The Impact of Stakeholders on Alternative Fuel Uses - Term Paper Example

Running Head: ALTERNATIVE FUELS The Impact of Stakeholders on Alternative Fuel Uses The modern age has seen an awakening to preserve nature and the natural resources. Human beings are looking forward to the several alternative options to fulfill their necessity without hampering the ecological balance. It was realized for quite some time that the burning of fossil fuels are causing hazards to the environment. To combat this problem the alternative sources of fuel had been deplored by researchers. Moreover, the price of petroleum is rising very steeply all over the world. The direct and indirect expenses associated with its usage is causing burden to many households as well as industrial houses. Again, alternative fuel can solve this problem. It was seen that hydrogen and ethanol generates the most lucrative forms of alternative fuels which can be used without any problem. They can be used both for generating electricity and for operating vehicles. The set-up of public-private partnership is also very important. The efficient working of the fuel stations lead to the success in the alternative fuel segment. To operate any business (including alternative fuels) the impact of the stakeholders cannot be ignored. The stakeholders in the alternative fuel sector are the infrastructure investments, the government policy, the industry, the environment, the economy and the consumers. The paper provides an overall view to show the sustainability of alternative fuels in these respects with an analytical approach. Moreover, this report illustrates the interaction between various stakeholders, as well as what impact they impart on the use of alternative fuel. The findings reveal that the roles of stakeholders in the use of alternative energy sources vary according to geographical regions and resource availability. I. Introduction  In the present days most of the fuel comes from the fossils like coal, petroleum and natural gas. These fuels are mainly used for generating the electricity, running industries, service sector and operating the vehicles. Furthermore it is also used in modern day agriculture, as it is becoming more and more capital intensive than labor intensive as it was before. The shift in technology from labor intensive to capital-intensive technology is an energy-consuming affair. Modern day farming uses tractors, power tillers and many more machineries that uses fossil fuel as their driving force (regarding the source of energy). The combustion of the fossil fuel is the main reason creating the atmospheric pollution. The entire world is growing conscious of the environmental hazards due to the combustion of the fossil fuels. Apart from the pollution it adds to the environment another important aspect of such fossil fuel should be considered as well. Fossil fuels are exhaustible and non-renewable source of energy; once used to generate energy they cannot be used again to produce the same. Adding to the problem the entire amount or volume of the fossil fuel in earth is constant and it is depleting as we are constantly using them to generate energy. The two main forms of fossil fuel crude oil and coal would be exhausted in some decades if some alternative sources of energies could not be found. This will put a stop to growth and development of human civilization and might well rob off what it has acquired so far. At the worst human genome might start to follow the foot prints of their forefathers and move backwards. Several researches are being conducted on the different alternatives of the fossil fuel. The research for the alternative fuels is an ongoing process at present. The alternative sources will facilitate human beings to use this new type of fuels instead of fossil fuels. This on one hand reduces the level of pollution and on the other would turn the growth process into a sustainable one. It is obvious that the importance and impact of the stakeholders cannot be ignored in such studies by the researchers. Similarly, the plan of moving away from the use of fossil fuel to alternative fuel needs the stakeholders to be in active action (Demirbas, 2007, p. 343). The framework of the government and industries of a country decides the position of stakeholders in facilitating the usage of the alternative fuel. This report imparts better understanding into the interaction between stakeholders, and their impact on the uses of alternative fuel (Wakeley, 2008, p.15). The depleting nature of the alternative sources of energy are becoming more and more evident since the production of domestic oils in the oil producing countries and the drilling in the Gulf area that once considered as the treasure island considering crude oil is reducing at a remarkable rate. This particular phenomenon is adding a pressure on already existing excess demand for crude oil and that would eventually reflect in the price of the same. It is easily comprehendible that those nations which are dependable on oil import to meet their demand for crude oil would have no chance but to court a worsening balance of trade situation and