Vinod Khosla at Milken Institute: Interview Excerpts

Vinod Khosla (VK) recently did a lengthy interview at the Milken Institute 2009 Global Conference. The interview was conducted by Elizabeth Corcoran (EC) of Forbes. You can see the video of the interview here:

Milken: Khosla on the Shift to Renewable Energy

These are excerpts from a transcript I put together from the recording. You can read the entire transcript (in three segments) on my R-Squared Energy Blog. I have labeled my comments with RR.

EC (13:40): In the past 90 days we have seen something like a billion dollars being put into solar investments - whether in the form of equity or debt. Is that stupid money?

VK: The people who are putting in gobs of money, behind people chasing First Solar at billion dollar valuations - I won't say it's stupid but it's not something I would do with my money. (EC: That pretty much counts as stupid). A diversity of opinion is good. I am often wrong. (EC: Sometimes you are). You only need to be correct once in a while because in our business you only lose one time your money but you can make 100 times quite easily. I don't have to be very right.

(RR: I would like to hear that during his next congressional testimony where he is trying to drive the direction of energy policy: "I am often wrong." But this also gets to the heart of why I often object to what he is saying. If he uses his high level of influence to help put us down the wrong path on energy policy, then what are the consequences of being wrong? They could be severe.)

EC (14:38): How many companies do you currently have in your portfolio?

VK: Our clean tech portfolio has probably about 50 companies.

EC (15:48): Which was the biggest disappointment?

VK: We have not had any large cut-offs - I am trying to think - in our clean tech portfolio. When we have invested a lot of money, there's one or two places - well one we wrote off; one called Altra. (RR: Altra is a corn ethanol producer that is on the ropes). There's one place we actually decided to change the plan - Cilion - and made it capital neutral, so they don't need a lot of cash. Got rid of the debt; the company is going fine, but sort of on the slow boat.

(RR: When Cilion was formed in 2006, they announced they would have 8 plants in operation by 2008 and achieve an energy return of better than twice that of gasoline. Here in 2009 they have zero plants in operation. The formation of the company included much fanfare, such as this quote from VK: "Cilion will be able to single-handedly produce all of the ethanol that the Governor has ordered for 2010 [900 million gallons], based on current consumption." So far, they have proven to be nothing but a money pit. So what if California had counted on that ethanol? These are the dangers of having someone unduly influencing energy policy and being "often wrong.")

EC (18:03): Last fall you said project finance was not an area you want to be headed into. Talk a little bit about where you see cellulosic ethanol going, and isn't that an area where you have been involved with project finance?

VK: It depends on what you call project finance. Cellulosic technology is something I am very interested in; I actually think it's the only thing that can replace the oil; I am fairly confident that within the next 5 years it will be cheaper unsubsidized than oil at $50, $60 a barrel.

(RR: I would like to see the math on this. It's amazing that someone can believe this, despite there not being a single commercial-sized cellulosic ethanol plant in existence.)

EC (18:48): Let's look at some of the numbers. You don't like plain ethanol, right; the kind that comes from corn and soy?

VK: Right. To be fair to the corn guys, they served their purpose. I have said for years that they are a good stepping stone. This is important. I will tell you a funny story that really makes a lot of sense. About two years ago, we said that corn ethanol would be a good stepping stone; they have raised a lot of visibility; there's a lot of pumps; cars are flex-fuel capable. It helped set up the infrastructure. The economics of corn will not work long-term relative to cellulosic.

EC (20:38): From your point of view, it's the 2nd generation ethanol (VK: Absolutely) that's going to make the most sense. What's had to go into that is a lot of biotech engineering, finding microorganisms that can efficiently convert. (VK: Sometimes, not always) Finding fuel stocks that will be cheap enough, whether you get them from trees or other brush or winter crops and so forth. Take us through the numbers. Where do the prices have to be in order to make that work, and what happens if oil declines in price? What happens if it gets down to $30/bbl?

VK: What I would say is that unless there's a competitor to oil, I don't think oil is going to $30/bbl. (EC: Even though John Doerr was in the Middle East, and people told him, "John, it's going to $30/bbl?) I won't speak for John. When we plan for unsubsidized market competitiveness, we plan on $50 oil. I suspect the price will be much higher, especially when economic growth resumes. And whether it's higher in a year or five years doesn't matter as much. Not only that, the problem isn't oil anymore, it's a carbon constrained world. And we are going to have legislation on that. It doesn't matter whether the science of climate change is right or wrong. Assume for a moment that we discover over the next 10 years that climate change science is wrong, and we don't have a climate change problem - not something I believe. We will still end up with legislation in the next five years. So, at this point it is fait accompli; it's going to happen.

EC (22:50): Doesn't that amount to government subsidies?

