InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

$1,230 in Instant Income?

$1,230 in Instant Income?Our top income expert recently pulled the wraps off his breakthrough moneymaking technique. And he proved beyond a shadow of a doubt how you can use it to generate instant cash payouts of up to $1,230 (or more). Over and over again. But then he took things a big step further and guaranteed you can make $1 million by following his program. And the second he did, our phones went nuts! Space is limited — get the details here.

 

 

The Alchemy of Energy Miracles

By Robert Rapier on October 25, 2016

If I told you that I had created a process to extract pure gold from seawater, you might deem it an amazing accomplishment. If I issued a press release stating these facts, it very well could go viral.

In fact, the oceans do contain an estimated 20 million tons of gold, worth close to a quadrillion dollars at the current spot market price. But you may have noticed that I have omitted a very important fact.

How much does it cost to produce a troy ounce of gold using the process I have designed? I explain that the production cost is only $50,000 or so per ounce (which today is worth about $1,265), but I am sure that with enough investment dollars — and maybe a few government subsidies — I can get that cost down to something more reasonable.

Readers immediately understand the problem. You don’t spend more to produce something than you can sell it for. But change the equation to energy instead of money and the lesson can be easily lost in translation.

That brings me to the point of today’s article, one I’m forced to reiterate often: in the world of energy as in most others, there is no free lunch.  

Earlier this month a research paper was published called “High-Selectivity Electrochemical Conversion of CO2 to Ethanol using a Copper Nanoparticle/N-Doped Graphene Electrode.” The paper reports on a fine bit of science, and the researchers were measured and cautious in their conclusions.

But something got lost in translation as media outlets sought to portray this as a “holy grail,” “game changer,” “major breakthrough” or “solution to climate change.” The benefits, one story said, were unimaginable. Part of the problem, in my opinion, is that the press release from the Department of Energy was titled Scientists Accidentally Turned CO2 Into Ethanol.

The word “accidental” plays into the misconception people have of how science is done. Many take the romantic view that game-changing, eureka discoveries are merely awaiting the next lucky accident, so when they read this headline the translation becomes something like “New Discovery Solves Climate Change.”

That’s because the public loves its energy miracles. People love the idea of a car that can run on water or the car that gets 400 miles per gallon (which of course GM and Ford suppressed) or the magic pill you can pop in your tank that greatly enhances fuel efficiency. So it isn’t surprising that this kind of story goes viral (in notable contrast to the articles debunking these viral stories.)              

In order to understand what’s really going on, let’s consider a fundamental principle of thermodynamics.

If you burn something containing a combination of carbon, hydrogen, and oxygen — e.g., gasoline, ethanol, wood, natural gas — that combustion reaction is going to produce heat, carbon dioxide and water. These are the combustion products.

It is possible to reverse the combustion reaction and convert that water and carbon dioxide back into all sorts of things. But you have to add heat. A lot of heat. How much? More than you can get from burning the fuel in the first place. No new catalyst, and no discovery, accidental or otherwise, can get around that fundamental issue without overturning scientific laws observed and confirmed over 150 years.

Given that, what can we say immediately about this process? Going back to the fundamentals of thermodynamics, we can say, without a doubt, that the process consumes more energy than it produces. In other words, to produce 1 British thermal unit (BTU) of ethanol will require the initial consumption of more than 1 BTU of energy (as well as related CO2 emissions.) The process would produce 1 BTU of ethanol yet to be consumed. The net effect once the ethanol is consumed is more than 2 BTUs’ worth of emissions per BTU of ethanol produced.

Now the researchers involved certainly know this. They actually acknowledged in the paper that the process is unlikely to be economically viable. To my knowledge they haven’t intentionally misled anyone.

But the public has been misled in the retelling of the story. I have heard this research presented as “an efficient way of removing carbon dioxide from the atmosphere.” No, that’s not at all what the researchers claimed. They claimed a Faradaic efficiency in the process of 63%. In other words, 63% of the electricity used in process was utilized in the reaction. They further said that 84% of what was produced was ethanol. That’s the “high-selectivity” part of the title.

But that says nothing at all about the energy consumption required to remove carbon dioxide from the atmosphere so it can participate in this reaction. That is an enormous energy cost because carbon dioxide exists at only 400 parts per million in the atmosphere. Or in the case of passive removal (which is what plants do by means of photosynthesis), the process is very slow.

The high Faradaic efficiency and selectivity also provide little information about the overall energy requirements to turn purified carbon dioxide into purified ethanol, but we already know that it’s more than the energy contained in the ethanol. And it could be a lot more.

There is a way that a process that is an energy sink could make sense, and that would be if you had cheap, surplus energy that might otherwise be wasted. For example, if a wind farm produced far more electricity than the grid could handle, you could envision dumping the excess power into such a process. But such an intermittent process brings up its own set of issues, and then there’s the question of whether that would really be the best use of the surplus energy.

As a general piece of investment advice, if someone offers you a chance to invest in a scheme for turning air, water, or carbon dioxide into fuel, hold onto your wallet. It’s almost certainly a money-losing proposition. If that should ever change, we will break it down for you in The Energy Strategist.

Now, I need to get back to processing ocean water…       

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

 


You might also enjoy…

 

R.I.P Bull Market—Here’s How To Protect Your Wealth

I hope you’ve enjoyed the phenomenal bull market of the past eight years…

Because it’s about to come to a screeching halt.

The Federal Reserve’s nearly decade-long spending spree has finally come to an end.

With no other options left at their disposal, the Fed has no other choice than to raise interest rates to keep inflation in check.

And that leaves you with two options…

Do nothing and suffer the agony of watching the profits you’ve accumulated over the years evaporate right before your eyes…

Or reposition your portfolio and invest in companies which prosper as inflation rises and interest rates soar.

I think the choice is clear. And I’ll show you the best new positions you can take if you click here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.

Stock Talk

  1. avatar
    Wolf Creek Wayne Reply October 30, 2016 at 2:57 PM EDT

    I have always been skeptical of the economics of ethanol. In other words, I doubt we get back enough energy to justify the energy invested in producing it. A farmer burns diesel fuel to prepare the fields, to plant the seeds, to harvest the corn, to transport the corn, etc. Likely, he applies fertilizer, which required energy to produce and transport. Energy is required to turn the raw corn into ethanol. Equipment and energy is required to mix the ethanol into gasoline. With your vast knowledge and experience, I suspect you have a very good estimate of the energy returns. And, maybe a good handle on the purely financial costs of such things as crop subsidies, subsidies and/or penalties on the oil companies that process it and bring it to consumers.