I am working on two essays, but it is going to be a couple more days before I have either one of them finished. One is about the recent USDA report on the energy return of corn ethanol. This essay will include a look back at how the USDA’s methodology of allocating energy inputs has changed over the years, and how that impacted upon the calculated energy return for ethanol.

In the second essay, I will discuss in some detail my graduate school work (which I have never done on this blog), and report on where the process stands today. The process in question is the MixAlco Process and was developed in the lab of my former research advisor, Professor Mark Holtzapple at Texas A&M.

In the meantime, it is time to put up some new material. Kevin Kane, author of the Energy Fanatic Blog, has provided guest essays here before:

Energy Security Populism: Oil Prices, American Leaders, and Media

Iraq Oil & Gas Production: Geopolitical Compromises and Kurdish Autonomy

American Freedom from Oil: A Bipartisan Pipedream

His most recent piece touches on a topic that is frequently discussed here: The potential of electric cars. It was written for a South Korean audience, but some of the issues Kevin mentions are topics frequently debated here, and should provide some basis for discussion while I finish up these next two essays.

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The Tesla Motors Electric Vehicle Strategy for South Korea:

Luxurious, Sexy, and Fast Electric Vehicles

By Kevin Kane

Energy Market Analyst

On occasion, electric vehicle critics suggest that they are too expensive to compete with combustion engine vehicles, but this is not true. In fact, high-end, 500-kilometer range, luxury electric vehicles such as the Tesla Motors Model S, priced at $57,000 ($49,000 after tax incentives), set for production in early 2012, are very competitive, if not superior, to gasoline and diesel engine vehicles in the same performance class. With a 0-96 kilometer hour time of 5.6 seconds, the Tesla Model S performs like a Mercedes E550, offers a base price in the same range, and looks as beautiful as a Hyundai Genesis.

If successful as a start-up company backed with hundreds of millions of dollars in private capital and a $465 million dollar low-interest loan from the U.S. Department of Energy, Tesla will prove that the future of electricity-fueled vehicles will not be in slow moving city-cars, but instead it will be in sexy and luxurious electric sports cars and sedans that fully substitute gasoline and diesel-powered vehicles in each class.

The image of electric vehicles being small and slow should be removed from all policy directions and discussions for the following reasons:

(1) Battery costs are presently too high to profit from a low cost compact electric vehicle;

(2) Sedan-size electric vehicles offer companies more profit than small vehicles due to battery costs that can range from $12,000 to $36,000 depending on size and financial scheme;

(3) Smaller electric cars have smaller batteries that increase the frequency of charging, which increases the chance for exceeding peak load capacity if they eventually number in the millions; Thus, short range, small electric vehicles can result in electricity black outs while long-range sedan-size highway-capable vehicles may not; and

(4) Korean people like large size cars, not small ones. Smart companies only give people what they want, not what out-of-touch elites think would be good for them.

Electric vehicles that are profitable should be very fast, sexy, and luxurious. Goldman Sachs, JPMorgan, Deutsche Bank and Morgan Stanley all agree, evidenced by the fact they all are serving as underwriters for Tesla Motors.

In 2012, Tesla will start producing approximately 20,000 Model S sedans per year that cost $57,000 each ($49,000 after a $7,500 U.S. government tax credit). By 2013, Tesla may produce a long-range electric sedan that costs $30,000. Rather than wait for costs to come down to produce compact electric vehicles, Korean car companies may want to begin producing high-end luxury electrical sedans today while the rest of us will just have to wait until prices fall; otherwise, Korean car companies could fall behind their emerging competition, Tesla Motors, a company often called the Apple iPhone of cars.

I am back home in Hawaii, and over the next few days hope my schedule settles down to normal. I am aware of some lingering technical issues that need to be resolved on the blog (e.g., some of the comments have not been successfully imported from the old blog – but they will be).

I imagine that a fair number of new readers linking in here over the next week or so will be doing so in response to a report on electric cars that was released while I was in New Zealand. I am listed as an advisor on that report. So I want to discuss my role, and ultimately how this exercise has influenced my views on electric cars.

