Do biofuels actually cause more greenhouse gases?


I recently received a pointer to this blog article which references a NY Times piece about articles in Science that state that biofuels actually increase global warming by pulling land into the agricultural pool that was previously a carbon sink. The first of these Science papers is focused on the ethanol industry in the U.S.

During the past 14 years, 15 separate studies have shown that ethanol has a net positive energy balance. Only one study has contradicted it, but the researchers of that study (Pimental and Patzek) wrote the same paper 4 times so you may hear that the ratio is 15:4. It’s the one that always gets quoted (usually unknowingly) when someone tells you it takes more energy to produce a gallon of ethanol than you can get out of it. Now it appears ethanol opponents will have another study to quote, this time about biofuels creating additional greenhouse gases.

In looking in the supporting materials in Science Express, I found this curious assertion:

If corn-based ethanol could not receive a credit for removing carbon from the atmosphere – deleting the feedstock uptake credit from the GREET model– it would increase greenhouse gas emissions by 48%. It follows that if the use of land to grow corn for ethanol has the net effect of reducing land-based carbon sequestration, the overall effect will be a bigger release of greenhouse gasses.

In other words, they are stating that when comparing greenhouse gases from corn to gasoline, corn should not get a credit for having removed carbon from the atmosphere. Instead they think it should be compared to growing a forest or prairie in the place of farmland which would allow the carbon to be sequestered year after year. Forests and prairies give back carbon to the atmosphere every year when their leaves and grasses die. In the case of forests, every few decades the trees die, or burn, or are used for some other purpose and thus also give back their carbon in a brief instant of geological time. Unless you’re burying the carbon deep under the earth’s surface or oceans, any carbon taken in by plants is given off in a few months or decades. Soils also have a limited capacity to hold carbon and eventually reach a homeostasis after only a few decades. So I consider the logic used in this study to be flawed.

But I will expect that every biofuel opponent will quote it with abandon, never realizing that the authors of the paper are not comparing biofuels with fossil fuels, but rather biofuels with some imaginary state of affairs where forests that capture but do not release carbon to the atmosphere have been replaced by farmland.

All land capable of sustaining plants, whether it be used for farming, prairie, or forest eventually reaches a homeostasis when it comes to CO2 sequestration. Farming allows us to take advantage of the CO2 to carbohydrate conversion that occurs on land whereas prairies and rainforest that go unharvested do not. But in the end, they all return CO2 back to the atmosphere in a relatively short span of geological time. The only counter-examples are swamps that can, over the course of millions of years, turn vegetation into coal by trapping a tiny percentage of carbon each year.

Rawhide Energy Station Tour


The Northern Colorado Clean Energy Network and NCRES are planning a tour of the Rawhide Energy Station.

Date/Time: Meet on Tuesday, March 4th, 2008 at 9:15 a.m.
Meeting place: Northwest corner of Harmony Road/I-25 park-and-ride in Fort Collins, CO

The park-and-ride is located just north of the first traffic light when you head west on Harmony Road from I-25.

We will leave at 9:20 a.m. and carpool to the Rawhide Energy Station. Here are the directions from Harmony/I-25 intersection:

Go north on I-25 for about 22 miles and take Exit 288. Drive east for approximately 3 miles and turn north at the plant entrance. The tour is scheduled to begin at 10:00 a.m. The tour takes about 1.5 hours.

The Rawhide Energy Station is located 26 miles north of Fort Collins. It was built in the early 1980s and started generating power on March 31, 1984. It has a 274-megawatt coal-fired steam turbine for the base load and 4 gas turbines capable of generating 260 megawatts for backup of the steam turbine and for supporting peak loads during the summer time when electricity demand is high. It uses approximately 4000 tons of low sulphur coal per day. Rawhide is one of the cleanest coal-fired power plants in the nation in terms of sulphur dioxide emissions.

If you want to go on the trip, please contact me via email at or by phone at 970-978-6188 and let me know the names of the people you’re bringing, and whether you will be meeting at the Harmony park-and-ride for carpooling.

That phone number is my cell phone that I’ll have with me at the time of the tour in case you need to contact me on the morning of the tour.

Detailed maps of the meeting area and directions to Rawhide Energy Station are located here.