that will reflect a declining terms of trade condition (Donley and Stewardson, 2010, p.20). The current paper in discussion becomes relevant considering all these afore mentioned points and we would witness as we move through the paper that alternative fuel influences stake holders as an individual and as a society. II. Definition of Alternative Fuel In simple terms, the kind of fuel which is produced without the usage crude oil is termed as alternative fuel (Johnson, n.d., p.7). The challenge lies in replacing gasoline through alternative fuel (especially for powering vehicles). Alternative fuels reduce pollution and if it can impart power in an engine then use of fossil fuel can easily be replaced without compromising the efficiency of an engine. However, the car makers have to focus their special interest in building such a car or vehicle that can run on alternative fuel without a hint to the rider or the driver that the vehicle is running on alternative fuel instead of fossil fuel. The Energy Policy Act (EP Act) of 1993 defines the alternative fuel as: “Mixtures containing 85% or more by volume” of alcohol fuel, including methanol and denatured ethanol Hydrogen Liquefied petroleum gas (LPG) (e.g. propane) Compressed Natural Gas (CNG) Fischer Tropsch fuels ‘Electricity (including electricity from solar energy)’ ‘100% Biodiesel (B100)’ (Johnson, n.d., p.7). What is the logic of alternative-fuel? Does the production of natural gas from gasoline promise less pollution? Perhaps not, it has been recorded that a converted engine fares poorly compared to a gasoline-using engine. Steven R. King, manager, gas engine technology South-west Research Institute (SWRI) says, “If you don’t do it properly, you can make the engine much dirtier by converting it.” (Popular Science, 1992) III. Common Types of Alternative Fuel and Their Differences The alternative fuels include ethanol, hydrogen, LPG, CNG, Fischer-Tropsch fuels, electricity, and biodiesel. Ethanol is the most commonly used alternative fuels. It is popularly known as grain alcohol as it is mostly made out of corns in United States. The production of ethanol can be lot cheaper if it is produced from “agricultural crops and waste, plant material left from logging and trash including paper” (Johnson, n.d., 25). Efforts are on way to “raise the energy balance of ethanol to as high as 1:7” (Johnson, n.d., 26) Hydrogen (if non-fossil fuel is used) is capable of significantly reducing the GHG emission (Wakeley, 2008, p.15). It is easy to produce as from the historical times electrolysis is used to produce hydrogen from water. Though, natural gas is used as main raw material nowadays to produce hydrogen. Hydrogen is considered as an alternative fuel that burns free of pollution. This particular property comes from the fact that hydrogen burns with air and two third of that is nitrogen so the other gases produced in an internal combustion engine is free from any carbon pollutant and emits some other harmless gases only. (Johnson, n.d., 37) However, the production, distribution, and use of ethanol are increasing at a very fast rate in the United States. The same is not applicable for hydrogen. Its production and distribution is in a nascent stage. This is owing to certain facts ethanol is a liquid fuel and can be integrated easily into the infrastructure of gasoline distribution (Wakeley, 2008, p.8), which hydrogen fails to. Both ethanol and hydrogen meet similar barriers to reach out to the masses. They require more private and public acceptance for more investments and competing with petroleum in an open market. The pragmatic shift from petroleum will influence the gasoline market in the future (Wakeley, 2008, p.15). Liquefied Petroleum Gas (LPG) was first used in the year 1912 in the United States. It consists of butane and propane (Ball and Wietschel, 2009, p.208). According to Johnson (n.d.) “LPG fueled engines can pollute less than gasoline and diesel engines. LPG usually costs less than gasoline for the same amount of energy. In some countries LPG is used much more for vehicle fuel. In the Netherlands over 10 percent of the motor fuel used is LPG” (Johnson, n.d., p. 42) Compressed Natural Gas (CNG) might be considered as the most popular form of alternative energy of present era. Like fossil fuels it comes from underground and more like air not another form of fossil fuel. The gas contains 95% of methane and water vapor along with some other non-harmful gases (butane, propane, ethane etc.) covers the rest. Owing to the fact that CNG is almost completely combustible as it contains a simple one carbon molecular structure; the fuel bears a clean burning nature that is environmental friendly (Johnson, n.d., 29). In near future it is expected that CNG would be a strong contender for the prime alternative form of energy. The environmental friendly nature of the Fischer-Tropsch fuel and its viability as an alternative form of energy is well established by Davis (2007) “Fischer-Tropsch synthesis (FTS) technology, which produces hydrocarbons from synthesis gas (CO reacts with H2 to form a hydrocarbon chain extension- [CH2]) over