I became acquainted with the author of the report (Clive Matthew-Wilson, editor of the car buyers’ Dog & Lemon Guide) a year ago when he wrote and asked me a few questions. As this report began to develop, I helped with certain aspects of the well to wheels efficiency of the petroleum supply chain, and I went through some of the calculations to check for errors. There are aspects of the report that I really can’t comment on, because I don’t know enough about that particular aspect. For instance, I can’t comment on efficiency losses of electric transmission, or in the drive train of an automobile.

Regular readers know that I have long been enthusiastic about the potential of electric cars. In my view as fossil fuels deplete it is going to be difficult to maintain anywhere close to the level of mobility we enjoy today. There simply is not, in my opinion, a renewable liquid fuel option that can scale up and replace a large fraction of the fossil fuels we use today.

However, renewable liquid fuels for the most part are just captured sunshine (as is oil, natural gas, and coal for that matter), and there are a lot more efficient ways of capturing sunshine than photosynthesis (biomass, however, has the advantage of a built-in storage system). Solar panels offer a way – in principle – to produce as much energy as we use today in the form of oil. (See my essay Replacing Gasoline with Solar Power). So I have always viewed electric cars as our best hope for approaching today’s level of mobility as petroleum supplies decline.

In fact, the summary by the author of the report on the potential benefits of electric cars would look very much like my own:

“1. Electric cars improve the security of vehicle energy supply by avoiding liquid fuels that are often imported from hostile or politically volatile countries and are being discovered at a slower rate than they are being depleted.

2. Electric cars offer much improved air quality in cities.

3. Electric cars offer drastically reduced traffic noise.

4. Electric cars offer less CO2 emissions if the electricity comes from nuclear, hydro, solar, wind or perhaps biomass.

5. Electric cars are sometimes more efficient than petrol or diesel cars.”

However, the report then highlights issues regarding electricity production around the world. For instance:

“1. Globally, most electricity is produced using highly environmentally damaging sources, and much of it is produced from fossil fuels. There is unlikely to be a significant change in the way this majority of electricity is produced in the foreseeable future.

2. Although there are alternative forms of electricity production that cause less harm to the environment than conventional forms, these forms are invariably far more expensive, and are therefore unlikely to be adopted en masse in the near future. Thus, the central premise behind the electric car movement – that electric cars will be powered primarily from ‘green’ sources – is essentially wishful thinking. The car driver generally has no control over how and where the electricity that powers his car is generated. Electric cars do not stop environmental damage: rather, they tend to merely move it out of sight, from the highways to the power plants.”

I think we can broadly agree that a large fraction of our electricity is produced from fossil fuels. The 2^nd point will be more contentious. After all, it is the very assumption that electricity will be much greener in the future that leads to the conclusion that the future of transportation could be green and electric.

The Tesla/Lotus Elise comparison is very interesting. The author examined the way electricity is produced today in various countries, and concluded that in 4 of 5 countries, the Tesla would actually be dirtier than the internal combustion Elise because of the amount of electricity for the Tesla that would originate from coal. New Zealand was the one exception in which the Tesla was found to be greener:

“In four of the five countries we surveyed, the Tesla electric car was less efficient and more polluting than its petrol sibling. Only in New Zealand – where the majority of electricity is produced by hydroelectric generation – was the Tesla ‘greener’ than the Elise. However, a New Zealand scientist recently predicted that if the New Zealand car fleet was replaced with electric cars, the country would probably need to build coal power stations to meet the increased demand.”

– but this shows that IF a significant fraction of electricity production is shifted to greener sources, the electric car can be greener than the internal combustion engine.

Ultimately, I think this report provides a good reality check of many assumptions on the future of the electric car. I still think it is true that there is great potential, but you can’t ignore the fact that it is very likely in at least the short term that incremental electricity will not come from renewable sources.

GM is pinning their hopes on next generation electric and hybrid vehicles.

General Motors (GM) announced Tuesday that the company is investing $246 million to make electric motors for it’s next-generation hybrid and electric vehicles in their Baltimore area transmission plant.

The plant will be the first electric motor manufacturing facility in the U.S. operated by a major automaker, according to GM’s press release.

