A Breakthrough That Could Fuel a Revolution

A recent Wall Street Journal article by George Olah and Chris Cox reveals a better way of reducing carbon emissions than the proposed “carbon capture and sequestration.” They propose a way that simultaneously reduces greenhouse gas emissions while “growing the economy and increasing U.S. energy independence.” They write:

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…this environmental pariah can be recycled into fuel for autos, trucks and ships.

The United States is now producing abundant natural gas, which can also be converted into methanol inexpensively. The new breakthroughs in chemistry and drilling are not benefiting drivers, however, even though methanol is a superior fuel. It burns cleaner and has a higher octane than gasoline. It could successfully compete with gasoline. And not just gasoline. New advances make it possible for methanol to be used in diesel truck and ship engines too. How can this possibility become a reality? The authors have some great suggestions:

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 anti-competitive 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.