Newsmaker: Silicon Valley's Mr. Green

(continued from previous page)

Similarly, what if oil prices go down? Doesn't that trash a lot of business plans out there?
Khosla: That's a big risk for the oil-based start-ups. That's not a risk, for example, for solar, because solar competes with coal and electricity. So for transportation fuels, that is a risk. Now, there is also an upside: If there is a national carbon tax, those things go through the roof. So there is a risk and reward just like any other business, and you measure those risks. I believe these things are very competitive all the way down to $40 a barrel of oil. Can it go to 30 or 35 (dollars)? Yes, it can--you judge the risk of that happening.

It's the same as saying that there's a slight chance that Intel will come out with a Wi-Fi chip that costs $3. Sure, it can be done. In fact, they're probably working on it. So you're taking these risks every day, and there's no one reason to invest or not invest. It's usually a portfolio risk management, even within one venture.

The way I look at a typical chip venture is there's financial risk--can we fund it? There's marketing risk--can we be competitive in the marketplace? Who else can come out with what? There's a technical risk--can we develop it? What are likely delays? And then there are people risks. And you balance those risks. Clean tech is absolutely the same--you balance all the risks.

You say that people aren't asking the right questions when they are doing comparisons between different transportation fuels (such as ethanol and gasoline). So what are the right questions?
Khosla: Energy balance (the amount of energy required to produce a unit of fuel) is a silly question to ask. Why does it matter? It's really a substitute for two questions that are real questions that can be objectives at the personal level and at the national level.

First, well, of course, cost is always a question. You don't sell it if it's not cost-competitive. Period.

The more important question is: Does it cause a reduction in petroleum use? Petroleum use is a big problem. That is a national objective. So the national debate should be focused on petroleum use reduction. Even the worst ethanol plant has about a 90 percent reduction in petroleum use.

The second question is: What are the greenhouse gas emissions reductions per mile driven?

Those are relevant questions because you know those are the things you are trying to control as a country, as a planet, as a city, as a state. You want less petroleum use.

So ask those questions, and answers to those are very different than trying to measure some academic, hypothetical--some academic paper done some years ago (by Pimentel & Paztek analyzing ethanol energy balance). And people keep using it when it's not relevant to what we are trying to achieve.

Are you concerned that government interest will wane?
Khosla: You know there's always a danger. I'm very optimistic that this will be a key issue in the 2008 presidential election.

Do you mean energy policy overall?
Khosla: Yes, energy policy, energy security and greenhouse gases. So it's fortunate for my point of view that every presidential candidate has to go through Iowa (an agriculture-intensive state which has an economic interest in ethanol). It forces them to address the issue of the environment.

I'm not just talking about biofuels. You can't have a presidential candidate not take a position, one way or the other, on energy policy and environmental issues--energy and greenhouse gas emissions. So I think this will be a serious debate over the next two years, and I think that's a really good thing. It will stay in the public spotlight. Now the politics of this (are) the Democrats love it and the Republicans love it. That's really good news.

So can they lose interest? Sure. We could have an Iran instead of an Iraq in the next few years and spend our time worrying about North Korea or Iran. And there are people who would love to see us doing that, instead of talking about the economy, or the environment, or whatever else we should be talking about.  

More Newsmakers

[Blito]

"Even worst ethanol plant has about a 90 percent reduction in petroleum"

People are saying that we dont have enough crop in the world to fuel ethonol and it will cut into food but I hear that there are efforts to grow non-food type stuff for it too that are possibly genetically enhanced for it. There is a ton of stuff being talked about.

Plus, fuel cells are the future. Electric and Hydrogen is becoming more of a reality.

Also don't forget that you can create hydrogen fuel in a solar powered fueling station from water. No energy plant needed.

