In the early 2010s, the great financial crisis of 2008/09 was still on the minds of investors. That coupled with any number of other crises, including the oil spill in the Gulf of Mexico, multiple threatened/one actual shutdown of the Federal government, innumerable debt-ceiling-hike standoffs in Congress, and more. Investors were worried about the future. Sound familiar? It certainly does – different crises now, but a similar impact on our psyches.
During that time, I wrote a series of articles designed to encourage clients to look beyond the never-ending streams of negativity and focus instead on the wonder of American innovation. American companies do not just innovate, they make money through innovating. I think it’s time for a few more such articles.
Today’s topic – green gasoline. In the context of this article, green means without using fossil fuels (oil/natural gas) from the ground to produce the gasoline. Please don’t tune out thinking I’m going to take sides in an argument about climate science – I’m not. It’s all about the innovation.
A recent article in MotorTrend magazine described a joint venture involving Siemens, ExxonMobil, Porsche (owned by Volkswagen), and several energy companies from Chili. The project uses wind energy to power a chemical reaction that converts water into hydrogen and oxygen. That hydrogen is then combined with carbon dioxide pulled from the atmosphere to create green methanol. That methanol is then be converted into green gasoline with water as a byproduct.
The green gasoline can be used in a Porsche or any other car for that matter. The gasoline burns in the engine just like regular gasoline refined from crude oil, producing energy and the typical emissions from a car, emissions that include carbon dioxide. However, the fact that green gasoline is produced using carbon dioxide pulled from the atmosphere means that little new carbon dioxide is created in the overall process. The technology produces energy to power a car that is essentially carbon neutral to the environment.
The initial cost of making green gasoline in this way is estimated to be $45 per gallon. That’s not good you say. However, project participants expect efficiencies of scale and technology to reduce that to $7.57 per gallon by 2026. Further, the project is not intended as an effort to eliminate all fossil fuels from the entire energy supply chain. Rather, Porsche’s “end game is to ensure there’s a carbon-neutral fuel that can power the 70 percent of all Porsches ever built that are still on the road long after the new-car fleet is fully electrified.” Sounds like a great plan!
Three takeaways from this article:
- Volkswagen/Porsche thinks its business is helped in the long run to develop a carbon-neutral fuel for a specific purpose AND the capital required to do that is an investment that will yield a return. Why else would a for-profit company take on a project like this?
- Technological innovation is at work everywhere – from windy Punta Arenas, Chili where the project is based, to laboratories of ExxonMobil and Siemens, and in high-end performance cars built by Porsche. For-profit companies are best equipped to employ technology to solve problems and to make money for shareholders at the same time.
- The work done by this consortium will likely be used, adapted, re-engineered, and re-deployed to solve other problems for other companies. Innovation begets innovation.
A link to the MotorTrend article is here:
(https://www.motortrend.com/features/porsche-supercup-efuel-direct-air-carbon-capture/)
Here’s to innovation! Enjoy a beverage and some cheese straws while you ponder the wonders of green gasoline.
Wishing you a very happy holiday season and a prosperous new year! Cheers!!