The Mathematics of MLMs


Every once in a while I get solicited by someone promoting a Multi-Level Marketing (MLM) scheme. This has gone on for as long as I can recall. You have probably already heard an MLM pitch where you recruit 5 members, they each recruit 5 members, and so on until you rise to the top of a pyramid structure and become financially independent. It’s sometimes referred to as Network Marketing.

The majority of these schemes often involve buying ‘lotions and potions’, which have near magical properties. Once you sign up, you agree to recruit others to do the same. The products have amazingly high markups compared to other similar products you can buy in a supermarket. They need these high margins because when you work your way through the math, half or more of their proceeds are gobbled up in payments to people at various levels in the pyramid. With an MLM, instead of eliminating the middle man, you’re adding about 4 or 5 levels of middle men.

Unfortunately, none of these MLM companies can deliver the promise of financial independence to more than about .4% of the people who participate in the scheme. In reality, the ratio is likely to be less. I’ve worked through an example below that will show you what’s wrong with this business model.

If you assume that financial independence for you means making 5 times a minimum wage of $6/hr, then you’d need $60,000 annually ($5,000/month) to achieve this. Many MLMs promise incomes much higher than this, but let’s be conservative and use this amount. Let’s see how big an organization you’d need to get to that income level in an MLM structure.

Assuming that your product requires each member in your downline to purchase $200 worth of product per month and you get an average of 10% of the money that flows up through your organization, you would need about 250 people in your organization for you to earn $5,000/month. This means that it would be about 5 levels deep and might look like this:

You + 5 + 25 + 125 + 95

For the sake of simplicity in building a 250-person organization, let’s just say your bottom level is still filling in and that’s why the bottom level has 95 people. If you got a 10% commission on all these people’s purchases, your monthly income would be $5,000/month. That sounds pretty good right? Well, here’s the rub. ALL of the 250 people in your organization are making little or no money, yet ALL of them were recruited so that they can get to where you are, that is, to financial independence. The people in the bottom level of the organization are spending $200 per month and making nothing. The 125 people in the level above them are spending $200 per month and are making less than $8 per month in commissions on average, so they are out $192 per month. The 25 people in the level above them each have an average of 9 people in their downlines and thus are making $180 in commissions and so they are losing $20 per month. The 5 people above them have an average of 49 people in their downlines and are making $980/month less the $200 they spend on products so they are clearing $780 per month. That’s not even equal to a $6/hr minimum wage job.

So, in order to achieve your financial independence, you’ve got an organization of 250 people and not a single one of them will be making more than the minimum wage. But ALL of them were recruited with the promise that financial independence was achievable. So in order to achieve YOUR financial goals, you have built an organization where fully 99.6% are unable to achieve THEIR financial goals.

You may say that all you need to do is to keep on building the organization and that will lift everyone up, right? That’s all well and good, but the ratio of people who are financially independent to those who are making little or no money DOES NOT CHANGE. There will always 99.6% working for minimum wage or losing money in an MLM. Do you really want to be part of a scheme that only permits 1 in 250 of its members to achieve the financial goals that everyone who has been recruited is expecting to attain?

What usually happens in these organizations is that the majority of people who are unable to meet their financial goals eventually get disillusioned and drop out and so everyone spends their time recruiting replacements. Few ever manage to rise very far, because the top people are already in place and the bottom members are getting replaced on a continual basis.

MLMs are a complete waste of time, money, and social capital. I was hoping that with the arrival of the Internet that these schemes would simply just go away as people were able to educate themselves about the other side of these “too good to be true” stories. It does seem to be helping expose these schemes for what they are. If you’d like to see a great website on the inherent flaws in the MLM business model, go to Jon Taylor’s for an in-depth analysis of it as well as links to many other websites with similar supporting information.

I post this only for the purpose of helping people to wrap their minds around the mathematics of MLMs. I know that the majority of people recruited into MLMs are decent people who were recruited by other well-intentioned people who just repeated the sales pitch they were taught. But you can see from the math behind MLM pyramid schemes requires that for everyone who achieves financial independence, about 2% in their organization will make less than a minimum wage and the other 98% will lose money. I cannot imagine anyone feeling good about being a member of such an organization, especially if he is the one living off the other 99.6% of the people in his organization.