VK: No it doesn't. If you dump your wastewater into the river, is it a government subsidy if they require you to clean it up? In fact the nuclear industry is the one that's subsidized. They say we'll take your toxic waste, the government takes responsibility and subsidizes them. There is not a chance that you [nuclear] can compete in the market unsubsidized. Even if it had the toxic waste subsidy where they took waste off, you still couldn't compete at market interest rates. There's not a viable nuclear plant at 15% IRR or 15% debt, which is what the solar guys contend with. It's only because of 5% loan guarantees from the federal government that keeps nuclear in business.

EC (24:30): Come back to the tax on carbon, though, because there will be a tax. Right? (VK: Yeah). What do you predict that legislation is going to be?

VK: I suspect...look it's hard to predict politics...I suspect it won't happen this year it will happen next year. Many people are pushing to have it before Copenhagen this year. I hope we do. There is a 50/50 chance the House can pass a bill by summer. The Senate will take longer, and it will get stuck in the Senate. Anyway, my expectation is that next year we will have a carbon cap and trade.

EC (25:30): Do we know enough about how to make cap and trade work? Isn't that market just an opportunity for fraudsters to come in?

VK: Any market will have fraudsters to begin with. Will it take 10 years to get a system in place where there is not too much fraud? Yes. (RR: And during those 10 years another administration can come in and dismantle the whole thing).

EC (39:00): Let's get to those electric cars. You don't like the Prius.

VK: Let me be clear, and I am going to sneak in my Black Swan. I do drive a hybrid, but not a Prius. I drive a Lexus hybrid. Hybrids are an uneconomic way to reduce carbon dioxide. If you go to hybrids or electric cars, your cost of carbon reduction is about $100/ton. If you have 10 ways of reducing carbon at $50/ton, why would you spend $100? My beef is not with hybrids; we are investing in hybrid batteries; there is a good market and we can make money at it. But do I believe it's going to solve the climate change problem? No. (RR: None of the things that have been discussed are going to significantly rein in carbon emissions.) Save yourself the five grand, and instead paint your roof white. You will save more carbon that way.

(RR: He cited this paper by Art Rosenfeld at Lawrence Berkeley Lab: "White Roofs Cool the World, Directly Offset CO2 and Delay Global Warming").

(RR: VK then explains his problem with electric cars, and says lithium ion batteries are too expensive, are limited by electrochemistry, and will be for a long time. I would say that while VK seems to have a clear picture in his head on the issues with batteries, he suffers from a blind spot about similar limitations of cellulosic biomass. He then cites all of his investments into different areas, and concludes that sheer numbers mean something is going to work.)

VK: The chance that each approach will succeed is small. The chance that all of them will cumulatively fail is vanishingly small. Mark my words: Vanishingly small, and that's why we will have unsubsidized market competitiveness with fossil fuels. And the fossil fuel guys won't know what hit them. I don't see how by 2030 oil can compete. That's why I think by 2030 oil will go to $30, because it will be the alternative cost of marginal technologies.

(RR: I think he truly believes this. Yet it shows a failure to grasp issues of scale, biomass density, logistical challenges, and much more. If it were merely a numbers game, we could solve any technology problem by just throwing enough money at it. But there are fundamental issues here regarding biomass that will never - mark my words - never allow it to be produced for $30/bbl. Sugarcane ethanol, yes, can be produced for that in Brazil. But you will never turn cellulosic biomass into a liquid fuel, at scale, for $30/bbl - for the same kinds of fundamental limitations VK mentions for batteries.)

EC (47:40): So by 2030, what will be the primary fuel?

VK: I have a paper on my website that postulates about a technology race between biofuels and batteries. Whichever one makes the most rapid progress will get the larger percentage of the total passenger miles driven in the world.

EC (48:30): Does government risk factor in? There has been a cautionary tale in biodiesel, where there has been great interest, lots of money pumped in, and yet due in part to vagaries of how the environmentalists and government regulations have crashed into each other, you have got more than 100 biodiesel fuels (RR: Biodiesel plants, I presume?) around the country, none of which are producing fuel.

VK: You know, that's true, but you also have bankrupt financial companies. Look, failure is the natural mechanism of capitalism. But you are right. There is government risk. But we fixed a lot of that last week when the Low-Carbon Fuel Standard passed. It will force the right decisions looking back.

EC (53:25): I am going to open it up to questions in a minute, but one more question from me. Let's go back to nuclear for a minute. Aren't there Black Swans in the nuclear industry? (RR: I was thinking the same thing earlier; Black Swans only appear to have been considered by VK in very specific situations. A positive Black Swan is going to make some of his technologies successful, but he seems to discount any positive Black Swans from other sectors).

