CNNMoney.com 19-Feb-08: Goodbye gasoline? Not so fast

Goodbye gasoline? Not so fast

Spreading car culture will push gasoline demand ever higher, but experts say it will need some help to meet the world's growing energy needs.

By Steve Hargreaves, CNNMoney.com staff writer

February 19 2008: 12:48 PM EST

As more folks buy cars in expanding economies like India and China gasoline demand is expected to soar.

HOUSTON (CNNMoney.com) -- Gasoline use over the next two decades is expected to soar as developing nations get richer and more people there buy cars, but gas alone won't be able to shoulder the burden.

Along with their surging economies, the number of cars in India and China is expected to jump to 1.2 billion by 2050 from 20 million just a few years ago.

"Will oil be able to supply this increase in demand?" Dalton Perras, a director at Cambridge Energy Research Associates (CERA), asked at the group's annual energy conference here in Houston. (See correction below)

It will certainly supply a lot of it, he said. Dalton expects oil use in the worldwide transport sector to jump 50% by 2030. But it will need some help to meet the world's energy needs.

Experts here say the fuel mix of the future must rely not just on gasoline, but a variety of sources - everything from biofuels and electric power to synthetic fuels, natural gas and greater efficiency will all help meet this growing demand.

Although diversifying the world's fuel sources may help meet growing demand, the development of alternative fuel sources is still in a nascent stage with serious ecological and humanitarian concerns remaining unclear.

The biofuel "solution." There have been many questions asking if corn-based ethanol is actually any better than gasoline when it comes to reducing greenhouse gasses. And their growing use has been attributed to rising food costs worldwide. Largely because of these concerns, the energy bill recently signed into law by President Bush says a big chunk of future biofuels must come from non-food crops like switch grass and corn stalks.

CERA predicts biofuels in the U.S. will go from about 2 percent of the current fuel mix to 15 by 2022, as mandated in the new energy law. In South America, biofuel use could make up 25 percent of the continent's fuel mix, led by Brazil's sugar-based ethanol industry. The Europeans, long fans of diesel engines, are also expected to boost their biodiesel use.

Because ethanol is difficult to transport and store, that opens the door for other biofuels like biobutenol and methanol to take a share of the biofuel market, said Tiffany Groode, an associate director at CERA.

Electricity and the plug-in hybrid. The electric industry is also expected to help meet future vehicle fuel needs, as more cars utilize "plug-in hybrid" technology. Hybrid cars are powered by both gasoline and electricity. In most of today's hybrids all the power is generated on-board by the gasoline engine. A plug-in hybrid can also take in electricity from a wall outlet, greatly extending its range.

Plug-in hybrids can lift a lot of the load from gasoline's shoulders, if plug ins suddenly replaced all the vehicles on the road today, electricity use would rise by only a sixth while oil use would fall by two-thirds, said Dalton.

But plug-in electric vehicles, which would need power outlets at parking lots nationwide, face the same infrastructure challenges as cars that run primarily on biofuel.

Groode said only 2 to 3 of the vehicles in the U.S. can use a fuel mix containing more than 10 percent ethanol. Problem is, no one wants to buy the vehicles because there are very few gas stations that sell a mostly ethanol blend. But gas stations don't want to put in the ethanol pumps because so few people drive those cars.

'It's kind of a chicken and the egg thing," she said.

Tuning up fuel efficiency will also play a role. It's essential for the automotive industry to have clearer picture on the future price of fuel, as well as future fuel mixes like those containing the biofuel they may be required to use, according to Julius Pretterebner, a CERA Director.

But even with biofuels, plug-in hybrids, and greater efficiency, oil will still play a central role to meet demand from many people buying cars.

"We see conventional fuels today, we saw them in the past, and we will see them in the future," said Pretterebner.

Correction: An earlier version of this story misidentified Dalton Perras as Jim Dalton.

Fortune 27-Feb-08: Waste Not, Want Not

February 27 2008: 4:49 AM EST

Waste not, want not

Plastics maker Sintex seeks to solve India's energy and sanitation problems in one stroke - with an at-home biogas digester.

By Jeremy Kahn


A Sintex digester can turn manure into fuel for cooking and electricity.

(Fortune Magazine) -- Sintex Industries, a plastics and textiles manufacturer in Gujarat, India, is betting it can find profit in human waste. Its new biogas digester turns human excrement, cow dung, or kitchen garbage into fuel that can be used for cooking or generating electricity, simultaneously addressing two of India's major needs: energy and sanitation.

Sintex's digester uses bacteria to break down waste into sludge, much like a septic tank. In the process, the bacteria emit gases, mostly methane. But instead of being vented into the air, they are piped into a storage canister.

A one-cubic-meter digester, primed with cow dung to provide bacteria, can convert the waste generated by a four-person family into enough gas to cook all its meals and provide sludge for fertilizer. A model this size costs about $425 but will pay for itself in energy savings in less than two years. That's still a high price for most Indians, even though the government recently agreed to subsidize about a third of the cost for these family-sized units. "We want to create a new industry for portable sanitation in India that's not available now," says S.B. Dangayach, Sintex's managing director.

Government officials plan to end open defecation by 2012 (hundreds of millions of Indians use railroad tracks or other outdoor locales instead of toilets) and say biogas plants are part of the solution. A.R. Shukla, a scientific advisor in the Ministry of New and Renewable Energy, says India could support 12 million such plants, but only 3.9 million - mostly pricier models big enough to accommodate entire villages - have been installed to date. And last year the government fell far short of its target for new installations.

The future can be glimpsed on a dusty, rutted road in a poor South Delhi neighborhood. Here 1,000 people use an immaculately clean public toilet constructed by a nonprofit foundation, the Sulabh Sanitation Movement. The biogas digester attached to toilets provides cooking gas for a 600-student school and vocational-training program the foundation runs. In the past, nongovernmental organizations like Sulabh were the only ones offering biogas digesters.

But Sintex is hoping cities, real estate developers, building managers, and hospitals will jump at a ready-made way to harness the same energy.

Biogas digesters are just a small fraction of Sintex's business. The company has installed only about 100 of them. But it plans to increase investment and production tenfold in the coming year. That growth potential has helped Sintex stock more than double this past year. Human waste may be a stinky business, but to investors it smells like money.