively pursuing renewable energy projects including algae biodiesel. Newspapers around the country carry stories of how China is moving down the green path of development. If it’s true, China’s move in a new direction toward algae-derived liquid fuel may leave the west far behind in the number of installed hectares. Since the world’s manufacturing is done in China all they have to do is manufacture and install, the infrastructure is already there.

China can ramp up production on a scale to convert our existing liquid energy production within the next three to five years. It has the resources and motivation. Additionally, since many pollution and environmental problems exist in Asia, solutions could emerge from countries like China to tackle both issues in the energy production chain.

When we look back in history, production follows the same model. First a product is introduced but it is extremely expensive and there is no centralized manufacturing of that product. As more companies start to come out with the same product, than larger scale production begins and the price drops slightly. In the last stage many businesses are manufacturing in a centralized location with prices driven down to the lowest levels that make it affordable for the average person or family. The CD player is a perfect example. It cost $1500 in the 1980s; now you can buy one for $10. Although fewer and fewer people bother these days since the format is so antiquated.

Algae growing equipment is still in the beginning stage where machinery is expensive and not readily available for the average person or family. DAO Energy intends to change that. I am one of the principals in this company.

The Sichuan Trump Card

We have been courted by local business owners that have connections to Sichuan government officials who want us to conduct our project in Sichuan province. The reasons include earthquake reconstruction, job creation, environmental cleanup, carbon sequestration and energy production all in one program. Not surprisingly with mandatory CO2 emission compliance just around the corner, carbon credits have been one of the main subjects talked about in our discussions along with oil production.

Sichuan province remained one of the only electrical generation carbon neutral provinces in China as of 2008. In fact, provincial authorities sold all of 2008’s hydroelectric carbon credits to Saudi Arabia in early 2009. As we have been told, the current Chinese time line is three years before emissions controls take effect on a compulsory level and all carbon credit trading or sales go through China Construction Bank (CCB) in Sichuan. There has also been quite a bit of talk about a “Carbon Credit Trading Floor” being started in Sichuan to cover the western part of China. These are the reasons we have chosen Chengdu.

It’s all about Cost

Consider for a moment that we would be squandering our remaining energy reserves and commodities by building new facilities in every country to produce algae growing equipment while existing factories in Asia are unused. If we choose to go down that path it will be one of the greatest wastes of commodities, energy and investment in human history. During the last 15 years investment poured into Asia for this very purpose; centralizing world production of consumer goods. We should use that investment wisely in a way that benefits every nation.

I need to reiterate to everyone that although our system is manufactured in China for a lower cost, the installation, upkeep and repair of the grow-out and bio-reactors units will be done in each individual country along with growing, harvesting, de-watering and pressing of the algae. Refinement of the oil and processing of algae press cake by-products will be handled by companies in the local community. Local and interstate truck drivers will be driving on fuels produced as a supplement to existing nationwide supply chains. This idea of locality can be replicated everywhere.

At the end of the day, whoever manufactures the most affordable equipment will have the ability to produce oil at a lower cost than anyone else. Manufacturing algae bio-fuel equipment in China utilizing existing infrastructure should ultimately lower the cost of machinery, which in turn will lead us to our main objective; the production of inexpensive crude oil and local job creation in every country.

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About Dave

David DuByne is a renewable energy solutions educator, helping develop alternative energy infrastructure worldwide. For the past year, he's lived in Chengdu.

7 Responses to “The Next Step: Evolution of Power and Sichuans Role”

  1. Finally! Emissions Caps!

  2. So you’re saying biofuel production would remain centralized in China, while maintenance and waste disposal would done locally. Right?

  3. That’s exactly right, it is the concept that can be replicated location after location, country after country. The algae being grown would be a local strain used in a large scale carbon sequestration project being done locally. Harvested algae that digested CO2 to grow, would be processed for oil locally, and that fuel added into the local fuel supply. At first the amount would be enough to add to the diesel fuel supply to reduce exhaust emissions locally. Then the anaerobic digestion of the remaining green oil-less algae cake will produce methane for cooking which can be used by someone locally. The remaining natural nitrogen fertilizer after the bio-gas process can be used by local residents to grow healthier grains and vegetables locally.

    There are several more steps that can be done, and that is the concept: Replicate Locally. Keep in mind this requires education so the young of our world know what new energy systems we are switching to and why. Then their young imaginative minds can begin to solve steps that are currently hindering wide spread usage and implementation of a truly worldwide renewable energy grid.

    • How much can you localize before growing locally is no longer economically viable? It seems like it would be cheaper, per unit of energy, to grow on a massive scale – is this a myth?

      • Local production of algae on an industrial scale to replace the worlds current oil supply would generate more crude oil than we are pumping out of the ground currently. When I say large scale production I want you to picture a reservoir or lake that is ten square kilometers and extending from the shore are 100 meter long bags floating on the waters surface. These bags are an enclosed environment to grow algae floating on water using CO2 from local coal burning industries. Anywhere you have water you could replicate the process, fish farms I think hold the greatest possibility. Today there are 3.4 million hectares of fish farms in China. That surface space alone is more than enough space to replace the worlds crude oil supply without including lakes, rivers, ponds or reservoirs. The carbon credits given in the process to grow algae make it profitable on more than one level especially when you add in by-product revenue from algae bio-diesel processing.

  4. perhaps related, I have been studying the effect some mushrooms have on watersheds and forests — as in using mushrooms to clean up certain types of waste flowing into the waterways and to help replenish depleted soil and promote the growth of certain hardwoods. There are some people doing this on small scales in the US, but I don’t see anything (or haven’t yet) in China. My plan is to show my neighbors in San Sheng Xiang how to grow mushrooms (for profit, cuz that’s what they want) but also to keep their ponds and soil and bamboo groves full of the nutrients they need. Very very small scale ;)

    Which brings me to what i actually wanted to ask you: where are you/we now in terms of using algae for oil? are there any models being used on a state level? any companies investing?

  5. natalie merrey waggoner Reply December 5, 2011 at 2:08 pm

    Not on topic but, I am looking for debbie. We were friends in Indiana and I haven’t been able to find a way to contact her. I hope you see this and email me! Or at least pass along the info.

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