<![CDATA[Grist - Comment Feed for Venture capitalist predicts]]> Grist Comment Feed en Comment #1 by Julia Olmstead http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/ Tue, 23 Jan 2007 01:07:48 -0800 http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/1 Wow

I wish I could be as optimistic as you are, Mr. Khosla. Here in Iowa we like to talk a lot about cellulosic ethanol but we'd rather grow as much corn as possible (thanks, government subsidies). I think most farmers probably laugh at the idea of switching to "grass cocktails" -- they would go broke if they were producing the yields Tilman is talking about. The income would hardly take them to the distillery. And, oh yes, we continue to build new ethanol plants that aren't compatible with cellulosic feedstocks.

But you're right, I do plan to increase, or at least maintain, my critiques of biofuels (although I've yet to get any oil money offered to me), including cellulosic ethanol, primarily because they distract from energy conservation. There are so many more efficient alternatives being pushed to the wayside (including walking and bike riding, but I guess those don't produce profits), or grossly underfunded, by the biofuel hype.

Here at the Midwestern land-grants, we're suffering from what I might call a "greasy-green hole" --the combination of decreased federal research dollars and vast quantities of funny money dangled by agribusiness for biomass research. I would be hard pressed to name a single agronomist who is not involved in something related to biomass/biofuels (myself included). This at the expense of research that might, you know, help us develop something like more sustainable food cropping systems? Doesn't seem like we're really acting in the public good, but I guess we are improving the profit prospects of venture capitalists bold enough to invest in these technologies. Nice of our state governments to provide the infrastructure for that.      

]]> Wow

I wish I could be as optimistic as you are, Mr. Khosla. Here in Iowa we like to talk a lot about cellulosic ethanol but we'd rather grow as much corn as possible (thanks, government subsidies). I think most farmers probably laugh at the idea of switching to "grass cocktails" -- they would go broke if they were producing the yields Tilman is talking about. The income would hardly take them to the distillery. And, oh yes, we continue to build new ethanol plants that aren't compatible with cellulosic feedstocks.

But you're right, I do plan to increase, or at least maintain, my critiques of biofuels (although I've yet to get any oil money offered to me), including cellulosic ethanol, primarily because they distract from energy conservation. There are so many more efficient alternatives being pushed to the wayside (including walking and bike riding, but I guess those don't produce profits), or grossly underfunded, by the biofuel hype.

Here at the Midwestern land-grants, we're suffering from what I might call a "greasy-green hole" --the combination of decreased federal research dollars and vast quantities of funny money dangled by agribusiness for biomass research. I would be hard pressed to name a single agronomist who is not involved in something related to biomass/biofuels (myself included). This at the expense of research that might, you know, help us develop something like more sustainable food cropping systems? Doesn't seem like we're really acting in the public good, but I guess we are improving the profit prospects of venture capitalists bold enough to invest in these technologies. Nice of our state governments to provide the infrastructure for that.      

]]> Comment #2 by Ron Steenblik http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/ Tue, 23 Jan 2007 04:01:39 -0800 http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/2 Provide us with the evidence

(Well said, Julia!)

Mr. Khosla, you write:

We will soon see the end of tariffs and protectionism, global markets, and aggressive adoption of these new fuels. Why should we tariff biofuels when we don't tariff oil? And despite popular belief, oil gets more subsidies than ethanol!

The tariff on ethanol has been extended again and again ever since it was first imposed in 1980. Last year there was talk of ending it early; we saw where that went: nowhere. The tariff was due to expire, in any case, at 00:01 on 1 October 2007. But, surprise, surprise, it was extended once again, this time to the moment the ball drops on Times Square, ushering in 2009.

Meanwhile, Congressmen Earl Pomeroy (D-ND) and Kenny Hulshof (R-MO) have introduced the "Renewable Fuels and Energy Independence Promotion Act", which proposes making permanent the biodiesel and the ethanol tax credits, as well as the small agri-biodiesel producer and small ethanol producer credits, AND the $0.54/gallon MFN import tariff on ethanol.

