Friday, June 2, 2017

The per gallon cost of fuels and production costs

What is an easy, but inaccurate way to compute the per gallon cost of electricity?

Assume price is composed of energy cost, and look at Tesla tax subsidies, and we can say that over the cycle, electric cars seem to be about 25% more energy inefficient. So, if the fossil price is 4, give the per gallon electric price a 6.  And a gallon of corn oil goes for 8, and a gallon of algae oil goes for about 20. (a year or so ago it was nearly 30).

4,6,8,20   Why algae oil? Because the ocean has phosphorus and potassium.

Assuming plenty of ocean, and the expense of nitrogen fixing, the technology of flat ocean farming in plastic containment yields to robotic intensity, with high energy input to fix nitrogen and run some equipment.  The capital cost of current algae is all about sanitary conditions, which is not completely solved. The ongoing costs are co2 concentration.

So, in plain speaking, the algae grower have to replace all the parts of the corn plant related to plant capital equipment. If he can, the algae oil approaches the cost of corn oil, and it gets the advantage of cheaper space on the ocean surface.

These costs do not include climate change mitigation, and because of battery costs, electricity will always be slightly behind fossil.  It always has been, nothing I see changes that except tax distortion for climate change.

But, fertilizer can be fixed by solar electric without the cost of batteries.  Electric, without battery cost, is the cheapest of all sources, and perfect to run nitrogen fixing factories, near the land and ocean farms.   This drops the energy cost of biofuel by 25%, so the 8 becomes a 6.  We have really just adopted fertilizer as the electric energy storage system, then converted that to liquid fuels which have a much more efficient storage system.

Much better approach, keep the pressure on biofuel farming, especially the ocean where farm land is free, and potassium or phosphorus available.  Focus on solar powered nitrogen fixation.

The other advantage of solar electric nitrogen fixing.  It lowers the cost of fertilizer, and all land, bio and food, becomes somewhat cheaper to operate.

Bring the rambling to a conclusion

The medium and long term is about driving down capital costs and making land space the binding constraint. Then the tax is mostly about expanding or shrinking the land devoted to solar conversion (bio or electric).  The control on CO2 requires land allocation, but the volatility of allocation changes is 1/2 for bio fuels, as they extract carbon.  Electric reduces the average land mass, bio reduces volatility land mass.

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