VK: There probably are. In fact, Bill Gates is funding one. The problem with nuclear, I think, is different. Because of the NRC, it takes 20 years to build one. And I have to give them $100 million to approve every step of the process. The problem with nuclear is that the innovation cycle is very long. If I am building a nuclear plant, I think of something, 20 years later I build something and see how it performs. If I am building a solar thermal plant, six months later I change my manufacturing line. I can even do it half way through building a power plant.

EC (54:40): And if you are building an ethanol plant, two or three years later it's ready.

VK: Yeah, though every six months people plan on changing the bug in their plant. Every six months you change the bug. Keep evolving it, improve the efficiency. The cycle of innovation - how long it takes - is a really important metric for judging how effective a technology will be in getting to market.

Q3 from audience (57:20): With respect to cellulosic ethanol, this question of indirect land use that has ended up in the standards; do you think that will continue?

VK: It's a fairly complex issue; the science is very uncertain. I think it is figured into the California Low Carbon Fuel Standard. The end result is a reasonable compromise. It's also something that is fairly uncertain right now. I think the California Air Resources Board (CARB) came up with something that's a reasonable answer on indirect land use impacts. The corn ethanol guys wanted to have zero. They didn't get that, so they are now complaining in Washington. I think CARB could have phased it in more slowly because the numbers are so uncertain, so I would not agree 100% with CARB. But I would agree 90% with them.

Q4 (59:10): That's corn. How about cellulosic?

VK: I think cellulosic should be measured the same way, but I think the impact will be fairly small, and over time it has the potential to be the biggest opportunity to sequester carbon in the soil. I don't want to get into the details - there are papers on my website about this - but it is possible to change agronomy practices to raise biomass and sequester carbon at the same time. It is the annual crops, where you till up the soil ever year, that you have a problem. Perennial crops, and sugarcane is such a crop, you have a much better chance. Also, a lot of cellulosic crops can be grown without a lot of water and on marginal lands.

EC (60:20): So the amount of land we would need, if we were to truly replace gasoline, how much land would we need?

VK: Under optimistic scenarios we need zero land in this country to replace all of the gasoline in this country. (RR: He referred to this paper - Where Will Biomass Come From? - on his website for a detailed explanation). Look, this is really important. We can't do linear extrapolation of the past. (RR: Because it doesn't give the desired answer). If we do, we are sure to fail. We have to do things a new way. The best way to predict the future is to invent it, not extrapolate the past. (RR: Audience starts to applaud). And this is a fundamental difference.

Thank you all very much.

RR: Good catch. Your comments are generally spot on. I always have to do a sort of double take with the ethanol enthusiasts. Burning biomass to generate electricty is much more thermodynamically efficient than trying to use ethanol as an energy carrier. These folks are just so in love with liquid fuels thay just won't get it! The same argument applies to hydrogen, why pay the major energy cost of conversion twice (once to make the fuel, and the other when you use it)? Don't these people get the concept that the net amount of high quality (in the thermo sense) availability is the KEY challenge? Pursuing low efficiency carrier fuels is a step backwards.

Many thanks to Robert for taking the time to transcribe this interview, and to add his own comments. One comment I found interesting is

There's not a viable nuclear plant at 15% IRR or 15% debt, which is what the solar guys contend with. It's only because of 5% loan guarantees from the federal government that keeps nuclear in business.

At this point, the government is holding debt costs down to very low levels in general with its current policies, if businesses can get the debt. This means that wind is now being financed at 5%, at least where financing is available, according to Jerome a Paris.

It is hard to see how interest rates can stay this low can last very long. Costs will be considerably higher once interest rates rise. Also, the total quantity of debt available is pretty low now. It seems like the quantity of debt available will decline, as banks try to rebuild their balance sheets.

But if this reduction of available credit puts downward pressure on prices (as it certainly has in housing) deflation occurs. Interest rates can be very low, zero or even less than zero(theoretically) in deflationary scenarios since the principal itself gains value as time passes.

Of course increasing scarcity of commodities puts upward pressures on prices, creating an inflationary scenerio that pushes up interest rates.

Who is to say that for a while (2? 3? 5? 7? years) these two competing pressures can't more or less balance and keep interest rates moderate. Tricky stuff.


As I commented on your blog, I've looked at Khosla's analysis of the cost of electric vehicles, and the hybrid premium.

His analysis is as wrongheaded as anything ethanol-related you might point to. For instance, he assumes that you have to write off the additional capital costs in only 5 years. Given that an EV or hybrid is likely to be used for 20 years or more, he's overstating the costs by a factor of 2 (not more, because you do have to take into account time value of money).

This is an important thing: EVs and PHEV (especially) are competitive with $2.50 gasoline, even before you factor in external benefits like CO2, security of supply, trade deficits, peak oil, etc.