iron and cobalt catalysts is very effective. Recent studies emphasize the importance and development of a robust, active catalyst suitable for the production of transportation fuels (high-alfa catalyst).” (Davis, 2007, p. 101) FTS is a commercially viable approach to convert synthesis gas into liquid fuels and can help decrease the U.S. dependence on oil imports. Furthermore upon combustion, FTS derived diesel fuel compared with conventional diesel fuel not only yields low nitrogen oxides (NOx), carbon monoxide (CO) and hydrocarbon (HC) emissions, but also much lower nano-particulate ,matter emissions which are supposed of being a leading health threat. The economic and ecological importance of “green” FTS-derived transportation fuels is based on generation of synthesis gas by biomass conversion (renewable energy source). This route has the advantage that almost all biomass materials are suitable for gasification to produce “syngas” for the FTS process.” (Davis, 2007, p.101) The above mentioned part emphasizes the need to develop and improve FTS- catalysts to meet the future fuel challenge. Klerk (2009) has also emphasized the role of FTS that it can play in near future as an alternative fuel source. That on one hand will reduce the dependency of import of crude oil and on the other will pave the way for a greener environment. According to Klerk (2009), FTS might have significant contribution in strengthening the U.S. military. (Klerk, 2009, pp.17-18) Consideration of electricity as an alternative form of energy is an ambiguous issue. Electricity produced from heat by burning coal is equally polluting in comparison with other forms of similar polluting agents. However, hydroelectricity and solar electricity is environmental friendly and renewable. Besides fuel cells can also turn mix of oxygen and hydrogen into electricity, no burning takes place yet energy through electricity is produced that is bereft of any pollution or polluting agent. Considering this fact fuel cell vehicles are regarded as zero emission vehicles and a key to future transport. (Johnson, n.d., p.38) Biodiesel fuel also plays a key role in alternative fuel market. This fuel is produced by the industrial sector and by less important manufacturers. It can be made from cooking grease. Biodiesel could bring down the dependence of foreign oil imports. According to Robert McCormick, a key engineer at the Department of Energy (DOE) National Renewable Energy Laboratory (NREL), predicts that the long term use “could produce a volume equal to about twenty-five percent of today’s on highway diesel fuel” (Schmidt, 2007) IV. Comparative Analyses of Alternative Fuel  Different types of alternative fuel are winning the markets in different locales of the world due to prudent marketing of the same. However, before deciding on the type of the alternative fuel best suited for the various usages in a country, the government needs to study the previous usages of conventional fuel in that particular geographic region. The contrast and comparison can be easily done if the past usage of fuel in that country is studied well. The dividing line for the usage of the conventional and the alternative fuel can be drawn by implementing different government policies after studying the past cases well (Goodger, 1980, p. x). Due to the ecological reasons and the sharp fluctuation of n-butane cost is resulting in the more and more production of Methyl-tri-butyl ether (MTBE), as well as Dimethyl ether (in short DME). These ingredients are used for raising the octane number in the automobile gasoline (Lapidus, Golubeva, Krylov and Zhagfarov, 2009, p. 310). The alternative fuels like Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), electricity, hydrogen and alcohol are good substitutes for petroleum. Ethanol and methanol are the main internal combustion of engines (Demirbas, 2007, p. 319). Conventional compression ignition engines (shortened form for this is CIE) can be made from di-methyl ether (DME), Fischer-Tropsch (F-T) diesel, biodiesel, vegetable oil, and dimethyl ether (DME). DME and F-T can be made from natural gas, and therefore do not depend on the availability of the feedstock. F-T product can compose catalyst influenced ingredients like cobalt (high in parafif) and iron (high in oxygenates and olefin). Biodiesel has many advantages when it is compared with the conventional diesel. They are highly viscous (at least 10 to 20 times the conventional ones (Demirbas, 2007, p.343). The following illustration shows the process of motor-fuel production. Figure 1: Natural gas refining for motor-fuel production (Demirbas, 2007, p.343) The industrial testing shows that the technology based on MHR-T production from water and methane is very competitive for industrial world. Low-potential heat and fuel for the commercial as well as the domestic purposes are novel idea (Stolyarevskii, 2009, p.2525). At present, there are no vehicles which run on hydrogen power. The other varieties of the alternative fuels are available in most parts of the world. The results of using these variations are benchmarked against the use of by-products