EntConnect 2008


I am helping to organize an entrepreneurial conference called EntConnect that runs from March 27th-30th, 2008 at the Sheraton West Denver hotel in Lakewood, CO. This conference has been held each year since 1992 and initially grew out of a conference organized by the publisher of Midnight Engineering magazine. Midnight Engineering was published for about 8 years in the 1990s and was targeted at engineers and technologists who engaged in entrepreneurial activities, often in their spare time, as its name suggests. Even though the magazine is no longer published, many of us had enjoyed the conferences so much that we kept them going. I say ‘we’, but I should mention that it’s the hard work and dedication of John Gaudio who pulls the conference together each year. This year a few of us have stepped up to give John a helping hand. He’s letting me take care of the website and on-line registration system.

The conference has taken on the feeling of a reunion. We sometimes bring in new members and friends which helps to keep things interesting. This year we decided to make an effort to recruit other like-minded people to participate. If you’re interested in entrepreneurial pursuits perhaps you may like to join us.

The conference runs from Thursday through Sunday starting off with a ski day at one of Colorado’s world renowned Summit county ski areas. We generally choose the ski area depending on snow conditions at the time. Past ski trips have been to Keystone, Breckenridge, and Arapahoe Basin. Friday, March 28th has a number of fun activities starting with high performance go-cart racing and/or indoor skydiving and ending with an Italian feast at Valente’s restaurant in Wheat Ridge. After dinner, some conference participants meet for drinks and conversation at the hotel lounge.

The main part of the conference takes place on Saturday with presentations from conference participants on subjects mostly related to entrepreneurial activities. In the past we’ve had topics that included how to improve your company’s ability to show up in web search results or improving your marketing effectiveness as well as many, many other subjects. Some of our members are quite skilled at spotting technology trends and letting us know about them far in advance of their arrival or widespread adoption. The conference goes on all day Saturday with morning, afternoon, and evening presentations. We take a break to go out to dinner at one of the local restaurants in the evening. The late evening activity planned for Saturday night this year is an informal poker game.

The conference is very relaxed and allows for numerous opportunities to have side discussions with people who have entrepreneurial interests. A few of our past participants have grown their businesses from garage startups and sold them for enough money that they could comfortably retire. Curiously, no one has opted to retire. We’ve also had people who have made fortunes and then lost everything during a market shift. A few of us are not entrepreneurs by the strict definition of the word, but enjoy networking with entrepreneurs in the hope that some of it may rub off on us.

The regular cost of admission to the conference is $299 and we have special discounts for rooms at the Sheraton Denver West hotel for $75 per night. There is a period where you can receive a substantial discount if you sign up early. If you sign up before Feb 11th, the cost of the conference is only $99. The cost after Feb 11th will be $149 up until Feb 29th. After that, it will be the full $299. Junior registrants (age 21 and under) are admitted at half of the regular prices. The cost covers the conference admission only. All other activities are pay-as-you-go. For example, if you participate in the ski day, then the lift tickets, meals, and equipment rental are the responsibility of the individual. Similarly, the Friday afternoon events this year are expected to run approximately $30 to $50 depending on which ones you choose. The Friday evening Italian dinner at Valente’s is $35. The Saturday lunch at the hotel is often picked up by one of our sponsors, as are the refreshments on Saturday evening. Thus there is a lot of flexibility on which activities you’d like to participate. You may opt to attend for the entire 4 days or just for the weekend conference.

EntConnect is a great place to network with others and to give and receive advice on running a business. There are many opportunities to participate in the discussion and you can even present a topic of your own. The schedule of topics and speakers comes together on the website as the start date approaches. You can follow its development at You can see a representative Entconnect agenda by looking at last year’s agenda which is linked to the website.

Entconnect has a guarantee that if you are not delighted with the conference, you can request and receive a full refund. I don’t know of many conferences that offer a guarantee like that. Similarly, if you find that you cannot attend for after you’ve paid, you can request a refund or have your registration fee applied to next year’s conference.

We have resisted promoting the conference for fear it may to grow too large since we did see it expand to over 250 attendees one year. After that, it was decided to scale it back in size to give it a much more relaxed and friendly feel. For the past few years, it has averaged around 25 to 30 attendees, but we would be happy to increase to double that size.

Please feel free to contact me if you’d like more details on the conference or visit the website at