Is Khosla saying cellulosic ethanol will drive farm tractors and maybe replace the natural gas used in nitrogen fertiliser and have enough left to drive 800 million cars and sequester carbon? Don't think so.

Strangely I agree with him on other points.

Khosla is a super-salesman. You have to take him as such. However, Jeff Broin says he can make cellulosic from corn cobs for $2.50, Now, and he says he's pretty sure he can do it for $2.00/gal when his Emmetsburg, Ia, "project Liberty" starts producing in 2011. I gotta take him pretty seriously. He's "earned" the respect.

Mascoma's made some waves in the last couple of days with their announcement that they've developed an enzyme that will combine, IIRC, 3 processes into one.

Plus, Khosla's "Range Fuel's" Soperton, Ga. plant will be kicking off in 2011; so we might not want to Completely disregard Everything he says.

The trick in cellulose, I think, will be their ability to get "efficiency" in smaller plants. Transport looks to be a stumbling block if they can't.

I agree with RR that cellulosic ethanol is a pipe dream. Poet which is a large ethanol producer with a plant 14 miles from my house, plans to use corn cobs. Their Emmetsburg pilot plant is an add on facility to their regular ethanol plant if I am not mistaken. It is I believe funded by a government grant.

I have a hard time with their estimate of costs to arrive at the $2.50/2.00 for cellulosic ethanol. As was the case with corn, as the use of corn cobs ramps up, so will the price. Even now I do not understand how they price cobs as a feed stock. There is no futures market. Feed stock is the most important cost in making ethanol.

When/if ramped up cobs use happens the price of cobs will skyrocket. It has to as cobs are not something that is suited to current infrastucture like corn. They require unique equipment to gather and store in large quantities. They are also very bulky. Our local elevator estimates that to keep a typical local 100 million gallon ethanol plant running on corn cobs would require a semi load arriving every 8 minutes around the clock.

This, if it were happen, means that the price of cobs must be high for farmers to buy the combine gathering attachments, semi's, storage facilities and equipment to handle them. If the price of cobs should stay low or "free" (since they are now waste) farmers will not invest and there will not be enough supply. I believe this to be more or less true for other cellulosic ethanol schemes.

Those other sources of cellulose which look so tempting are probably in fact expensive even if the technical problems are solved. Trees may look like a gift the first time they are used, but then it takes years to replenish the supply. Money, land and labor costs have to be taken into account.

The final nail in the cellulosic ethanol coffin is the questionable wisdom of growing a single use crop in the first place. Suppose down the road push comes to shove and animal/human food demands price corn such that ethanol is truly uncompetitive as most on this site hope. What then? If corn is the feed stock, the solution is to shut down some plants as is happening now due to low liquid fuel prices.

If those corn acres or other acres are diverted to single use cellulosic ethanol feed stocks this can not happen. We are stuck. I read yesterday where a proposed plant in Mississippi was to convert pasture to biomass cane for ethanol. Clearly this is sacrificing food for biomass feed stock. Those cattle that were grazing on the supposedly unproductive pasture were in fact part of the nation's food supply even more than corn.

Dual use crops such as corn for ethanol make more sense than cellulosic ethanol.

Isn't the Brazilian biomass industry just externalizing much of its cost onto their environment?

I mean, even if you don't count the rate at which they are chewing up rainforest, they still need a prodigious quantity of land (robbed from the forest at some point), along with the tropical climate and such, to produce a relatively small amount of fuel per Brazilian. I doubt that it would be such a bargain if they had to count the cost of irrigation, fertilizer, or other such inputs.

I don't feel there is enough energy in cellulose to bother with.

Solar thermal and PV need a real push before it is too late


The Sugar Cane land is about a thousand miles south of the Rain Forest.

They have 150 Million Acres of Fertile land lying fallow in the Cerrado. They farmed 58 Million Acres in the Cerrado in beans in 2003. In 2008 they planted 53 Million Acres in Beans.

They log the Rainforest to get . . . wait for it . . . "Logs." An acre of rainforest can have up to 150 different types of hardwoods, and they are incredibly valuable. Usually, after logging, someone will turn cattle loose on it for a couple of years to attain "homesteading" rights. The rainforest land is very infertile, and usually no one attempts to farm it for more than a year, or two.

BTW, they're making progress against deforestation. The last I saw it was down about 60% over the last decade.

As for "fertilizer:" Cane doesn't require much. It requires a lot of water, but they Have a lot of water.

It's not quite the "perfect" deal it's made out to be by the anti-corn faction, but it IS sustainable, and they do have an incredible amount of fallow land.

