Water-Based Energy May Make Food and Fossil-Based Fuels Unnecessary

By R. C. Anderson, on August 27th, 2008

Energy concerns top many American’s list of what worries them most. With gas prices at over $4 per gallon in many places, food prices soaring and the debate regarding food-based biofuels raging, it may seem difficult to see a way past the energy conundrum we find ourselves in. The answer to increasing America’s independence from oil pirates overseas may be found in the most abundant resource on earth: water. Until now, many have merely dreamed of engines that could split the hydrogen and oxygen atoms of water to create energy and release nothing but water back into the environment. Published in the August 22 issue of Science, Matthew Kanan and Daniel Nocera of the Massachusetts Institute of Technology address a new and efficient way to transform the dreams of engineers everywhere into a new and attainable reality1.

Energy can come from many sources. Fossil fuels are the most abundant and the most readily recognized by everyone. Unfortunately, they are also seen as a direct cause of pollution and several environmentally problematic consequences. Ethanol, from corn and sugarcane, is becoming an increasingly popular alternative2. However, many worry that we will convert too much agricultural land and crops to strictly energy-producing acreage. This is especially true since some already see conflicts between our food resources and a world where many are starving. Biodiesel is another alternative growing in popularity. Although more energy is obtained with this method than with corn ethanol, gasoline must still be used, and biodiesel uses the same ingredients needed to produce vegetable oil for cooking. Due to the prevalence of vegetable oil in our diet, only a small destabilization in supply can create a large increase in cost, making it too expensive to use for fuel2.

Problems such as these have led many scientists to strive for a way to use water as a fuel source. Water is abundant, environmentally friendly and a premium source of the hydrogen used to create hydrogen gas. Until recently, the only way to accomplish these goals was to use catalysts, which split the atoms of water molecules at an increased rate, though these were only active with ruthless chemicals and the very expensive platinum metal. Nocera and his colleagues, however, have finally found a catalyst which will allow water molecules to separate under environmentally-friendly conditions using cobalt and phosphorous which are both plentiful and inexpensive3. Although adjustments must be made before this technology can begin replacing current fuel sources, the future use and cost of this type of energy production could have a steep inverse relationship.

Ultimately, scientists would like to see a combination between solar power and splitting of the water molecule. If catalysts such as the one created by Nocera can be made for large-scale use, it could be possible to use seawater for the process3. This could circumvent the need to use fresh water or desalinize ocean water which could save money and allow the first ocean-based energy plants to be funded and erected sooner. Add to this, the possibility of using solar energy to drive the reaction and the overall cost of such a project could continue to decrease over time. This predicts, however, that the cost of alternative fuels will decrease as research increases. The expense will be forced to decrease if alternative methods are to be used since, in 2000, prices for wind and solar energy were two and 21 times as much coal, respectively5.

Even with this new method of separating the hydrogen and oxygen atoms in water, the amount of water necessary to fully replace fossil fuels is extreme. According to Nocera, it would require 1015, or 10,000 trillion, moles of water per year1. Fossil fuels provide the bulk of our energy at 95% which equaled 170 million barrels of oil per day in 20004. It is thought that oil from known deposits will continue to last for 42 years, natural gas 60 years and coal for over 200 years2. With these numbers, research such as Nocera’s is vital for a comfortable future.

Scientists aren’t the only ones to show concern over our current dependence on depleting resources. Congressman Tim Holden who is Chairman on the House Agriculture Subcommittee on Conservation, Credit, Energy, and Research has been noted as saying that “our energy demands are at a critical point6.” Congressman Frank Lucas went on to say, “Expansion of traditional forms of energy, such as oil, coal, and natural gas must be pursued alongside development of alternative and renewable sources6.”

In a written statement to the Subcommittee, Jetta Wong, a senior policy associate with the Environmental and Energy Study Institute, noted that in 2007 transportation in the U.S. was “96% dependent on petroleum and consumed 70% of total U.S. petroleum demand7.” More importantly, 60% of this was imported. Making oil more expensive are the subsidies given to oil companies. Over the last 32 years, they have received more than $130 billion. This does nothing if not push alternative fuels more forcefully. It has even pushed the government, which on December 19, 2007, approved the Energy Independence and Security Act. The act called for “36 billion gallons of renewable fuel” in only 14 years. From this, 21 billion gallons is required to be biofuel based7.

As views shift away from reliance on foreign oil and other polluting fuel sources, research into alternative fuels is bound to grow. While many of the alternative fuels may not be able to replace fossil fuels singly, a combination of hydrogen power, wind, solar and perhaps even food-based resources might show enough efficiency and promise in the future to relieve the existing pressure on non-renewable energy sources.

1 – Kanan, Matthew and Daniel Nocera. In Situ Formation of an Oxygen-Evolving Catalyst in Neutral
Water Containing Phosphate and Co2+. Science 321 (5892), 1072-1075. August 22, 2008.

2 – Somerville, Chris. Primer: Biofuels. Current Biology 17 R115-R119. February 20, 2007.

3 – Service, Robert. New Catalyst Marks Major Step in the March Toward Hydrogen Fuel.
Science 321 (5889), 620. August 1, 2008.

4 – International Energy Annual 2001 Edition (EIA, U.S. Department of Energy, Washington, DC, 2003).

5 – Commission of the European Communities, Green Paper Towards a European Strategy for the Security of Energy Supply. Commission of the European Communities, Brussels, 2000.

6 – Subcommittee Reviews Electricity Reliability in Rural Areas. News from the House Agriculture Committee. U.S. House of Representatives Committee on Agriculture, July 30, 2008.

7 – Written Testimony by Ms. Jetta Wong of the Environmental and Energy Study Institute to the U.S. House of Representatives Committee on Agriculture, Subcommittee on Conservation, Credit, Energy, and Research. July 24, 2008.



