Hundreds of companies and laboratories are racing to find an economical way to make “green crude” from algae. The biofuel industry is grappling with a series of hurdles, which players readily recognized at a summit this week in San Diego and we cover in this story.

One question asked by one of the sector’s early leaders is will biofuel from algae look like Big Oil or Big Agriculture.

Steve Mayfield, who directs a new center for algae biotechnology at the University of California, San Diego, believes it should be more like agriculture.

“We’re not going to grow it in the lab … We are going to grow it on rice patties,” Mayfield said at the Algae Biomass Summit in San Diego.

Mayfield also helped found Sapphire Energy, a privately held company that has pulled in $100 million from venture capitalists. The company is looking at gene-based techniques to create a strain of algae that can be grown and harvested on a massive scale.

“What we need to do is domesticate algae. We are taking wild type strains and asking them to do what never was asked to do or evolved to do in the wild,” Mayfield said, pointing to how genetic changes have boosted crop yields.

Photo credit: Reuters

Perhaps you’ve heard about the Russian submarines patrolling international waters off the U.S. East Coast (if you haven’t, take a look at a Reuters story about it) in what feels like an echo of the old Cold War. The Pentagon’s not worried about this particular venture, but there are concerns from the U.S. energy industry about another Russian foray — this one in concert with Cuba. In rhetoric that may ring a bell with anyone who saw the 1964 satirical nuclear-fear movie “Dr. Strangelove,”
the Washington-based Institute for Energy Research is sounding the alarm about a Russian-Cuban deal to drill for offshore oil near Florida.

“Russia, Communist Cuba Advance Offshore Energy Production Miles Off Florida’s Coast,” is the title on the institute’s news release. Below that is the prescription for action: “Efforts Should Send Strong Message to Interior Dept. to Open OCS in Five-Year Plan.” OCS stands for outer continental shelf, an area that was closed to oil drilling until the Bush administration opened it last year in a largely symbolic move aimed at driving down the sky-high gasoline prices of the Summer of 2008.

Environmentalists hate the idea. So does Sen. Bill Nelson, a Florida Democrat who has made opposition to offshore drilling one of his signature issues. But as it turns out, it’s unlikely that anybody — from Russia, Cuba, the United States or anywhere else — is going to get petroleum out of the OCS in the immediate future.

For a start, it takes time to set up a deep-water offshore drilling rig. And any Cuban effort would be further hampered by the need to use equipment with less than 10 percent American technology, to comply with the long standing U.S. embargo against Cuba. As my Reuters colleague Russell Blinch reported in June, there may be scope for possible U.S.-Cuban cooperation here but no Cuban drilling platform is likely to be in the area this year.

Reports of a Russian-Cuban deal to explore for oil in the Gulf of Mexico prompted a quick response from the Institute for Energy Research, self-described as a free-market energy think-tank.

“This agreement between Russia and Cuba should serve as a wake-up call to Congress and this administration, especially (Interior) Secretary (Ken) Salazar, who is slow-walking a new offshore energy blueprint for the nation,” the institute’s president, Thomas Pyle, said in a statement. “If we are to remain competitive in the global market, our government must take its foot off the brake, and expand domestic energy production of all forms, onshore and off.”

What’s your take? Should the United States drill baby drill off Florida’s coast, reasoning that if U.S. companies don’t, Russia and Cuba will? Keep a congressional ban in place? Or wait and see?

Photo credit: Reuters staff photographer (Pensacola Beach, Florida, June 25, 2008); Reuters stringer/Russia (Russian nuclear submarine off Vladivostok, July 24, 2009)

Can semantics help save the planet?

A showdown between leaders of Chevron Corp and the Sierra Club on Wednesday night revealed a number of shared beliefs between the two California institutions, particularly about the need for a transparent way of pricing carbon.

The debate at San Francisco’s Commonwealth Club on Wednesday night pitted Chevron CEO David O’Reilly against Carl Pope, executive director of the Sierra Club, and both agreed that limiting carbon emissions should involve some sort of levy imposed by the government - if only there was a word for such a thing.

“It would be much cleaner if there was a transparent cost on carbon that one could see,” O’Reilly said.

The moderator suggested that was a ‘tax’. “Nobody wants to talk about it,” O’Reilly replied. 

“Call it a fee,” Pope then suggested.

They also agreed that legislation which is workable in California or other states was not so easy to sell at a national level, even though the White House now seemed supportive, according to Pope.

“You could have conversations with the Republican caucus in the Idaho legislature that you couldn’t have with anybody in Washington D.C.,” Pope said of the eight year Bush administration.

They strongly disagreed on the timeline for cutting carbon emissions, but both saw cars as among the last carbon emitters that would go, simply because people would have to pay to replace them.

“The last clunker on the road will probably be one of the last relics of the energy economy of the 20th century,” Pope said.

Pope also suggested that all oil companies worldwide should commit to putting 10 percent of their profits over the next decade into a fund to help communities hurt by production of oil and gas.

O’Reilly, having said earlier in the debate that he made $14 million last year, noted this cost would also be passed along to consumers ultimately, but didn’t think many were in the mood for that.