Why am I not surprised ? Kdolliso-guess-book :

"They have 150 Million Acres of Fertile land lying fallow in the Cerrado"

My -myrtvedt's calculator computes this acerage in at 7.1% of Brazils total land area.
But --- CIA-factbook : Brazil arable land: 6.93%

Pick up the phone Kdolliso and tell CIA that you have discovered some more arable land - you know "fallow land" means ... pick one
1-Land left unseeded during a growing season.
2-The act of plowing land and leaving it unseeded.
3-The condition or period of being unseeded.

now Kdolliso , which is it ? 1, 2 or 3.
This is very good news for Brazil... Or are you just citing Brazil arable land as Fallow ??
You are very easygoing on facts Kdolliso. Very Helium, if I may say !

and then you have this one, can anyone understand this, I mean English speakers ?

BTW, they're making progress against deforestation. The last I saw it was down about 60% over the last decade.

down, what down ..? has 60% or 40 % grown back or ... is it less cutting, or maybe is it by some sort of volume ... or export is down perhaps ...

NO - I don't think anything is down UNTIL YOU PROVE IT. And when you do, still I can not BELIEVE you - due to your very lousy track record -

Brazil is approx 3,300,000 sq miles. 2,112,000,000 Acres.

The Cerrado (the world's largest savannah) covers 23% of Brazil's land area. Or, 485,760,000 Acres.

The main crop is soybeans. They planted 53,000,000 acres in 2008. That leaves 432,000,000 acres of Savannah. You have a hard time believing there are 150 Million Acres lying fallow, there?

I'll try to find the quote from Silva Lula, the President of Brazil.

The Cerrado

Okay, they CUT DOWN 60% Less trees in 08' than they did in 98'. will that do it?

Okay, here:

The cerrado has an area of 207 million hectares, or 24% of the Brazilian territory, being 139 million areas on which it is possible to produce, according to the Embrapa. Currently, 14 million hectares are farmed with annual plants, like soy, cotton and maize, another 3.5 million are occupied by perennial crops, like coffee and fruit, and 60 million are used for cultivated grazing land.

This leave 175 Million Acres, available.

Brazil - The Cerrado

Jeez, Paal, Google is just full of this "Brazil" stuff.

you are just going extremely astray here .... come back to court !
Please prove this excessive - still not documented - claim.

They (Brazil) have 150 Million Acres of Fertile land lying fallow in the Cerrado

You may also back your "60% down" claim if you can, but that one is actually outside my sphere of interest.

Why are YOU jezzzing ? I'm am the one who should do that.

Are you slow ? CIA factbook over your input ANY DAY ....... (SKIP DOWN TO .... ehhh Brazil and scream out loud to yourself)

Brazil arable land: 6.93%
permanent crops: 0.89%
other: 92.18% (2005)

You see .... other lands in Brazil is stated to be 92,18% . And none of that is FALLOW because fallow is RESTING ALREADY ARABLE.

The Cerrado covers 23% of Brazil's land area ??? so.... ? well it's n ot arable per see.
If I tell you the size of Antartica or the Sahara dessert, would that prove anything about Brazils arable land ? I see you just continnue your undocumented and erroneous "methods" - it's a pity

Here ya go, straight from the horse's mouth

President Luiz Ignacio Lula Da Silva

Lula rejected arguments that biofuels reduce the amount of land available for food production, noting that Brazil has 60 million hectares of unused grasslands that have already been deforested and no longer serve as pasture for livestock but can be "recuperated" for the cultivation of sugar cane and oilseeds to produce biodiesel.

Uh, Paal, old buddy. If you subtract 0.89 from 6.93 and multiply the difference times 2112 you come out with 127 Million Acres.

The CIA has a pretty "tight" definition of "arable." The definition many use is "suitable for agriculture." Agriculture includes, in most definitions, grazing, rowcropping, truck farming, orchards, etc.

The CIA seems to limit arable to "ready to plant," or somesuch.

BTW, the Ag minister, when referring to the country as a whole came up with, IIRC, 400 Million Acres that could, without cutting down a single tree, and, maintaining their production of other agricultural products, be planted in energy crops.

alright fine! It seems to be two sorts of truths out there. One real and one pending. I will stick to reality for some more time - where as you can dream about that area for ethanol.

I had a fast skimming in Wikipedia on that Cerrado area and the prospects are not very good long haul ... The soils are generally very old, deep, and naturally nutrient poor, but it could be made fertile by appropriate additions of phosphorus and lime... and other fertilizers and pest limiters.
Remember this is gonna constitute a grand , if not insurmountable task , remember you are talking about 7 % NEW and ADDITIONAL agro-area of Brazil here ... good luck to all involved, they'll need it .. you and Brazil need "totoneila"'s help to give directions on NPK and more ...

The Cerrado is one of the most threatened ecosystems in Brazil, suffering effects of the agricultural activities ... I see only bad news here.

It's a Savannah, Paal. Almost 3 times the size of Texas. Sparsely populated, and lightly farmed.