of petroleum. However, the production and availability of the alternative option of the fuel does not present a rosy picture at present. Therefore, these fuels are not economic in many geographic areas (Wakeley, 2008, p.1). In the present age, almost every vehicle is powered by either the diesel or the gasoline. Petrol and gasoline are invariably derived from petroleum. These are non-renewable resources. The depletion of any of the natural resource can cause havoc on the environmental equilibrium. So Fischer-Tropsch (F-T) is used. It uses different catalysts and produces oxygenates and HC (linear). This fuel has a high amount of CN, and low sulfur. It also has very less aromatic content and unrefined gasoline. Di-methyl ether (DME), made from natural gas is the output of gasifying of biomass. It has high rate of cetane and is the most suitable fuel for diesel engines. This has less gas content compare to diesel. Biodiesel fuel may be produced by different vegetable oils (like olive, peanut, sunflower, soybean, olive and palm) extracts. These are not so good for producing the diesel because they are highly viscous. Moreover, these are less volatile. The formation of the Methyl Ether reacts to the atmospheric pressures. The content of water in the fats and the vegetable oils are very important for producing or reducing the effectiveness of the catalysts. A new method of producing of the bio-fuel has been possible due to the supercritical methanol method (non-catalytic) (Demirbas, 2007, p.343). V. Stakeholder Analyses on Alternative Fuels ‘Necessity is the mother of invention’ when quality of air surrounding us touched the madir the government officials realized this is the high time to act otherwise mother nature might break off beyond its resilience. Collantes has rightly mentioned in this regard “Thirty years ago, policy activity on transportation energy rose driven predominantly by concerns over urban ambient air quality, and resulted in such landmark statutory pieces as the 1990 Clean Air Act Amendments, California’s Sher Act of 1988, and the California Low-Emission Vehicle and Clean Fuels program.” (Collantes, 1059)The current trends forecast that the price of the crude oil will continue to rise in future, making the alternative fuel a viable option that might even be compulsory. The results of using these variations are benchmarked against the use of by-products of the petroleum. However, the production and availability of the alternative fuel does not present a rosy picture at present. Therefore, these fuels are not economically viable in many geographical areas. The greenhouse gas (GHG) emissions (resulting in global warming) and the energy imports of any nation can be curtailed by this prudent measure i.e by adopting alternative fuel instead of fossil fuel. The meteoric rise in the oil price due to the political and military instability in the Gulf is a hindrance to the economic development of many nations (Wakeley, 2008, p.1). The various stakeholders involved in the production, promotion and utility of alternative fuel are the infrastructure investors, the government policy makers, the industry, the environment, the economy and last but not the least- the consumers. The interaction pattern between the different stakeholders in this segment (alternative fuel) is illustrated as below (Wakeley, 2008, p.15). Figure 2: stakeholders’ interaction pattern (Wakeley, 2008, p.15) The relation between the stakeholders and the consumption of the alternative fuel was analyzed systematically by Bryne and Polonski in the year 2001. Additionally, Polonsky also gave importance to the relation between environmental groups and firms. It is a social initiative to make the stakeholders feel that they are making their contributions to the society (Freeman, Harrison, Wicks, Parmar and Salle, 2010, p.158). This will make sure that they serve their part for their own benefit. Ethical responsibilities connected with Corporate Social Responsibilities of firms and individual consumers determine the sustainability of the environment. Apart from them the NGOs might also play a major role in spreading awareness in this regard. The different stakeholders for the alternative fuel usage regard that conservation of forest and biodiversity is absolutely essential for maintaining the ecological balance. The government and non-government developmental institutions are already feeling that rural development can be better accomplished by the use and promotion of alternative fuel. However, the conversion technologies are in the nascent stage and they needs time to fulfill the expectations of the stakeholders (Loeffler, 2010, p.12). The opportunities of the innovation (institutional and technical) in the alternative fuel segment are generally coordinated by the stakeholders. The effort of the stakeholders for building and using the refueling (hydrogen) stations are of prime importance. The technologies involved in the production, the delivery and the usages of the alternative fuels cannot be designed without including the stakeholders. The process of the storage of the alternative fuel also depends