“If you can get the government to increase taxes other than on a few of us, I agree,” O’Reilly said to boos and hisses.

Clashes in the Amazon between indigenous protestors and Peru’s army that killed some 60 people last week throw some old issues into sharp new relief: development versus the environment and local versus foreign control of natural resources.

Indigenous tribes, worried they will lose control over natural resources, have protested since April seeking to force Peru’s Congress to repeal new laws that encourage foreign mining and energy companies to invest billions of dollars in huge tracts of pristine rain forest.

In the developing world, extractive industries have a bad record of bringing benefits to local people. Prime examples include the oil-rich Niger Delta in Nigeria and mineral-rich South Africa under apartheid.

Equally bad is their record on the environment. The despoiled Niger Delta also springs immediately to mind (and it is probably no coincidence that it has also been wracked by conflict and insurgency).

The tensions in Peru also highlight the on-going debate about the environment versus development — especially when that development involves the planet’s dwindling rain forests.

A seven-year economic boom has failed to significantly reduce poverty in Peru, which is where about 36 percent of the population remains mired.

Developing countries such as Peru have long argued that the rich world reached its affluence in part by exploiting its own environment (and its colonies’) and natural resources and that they should be able to do the same.

But the world’s rain forests are the most biologically diverse ecosystems on the planet, and left intact could still generate untold economic riches. They contain countless species which have not even been discovered or described by scientists. Some may hold the keys to medical or other scientific breakthroughs. They also have huge potential as ecotourist destinations (a sector that creates local jobs and encourages local investment).

Letting the rain forest stand can also play a big role in the struggle against climate change. Chopping down fewer trees and caring for the soil may be cheaper and more effective in fighting climate change than curbing emissions from coal plants, the United Nations Environment Programme (UNEP) said on Friday. Trees store the greenhouse gas carbon dioxide (CO2) as they grow. You can see our story on the report here.

Tropical rain forests are shrinking almost everywhere they are found, from Borneo in Asia to west Africa to South America’s Amazon. Estimates for deforestation rates vary widely and some of the predictions from the 1980s for example have long since proven to be alarmist (one otherwise fine book from the mid-1980s, which has been many a student’s introduction to rainforest ecology, predicted at the time that ”there will be little left of this fascinating habitat by the end of the century.”) But there is no question that the world’s rain forests are in trouble — not least some would argue because they are found in tropical countries which tend to be poor.

Alternative paths to development also include a plan to pay tropical countries not to chop down trees — but an exclusive Reuters report last week revealed that the plan risks being discredited by opportunists even before it starts.

What do you think? Should Peru exploit its rain forest regions in a bid to attract badly needed foreign capital? Or should other paths to development be taken which can hopefully spare the rain forest from the axe?

(Photo: Native people hold sticks as they barricade the entrance to Yurimagua city, in a remote Amazon region of northern Peru, June 6, 2009. They are protesting the government’s drive to lure foreign energy and mining companies into the rain forest. REUTERS/Enrique Castro-Mendivil/PERU)

Rich Kinder, CEO of Kinder Morgan Energy Partners, says the Obama Administration's push to develop alternative energy sources such as wind and solar are not the answer to reducing the nation's dependence on oil or reducing greenhouse gas emissions. Click below to hear where Kinder thinks the U.S. should be focusing its attention.

Kinder: wind, solar not the answer from Reuters TV on Vimeo.

“If you liked credit derivatives swaps, you’re going to love cap-and-trade.”

One can presume that Chevron Chief Executive David O’Reilly is not a fan of the current deep worldwide recession — which was worsened by a credit-market lockup blamed in part on hard-to-value securities.

And, he made it very clear on Thursday that he is not enamored of the system the Obama administration hopes to use to reduce U.S. emissions of greenhouse gases including carbon dioxide, which are produced through the burning of fossil fuels sold by the No. 2 U.S. oil and gas company.

“It’s smoke and mirrors,” O’Reilly told a Boston business group. “Personally, I think it’s going to be a difficult system. I don’t think the American people trust it.”

A proposal working its way through the U.S. Congress would put in a place a cap-and-trade system that would give individual U.S. companies the right to emit certain quantities of greenhouse gases, which contribute to global climate change. Companies whose emissions are below their allotment could sell their extra rights to other companies.

The Obama administration in its budget proposal released on Thursday called for the initial emissions permits to be sold, rather than given away free. That would give businesses a financial incentive to reduce their emissions.

O’Reilly argued that an easier way to reduce emissions would be to raise taxes paid on gasoline for cars. He said Washington has embraced cap-and-trade to avoid the appearance of raising taxes.

“Politicians like it because they don’t like to talk about taxes,” O’Reilly said.

There is no doubt that Californians made themselves clear on Thursday when they gathered to tell U.S. Secretary of the Interior Ken Salazar that they had had enough of offshore oil drilling and were ready to turn their attention to solar, wind and other renewables.

“I think the verdict today is very clear, that drilling is inappropriate,” said Leah Zimmerman, who attended the meeting dressed in a polar bear suit.