So, what special intelligence do you have to give us any assurance that this bill will be defeated and some bill that seeks to do the complete opposite will win the day?

And as for oil getting more subsidies than ethanol, that has been true in aggregate terms, but certainly not per-gallon, much less per unit of useful energy. Doug Koplow (no sympathizer for the oil industry, he), in a study he undertook several years ago, found that, per unit of energy, ethanol was one of the most heavily subsidized energy forms, coming in at over $17 per MMBtu, compared with oil's $1.40 (both figures are updated to 2006 dollars), even counting expenditures in defense of the Persian Gulf. (See Table 3.4 in "Biofuels: At What Cost?".) The subsidy rate for ethanol has since dropped to around $15/MMbtu, plus or minus $2, and the rate for oil may have increased. But it is hard to imagine that, even allocating all subsidies to oil to just two products, gasoline and diesel, would bring the value per MMBtu anywhere near where the per-MMBtu subsidies are for ethanol.

You then add,

I suspect we will see rapid adoption of the flex-fuel model and initial plans for flex-fuel hybrid cars.

Is that good news? According to the latest figures from the U.S. Energy Information Administration, three-quarters of the FFVs produced in 2005 were pick-up trucks or SUVs. And the 2007 crop of vehicles does not look much better. But I guess we should be joyful: GM recently announced that it will be offering FFV versions of its Hummers, starting with the 2008 model year.

]]> Provide us with the evidence

(Well said, Julia!)

Mr. Khosla, you write:

We will soon see the end of tariffs and protectionism, global markets, and aggressive adoption of these new fuels. Why should we tariff biofuels when we don't tariff oil? And despite popular belief, oil gets more subsidies than ethanol!

The tariff on ethanol has been extended again and again ever since it was first imposed in 1980. Last year there was talk of ending it early; we saw where that went: nowhere. The tariff was due to expire, in any case, at 00:01 on 1 October 2007. But, surprise, surprise, it was extended once again, this time to the moment the ball drops on Times Square, ushering in 2009.

Meanwhile, Congressmen Earl Pomeroy (D-ND) and Kenny Hulshof (R-MO) have introduced the "Renewable Fuels and Energy Independence Promotion Act", which proposes making permanent the biodiesel and the ethanol tax credits, as well as the small agri-biodiesel producer and small ethanol producer credits, AND the $0.54/gallon MFN import tariff on ethanol.

So, what special intelligence do you have to give us any assurance that this bill will be defeated and some bill that seeks to do the complete opposite will win the day?

And as for oil getting more subsidies than ethanol, that has been true in aggregate terms, but certainly not per-gallon, much less per unit of useful energy. Doug Koplow (no sympathizer for the oil industry, he), in a study he undertook several years ago, found that, per unit of energy, ethanol was one of the most heavily subsidized energy forms, coming in at over $17 per MMBtu, compared with oil's $1.40 (both figures are updated to 2006 dollars), even counting expenditures in defense of the Persian Gulf. (See Table 3.4 in "Biofuels: At What Cost?".) The subsidy rate for ethanol has since dropped to around $15/MMbtu, plus or minus $2, and the rate for oil may have increased. But it is hard to imagine that, even allocating all subsidies to oil to just two products, gasoline and diesel, would bring the value per MMBtu anywhere near where the per-MMBtu subsidies are for ethanol.

You then add,

I suspect we will see rapid adoption of the flex-fuel model and initial plans for flex-fuel hybrid cars.

Is that good news? According to the latest figures from the U.S. Energy Information Administration, three-quarters of the FFVs produced in 2005 were pick-up trucks or SUVs. And the 2007 crop of vehicles does not look much better. But I guess we should be joyful: GM recently announced that it will be offering FFV versions of its Hummers, starting with the 2008 model year.