on the awareness of the stakeholders. The standard of the alternative fuel and its coding as well as the outreach also depends on the efficiency of the stakeholders. This strategy of giving focus to the stakeholders yields positive results. The propagation of the use of alternative fuels becomes faster if the stakeholders are included in it. However, the process becomes unpredictable at times (Melaina, 2008, pp. 4-5). The common pitfall which should be avoided in the process to ensure the stability are to maintain a policy commitment, a consumer focus, the number of stations, the geography, the funding, as well as the coordination among the stakeholders (Melaina, 2008, p.6-7). The need for the planning and the commitment to any process which includes a public-private partnership minimizes cost. The risk is also minimized in this way. There is a need to rethink the current business process and give focus to the stakeholders. The implanting of the cross-functional teams is also needed. The strategy of the infrastructure development is also in the purview of the government industry stakeholder. A constant coordination is needed between the government and those business tycoons who are involved with the automobile and the fuel sector. Such a business model needs to be developed early in the stage of production. Later, the difference of opinions between the auto-makers and the energy company may hamper the production, the distribution as well as the consumption of the alternative fuel (Melaina, 2008, p.10). However the much needed technical trajectory that is important in embracing any paradigm shift is in presence with full authority; as mentioned by Collantes (2008) “In the 1990s, for instance, a new paradigm was proposed in the form of battery electric vehicles (BEVs). In the 2000s, the proposed new paradigm took the form of hydrogen fuel-cell vehicles (FCVs).” (Collantes, 2008, p.1060) Collantes (2008) also highlighted the different bargaining power of the different stake holders. (Collantes, 2008, p.1063) As mentioned by Collantes (2008) “On average, respondents think that the problem that hydrogen is most fit to address is the need to find alternatives to oil.” (Collantes, 2008, p.1064) Collantes has also found pro government sentiment among the public considering adaptation and the extension of necessary funding for the same considering the alternative form of fuel. Collantes’s research revealed interesting results regarding the stake holder and alternative fuel. First of all, a demand to the government for funding the project would enhance hydrogen delivery infrastructure and would encourage purchase of the car run by the same fuel. The Government should follow pro internationalization, pro-command and control, regulation of the fuel market through the imposition of tax on conventional fuel. On the other hand, people should be encouraged to shift towards hydrogen as fuel through subsidies. Encouraging innovation towards fuel efficient vehicles would act in three ways: put a check on the pocket of the consumer, avoid scarcity of fuel in near future and spreading less pollution (Collantes, 2008, pp.1064-1068) The social stake has also been highlighted by the researcher and this implies that individual awareness ultimately leads to greater social benefit. In this context, Collantes mentioned “I found three salient general policy preference dimensions: the preference for command-and-control approaches, the preference for addressing externalities with technology-neutral strategies, and the preference for facilitating technological progress and innovation.” (Collantes, 2008, p.1072) The fuel station executions are also accountable for the smooth running of the distribution process of the alternative fuels. The coordination is to be maintained between the location and the timings of the users, the stations, the vehicles and many others. A proper plan needs to be rolled out following the standards of safety and economy. The equipments should be up to date. The local supporters and the leaders are also important stakeholders and should be aware of the usage of alternative fuel and should promote the usage of the same. The role of each and every stakeholder should be properly defined while making policies to implement the usage of alternative fuel. The policies may be wide-ranging and varied (Melaina, 2008, p.10). Workshops should be conducted for training the stakeholders on the usage of the alternative fuels. These trainings should be conducted in frequent intervals as the lessons learnt might be forgotten with time. The experienced stakeholders can stand as the main proponents to expand the usage of these alternative fuels. Sharing their stories with others, might also, motivate the rest. The supply chains should be properly managed and trainings regarding the supply chain management in this sector are absolutely necessary like any other sector. The usage of the hydrogen as an alternative fuel is not so common. Various policies and processes need to be developed in the trainings session on how to use this source of fuel with utmost efficiency. Many more hydrogen stations