Biodiesel, Hydrogen and Electric Cars: Who Wins?


1. The future of biodiesel compared to hydrogen and electric cars


Biodiesel has the great advantage that it can be stored easily. At the same time, it is relatively free of environmental pollutants and the content of dioxins and sulfur is minimal. This is good for engines and actually results in cleaner burning fuel. That may be one reason petroleum has caught on where electric cars couldn’t 100 years ago, because you didn’t have to rely on a power grid in the middle of nowhere. 

This means that biodiesel has many of the positive properties of conventional diesel fuel, but is more environmentally friendly. This may seem prophetic, but it could indicate that biofuels will replace conventional diesel. 

What is holding biofuels back is a lag in innovation in two areas. One area is how to effectively commercialize biofuels. The other is how to produce biofuels with a high energy return on investment (EROI). Both of these issues are particularly relevant in the development of algal biofuels. This is because algae biofuels have the greatest potential of all biofuels, as they do not compete with agricultural use. While we saw a steep increase in algae biofuel investment until the 2008 financial recession, we have since seen a gradual decline in algae biofuel spending.

This coincides with the decline in oil prices since the 2008 financial recession. There was a slight recovery after the financial recession, but more recently the price of oil has fallen again. Since April 2020, oil prices have fallen significantly as oil storage facilities had much more oil than they could sell to customers. Only in the last few weeks have oil prices risen, which has to do with supply reductions in the Gulf states. This has also affected spending on biofuel research and development. Public interest in biofuels and biodiesel has also waned. In fact, there is a close relationship between oil prices and biofuel commercialization and innovation. The two correlate, so when one picks up, the other picks up as well.


2. The future of the electric car compared to hydrogen and biodiesel


Electric cars rely primarily on a power grid where you can drive anywhere. Power grids are inherently fragile and can falter due to power outages. That may be less of a problem now, but in the past, power outages were much more common. As European nations increase the share of renewables in the power grid, it means grid stability will be more affected. That, in turn, can undermine the transportation system in a way that diesel cars never could.

Certainly, moving oil from far-flung locations in the Persian Gulf requires considerable navigational skill, a well-planned midstream business. We’re not even talking about the costs in the up-stream business and the refining in the down-stream business at this point. They also finance the coffers of other countries in the Middle East. Nevertheless, maintaining the power grids is not without costs, and the power grids have high operating costs. At the same time, distribution grids would need to be expanded to allow people to park their cars at home and recharge the battery when they are not driving the electric vehicle. But that raises another set of questions that have so far gone unanswered.

Who will pay for the expansion of the power grid (in Germany)? Most likely, tax money will be used. But will this be included in the price of buying a new electric car? Would people still want to buy that car if they included the cost of expanding and maintaining the power grid for the explicit purpose of driving an environmentally friendly electric vehicle. And the question is whether this will pass legislation because most people will not be able to afford an electric vehicle. The number of people who will be able to afford an electric vehicle will be very small.

From a legislative standpoint, you need the utilities first and then you need the electric car. In the same way, you need the downstream oil operations and gas stations first before you buy a diesel car. The process of getting all this done is likely to be messy and take a dozen years or more. It could only happen on a societal basis and include everyone because of economies of scale. In this case, it is either tax dollars that would benefit relatively few people and compete with other needs, or it is privately funded. If it is privately financed, the costs would initially skyrocket because the expansion of the power grid probably cannot be subsidized. 

Solar or geothermal energy can also be used in residential complexes. One solution may be for apartment owners to become their own electricity producers. The state could consider legislation that allow apartment owners provide utility services, i.e., electricity and heat, to their tenants. This would have a significant impact on utility grids. Electricity grids are based on the principle of subsidiarity. It is considered a public good and everyone uses the same public infrastructure. If apartment owners provide electricity and heat themselves, fewer services would have to be provided through the power grid. 