]]> Comment #3 by Daniel Gibbs http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/ Sat, 27 Jan 2007 03:56:53 -0800 http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/3 Cellulosic ethanol

There is no question that large-scale production of cellulosic ethanol will be difficult to achieve, but it's worth it. Here's why: we need liquid hydrocarbon fuels to replace gasoline, jet fuel, and diesel. These need to come from carbon-neutral or carbon-negative sources, and that means sugar and lignin from biomass.

The problems: (1) the carbon balance does indeed depend on the process used, and deteriorates as the distance between feedstock collection (e.g. harvest) and fuel production sites increases. Biomass is much less dense than coal or oil, and we need to develop ways to produce biofuels and chemicals in a much more dispersed fashion. It takes 27 truckloads of switchgrass to produce one truckload of ethanol. The ratio for corn is about 3.6 to 1. This means we need to solve the problems of building many smaller plants vs. fewer large plants, which have the current technology benefit of economies of scale. This is a tough problem.

(2) The molecular problem is that cellulose is inherently a crystalline stuctural material, built to last thousands of years in some environments. Starch is an ephemeral storage material, designed to be readily broken down by tiny plant embryos. Both cellulose and starch are made from the same monomer: glucose. This is the reason the U.S. ethanol industry started with corn starch - now it must evolve, and do so rapidly. We need to get very large quantities of glucose (and xylose) from a two-by-four, figuratively speaking.

The benefits: global warming has come upon us rather suddenly, and will almost certainly reach unacceptable levels no matter what we do. It is very much in our interest to begin replacing fossil fuels with realistic biofuels now. Green plants absorb solar energy and carbon dioxide for a living. They are the only practical means of removing CO2 at the atmospheric concentration of 0.04% (400ppm soon). They also store that carbon in glucose, and the solar energy in chemical bonds, something which current solar technologies cannot do.

A second benefit is that we may begin to reduce the massive transfer of wealth from the U.S. and other oil consumers to oil producers. When oil prices reach $70/bbl, our oil trade deficit reaches $300 billion per year, not quite a billion dollars a day. Not counting Iraq at $9 billion per month.

Both global warming and oil prices are likely to get worse. In 1998, I wrote a paper titled "Global Warming and the Need for Liquid Fuels from Biomass" - linked at our website http://www.generalbiomass.com. The data at that time (ca. 1993) indicated that China had 9.5 million vehicles with a 6-year doubling time. India had 6.2 million with a 7-year doubling time. I read today in Fortune that China has 33 million automobiles, and is projected to increase to 130 million by 2015. You do the math, but that suggests a doubling time of about 4 years for China's autos. For reference, the doubling time for all world vehicles was 26 years in 1993.

Against that backdrop, I hope there will be more public and private support for cellulosic fuels than has so far been evident. Clearly they should be sustainably produced and used to power hybrids, not SUVs. Congress can do this if it has the will. Cellulosic ethanol comes out very well in greenhouse reductions in LCA (Life Cycle Analysis) studies by Kammen at Berkeley and Wang at Argonne.

Finally, we should think beyond agriculture. In North America, dozens of paper mills have shut down due to foreign competition. Some of these could be refitted as forest biorefineries, making ethanol and other feedstocks to displace oil. More than half the world's people will live in cities in 2008, generating lots of waste paper which could be made into ethanol.

Daniel Gibbs, Ph.D.

]]> Cellulosic ethanol

There is no question that large-scale production of cellulosic ethanol will be difficult to achieve, but it's worth it. Here's why: we need liquid hydrocarbon fuels to replace gasoline, jet fuel, and diesel. These need to come from carbon-neutral or carbon-negative sources, and that means sugar and lignin from biomass.

The problems: (1) the carbon balance does indeed depend on the process used, and deteriorates as the distance between feedstock collection (e.g. harvest) and fuel production sites increases. Biomass is much less dense than coal or oil, and we need to develop ways to produce biofuels and chemicals in a much more dispersed fashion. It takes 27 truckloads of switchgrass to produce one truckload of ethanol. The ratio for corn is about 3.6 to 1. This means we need to solve the problems of building many smaller plants vs. fewer large plants, which have the current technology benefit of economies of scale. This is a tough problem.