needs to be set up with government assistance. The ownership for the duty in this segment is to clearly demarcated and discussed. The new market (production or distribution of alternative fuel) entrants need to be encouraged and helped to flourish in their own mission. Thus, they would not leave the market with a negative experience that might act as a negative barrier for other new entrants in the same field (Melaina, 2008, p.14-15). The stakeholders play different roles in the different geographic locations. There are many resources of the alternative fuels. The different resources are available in the different locations of the world. The knowledge and the past experiences show that use of all sort of alternative fuels are not viable in all the parts of the world (Andriof, 2002, p.223). Hence, the roles of the stakeholders may vary in the different geographic areas. The stakeholders in Brazil were credited for giving the idea to use the waste to create source for alternative fuel. So strong was the acceptance of the other local bodies that finally this novel idea was implemented with success. The stakeholders in Thailand supported the cause and followed the footsteps of Brazil initially. They keenly used the waste matter, by using technology to convert them to alternative fuel. However, the people of Portugal did not approve of the idea of using waste to create alternative fuels. Thus the plan failed in the country due to the negative response. Moreover, within passage of time ‘black market’ in Thailand spoilt the proper role of the stakeholders. The risks and the benefits associated with the use of alternative fuel needs to be assessed in separate manner in different regions of the world (Andriof, 2002, p.223). In the United States, the stakeholders play a vital role in the alternative fuel sector, especially in Texas (Schmandt, 2010). Turcksin et al (2011) reflected upon a particular approach known as multi-actor multi-criteria analysis (MAMCA) in order to evaluate the measures of policies to be adopted. This method takes into account the stakeholders’ opinion. With respect to Belgium, four options of bio-fuels along with fossil fuel have been chosen for the analysis with the help of stakeholders’ aims and involvement. Considering the supply chain of bio-fuel the stakeholders involved comprise feedstock producers, distributors of fuel, end users, manufacturers of automotives, government, non profit organizations, etc. Deciding on the particular bio-fuel to be used in a nation requires some ground for decision-making and MAMCA helps in this process. VI. Conclusion  The present study has portrayed that prices of petroleum and fossil fuels are increasing all across the world owing to their diminishing availability. Besides they spread pollution while combustion that is harmful in terms of long run health of the environment. In simple terms these costly fossil fuels results in the higher expense of buying it and its by-products. This is rendering great difficulties to the different economies. Moreover, the prices of many other consumer goods are increasing because most vehicles for the transportation of consumer goods use gasoline. This in turn reflects through the price of the product they carry. This is an indirect problem related to the increase in price of gasoline. This is called as an inflation spiral that has been witnessed whenever the crude oil price has experienced a rise in price. The tremendous usage of the gasoline at present can be curbed by using alternative fuels (Johnson, n.d., p.5). It has been proved that with the increase of income the propensity to consume gasoline increases in every household. So, the government should be very proactive to pass the plans for proper allocation of gasoline (Shepard, n.d., p.55). Considering the fact it is exhaustible and spread more pollution than the alternative fuels. These have paved the way for the stakeholders of alternative fuels to lead a strong collective bargaining in favor of adopting alternative fuel as the main form of energy (Freeman, Harrison, Wicks, Parmar and Salle, 2010, p.158). At the end it is obvious, what is exhaustible and might cause pollution should be got rid of, in order to create a greener and peaceful earth that not only benefit us but our future generations as well and only then might we will be able to call that sustainable development has been achieved in true terms. To be precise the benefit of the present and future stake holders related with alternative fuel as a substitute of fossil fuel would be equally addressed. References 1. Androif, J. (2002). Unfolding stakeholder thinking, Sheffield: Greenleaf Publishing 2. Automotive Newsfront, (1992). Popular Science, 241 (1), Retrieved on July 30, 2011 from : http://books.google.co.in/books?id=mQEAAAAAMBAJ&pg=PA38&dq=%22ALTERNATIVE+FUEL%22&hl=en&ei=cnIyTurcI4X40gHsxpHXCw&sa=X&oi=book_result&ct=result&resnum=7&ved=0CFUQ6AEwBg#v=onepage&q=%22ALTERNATIVE%20FUEL%22&f=false 3. Ball, M. and M, Wietschel, (2009). The Hydrogen Economy, Cambridge: Cambridge Publishing Press 4. Collantes, G. 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