Originally posted on our collaborative site, Ourblook.
OurBlook interview with Richard Armstrong, president of Renewed World Energies.
What do you see as the pros and cons of the American Clean Energy and Security Act?
RA: I am glad to see this country making positive steps to control our emissions and begin the long process of switching to renewable energy … and this will be a long process. Personally, I see passing the American Clean Energy and Security Act as a first step that should have happened long ago. We need to do something and this is a great start, but it’s only going to work if the majority of the public will embrace the ideas.
The Pros are helping us and the utility companies begin creating good workable solutions in power generation with renewable sources that are not from fossil fuels, which when burned, gasified or refined have less Nox, SOX and particulate matter.
The Cons are the loopholes; as it is written now, the utility companies are allowed to reduce the 20 percent power from “green” sources by getting the individual state governors to petition a reduction to 12 percent and energy savings to 8 percent. The energy savings can be easier to come up with than purchasing green energy. The energy mandate, as it has been suggested for years, is that we can individually do much for reducing our electrical demand, but until the “green” products that are available to consumers are affordable, they won’t be bought by many. This as in many products that start out being expensive will be reduced through competition and further cost saving developments. Carbon reduction: I will be very interested in seeing the final outcome of this.
Do you see alternative energy playing a major role in the U.S. or is it likely to always play a minor role? Will it ever be able to stand on its own two feet or will it always need a subsidy to compete with traditional energy?
RA: This is actually humorous, in that oil companies get plenty of subsidies: Greenpeace believes Europeans spend about $10 billion or so (USD equivalent) annually to subsidize fossil fuels. By contrast, it thinks the American oil and gas industry might receive anywhere between $15 billion and $35 billion a year in subsidies from taxpayers.
Why such a large margin of error? The exact number is slippery and hard to quantify, given the myriad of programs that can be broadly characterized as subsidies when it comes to fossil fuels. For instance, the U.S. government has generally propped the industry up with:
- Construction bonds at low interest rates or tax-free.
- Research-and-development programs at low or no cost.
- Assuming the legal risks of exploration and development in a company’s stead.
- Below-cost loans with lenient repayment conditions.
- Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire.
- Sales tax breaks … taxes on petroleum products are lower than average sales
- tax rates for other goods.
- Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth).
- The U.S. Strategic Petroleum Reserve.
- Construction and protection of the nation’s highway system.
- Allowing the industry to pollute … what would oil cost if the industry had to pay to protect its shipments, and clean up its spills? If the environmental impact of burning petroleum were considered a cost? Or if it were held responsible for the particulate matter in people’s lungs, in liability similar to that being asserted in the tobacco industry?
- Relaxing the amount of royalties to be paid (more below).
While it’s easy to get bent out of shape that the petroleum industry “probably has larger tax incentives relative to its size than any other industry in the country”, according to Donald Lubick, the U.S. Department of Treasury’s former assistant secretary for tax policy, remember that subsidies are important across all sectors of the energy industry.
I believe that algae in particular can be a very real solution in power generation, green gas, JP8, green diesel and green lubricants and a great deal more. America has always been able to come up with solutions, this is just another opportunity. The subsidies will be required for a short time, perhaps 10 or 15 years, but I know that some of the alternate energies will continue to get less and less expensive. Solar panels used to be more expensive and less efficient than the ones currently available. We will strive to reduce our costs and raise yields until it is not only commercially viable but far cleaner; this will happen!
RWE does have a solution and our business plan does not include subsidies or tax incentives, which means that we are standing on our own two feet without them.
Tell us about algae processing … what are the pros and cons of it, what does your bioreactor system do, where and how can it play a role in our energy system, is it a nice-to-have wishful dream or is it a practical reality?
RA: As in any emerging technology, the first few to come along are incredibly expensive … algae systems are not immune to this; however, we are continuing to decrease cost, just as other algae companies are doing.
Our system, which consists of three to four acres of algae bioreactors at Georgetown, S.C., will produce 1.6 megawatts of power, enough energy supply for about 1,280 homes.
Our bioreactor systems, because they are a closed system, can retain the algae strain purity much better than an open pond design, which keeps the product consistent. We use the biomass or harvested algae to create electrical energy. This is done by processing the biomass in a biorefinery, which produces both a gaseous fuel and a liquid fuel (green diesel).
The gaseous fuel is burned in a gas turbine generator, the liquid fuel is burned in a turbine as well, because the generators are Duel Fueled Generators and can use either fuel source. The turbines then produce electrical power which is fed to the grid system. Most power companies purchase “green energy,” which helps with the 20/20 initiative. So power generation is most definitely a practical reality.
(Editor’s note: the RWE web site notes that algae is a plant, has a rapid growth rate, exists worldwide with numerous species and can be grown on property undesirable for other commercial uses.)
Can you give us an idea of the potential of algae processing … i.e., can it provide as much energy as wind power or solar power in the U.S.? How do you compare it to other methods?
RA: I believe all of these technologies will be an integral part of the overall solution. Solar power can be as much as $8 per watt or $8,000 p/KW and as low as $3,500 p/KW capacity (capacity, I mention is the capital cost to build the facility); wind $3,500 p/KW capacity … however, wind generators are not the best technology everywhere, especially low wind areas.
Algae … at least RWE is closer to $2,500 p/KW capacity. We are working hard to reduce this to under $1,000 and we, unlike wind and solar, can consume the Nox and CO2 produced by existing coal fired generation plants. The limit to how much energy can be produced with algae is land mass, which to replace all imported oil would require approximately 17 million acres; however there are in New Mexico and Arizona alone about 48 million acres of land that is not used or cannot be used for farming, which makes it ideal for our systems.
Is there anything else you’d like to say about algae processing or alternative energy?
RA: If America is to ever be successful in completely or partially switching to renewable energies, I think it’s going to have to be a joint venture with big oil companies. The competitiveness between the two must cease, but it will be difficult, as there is a tremendous amount of money at stake and some of the organizations do not like to share.
It is an exciting time to be an American, in that we have a great many opportunities in renewable energy and America has been able to meet challenges with ingenuity.