Climate change, unstable political situations and economic complexities are already affecting the transportation industry. In the first part of a three part series on future of transportation, Shai Agassi explores the current situation.
Projecting the Future of Energy, Transportation and the Environment
In 2005, the world entered the “post peak-oil” era, as predicted by many oil experts years before reaching this situation. The price of oil is dominated by two factors, new discoveries of oil fields and global demand for oil, falsely called production. As the R/P ratio (Reserves to Production) slides we begin to witness sharp price hikes in the futures market for oil immediately affecting the price of fuel at the pump. During the last 10 years, the price of oil shot up from US$ 10 a barrel to well above US$ 80 a barrel, with current predictions more certain of the price crossing US$ 100 a barrel than ever coming back to US$ 50. The oil market is tightly intertwined with the car market, as both products complement one another to produce the “complete product” consumers desire - the freedom of personal commute. With this document we try to project the most probable set of changes in the energy markets and the transformational technologies that exist today and how they will come together to address this emerging oil shortage. The paper will also try to illustrate the potential business, national and regional effects of such transformation to the energy and related industries. It is important to note that as these markets are so complex and interdependent; many other events may happen can accelerate or alter the course of events described here. The technologies that are described here are all present today and no scientific breakthrough was assumed or needed.
Current State
The world depends on oil today as its fundamental transportation energy source. Half of oil production is used to drive consumer cars, commercial transportation (mostly trucks and boats) and air transportation. With the emergence of China as an outsourcing powerhouse, and the Internet as the global e-shopping mall, we have significantly increased the distance our global materials and finished goods travel, requiring more transportation fuels. Even more critical, with the emergence of a consuming middle class in China and India, we have a sharp rise in demand for cars. Those cars in emerging countries drive on congested roads and use cheaper older engine technologies - creating an immense demand for fuel and tremendous amounts of car emissions.
Various solutions have been proposed in recent years, with varying degree of success. Most prominently, ethanol as a short-term fossil fuel replacement and hydrogen infrastructure as a long-term solution, were touted as energy source and distribution mechanisms for our transportation needs. It is the authors’ belief that while ethanol has a very important role to play in the short term it is not a long-term solution at scale for the needs of driving a billion cars, which is the scale of our market within a few decades. Hydrogen on the other hand, is a fundamentally flawed approach due to the negative energy equation underlying the generation, storage and consumption of hydrogen in cars.
To understand the energy flow of fuel we need to understand the following energy/time cycle. Fossil fuel is the result of solar energy mixed with water in plants as we discover it after millions of years. Over the millions of years, the earth’s core energy and pressure concentrate the carbon-hydrogen bonds into high energy density molecules that humans extract, refine and burn (inefficiently) in small car engines.Unlike most descriptors used, we as humanity do not produce oil; we merely discover and surface it. To understand the cycle, let’s examine what happens to crude oil after we have it on the surface. Through the application of an energy intensive process of refining oil we attain its most valuable derivative hydro-carbon molecules - fuels and other petrochemical derivatives (such as plastics). We deliver the fuel through pipes and trucks to gas stations, where cars fill fuel into the car and consume the fuel through a very wasteful internal combustion engine - losing roughly 80% of the chemical energy fuel carries to non-productive heat.
In the process of releasing energy from fuel, we break carbon-hydrogen chemical bonds, creating CO2 as an undesired by-product which is slowly altering our atmosphere, heating our planet in the process. At the surface level fuel produces many other derivative gasses, such as NOx, that cause local pollution and deaths.
To solve our critical global shortage of oil, we must find solutions that do not require the millions of years earth takes to make oil out of plants. Ethanol can be made through direct conversion of plants (mostly sugar cane in Brazil, and corn in the US) into biofuel, cutting earth’s heat and pressure out of the loop. The problem with ethanol is the energy, water (not to mention the shortage of arable land) required to produce a unit of energy is so high today that scaling the solution affects our ability to feed our population. In a sense, we are entering a stage where oil has becomes tightly linked to food in a very dangerous zero-sum game. The manifestation of that link can be seen in sharp price hikes for basic food crops, such as corn, in the US over the last few years. Even worse, in countries like China we are running out of enough clean water for drinking and irrigation (which consumes 80% of our sweet water). The only way to produce more water is through desalination, in essence converting energy into water. As such, converting water into energy is the reversed process to the one desired by nations looking to solve our immediate water shortage. Other problems stemming from the inability to distribute of etha ol through pipes (Ethanol is a corrosive material) had already reduced the appeal of this fuel and prices for ethanol are dropping sharply in the US, despite rises in oil prices.
Hydrogen, on the other hand is not an energy source, rather an energy distribution mechanism. In a sense, we need to produce hydrogen, compress and distribute it, store it in the car without having it stream out of the container (a very complex problem), after which we can run it through a very expensive fuel-cell, where hydrogen atoms (the proton in the atom) combine with oxygen from the air, releasing an electron. It takes four electrons in production of hydrogen atoms to produce a single electron within the fuel cell. In a sense, we lose 75% of the energy we start with if we go through the hydrogen route. Regardless of the technical and economic problems in producing a viable hydrogen infrastructure, it is simply an inefficient process that cannot help us at scale. To understand the fundamental problem of hydrogen, we need to remember that what we want is the electron in the hydrogen atom, yet we seem to attach it to a proton which is 2000 times bigger to produce an inefficient distribution mechanism. The only question is why?
Our proposed solution improves the original solar energy concentration cycle by eliminating the role plants play routing photons from the sun (and their variants - wind and wave energy) into electrons within millions of car. We do so by collecting solar energy (through large scale solar thermal installations), generating electrons, sending the energy directly over the electric grid into an electric battery which powers an efficient electric motor. Motors, unlike engines, do not generate friction or heat, providing 90% + efficiency in converting electricity to motion. Past issues - such as battery cost, distance, speed and battery life have significantly improved over the last decade and the economics have now tipped in favor of electric transportation, as we will illustrate in the following paragraphs. A significant change required is the creating of new class of infrastructure replacing the role gas stations played with combustion engine based cars.
When we convert our transportation from combustion engines to electric motors, build renewable sources for the required electricity (a car needs an installation of approximately 1.2 kW of solar power, or 70% as much wind power) and connect the generation with the car through an intelligent Electric Recharge Grid (ERG) we will create a sustainable transportation energy solution which will go practically forever with no reliance on oil and no emissions.