[markapp]

ethanol worst possible fuel on several reasons

Grain ethanol is one of the worst possible fuels we could use for several reasons.
1. cost at best we get 1 gallon ethanol from 1 bushel corn=3 dollar a gallon whosale cost not even adding the cost of processing the corn or distilling the ethanol.
2. competition with food using grain as an ethanol source has pushed the price of corn from 2 dollars a bushel to 3 dollars a bushel over the year from 3/06 to 3/07. Theis has not yet shown in the price of groceries since they use price hedging forward contracts to produce our food but in the near future expect soaring prices for any grain based products including soda pop breads corn chips etc. The 1/2 again price increase will contribute greatly to starvation in poverty stricken parts of the world who had trouble buying enough food before taking the price to 1/2 again or possibly double in the near future.
3. green fuel hardly. to produce a gallon of grain ethanol requires about 70% of the btu's it can produce when burnt. Guess what we burn to produce it? Natural gas or coal so we pollute even more with ethanol than just burning the petroleum. By the time you add the internal combustion engines involved in planting pumping water and harvesting and drying the corn you are really deep in the negative column.
4. Efficiency even the ford manual admits that at best e-85 will provide about 70% as many miles per gallon as petroleum in the flex fuel vehicles so it's true value is 70% of petroleum yet it's production cost is about twice the petroleum at 3 dollar a bushel corn.
Our current most valuable fuel reserves are coal The best current technology is coal slurry firs with stack scrubbers. We would be wise to focus local short trip vehicles to electric supplied by very large coal burning generators located at the reserves or mines.

[rrapier]

Silly Question?

Regarding the energy balance issue, it was Mr. Khosla who was claiming that it is twice as efficient to produce ethanol as to produce gasoline. When he was shown to be incorrect on this point by me and others, suddenly it becomes a silly question. Coincidence?

I agree with him that petroleum reduction is important. But the energy balance issue is also important. If you take 1 BTU of natural gas to make 1 BTU of ethanol, you have displaced petroleum. But you would have displaced the same amount of petroleum had you merely used the natural gas directly as a transportation fuel, and you wouldnt have paid a bunch of subsidies to do so, nor would you have eroded your topsoil in the process. So, no, energy balance is not a silly question. It is a key question.

Cheers,

Robert Rapier
<a class="jive-link-external" href="http://i-r-squared.blogspot.com" target="_newWindow">http://i-r-squared.blogspot.com</a>

[rrapier]

I Should Also Mention...

That I am the source of the articles at The Oil Drum, mentioned in this story. There are a number of essays there, including one by Mr. Khosla, that can be viewed at:

<a class="jive-link-external" href="http://www.theoildrum.com/tag/Vinod%20Khosla" target="_newWindow">http://www.theoildrum.com/tag/Vinod%20Khosla</a>

My objectives in these essays were to remove the hype element, rebut the mythology, and have some serious discussions on the science involved.

Cheers,

Robert Rapier

[Blito]

Hirearchy resource list

I agree, the energy balance question is vital to the discussion because a perpetual machine can't be created, just perpetuity for the whole system using many resources for their respective outlets. Basically what can run what most efficiently. That's what is so great about renewable energy is that it is a perpetual machine if used on the whole correctly. The plant can use less petroleum in but if the car can run natural gas and cause less pollution plus not use petroleum then why use natural gas to make the ethanol and just put it in the car? Because it might also be better to use both as it's easier to grow ethanol then mine for natural gas as with ethanol you can create non-food supercrops etc probably and natural gas is just one thing.

I think it should be placed in a hierarchy of renewable resources hardest to easiest:
Natural Gas - Hardest to mine and extract (less of it)
Ethanol  Easier to grow and more of it same BTU use as natural gas though
Wind  Powerful and plentiful probably best option when all else fails or for middle ground
Solar. Weakest energy but extremely easy to use, smallest foot print, and dependable less impact on environment.
Fuel cell tech. Very easy and cheap to create using other top resources properly (Hydrogen can be created from water with a local filling station).
I think Fuel cell is the best option overall.

An article in the Audubon society magazine states that Wind power makes up about 1 percent of US energy and they are pushing to become maybe 20 percent in the next 10 years. It's a matter of placing them properly so they don't hit birds and bats which seems to work out.