“Electric motors are driving the next wave of automotive growth,” said Tom Stephens, GM’s vice president for global vehicle operations.  “The expansion of the Baltimore plant will generate a significant influx of money and jobs into the greater Baltimore area, creating U.S.-based manufacturing jobs.”

The plant, which opened in 2000, will employ nearly 400 people.

“Electric motors are the engines of the future,” Stephens said.  “By designing and manufacturing electric motors in-house at Baltimore Transmission, we can more efficiently control the design, materials and production processes. It will also enable us to lower costs and improve performance, quality, reliability, and manufacturability of the electric motors we use in our vehicles.”

The investment will be underwritten in part by a $105 million grant awarded to GM last year by the U.S. Department of Energy.

“In the future, electric motors might become as important to GM as engines are now,” said Stephens. “Our goal is simply to establish GM as a leader in automotive electric motors,” he said.

Nissan Motor Company has announced that their Oppama Plant in Japan will begin manufacturing electric vehicles (EV’s) in the fall of 2010.

The company plans to mass-produce the EV’s by 2012, but will begin the intial phase with the production of 50,000 vehicles next year.

Nissan also reported a full-year net loss of $1.4 billion for 2008, with a net loss of $2.8 billion in the fourth quarter alone. The Japanese automaker has seen U.S. sales plummet 35 percent this year.

The company says that it’s committed to becoming a global leader in zero-emission vehicles, and that it will also seek to build components and have some of the EV production done overseas.

With more than 200,000 vehicles, the USPS can make a significant impact if they were to revamp their fleet.

With an estimated 219,000 service vehicles, the United State Postal Service operates the largest civilian fleet in the country. Since the vast majority of these vehicles are powered by gasoline, rising gas prices are having a huge impact on operating costs.

According to the New York Times, every 1-cent increase in the price of a gallon of gas costs the USPS $8 million. In 2007, the fleet drank $1.7 billion in gasoline. This year costs are projected to go up by $600 million, giving the USPS the motivation to find alternatives.

President Obama has an idea to reduce dependence on gasoline. His energy plan calls for putting a million electric cars on American roads over the next six years. This gives Ruth Y. Goldway, a member of the United States Postal Regulatory Commission, an idea.

Goldway writes, “Converting just its 142,000 standard delivery trucks would reduce gasoline consumption by up to 68 million gallons a year and save the Postal Service millions of dollars. Delivery vehicles could be powered by electricity from solar panels installed on the roofs of mail sorting centers and local post offices — a self-sufficient system. You could plug in your own electric car there while you drop off parcels and buy stamps.“

She also points out that by converting at least a chunk of the USPS fleet, green jobs would be created across the country. Times are tough and the recession is taking a toll on virtually everyone. Could electric postal vehicles be just what the country needs?

The USPS already had one failed attempt at reducing dependence on gasoline. Between 1999 and 2005, it purchased more than 30,000 ethanol-capable trucks and minivans. The vehicles had larger engines than the vehicles they replaced and got as much as 29 percent fewer miles per gallon. Since corn-based fuel is not readily available in many areas, the USPS powered less than 1,000 of the vehicles with ethanol.

The result? The U.S. Postal Service increased its gasoline consumption by more than 1.5 million gallons after purchasing the ethanol-capable vehicles.

The USPS is deploying hydrogen-powered Chevrolet Equinox fuel cell vehicles in partnership with GM.

Ready to try again, the USPS is now testing a new hydrogen fuel cell vehicle. In July, General Motors provided the agency with the Chevrolet Equinox fuel cell vehicle. This fourth-generation vehicle uses no petroleum-based fuel.

The USPS entered an agreement with General Motors to participate in a two-year trial of the fuel cell vehicles.

Richard Maher, a USPS spokesperson in Irvine, Calif. told Government Executive, “The carriers like it a lot. It’s very comfortable.” He also said the vehicle is extremely quiet and has smooth acceleration.

This is not the first time the USPS has tested Chevrolet’s hydrogen cell vehicles. Maher said the previous prototype was rejected because it was smaller and quieter than the current Equinox model. Its small size restricted the amount of mail that could be carried on routes and it was a little too quiet, often startling pedestrians.

General Motors hopes to generate consumer interest as the hydrogen fuel cell vehicles hit the road to deliver the mail.