(2) The molecular problem is that cellulose is inherently a crystalline stuctural material, built to last thousands of years in some environments. Starch is an ephemeral storage material, designed to be readily broken down by tiny plant embryos. Both cellulose and starch are made from the same monomer: glucose. This is the reason the U.S. ethanol industry started with corn starch - now it must evolve, and do so rapidly. We need to get very large quantities of glucose (and xylose) from a two-by-four, figuratively speaking.

The benefits: global warming has come upon us rather suddenly, and will almost certainly reach unacceptable levels no matter what we do. It is very much in our interest to begin replacing fossil fuels with realistic biofuels now. Green plants absorb solar energy and carbon dioxide for a living. They are the only practical means of removing CO2 at the atmospheric concentration of 0.04% (400ppm soon). They also store that carbon in glucose, and the solar energy in chemical bonds, something which current solar technologies cannot do.

A second benefit is that we may begin to reduce the massive transfer of wealth from the U.S. and other oil consumers to oil producers. When oil prices reach $70/bbl, our oil trade deficit reaches $300 billion per year, not quite a billion dollars a day. Not counting Iraq at $9 billion per month.

Both global warming and oil prices are likely to get worse. In 1998, I wrote a paper titled "Global Warming and the Need for Liquid Fuels from Biomass" - linked at our website http://www.generalbiomass.com. The data at that time (ca. 1993) indicated that China had 9.5 million vehicles with a 6-year doubling time. India had 6.2 million with a 7-year doubling time. I read today in Fortune that China has 33 million automobiles, and is projected to increase to 130 million by 2015. You do the math, but that suggests a doubling time of about 4 years for China's autos. For reference, the doubling time for all world vehicles was 26 years in 1993.

Against that backdrop, I hope there will be more public and private support for cellulosic fuels than has so far been evident. Clearly they should be sustainably produced and used to power hybrids, not SUVs. Congress can do this if it has the will. Cellulosic ethanol comes out very well in greenhouse reductions in LCA (Life Cycle Analysis) studies by Kammen at Berkeley and Wang at Argonne.

Finally, we should think beyond agriculture. In North America, dozens of paper mills have shut down due to foreign competition. Some of these could be refitted as forest biorefineries, making ethanol and other feedstocks to displace oil. More than half the world's people will live in cities in 2008, generating lots of waste paper which could be made into ethanol.

Daniel Gibbs, Ph.D.

]]> Comment #4 by tblakeslee http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/ Fri, 02 Feb 2007 08:43:59 -0800 http://www.grist.org/article/vinod-khoslas-forecast-for-2007-trends-and-outlook/4 Geothermal is already cheaper than clean coal!

I completely agree that coal is a disaster and will probably never be economical with sequestration. Geothermal is already competitive and reliable and unlike wind, it works 24/7. The latest MIT study says that geothermal can be used economically even without hot springs by copying the water injection technique used on oilwells. Ormat (ORA on the NYSE) is already doing this profitably and with excellent reliability. They currently have 900 MW in operation and have orders for 200 MW in New Zealand and 380 MW in Indonesia. Here are some links to the report:

http://www.renewableenergyaccess.com/rea/news/story?id=47 ...
http://geothermal.inel.gov/publications/future_of_geother ...
http://messages.finance.yahoo.com/Business_%26_Finance/In ...

]]> Geothermal is already cheaper than clean coal!

I completely agree that coal is a disaster and will probably never be economical with sequestration. Geothermal is already competitive and reliable and unlike wind, it works 24/7. The latest MIT study says that geothermal can be used economically even without hot springs by copying the water injection technique used on oilwells. Ormat (ORA on the NYSE) is already doing this profitably and with excellent reliability. They currently have 900 MW in operation and have orders for 200 MW in New Zealand and 380 MW in Indonesia. Here are some links to the report:

http://www.renewableenergyaccess.com/rea/news/story?id=47 ...
http://geothermal.inel.gov/publications/future_of_geother ...
http://messages.finance.yahoo.com/Business_%26_Finance/In ...

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