Who’s Afraid of the Big, Bad Pandemic? How New Technologies Add Resilience to Our Economy and 7 Wolfpack Experts Analyze the Options

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June 09, 2020

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by Jim Lane (Biofuels Digest) ... A thread of hope appeared this week from the bioeconomy’s Wolfpack, seven due diligence experts hungry for value — Paul Bryan, Ron Cascone, David Dodds, Michele Rubino, Joel Stone and Steve Weiss. Let’s see how they analyzed the options.

The Undamped Network

NEXANT’s Ron Cascone asked a good set of opening questions: Why were we so dependent on an overly-constrained, inflexible, unsustainable, non-resilient set of supply chains for energy, fuel, food, water, shelter, clothing, medical care, and everything else we depend on? All this was in the name of “efficiency”, personified by the mentality of “just in time” supply chains, and “just enough” critical services. The trouble is, goods and services don’t behave like information technology – you actually have to have physical alternatives and plans in place to survive a catastrophe.

David Dodds writes: Current global supply chains resemble an undamped network. In such a network, a connection between any two points is rigid, and energy can move very fast and without any loss between those two points, and this makes the network very efficient. But any undesired perturbation at one point is also propagated throughout the network very quickly. A single undesired perturbation will eventually dissipate, but multiple independent perturbations will lead to disturbances bouncing around the network, with both constructive and destructive interferences occurring at various places. At some points, the interference forces will overwhelm and destroy parts of the network. Building a network that has damping, by making the connections less rigid and therefore individually less efficient, makes the entire network more robust although at some cost of point-to-point efficiency.

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From Just in Time to Just in Case

McKinsey says we have to move from “ just-in-time to just-in-case supply chains; stop optimizing supply chains based on individual component cost and depending on a single supply source for critical materials”.

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The Utility Model

Ron Cascone writes: The electric utility industry, with some exceptions, is one relevant, competing sector offering a contrasting model to the oil and gas sector and to many other sectors that have had poor resiliency in the crisis. They tend to have, or are working towards, “plans B”, in cases of weather emergencies, fires, floods, earthquakes, cyberattacks, etc.

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A Place for Carbon, and Distributed Systems

Michele Rubino writes: One thing that strikes me about McKinsey’s post on supply chains is that there is no mention of a carbon intensity metric. Low carbon intensity will increasingly correlate with resilience. While economies of scale matter, they are dwarfed by diseconomies of supply. Aggregating bio-based feedstock costs, for example. That’s why you don’t have 5 huge corn ethanol refineries in the US. In the bio-economy, small and distributed wins: in terms of carbon intensity, resiliency, cost.

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Joel Stone wrote: I much agree with the points made by Michele and others. I would suggest that a distributed and decentralized supply chain will be the logistics and manufacturing as well as farming of the future. I remember Jim Woolsey and myself serving on a discussion panel over 10 years ago discussing decentralization of power generation as a means to offer security of logistics and supply. The same holds true for all consumer goods as the pandemic has proven to us.

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A resilient energy system proposed

Is modularity the path forward to making decentralized production work?

Ron Casone wrote:

I propose that we leverage existing assets and known, commercialized off-the-shelf technologies to most quickly achieve a resilient domestic energy system. This would entail:

1. Building AD systems throughout the US, in cities using food waste, and in rural areas ag waste, seaweed, road and forest clearing wastes, etc.

2. Use off-peak power to generate hydrogen to convert the CO2 in biogas through dry reforming to methane to join with the methane in biogas

3. Collect this RNG using the gas grid to deliver it to many central locations to make methanol and/or DME to replace diesel and LPG

4. Use the RNG to make olefins using commercialized MTO technology – make plastics and chemicals

5. Use RNG in SMRs to make syngas for FT diesel, jet, and naphtha

6. Feed bio-naphtha to crackers

7. Use the RNG as CNG in converted gasoline and diesel ICE engines as Nexant did with PTT in Bangkok in 2004

8. Use RNG in SOFCs for facility CHP and for grid power back-up

The entire strategy can be bootstrapped on fossil natural gas, in world-class sized existing facilities, for e.g., SMR, methanol, etc. so that economics during transition are competitive.

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Paul Bryan writes about the importance of focusing on reducing carbon rather than giving a specific advantage to a single molecule. “By focusing penalties on the specific thing that you are trying to prevent, you avoid the error-prone and politically-fraught process of “picking winners.”

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A friend of the wolves, Robert Kottkey, offered some cautionary notes: ... Asking companies now to enhance their supply chains and warehousing capabilities in preparation for another pandemic is quite a request and I don’t see as being widely adopted.

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I enjoy the Wolves and their perspective. I wonder how much methane is really out there, how much waste there is to capture, compared to how much energy we need for transport. I suspect we need more than waste feedstocks, and possibly a wider selection of fuels. We might get into that later in the week.

We also need a new theme. In the 2000s, the world moved on renewable fuels because it responded to a Big Message that was usually summed up as the Three Es: Energy Security, Environment, Employment. But we ran into the Three Fs: Fracking, Food vs Fuel and Factory Automation. These killed the Three Es.

We might think about the Three Cs. Carbon, Choice, Circular.

Carbon. We may not all agree about every environmental goal, but everyone is for reducing carbon, and the bioeconomy can deliver.

Choice. No one much likes ‘picking winners’, and everyone likes choice, and the bioeconomy gives us more choices, more options, more ways to supply the chain when it breaks, more choices on project size and location, so let’s focus on that too.

Circular. No one likes waste, or one-and-done, everyones for re-use, and re-cycle, That’s resilient. The bioeconomy can deliver on that.

Carbon, Choice, Circular — a Big Message we can all believe in as we tackle the Big Bad Wolf. READ MORE