Heck, they, actually, grew Less soybeans, there, in 2008 than they did in 2003. 53 Million Acres. Out of about 485 Million Acres.

It's a Vast Country, Paal, in a Vast World.

The time frame for building a nuclear plant can and should be shortened substantially if obly the public and the regulatory agencies would come to thier senses.It is said that the French have one kind of nuke and one hundred kinds of cheese while we have one kind of cheese and one hundred kinds of nukes.A lot of the the arguments you hear about the costs of nuclear power remind me of the some of the arguments about the costs of capital punishment.The foes of capital punishment have been known to argue that capital punishment is more expensive than long term incarceration,which is often true.What they neglect to tell you is that it costs so much because they make sure when they can that the court process lasts for years with megabucks being spent on lawyers on both sides.

Methinks I see a similar argument put forth by VK in regard to the poor prospects for nuclear power.

Now I will admit right up front that I know next to nothing about the actual manufacture of cellulosic alcohol,but I do know a little about farming and forestry.All this blather we hear about cellulosic alcohol being produced from crops grown on marginal land is based on a combination of wishful thinking and deliberate misinformation emenating from people pushing particular projects and plain old gullibility on the part of the people writing about renewable fuels.

Farmers can be divided into two classes for convenience sometimes-those who know how to farm but very little about the world in general ,and those who farm and also possess a little education.I do not know a single farmer of the second sort who did not recognize immediately ,as soon as he found out about the ethanol program ,that it would result in a boom in corn country, a sharp run up in the costs of feed grains,shortfalls in other crops as land would be diverted to corn,a corresponding run up in fertilizer prices etc.-all of which happened as surely as retail gas prices rise when crude oil prices rise.

Now there is a substantial amount of scrap wood,residential garbage,leaves from city lawns,etc that can be used to produce ethanol at little cost,but once you start farming cellulose there will be very substantial costs involved.I have not actually researched this subject, so I am so to speak, painting with a broad brush.

This so called marginal land is generally pasture land or scrub timber land or cropland that produces "marginal" crops.People live on it and get thier living from it,and they will be displaced.The marketable products they produce today,such as they are, will be in somewhat shorter supply.

"Marginal"also means hilly sometimes.Such land can be used as pasture land without soil loss, but it cannot be cultivated if it is really steep.Can the cellulose people say "soil erosion"?

Another word for marginal is dry.Readers who have lawns will have noticed that the amount of time spent mowing the grass is almost exactly proportional to the rainfall.

You cannot raise ANY crop and remove it from the land withuot suffering a declining yield after a few years-unless you replace the lost nutrients,such as they are, for the given crop.Can anyboby pushing cellulosic ethanol say fertilizer?Cornstalks you say?Straw you say?

Well the corn is chopped entire and fed to cattle. Else the stalks are either plowed in or left to rot as mulch. Either way,the organic material is returned to the soil in the latter case.Straw is frequently baled and sold,else it goes back to the soil.

A better argument for making cellulosic alcohol can be made for using logging debris,but it makes more sense to simply burn it to generate steam for industrial purposes,especially if the waste heat can be captured in a cogeneration scheme-of course then it is no longer waste.

The camel's nose is his worst part,because it is the wedge he uses to get the rest of his body into the nice warm tent.Cellulose crops will migrate to good land rather quickly it it really catches on.

This little list of problems is not intended to prove that cellulosic alcohol won't be commercialized, but simply to illustrate that it is not the silver bullet that some of it's boosters wqould have us believe.

Old Farmer, I've read all your posts with interest, and great respect. There's no doubt in my mind that you, and X have forgotten more about farming than I will Ever know.

But, let me mention this. I live in Northern Mississipi. My area is mostly scrub brush, and second rate pasture. And, lots of kudzu. I don't think too many people make a "living" off of what I'm describing. Some are retired. Some work in town. BTW, 2/3 of ALL farmers' incomes are derived from work OFF of the farm (you knew that - I just threw it in for the few that didn't.)

We have, in the middle of some rather unexciting land, a landfill. My reckoning is that we could convert the landfill waste, and the cellulose from energy crops (poplars, switchgrass, etc.) grown within 3 miles of the landfill, and power one hundred percent of our cars, and farm tractors.

Of course, we Won't Need to provide 100% of our transportation/farming energy from such a source, but, hey, what would be bad about providing, in a Post-Peak world, 25% of it?

Just a thought.

k. doll --

thanks for inoculating us against all this negativity here,.

Did you register to say all that ? hmmm
I'd say if you pay heed to k. dolly, I'm afraid you will need another and stronger inoculation at a later stage. Hopefully for you, you only got a placebo from Dolly ...