“California is well-known for being an innovative state. Why not take advantage of that rather than trying to dampen it?” asked Craig Cadwallader of the Surfrider Foundation, a group dedicated to protecting oceans and beaches.

When Salazar took office in January he was handed a Bush-era plan to open parts of the Atlantic, Gulf Coast, Pacific, and Alaska to outer continental shelf drilling.

He decided to arrange four meetings nationwide to listen to what people had to say.

“This is a sea change from the Bush administration,” said California Lieutenant Governor John Garamendi.

Salazar did not say whether the Obama administration’s energy plan would allow for new offshore drilling, but said that it would include oil and gas.

“We may not always be able to do what is popular politically but we have to do what is right based on the policy issues that are driving this country,” he told reporters. He cited those issues as national security, environmental security and economic opportunity.

“You can see public opinion on these things change over a very short period of time depending on the price of gasoline,” he said. “We need a longer term framework.”

– Reporting by Clare Baldwin

Photocredit: Reuters/Max Whittaker (U.S. Secretary of the Interior Ken Salazar with California Governor Arnold Schwarzenegger in Sacramento, California April 15, 2009)

An environmental group this week issued a report saying oil and gas companies have enjoyed exemptions to common sense anti-pollution federal rules that govern companies in other industries. This has led, the Environmental Working Group claims, to fouled groundwater, creeks and acres and acres of formerly pristine land in the U.S. West.

The report, “Free Pass for Oil and Gas in the American West,” contains county-by-county maps of what it says are examples of mismanagement of the oil and gas industry.

“Drilling companies regularly complain that environmental standards deny them access to sites where they’d like to drill,” the EWG said. “But the cratered landscape tells a different story.”

The report claims that 270,000 oil and natural gas wells have been drilled since 1980, and 120,000 of them since 2000.  Most of those wells are for natural gas.

The EWG says that these well have been drilled with waivers to federal environmental laws including the Safe Drinking Water Act and the Clean Water Act.

Billionaire T. Boone Pickens is spending $2 billion on a bunch of windmills and so far has no way to get the electricity they will produce to market. Last December he said he was a touch anxious, but on Wednesday he didn’t seem worried at all.

Pickens is pretty sure President Barack Obama will get some new power lines built to those plains in the Texas panhandle, but if need be, the oil-man-turned-renewable-energy-advocate will take his toys elsewhere.

“I’m not going to end up with 687 turbines in my garage. They are going to be sticking up spinning someplace,” he said at a San Francisco stop on his latest tour to drum up support for his plan to use wind power and natural gas-fueled vehicles to wean the Unites States from imported oil.

Pickens expects the price of a barrel of oil to hit $75 by the end of the year as OPEC cuts production, and between that and the desire for energy independence he sees Obama finding a way to get transmission lines built from Texas to markets that need electricity – like California.

One person at the event asked him if he could end up being the “czar” of transmission, production, and more. “Yeah, I’d love it,” the old independent “wildcat” oilman said.

But Pickens is not planning to build transmission lines himself, in part because of financing. “If you’re gonna be the czar of all those things you mentioned there, you’ve got to have a hell of a lot more money than Boone Pickens has got,” he said.

Frates Seeligson is one of many ranchers contending with an historic drought in the hard heart of Texas. You can see a report on the situation by myself and photographer Jessica Rinaldi here.

Seeligson, an affable fourth-generation rancher who farms to the east of San Antonio in an area currently suffering from what has been dubbed “exceptional” drought conditions, told me that “there are only so many ways that you can make money from dirt.”

In Texas, much of the money from dirt has come from two commodities that have iconic status in this rough and tumble state: oil and cattle.

But like many Texas cattlemen, Seeligson is also finding money in white-tailed deer and leases his ranch to hunters.

Some Texas farming operations have gone completely over to hunting. Some mix cattle farming with hunts for “exotic” species from Asia or Africa; some focus on bird hunting.

I saw it first-hand on a south Texas ranch where I went turkey hunting last April. The farmer there also had cattle, exotic Asian deer for hunting, and did regular quail hunts with raised birds released on his property.

I’ve also seen it at work in South Africa, where “game farming” is a huge and growing business.

In the lease situations in Texas, the hunters themselves put out supplemental feed for the game and the rancher works with biologists to see how many deer can be sustainably taken from the land.

The vast majority of Texas land is in private hands, so the opportunities for hunting on public lands is much more limited than in most other states or in Canada.

“The old paradigm in Texas was oil and cattle. Now it’s wildife and water,” Seeligson told me.

Some would argue that the supplemental feeding might inflate game numbers beyond what they should “naturally” be or even encourage some animals to roam where they don’t belong.

On the other hand, deer overall are probably less harmful to the environment than cattle. As a rule they probably use less water than cattle and don’t graze everything to the ground, unless there are too many in a small area.

Regardless of where one stands on the issue, the economy of rural Texas is changing, and there will be long-term environmental implications in all of this.

(Photo: Frates Seeligson inspects a dry river bed on his drought stricken Texas ranch. He supplements his cattle income by leasing his land to hunters as well. REUTERS/Jessica Rinaldi, March 4, 2009, USA)