With oil prices approaching $150 a barrel and gas prices more than $4 a gallon, everyone is looking for an alternative to these two fuels. Just about every day, it seems, the “next fuel” is discovered.
Recently I read about Canadian scientists claiming to have extracted fuel from the unwanted and disliked kudzu plant. I had to smile when I saw this, because a couple of years ago I wrote a novel (the “economic thriller” Micro Mischief), which was based on this very premise! Who would have ever thought?
But “kudzu fuel” is just the latest. People are excited about fuel being made from crops, from grass, from animal waste, from wind, from rocks (oil shale), from the sun, from ocean tides, from under the ground (geothermal), and from hydrogen, to name a few.
However, any fuel — indeed, any invention — must pass two tests to be successful. The first is simply that the invention is technically possible. Simply put, it must work. This means that we can use the kudzu plant to make a fuel to power our cars and trucks, or that solar power can be transformed into electricity to heat and cool our homes.
The technical test also goes beyond the laboratory. A fuel is no good unless it can be delivered from the production point to the end user. So promoters of alternative fuels must also think about how that fuel will be trucked, piped, wired, or otherwise sent to the millions of necessary convenient outlet points for consumer use. This has been an issue with ethanol.
Safety and pollution are other considerations in the technical feasibility of fuels. Clearly, we want a fuel to be safe in its production, delivery, and use. While safety is taken for granted with current fuels such as oil and gasoline, it is an issue with the fuel that many see as the successor to oil — hydrogen. Advocates of hydrogen power are working hard to overcome questions about safety, and they will have to pass the safety tests beyond a shadow of a doubt for the fuel to be feasible and accepted.
The same is true with pollution. We want alternative fuels to be low polluters both as they are manufactured and as they are used. By this standard, there are some concerns about fully electrically powered vehicles. The issue is that electricity is not a basic fuel — it must be generated from some other source, such as oil, coal, water, or nuclear. So if, for example, a shift to electric cars increases coal-based electricity generation, air pollution might actually rise.
If all the technical tests for a fuel are passed, there still looms one more hurdle: the economic test. For any fuel to be successful, enough consumers must be willing to pay a price high enough to cover all the fuel’s costs.
It’s this economic test that’s making it so hard for many alternative fuels to break through to widespread use. Although it has become cheaper, by most measures solar power is still more expensive than other heating and cooling fuels, especially when the cost of installing the panels is included. The same goes for wind power and tide power.
Some suggest the government level the price playing field between conventional fuels and alternative fuels by increasing taxes on conventional fuels and providing subsidies to alternative fuels. Indeed, many alternative fuels do receive subsidies in their discovery, production, and purchase by users. But there’s always an issue of the size of such subsidies and their impact on federal and state budgets.
Of course, any move to substantially increase taxes on conventional fuels, such as gasoline, especially at a time when those prices are historically high, would likely run in to severe opposition.
It’s the twin issues of technical feasibility and economic reality that make the development of alternative fuels difficult. One prediction, at least to this economist, is for sure. As the price of conventional fuels rises, more alternative fuels will pass both tests. We just have to be patient.
Dr. Michael L. Walden is a William Neal Reynolds distinguished professor at North Carolina State University.