If you look just upthread here kdolliso claims that 7% of Brazils Fertile land is lying fallow, but no links or other proof for his mostly loose and random claims. My homeland Norway has only 2,7 % arable land , does that make 97.3 % fallow ? (CIA factbook)

To Robert (!) Kudos and thank you for your relentless chase for the truth ... "there is only so much matter, no matter what they say" - in particular on a yearly basis.

Having worked in the pulp and paper industry for many years I know that it was a struggle to maintain enough wood. More wood could be grown if private landholders adopted better forest management, but not enough to replace a significant amount of petroleum products. Also, many developing countries are dependent on firewood.

I believe that I read that 50% of all biomass was now being harvested (V. Smil in Energy at the Crossroads?)

Cellulose is the principal component of wood, which also contains lignin. I remember dry wood being something like 60% cellulose, the balance being lignin. The chemically pulped wood fiber found in brown corrugated boxes and toilet tissue is mostly cellulose. Printing, copying and writing papers are mostly cellulose but contain about 15% or more mineral fillers. Newsprint is ground wood, containing about 30 to 40% lignin, and the balance cellulose. Cotton is almost pure cellulose.

Pulp and paper mills waste nothing. Bark and spent cooking chemicals with their dissolved wood lignin is burned in boilers to generate steam and power.

Crop residues contain cellulose. Putting crop and forest residues back in the soil helps the soil hold moisture, loosens the soil and retains valuable fertilizer nutrients. Lost nutrients include wood ashes that now go to landfill at paper mills and also the NPK that gets dissolved in the chemical pulping liquor but would be difficult to recover.

Non recycled waste paper is the best area of opportunity for cellulose. Using recycled paper will drive up paper cost.

Timberlands outperformed almost all other investment classes since about 1950. That should tell you something about the amount of cellulose available.

I think the best role for cellulosic biomass (trees, grass etc) is to live and die in the same place for generation after generation. Humans should remove just a smidgin like some of the seeds or maybe an occasional sawlog. Most of the biomass should fall back to the soil, not be taken away.

I think we should electrify what we can and where that's not possible like jet fuel we can make synthetic hydrocarbons. The carbon could be organic not fossil and the hydrogen could come from nukes or renewables. These fuels could not only work in current cars and planes but also be long term sustainable. The fuel will be expensive but mainly for high priority needs.

At present what looks like biomass energy is highly unsustainable. Visitors sometimes admire a nearby paper mill which is supposedly energy self sufficient from black liquor generated in the Kraft process. Not even close. The log trucks run on diesel, most of the machinery (eg chippers) run off grid electricity, coal trains arrive to supplement the black liquor in the boilers and back in the forest they have to spread synthetic nutrients to get the new trees to regrow. It can't be done without external energy inputs.

The best way to predict the future is to invent it, not extrapolate the past.

The audience clapped--understandably. I'd guess that the normal instinct of an optimistic people is to support invention and inventing our way out of whatever perils we now face. A lot of the wealth that this country has--or had at one time--may well be due to the clause in the Constitution granting patent rights to inventors.

However, I'm wondering if perhaps this same clause on inventions and patents may not be a hindrance on the search for technological fixes for our current problems. If everyone invents in order to patent and make money on the ownership of a patent--and some companies patent everything, even one-line bits of computer code (see IBM)--then the profit motive is behind every move and every innovation.

If we are in mortal danger, shouldn't we discard or suspend these patent rights for a while? Do innovations and patent rights remain operative in wartime? Is this a time when the rights of the "common" good should take precedence over individual good and profit?

Just asking. I don't know. It may be worth exploring--or not.

The comment about white roofs seems a bit strange and dishonest.

The report says a 100m2 roof is equal to 4 tons of CO2 or 40000 tons per square kilometer and if all the worlds roofs and pavements( covering about 400000 square miles) were white it would save 44 GtCO2 a little more than all the CO2 produced by burning fossil fuels for one single year at ~30GtCO2.

So let's paint the roofs white and the we can burn up all those delicious fossil fuels?

The only problem is that we are losing glaciers all over the world; the Alps used to have 1000 square miles of glaciers now it is down to <500. Temperate zone glaciers have lost 50% of their area since 1900. Perhaps in 2100 there will be almost no temperate zone glaciers left. So whatever roof painting gets done will hardly offset for the shrinking natural albedo.

The arctic zone glaciers only now are starting to shrink rapidly. Also the permafrost area is melting fast with runoff increasing by 7% since 1930(setting the stage for huge methane emissions). Emissions from a big Siberian peat bog could be larger than 20 GtCO2 equivalent in methane.

So by all means paint your roof white and your driveway too. But you still have to do the CO2 control stuff.

What percent of electric use is for air conditioning nationwide?