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Will Robots Destroy Our Economic System?

By Bhagwad Jal Park, on August 27th, 2008

I don’t count myself as a visionary, but there is a specter looming over mankind’s collective head, and I’m not sure if I can see how we can avoid it.

In my opinion, creating good artificial intelligence is just a matter of time. Already researchers have created a robot that uses a rat’s brain, and the future consists of computers that can think just as we do. The field of robotics is also growing rapidly, and powered by a human brain, we can have robots that walk, talk, and comprehensively pass the “Turing Test”.

Now I’m going to make the following assumptions:

  1. A time will come when a robot’s capabilities will outstrip those of humans.
  2. Robots will steadily become more and more affordable.

It’s important to understand that I’m not suggesting that robots will take over the human race. Surely we are not so stupid as to allow that possibility. We can always ensure laws like the “Three Laws of Robotics” are in place before allowing the robots any sort of autonomy. I’m still firmly insisting that the robots will not be “Conscious” and cannot have a will of their own. At least not in this article.Robots

Image Credit: Vaguely Artistic

The first thing that will happen, given the above assumptions, is that corporations will lay off their employees and use robots instead. The forte of humans lies in their capacity for judgment. All other repetitive work can be delegated to simpler machines. But once robots can replicate that as well, the need for humans vanishes. Robots are preferable to humans because

  • You do not have to pay them a salary. Only their running and repairing costs.
  • I’m assuming that the knowledge of one robot can be easily transferred onto another thereby obviating the need for the lengthy training that humans need.
  • Easier to manage, no ego hassles, etc.

So the first results of artificial intelligence will be massive layoffs. The corporations will do this because market forces will pressure them into doing so. However, when more and more companies lay off their workers and replace them with robots, who will have the money to buy their products or services when everyone has lost their jobs?

It’s like the Prisonner’s Dillemma. Each company will be forced to do the rational thing by hiring robots, but collectively they doom the economy to destruction. End of first stage.

Act two. As robots get cheaper and cheaper, everyone will find a way to own their personal robot. This robot will be like Jeeves on steroids. It will do all the chores, cut your hair, and mend your clothes. I’m also assuming that it will have the sum total of all human knowledge in it’s head and infinite dexterity in it’s fingers. Given this, it will probably make clothes for you, grow your food, and take care of every other small convenience that you would normally have paid for. This is very important because you must remember that no one has money or a job thanks to the logic in Act 1.

Robot ServeImage Credit: potarou

To complete the loop, robots will be able to power themselves by building their personal dynamo or some such device.

So the stable outcome will be:

  1. Everyone will own a robot.
  2. Occupations like tailors, lawyers, accountants, and even doctors will disappear.
  3. People can just sit at home and let their robots take care of them.

In my opinion, certain services that robots cannot supply like amusement park rides and movies will still be provided for by corporations, but they will be free! What’s the point of charging money? They will anyway be run by robots, and what will people do with money? No need to buy anything as robots will provide everything for us.

I’m fairly sure I’m not getting the complete picture here. I get the nagging feeling that I’m missing out on some other consequence that I can’t yet put my finger on.

What do you think?



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IRS Gets Upper Hand in Fight Against Tax Shelters

By G.L.C., on August 27th, 2008

Many companies have used tax shelters known as Lease In Lease Out (LILO) and Sale In Lease Out (SILO) to claim deductions. A string of recent court decisions are being seen as a major victory for the Internal Revenue Service in its fight to outlaw the use of such tax shelter. The IRS designated LILOs as “listed transactions” back in 2000 and SILOs in 2005.

In BB&T vs. United States of America, the Court held that to have a tax deduction for lease or interest expense, you must actually incur them. And to incur them, you must have a genuine lease and genuine indebtedness.

In AWG Leasing Trust vs. United States of America , a federal district court denied tax benefits to a U.S. partnership related to its alleged purchase of a German waste-to-energy facility as an abusive SILO transaction.

In Fifth Third Bancorp of W. Ohio vs. United States of America, a federal district court jury, applying the economic substance doctrine, denied tax benefits related to a bank’s leasing arrangement for passenger rail cars as an abusive LILO transaction.

LILO involved corporate leasing of infrastructure on paper only while SILO involved corporate sale on paper only. In both tax shelters, the infrastructure is leased back to the owners. LILO and SILO as tax shelters have been under scrutiny from lawmakers. In 2003, the Treasury and Senate Finance Committee held an investigation on these tax shelters.

The IRS has over the years been using various incentives to entice users of tax shelters to come forward. With the tax shelters becoming more sophisticated, the IRS had to spend time to figure out who is buying what and leasing what.

According to the IRS many companies including large banks had bought more than thousands of tax shelter to improperly defer taxes and bolster their balance sheets. Bolstered by this recent ruling, the IRS is now offering a chance to such companies a chance to settle. The settlement has five main features:

  • The taxpayer must agree to concede 80 percent of any claimed interest expense deduction, amortized transaction costs, and head lease rent expense for each tax year through 2007
  • The IRS agrees to disregard 80 percent of any reported taxable rental income with respect to SILO or LILO transactions for each tax year through 2007
  • The taxpayer must agree to report in 2008, 80 percent of the original issue discount (OID) connected with the SILO or LILO transactions for each tax year through 2007
  • The taxpayer must exercise best efforts to terminate its SILO or LILO transactions on or before December 31, 2008
  • The taxpayer must agree to recognize as ordinary income any termination gain, whether realized under an actual or deemed termination.

Companies that do not accept this offer could end up fighting a loosing battle. With three court decisions in its favor, the IRS is having a strong hand.



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