I recently spent three weeks in India, and like most Americans traveling the subcontinent, I was struck by the deep differences between our two societies.  Waste disposal is a highly visible one – in the United States, we like to bury our trash and forget about it.  In India, trash is thrown on the ground and forgotten, or rather, ignored.

One of the sharpest differences between the United States and India, though, is the power system.  Citizens of developed countries are used to 24/7 access to power.  Sure, sometimes that power may be more expensive (thanks to utility attempts to balance demand throughout the day and night).  But when we flip a light switch, we take it for granted that the light will indeed turn on.  What if it didn’t?  What if we had regular power cuts, either scheduled or for emergency purposes?

In India, power cuts are a part of life.  The infrastructure was not built to handle such a huge population and, while construction is rampant throughout India, progress is slow and expensive.  Thus, utilities simply shut off the power when it becomes too difficult or expensive to run.  In Chennai, the capital of Tamil Nadu, power cuts are scheduled for 2 hours a day, staggered across different parts of the city.  In the house where I was staying, the power went off from 4 p.m. to 6 p.m. daily.  In remote villages, access to electricity is the exception: power cuts can last as long as 16 hours, every day.

Geographic Inequality

This may seem backward to those of us used to constantly running air conditioners.  But if American utilities practiced routine load shedding, even for 5 minutes a day, huge amounts of energy could be saved.  This is the principle behind smart appliances, which don’t consume electricity when it’s not needed.  In India, where smart appliances are still essentially unknown, load shedding is an effort to prevent emergency power cuts and blackouts, such as the massive blackout that gripped 20 states in north India last July.  Demand often outstrips supply, especially with inefficiencies and theft common across the Indian power grid, which accounts for between 20% and 50% of all power generated in the country.

Officials tend to blame coal shortages, although it is really a matter of geographic inequality.  India’s grid is fragmented.  Even when there’s a surplus of electricity in one part of the country, it’s impossible to transport it without losing most of the energy along the way.  Clearly, the Indian grid needs revamped massive upgrades.  On the website Powercuts.in, citizens can report electricity outages via mobile web, SMS, Twitter, and other smartphone applications.  This website takes the information and makes it publicly available.  This is only effective in major cities, though, where cell phone reception is reliable and consistent.  The full extent of load shedding is hard to quantify.

In India, one of the most rapidly developing economies in the world, major inefficiencies in the grid cause many people to be without electricity on a daily basis, slowing development and costing billions of rupees in lost productivity, especially in villages.  The situation could be improved by integrating localized renewables, which is already happening, as well as better mapping of electricity use nationwide, which could reduce theft and inefficiencies.

It’s difficult to imagine, as an American, the effects of such widespread blackouts.  But with the growing frequency of major natural disasters and our own grid aging, they may soon become more familiar.

The price of guar gum, a product used to thicken food for decades, has been up and down this year.  The gum is made from guar beans grown in India.  The country produces over 1 million metric tons of guar beans and exports nearly half a million metric tons of guar products annually.  Guar gum is also used in medical products and to thicken and bind various products like pills and lotions.  Recently, guar gum has been put to a different use.  Hydraulic fracturing (or fracking), the process by which hard-to-get natural gas is extracted from shale, requires a “gelling” product, a hydrocolloid, to keep cracks open as water and natural gas are pumped back out.  Guar gum has proven to be an economical alternative to other gelling agents used in fracking and less detrimental to the environment.

Indeed, fracking is rapidly becoming the largest market for guar.  Over the past 2 years, the demand for guar gum rose from 250,000 metric tons to 480,000 metric tons per year.  That’s why in March 2012, when the Forward Markets Commission (FMC) of India closed physical guar contracts for the season, drastically reducing exports, an outcry arose.  The Commission’s reason was the rapid rise in guar prices; between December 1, 2011 and March 27, 2012, the price of guar almost quadrupled.  This caused inflation in food prices, especially in parts of India such as the desert state of Rajasthan, where guar is still used as a primary protein source.   Since the FMC’s intervention, however, the price of guar seeds has fallen 7% and the price of guar gum is down 6%.  The market is expected to open for contracts again sometime in the next few months, once guar crops have been sown.  However, potential droughts could mean a short supply of guar, despite high demand.  Prices are expected to soar again as soon as the FMC reopens the guar market.

Due to the highly unstable supply and fluctuating prices of this humble bean, many companies are now exploring alternative gelling options.  TIC Gums, for example, is introducing Ticaloid Guar Replacement (GR) 8700, a complete replacement for guar gum in applications ranging from fracking to food additives.  Other companies experimenting with guar substitutes are Baker Hughes Inc., Halliburton Co., Nabors Industries Ltd., Trican Well Service, and Ashland Inc.

The lack of a reliable, inexpensive hydrocolloid means natural gas markets may not expand as rapidly as initially projected.  Indeed, the pace of natural gas drilling in Pennsylvania has slowed considerably since 2010, from an average of 6 new wells to 4.6 wells per day.  Lower supplies of natural gas would slow the shift away from coal, nuclear, and other forms of power generation.    Finding a synthetic substitute for guar could stabilize price and, therefore, the supply of natural gas.  Once the export ban is lifted, though, impoverished farmers in Rajasthan will enjoy  high-demand from the fossil fuel industry halfway around the world.

