GEORGE A. OLAH, professor of chemistry, USC Dornsife, and Chris Cox, USC trustee.
This op-ed originally appeared in the Wall Street Journal on Oct. 10.
In the three weeks since the Obama administration issued its long-promised proposal to reduce carbon dioxide emissions, it has become clear the plan is far from perfect. By placing the burden of expensive new carbon capture and sequestration technology on the U.S. alone, and potentially requiring steep cuts in domestic energy to conform to carbon caps, the proposal could send the U.S. economy into shock without making a significant dent in global emissions.
There is a better approach that can reduce greenhouse-gas emissions while growing the economy and increasing U.S. energy independence.
In place of expensive mandates and wasteful subsidies, what is needed are powerful economic incentives. These incentives should operate not just in the U.S., but in other countries as well.
Thanks to recent developments in chemistry, a new way to convert carbon dioxide into methanol—a simple alcohol now used primarily by industry but increasingly attracting attention as transportation fuel—can now make it profitable for America and the world to reduce carbon-dioxide emissions.
At laboratories such as the University of Southern California’s Loker Hydrocarbon Research Institute (founded by George Olah, one of the authors here), researchers have discovered how to produce methanol at significantly lower cost than gasoline directly from carbon dioxide. So instead of capturing and “sequestering” carbon dioxide—the Obama administration’s current plan is to bury it—this environmental pariah can be recycled into fuel for autos, trucks and ships.
Related breakthroughs in chemistry now make it possible to efficiently convert natural gas from shale into methanol. Hydraulic fracturing is making shale gas so inexpensive and abundant that America now taps more natural gas than either Saudi Arabia or Russia. Until now, however, that abundance of supply has not translated directly into benefits for drivers in the form of lower fuel costs, or reduced dependence on foreign oil. The methanol-conversion process can be a game changer, because shale gas can immediately be put to use as liquid transportation fuel.
Methanol has long been known as a superior fuel for cars, one that is better for the environment than either gasoline or ethanol. Beginning in 1989, the California Energy Commission tested the viability of methanol as a vehicle fuel and found that it generates much lower vehicle emissions. Methanol-gasoline blends have cleaner burning properties than gasoline alone, reducing harmful NOx emissions—mono-nitrogen oxides, which produce smog and acid rain—and polluting particulate matter.
Methanol also provides higher performance. It has an octane rating of 100, greater than premium gasoline, one reason that pure methanol was used for decades to fuel the race cars at the Indianapolis 500. Yet putting methanol in the gas tank is economical, too. It is significantly cheaper per mile driven than either gasoline or ethanol. Unlike ethanol, methanol does not raise food prices.
These advantages are not limited to cars. Swedish advances in modified diesel engines have opened the way for using methanol in diesel-powered trucks and maritime transport. An independent MIT study in 2011 on “The Future of Natural Gas” led by Ernest Moniz, now the U.S. Energy Secretary, concluded that methanol is the best use of natural or shale gas in transportation.
At the University of Southern California, we have taken this idea much further, developing the concept of a comprehensive methanol economy supported by much enabling chemistry. (The university and the inventors stand to profit from patents on the processes involved.)
These new ways of converting shale gas and recycling carbon dioxide into methanol have already moved from the laboratory to wider deployment. In Iceland, the George Olah Renewable Methanol Plant, opened last year by Carbon Recycling International, is converting carbon dioxide from geothermal sources into methanol, using cheap geothermal electrical energy. The plant has demonstrated that recycling carbon dioxide is not only possible but commercially feasible.
Instead of paying extravagant sums to sequester unwanted carbon dioxide, we now can recycle it into valuable fuel while mitigating carbon-dioxide emissions. But one thing stands in the way. What is needed to permit large-scale use of this technology in the U.S. is an end to anticompetitive laws.
Given the advantages of methanol, it is not surprising that millions of U.S. and European cars today operate on gasoline mixed with methanol in countries around the world. Not so in America. That is because for years, federal law has subsidized corn-based ethanol. Since 1980, those subsidies—largely in the form of tariff protections and tax credits—have exceeded $45 billion. The subsidies expired in 2011, but Congress continues to mandate that the oil and gas industry purchase ever-larger quantities of ethanol each year to be blended into gasoline. All of this has tilted the playing field so that superior fuels such as methanol cannot compete.
There is another crippling legacy of this pro-ethanol government policy: Manufacturers of cars for the American market honor their warranties only for vehicles using mandated fuels (gasoline and diesel), which in turn may contain only ethanol as a blend. One means of addressing this inequity would be for Congress to pass the bipartisan Open Fuel Standard Act of 2013, which would put methanol, natural gas, and biodiesel on the same footing as ethanol (but without subsidies and without telling consumers which one to choose) for use in flex-fuel cars.
Little is required to achieve the objectives of a healthier environment, stronger economic growth, lower fuel costs and increasing energy independence that new technology and chemistry offer. We don’t need to spend new billions of taxpayers’ money on subsidies and imports. Federal law should allow other high-quality alternatives to gasoline—including methanol—to compete. If the Obama administration truly wants to do something about carbon dioxide from coal-fired power plants, the solution is as close as the family car.