Then there is the question of where the electric vehicles are produced and where they are sold. Much of the revenue and income opportunity generated by the electric car revolution is generated at headquarters, for shareholders and the production site. Most of the electric cars produced in Europe and the batteries built for them will probably be manufactured in eastern Germany. How do other countries like France benefit from electric cars being made in Germany? While Poland and the Czech Republic can partially benefit from electric car production in eastern Germany due to their geographical proximity, this is not the case for southern Europe. This is a specifically German problem. If Germany succeeds in establishing itself as a hub for the production of electric vehicles, this could lead to divergences at the European level, as Germany appears to be taking resources, including labor, from its neighbors. 


3. The future of hydrogen compared to electric cars and biodiesel


Hydrogen-powered vehicles are widely seen as the future of the auto industry. They have been embraced in Germany, Europe’s number one car market. At the same time, however, there were skeptics who doubted the long-term potential of hydrogen vehicles. This has to do with the difficulty of storing hydrogen, which leaks and escapes into the environment at every turn. The whole argument boils down to the need to convert hydrogen from another fuel source and turn it into hydrogen. Which energy source that should be remains an open question. At the moment, natural gas is used to produce hydrogen, which is not very effective in terms of energy. In addition, countries like Germany are dependent on natural gas imports from abroad. In the case of Germany, the natural gas comes to Germany either as pipeline gas from the Russian Federation or, to a lesser extent, from the North Sea basin, or it is supplied as LNG from the USA and the Gulf States from countries such as Qatar.

This also calls into question how renewable, or should we say carbon-negative, hydrogen really is. One of the main arguments of hydrogen proponents is that it is a clean energy source. At the same time, it is perceived as nearly carbon neutral or even carbon negative. In the car market, we pay a premium for it. It’s less of the sulfur and dioxin emissions associated with conventional diesel engines.

If hydrogen is produced from renewable energy sources, this will require the development of an entirely new infrastructure for the safe and effective storage of hydrogen AND the expansion of renewable energy generation. We already have problems building storage facilities for wind energy. Renewable power generation is inherently volatile and requires baseload injection from fossil fuels and nuclear. So the question is how to stabilize the grid when so much renewable energy is being produced. The more renewable energy that is produced, the more important it is to stabilize the grid as a whole. The more renewable energy that is produced, the more Germany’s neighbors will have to participate in managing the grid infrastructure because the power grids in Europe are all interconnected. In addition, transformers can suffer from fluctuations in the power grid. It is incredibly expensive to build and replace transformers. This leads to enormous costs. So hydrogen is currently only feasible with subsidies, grants and incentives to get started. The hidden costs are not included in the operating expenses. We are still a long way from a full-fledged hydrogen economy.

Hydrogen can be produced from waste materials, including recycled plastic. But this process is energy-intensive and requires significant engineering skills. It is seen as a solution to the hydrogen problem because waste-to-hydrogen solves two problems at once. Waste-to-hydrogen gets rid of some of the waste while generating the energy we need for transportation and industrial use. 

They have fallen a bit out of favor lately against their competitors, electric vehicles. While it is too early to tell if hydrogen fuel will be ready for the mass market, we can be clear that the energy return on investment (EROI) of hydrogen is not as high as conventional petroleum. In terms of hydrogen, it really comes down to cost and energy recovery.


4. Conclusion


At present, there is really no clear winner. Biodiesel, hydrogen and electric cars are competing against each other, but all have significant drawbacks. Biodiesel can become a welcome addition to existing conventional oil. Biodiesel can become a niche market. If we are able to develop environmentally friendly superfuels from it, it will be of great use in the aviation industry, where biofuels can be used as a sustainable aviation fuel (SAF). Biofuels are finding great use in the aviation industry, electric vehicles in the passenger car market, and hydrogen in the trucking business. With all of these technologies, commercialization, mass production and innovation are key to driving down costs. 


Many thanks for the shared interest in the energy world!



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