The integration of biofuels into the mainstream fuel supply may have taken a step backward. On May 24, a bill passed the Senate Armed Services Committee detailing the stipulations on biofuel use by defense vehicles.  If this bill passes the full Senate, the Department of Defense could be prevented from pursuing its initiative to develop commercially-available biofuels.  In addition, the $642 billion defense authorization bill repeals Section 526 of the 2007 energy bill, which specifies that alternative fuels purchased by the DOD cannot emit more carbon than conventional fuels.  This bill was passed by the House of Representatives in mid-May.

Support of this bill is spotty in Congress. Repealing Section 526 and dismantling the biofuel initiative are independent, as some senators support the initiative but want to repeal Section 526. Support for either seems dependent on the amount of coal and oil production in the senator’s home state.

Should this bill go into law it would be a major hit to the biofuel market in North America.  Currently, the Department of Defense is a key stakeholder in the biofuels industry.  From Pike Research’s 2011 report, Biofuels Markets & Technologies, the following chart breaks down the production of biofuels by geographic region.

Biofuels Production by Region, World Markets: 2011-2021

(Source: Pike Research)

The amount of biofuels produced in North American markets could shrink significantly should this bill pass.  What’s more, a decline in the use of biofuel would inevitably signal an increase in the use of petroleum-based fuels for defense applications.  This could mean an increase in imports of foreign oil, or a heavier dependence on domestic natural gas.  As demonstrated in a recent blog by Mackinnon Lawrence, the prices of these two commodities fluctuate wildly depending upon their domestic use.  However, the military use of petroleum-based fuels is small relative to light-duty vehicle use (2.4% of the total, versus 61% by light-duty vehicles)(NGV-10).  Thus, regulation of military biofuel use makes little difference in the total amount used.  The funding and research into biofuels provided by the Department of Defense, though, represents a major impact to the overall market.  While the overall demand for biofuels in the United States would not be greatly affected, the impact on the entire sector would be dramatic.

Recent innovations in cellulosic biofuel production that have created hope for a stable domestic supply of energy could be undermined by a cut in funding from the Department of Defense.  That’s the last thing this fledgling market needs.

Fiberight, an Iowa-based ethanol company, recently opened the nation’s first full-scale cellulosic ethanol plant. For years, Iowa has been the center of ethanol production within the United States, pumping out corn-based fuel for the masses. But the corn ethanol industry may be facing challenging times as debates over government spending and energy efficiency become keys to the looming presidential race.

Agricultural subsidies started in large part because of the Great Depression, as an effort to keep farmers on their land. However, nearly a century after their institution, farm subsidies are still being renewed. The most recent ethanol subsidy, The Food, Conservation, and Energy Act of 2008, subsidizes corn growing as well as biofuel research. In fact, federal law now requires the production of over 10.5 million gallons of biofuel a year. New flex-fuel cars have been produced to run on E85, a special blend of fuel that contains 85% ethanol. The motivation is to reduce our dependency on foreign oil-based petroleum, thereby cutting fuel costs as well as emissions. But ethanol may not be a silver bullet for energy woes.

Ethanol can be produced from a variety of plant materials, including sugarcane, switchgrass, and wheat. Here in the United States, almost all ethanol is produced from corn. It can make more sense for a farm to grow a large amount of corn than a combination of other crops because there is such a huge monetary incentive for doing so. The Food, Conservation, and Energy Act of 2008 continues a practice that has existed for years, generating $37.3 billion of corn subsidies between 1995 and 2003. Yet the amount of energy it takes to grow, harvest, refine, and transport the corn for ethanol is greater than the energy obtained from using it as fuel. Gasoline mixed with ethanol, which is sold in all states, also reduces fuel economy in most engines. Sugarcane ethanol is more energy efficient to produce, but its import is heavily taxed within the United States.

In addition, diverting grain to fuel drives up the cost of food, which can make it difficult for low-income families to fill their stomachs. Despite the food supply issues and reduced fuel economy, corn-based ethanol continues to have strong support from some federal lawmakers. According to Pike Research, the United States now leads the world biofuel market with a 44.7% share, as seen in the following chart from Algae-Based Biofuels.

However, this may not be the case for much longer. Republican presidential candidate Tim Pawlenty, among other candidates, is making the elimination of energy subsidies a key part of his campaign. The primary reason for this, Pawlenty claims, is to reduce government spending. However, there are added benefits to eliminating the corn ethanol subsidy — it could very well be accompanied by an elimination of petroleum subsidies, and a reduction in corn ethanol could lead us to search out more sustainable forms of vehicle power, such as electricity, fuel cells, cellulosic ethanol, or sugarcane ethanol. Fiberight may be the first in a wave of companies developing a more sustainable biofuel by manufacturing cellulosic ethanol on a large scale. In addition to Fiberight, Petrobras and Colorado-based ZeaChem are two companies throwing themselves into the cellulosic ethanol research ring. Eliminating government support for corn ethanol is becoming a hot topic in political debates, allowing the public to consider truly viable options for transportation energy.