May 16, 2006
Venture Capitalist Vinod Khosla Promotes Biofuels
Sun Microsystems co-founder and venture capitalist Vinod Khosla argued in a speech at Stanford that the United States should put taxes in place to assure that oil prices will not fall so as to provide incentives to develop alternatives.
During his speech, titled "Biofuels—Think Outside the Barrel," at the Schwab Center to about 100 energy scholars, economists and policymakers, Khosla outlined three "action items" for switching to biofuels:
- 70 percent of all new automobiles should be flex-fuel vehicles, giving drivers the option of gasoline or ethanol;
- 10 percent of gas stations in the United States should distribute ethanol to "achieve criticality";
- Create a tax on cheap oil to stabilize oil prices in the unlikely event they should fall below $40 a barrel. (Oil is currently $72 a barrel.)
"I don't think oil will ever [fall to] $40 a barrel until an alternative appears," Khosla said. "If an alternative appears, we will see the manipulation of oil prices to drive alternatives out of business. This [tax] is to assure Wall Street that [it] will not be subject to oil price manipulation by Saudi Arabia."
Biofuels might become cost effective once scientists and engineers make cellulosic technologies work. Cheap cellulosic technologies would allow the breakdown of the sugars in complete plants. Switchback grass and other grasses could yield several times more energy per acre than corn. However, I have doubts about biomass even if done much more efficiently than corn. Cheap photovoltaics combined with cheap lightweight batteries would make use of much smaller land areas and also allow use of lands which support little vegetation. Plus, photovoltaics wouldn't use water or cause run-off of fertilizers and pesticides into creeks and rivers.
Last year, there was an article about the meetings of OPEC officials about "the threat" of alternative energy developments if the price of oil rises too much.
Separately, George Soros said that by next year, some newly developed oil fields will come online, and perhaps this will put downward pressure on oil prices (temporarily, of course). But at the same time, if the price of oil does decline a lot next year, which is possible since we might have an economic slowdown, then as it was pointed out in the blog, this might drive many alternative energy companies out of business when they are the most vulnerable: Many companies have already invested and risked a lot of money by buying equipment, building prototypes, spending on salaries, etc, and if there is a sharp decline in the price of oil for a couple of years, this can make them lose very large sums of money, and they might once again panic and retreat.
One of the problems with biomass that no one is talking about is the problem of crop failure. Disease, flood or drought could leave us paralyzed if we became too dependent on biomass.
Randall mentioned a point often overlooked about solar. It can use the land most worthless for anything else. What other energy source does not need water, fertility, underground minerals, wind, radioactivity, a specific climate.
And unlike fossil and nuclear there is no reason for nations to quarrel about solar. International politics would be totally changed.
Solar has problems but unlike other energy sources the problems are technical and not political.
But the article is about biofuels. Ethanol may ease the pain if celluose can be handled. Otherwise where do we get enough? And worldwide, huge areas lack the water and soil to ever produce significant quantities of biomass.
K: "What other energy source does not need ... a specific climate."
I suppose solar doesn't need a specific climate, but certainly it's not going to be very productive in areas with lots of clouds or without a lot of strong, direct sunlight. If it isn't cost competative in the Southwest today, it's going to be a long long time before it makes sense in the Northeast.
Tom: Solar is competitive in areas similar to the Southwest today. In the US we already have developed massive coal fields and the rail and sluices to get it to existing powerplants. Those facilities are sunk money which make it more difficult to justify solar but it is still gaining.
Most of the world's areas with great sunlight do not have that sunk investment in other energy facilities. For them solar can and will be the choice sooner.
Solar will always work better with more sunlight. But it works rather well at some some high latitudes. Air conditioning consumes huge amounts of power even far North. But solar works best just when AC is most needed. We don't often get such a pleasant coincidence.
I figure the chances for a cost breakthough in solar cells is about the same as for ethanol from celluose. We may get both, we may get neither.
Solar photovoltaics produce electricity all year around and even during droughts. Crops do not make use of the same land area as consistently. Think even about the planting period. When the seeds are first planted even then the light falling on the ground is wasted and when the initial sprouts pop up only a small fraction of the light falling on the ground gets caught by leaves. So what percentage of the year does a corn field in Iowa capture the photons to produce sugar stores?
Solar would allow not just deserts but also the surfaces of human structures to capture useful energy.
My fear with biomass is that some group will develop a way to make cellulosic technology work. Then the world over lots of land that now supports wildlife will get converted to growing crops to produce liquid fuels for cars.
I agree with that fear Randall.. and I would pay extra for fuel instead of converting a large percentage of wild grazing land to make fuel crops.
I don't think honestly it will ever be viable though. Think of all the steps involved in making crops. Leveling the land, planting crops, moving in water, and maintaining that system, pesticides, fertilizers which can be used as fuel anyway, then harvesting, transporting to cellulose conversion center...
Its hard to see that competing with something like deep sea drilling, or coal-liquid process on a large scale. And if it does it will just mean our current process of driving around is too inefficient.. and we will speed up moving to electric cars/plug-in hybrids for a large percentage of travelled miles.
"My fear with biomass is that some group will develop a way to make cellulosic technology work. Then the world over lots of land that now supports wildlife will get converted to growing crops to produce liquid fuels for cars."
By the time the cellulose digestion technology is created in a few years, I am sure there will be genetically engineered fast growing grass and other plants that will be in special regions like giant greenhouses where there used to be wastelands or deserts.
While Vinod Khosla has had a few bets pay big (be bats less than 300), I would never consider him an expert on energy policy. I am amazed that people waste their time listening to fools like him. Biofuels are not viable at this time. Humanity has a number of better alternatives that would better serve its energy needs (nuclear, coal, solar). In the future I would suggest that we leave Vinod Khosla play the dice and attribute no genius to someone rolling a a pair (its luck).
Makes sense ... by the time we we have the fast growing grass and the cellulose digestion technology we will also have solar cells that operate at 99% efficiency. We can then tax the 99% efficient solar cells to fund research to discover new ways to create wild life preserves.
I think that Biofuels are the WRONG way to go. Carbs are NOT efficient. The last time humanity used carbs we leveled most of the forests within our reach.
Vinod Khosla and the Greens should think before they unleash an environmental disatster that will use goevrnment subsidies to destroy our environment. I cannot stand this type of thinking. Vinod Khosla is an IDIOT and should start thinking.
Sorry for the rant.
what possible motive could any sane person have to denounce green fuels as a prelude to disaster?
who ever this mental midget is they do not know that as of now most celluose is in the form of waste.
this waste fills up landfills or is burned.if we can make this process work,we can reduce our oil
use by 45-50%.as soon as green fuels become accepted,we will see a sudden drop in oil prices in order
to woo us away from green fuels and set us up for another round of fuel price hikes even higher than before,to say nothing of endless military actions to protect our our supply.