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Why Ethanol--Not Electric Cars and Hybrids--Is the Answer

Posted Jun 03, 2009 11:57am EDT by Sarah Lacy in Venture Capital, M and A, IPOs, Clean Tech

Times are tough for the biofuel movement. Concerns have been rampant about how much gas it takes to produce a gallon of ethanol and about how much farmland and corn would be needed to produce enough fuel to make a dent in our gasoline addiction. Combine that with the popularity of the Prius and the sex appeal of Tesla’s sporty all-electric cars, and biofuels like ethanol are looking like something only Willie Nelson could love.

Not so fast, says famed Silicon Valley venture capitalist Vinod Khosla of Khosla Ventures. In a rare sit down interview with the cleantech bull, Khosla explained why most of the concerns about ethanol are either based on myths or don’t take into account the rapidly changing science in the field. It’s not that electric cars and hybrids won’t help, but when you consider the billions of cars coming on the market from fast-growing economies like India and China, electric cars on a mass scale just aren’t realistic, he says.

But, increasingly, ethanol is. Khosla argues it’s cheap and plentiful enough to make 80% of new cars coming onto the roads in the next 10 years low-carbon emitters. He doesn’t just mean ethanol made from corn. Already scientists are making ethanol from bark, switch grass and other non-food bio-materials that can be planted easily and widely.

Despite his bullishness, Khosla doesn’t believe the government should be picking favorites or propping up the industry with rich corn subsidies. He advises that the government set strict standards for carbon emissions, then get out of the way while private industry slogs it out to find the best and most commercially viable solutions to meet those standards.

For all this to play out, Khosla considers it his job to do something many VCs have shied away from in recent years: Funding risky “science project” style investments and making them work physically and economically. Only then will Wall Street believe in biofuels, and that’s when the real investment in changing the environment will begin.

124 Comments

shags1_23
shags1_23 - Wednesday June 03, 2009 12:08PM EDT

Hemp produces four times as much cellulose per acre than corn. That cellulose can be used to produce ethanol.

Paul
Paul - Wednesday June 03, 2009 12:09PM EDT

Laughable.

JeffreyC
JeffreyC - Wednesday June 03, 2009 12:09PM EDT

Please refrain from publishing this sort of ignorance in the future. Ethanol does NOT emit less CO2 than gasoline. It is not a low carbon fuel. This is nothing more than a rich guy trying to make more money for himself by either pushing bold faced lies or simply making stuff up.

JoelM
JoelM - Wednesday June 03, 2009 12:10PM EDT

Electric cars are not going to be impractical and expensive for long. Check out zapworld(dot)com. This company is going down the right path.

johnm
johnm - Wednesday June 03, 2009 12:12PM EDT

ethanol sucks it gives lousey gas mileage so u use more of it duh?

Yahoo! Finance User
Yahoo! Finance User - Wednesday June 03, 2009 12:16PM EDT

Corn was the wrong choice. Latin America is making three times more ethanol out of a plant the grows faster and has more sugar mash producing substance. But the government pride during the Bush years commited to one idealogy. So we now can look at other options now that we see more than poor people are suffering from raising corn prices. Yes, once the upper middle class starts suffering, changes now have to be made. Yes sir!

yabadabado
yabadabado - Wednesday June 03, 2009 12:16PM EDT

when there is a food shortage, don't cry.

Richard
Richard - Wednesday June 03, 2009 12:18PM EDT

I find this article hard to believe.

shags1_23
shags1_23 - Wednesday June 03, 2009 12:23PM EDT

Headline: New Bacteria Could Make Cheaper Ethanol. Makes it from waste biomass. Check it out http://www.reuters.com/article/environmentNews/idUSN0847220620080909 It doesn't take much to make your car run on ethanol; just replace the rubber seals with silicone ones.

Ned
Ned - Wednesday June 03, 2009 12:24PM EDT

Khosla bought into corn ethanol in a big way and he is leaking money. His judgment on renewables is poor or insincere, but he gets a lot of press because the only ones who are more ignorant are the journalists - or maybe this is just paid advertising.

Joe
Joe - Wednesday June 03, 2009 12:25PM EDT

What a pile of garbage. Khosla is just trying to sell himself and make a buck. There are advances out there, but the problems are real and will continue. Let's say we have bio-fuels that are 4x more efficient than corn. Corn has been generously estimated to give a 1 - 1.3 energy to production ratio.

Ned
Ned - Wednesday June 03, 2009 12:25PM EDT

Khosla bought into corn ethanol in a big way and he is leaking money. His judgment on renewables is poor or insincere, but he gets a lot of press because the only ones who are more ignorant are the journalists - or maybe this is just paid advertising.

san
san - Wednesday June 03, 2009 12:27PM EDT

Ethanol will mean more expensive food. You can run modern diesel cars on waste cooking oil though and that solves the problem of what to do with waste cooking oil. USA needs to get efficient, Citreon, Peugeot and Toyota have been selling 65+mpg for 3 years, Fiat and BMW will have 100mpg cars by 2012. Is it no wonder GM and Crysler went to the wall they are so far behind.

Jack Suede
Jack Suede - Wednesday June 03, 2009 12:27PM EDT

Right, because powering cars with something that requires large amounts of water and farmland presents no possible problms down the road.

ChrisG
ChrisG - Wednesday June 03, 2009 12:28PM EDT

This is ridiculous. Corn-based Ethanol not only costs a fortune (relatively) to produce, pollutes more than standard unleaded gasoline, but is now being show to be very corrosive. It's eating engines. Do the research. Look around. And if you drive a Lexus or Audi, don't get near it. Not even the 10% blends.

Charles Kung
Charles Kung - Wednesday June 03, 2009 12:29PM EDT

the problem with interviewing luminaries is that the interviewer tends to not challenge the assumptions of their guest. khosla first assumption is that Li-ion batteries won't be cheap enough. tell us why. second he says electric cars in china & india will use electricty from coal-fired plants, of course ignoring arguments that it's easier to move millions of cars to lower carbon if you change the utility to renewables. third, he says the only cheap way to move 800M cars to lower carbon is liquid fuels. again the assumption that we need 800M cars. he talks about mis-perceptions. well, he is also a source of a few.

b m
b m - Wednesday June 03, 2009 12:30PM EDT

what a load of crap! Lets see...the fertilizers are made using petroleum, the equipment to farm uses petroleum of which 60% is imported to grow FOOD that will be converted to alcohol so that we can drive our cars. Do we have a moral hazard here or what? Alcohol has less energy per unit than gasoline, so you use more of the stuff in you normal driving. And, if you took all the corn we now grow we would still not meet our fuel needs. Also, we do not have enough land in the country to grow all the corn needed to fuel our cars.

Yahoo! Finance User
Yahoo! Finance User - Wednesday June 03, 2009 12:34PM EDT

You're right CBW, those farmers have it way too easy. I get so pissed when I see a farmer driving around in his gold-plated Ferrari.

theeye
theeye - Wednesday June 03, 2009 12:36PM EDT

It's all about money and who's making it. Electric cars can be recharged by consumers by having alternators, thus not going on the grid and paying to recharge the batteries. To the rich, this seems like going against the Americian way of making huge amounts of money off of the consuming masses!!!!!!

Yahoo! Finance User
Yahoo! Finance User - Wednesday June 03, 2009 12:36PM EDT

Crikes! Bush even killed ethanol. I bet it was because of all his oil buddies, huh?

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