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The Crude Choice: Oil or Biofuels?

Guest writer Joshua Kagan is an analyst with Atlas Capital, a fellow with the Prometheus Institute for Sustainable Technologies, and an all-around...

Guest writer Joshua Kagan is an analyst with Atlas Capital, a fellow with the Prometheus Institute for Sustainable Technologies, and an all-around expert in the world of clean technology. In this four-part series, he explores a possible transition from fossil fuels to biofuels, and how algae might supplant oil as the dominant energy currency.

It is said that "the road to hell is paved with good intentions." I don't know the author of this saying, but it is apt, as the law of unintended consequences is both harsh and universal. Revolutionaries breed counter-revolutionaries. Drug prohibition finances billionaire drug lords. But what does any of this have to do with an article on the future of biofuels and the prospects for algae to replace petroleum?

To answer that, we need to jump to the year 1859. In a town in the middle of nowhere called Titusville, Pennsylvania, a man named Edwin Drake struck oil 70 feet below the ground, creating the world's first oil well. Combined with the discovery of coal for electricity generation, oil would be the primary fuel for global transportation and one of the key facilitators of an acceleration of globalization (combined with advances in media technology). Simply put, the unparalleled rise in economic prosperity that the West has experienced over the last 150 years is directly related to our ability to consume cheap and plentiful energy sources-of which oil is a main source. Yay for oil!

However, as you're well aware, the law of unintended consequences has, in the form of climate change, begun to rear its ugly head. We now find ourselves at a precipice, and the faster we can put down the pump, the more resiliently we can respond to the many ill affects of petroleum.

Today, the United States is the third largest oil producer in the world. We produce more than Venezuela, Kuwait, and Nigeria combined. We also are the largest importer of oil. The United States accounts for approximately 25 percent of the 84 million barrels of oil consumed globally per day. A little more than half of each barrel of oil (52 percent) is refined into transportation fuels like gasoline, diesel, and jet fuel. Global transportation fuel consumption is about 700 billion gallons per year. The rest of a barrel of oil is used in a variety of chemical and plastics that are in almost every single consumer product that we use today.

The national security and economic implications of annually sending hundreds of billions of petrodollars to countries with questionable commitments to human rights (i.e. Saudi Arabia, Iran, Nigeria, Russia, etc.) are rather obvious and do not need to be addressed here. If you believe-as I do-that the low-hanging sources of easily accessible and cheap oil have been exhausted and combine it with the 2.5 billion people in "Chindia" undergoing their industrial revolutions and becoming middle class consumers and global jetsetters-then, folks, we might have a big supply-and-demand problem in the coming years which could result in dramatically higher oil prices. Add in climate change and you can see why we need to find alternatives to petroleum as soon as possible.

At present, the only commercial and widely distributed petroleum alternatives are biofuels. You have probably heard of ethanol and biodiesel. These are referred to as "first generation" biofuels. What you might not realize is that 5 percent of U.S. gasoline consumption will be displaced by ethanol in 2009. At the same time, the United States will also dedicate one third of its entire domestic corn crop to producing ethanol, resulting in problems both philosophical (land use debates) and tangible (higher food prices).

Looming in the (what I hope to be) not-too-distant future is a biofuel that is non-food based, can live in salt or sewage water, and does not require cropland (e.g. can thrive in a desert). What I am talking about is algae. Algae is so productive-compared to any other known biofuel-that you could use just 1 percent of the U.S. landmass to grow enough algae to create enough fuel to displace 100 percent of U.S. petroleum needs.

Future articles in this series will explain what biofuels are, why we need biofuels but not ethanol or biodiesel, and how pond scum might create a bunch of unintended consequences or actually save the world.

From Petroleum to Algae illustrations by Jennifer Daniel.

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