Cool roofs and thermal/PV Solar seem to be a no brain er

I am building a cool roof with water catchment

About 50 years ago a pop-science paper by the Nobel Prize winner (in physics) Petr Kapitsa aligned all technologies of energy production according to one parameter - density of energy flux. Nuclear power was (is and will be) the leader, oil-gas-coal chemical energy - second. Renewable sources are characterized by the density of energy flux about 10 (!) orders of magnitude lower than that for nuclear fission. Therefore, constructions needed to convert original power into appropriate form should be enormous in size and demand excessive investments. There is no way to increase energy flux from renewable source and physics has not changed since the 1960s.

Could you explain what is meant by energy flux in the context of Kapitsa paper or give a link to that paper?

For wind, solar and hydro the energy density is concentrated. With hydro we use dams to give 1000 fold concentration and choose sites with high changes in elevation, with wind, turbine blades capture the energy from a large swept area and we choose sites with extra high wind, with solar we can choose regions with very high solar energy(latitude,clear sky) and we use "collectors" to concentrate the energy into one place.

With nuclear we use mining to select ores with high concentrations of uranium and then concentrate the metal and enrich in U235. With oil be identify natural concentrations and then extract only the oil leaving 99% of the sand or shale in place. ALL are originally diffuse low density resources, technology makes them useful.

Now if you want to imply that renewable energy is too diffuse to use, take the average rainfall and elevation or the average wind speed or the solar energy in one meter^2, but lets then compare the average concentration of oil in the first 10km of the earths crust or the useful uranium energy in granite. As far as I know, a nuclear reactor cannot run on unprocessed( ie not concentrated) granite: whoops I am mistaken, it can, it's called geothermal energy.


Your magnanimity is simply astounding. And no more so then when Khosla’s involved.

Seriously. Why do you always fail to highlight the man’s achievements for want of, dare I say it, gleefully listing his failures?

Look everyone! Khosla’s alternative energy investments (not surprisingly the corn-ethanol projects) are on the ropes, a failure, a money pit!

Just disregard the fact that gasoline partied like it was 1979 or the fact that the Khosla’s Cilion is situated in a bankrupt jurisdiction a.k.a. California; one that is desperately clinging to the edges of a collapsed American financial system – right?

In essence, you are asserting that Khosla and in particular, his stance on ethanol, is “a prime example of the dangers of having someone unduly influencing energy policy.”

You assert as much but fail as usual to mention Khosla’s other endeavours in the energy world i.e. the enzymatic projects, the nanotech projects, the engine & combustion projects, the electrical storage projects and of course Range Fuels.

Now I can’t speak for you on this but for me, if there’s anyone going to unduly influence Chu et al. then it damn well better be someone pushing the envelope on every energy project... everywhere.

But let’s revisit Range Fuels for a tic. Slated for operation in 2010, this cellulosic ethanol facility (commercial by your own standards) was omitted from today's cross-examination. Now why do you suppose that is I wonder?

Let me guess... waiting to strawman that one away as not being cellulosic?

LOL – I outlined for you some time ago exactly how that meme was going to play out in the public arena didn’t I?

That said, I absolutely concur with you here... “If he uses his high level of influence to help put us down the wrong path on energy policy, then what are the consequences of being wrong? They could be severe.”

A very true statement indeed – one that should be dutifully applied to every challenge we face... Anthropogenic Global Warming comes to mind.

Aye, t’was a cold year in Scotland. Colder’n most canna remember.

Not to worry, El

I don't think VK is going to "out-influence" the progeny of John D. Rockefeller.

Not in our lifetimes, anyway. :)

Why do you always fail to highlight the man’s achievements for want of, dare I say it, gleefully listing his failures?

First, you misread matter of fact statements as glee. There is no glee. To the contrary, I hope Khosla is hugely successful. I don't want to see us slip down the depletion curve without some mitigation options.

I am just reporting on issues that are important to me. But I think Khosla's cheerleading has resulted in a lot of wasted time and effort. Time is in short supply. As for his achievements? This is about energy. Can you show me an energy achievement? By that, I don't mean securing government financing of a plant that has yet to operate. I don't mean raising money (which if you watch the interview, he is having a lot more trouble doing these days because there actually haven't been any real achievements). An achievement will be if Range Fuels is profitable in 5 years. Do you want to make a bet on that?

Just disregard the fact that gasoline partied like it was 1979…

Had Khosla been lecturing us on gasoline, I wouldn't have disregarded it. But you seem to think I should have addressed a bunch of issues that weren't part of his interview. Such as…

But let’s revisit Range Fuels for a tic. Slated for operation in 2010, this cellulosic ethanol facility (commercial by your own standards) was omitted from today's cross-examination. Now why do you suppose that is I wonder?

You leave me almost speechless. First, it was omitted because Khosla never mentioned it during his interview. Therefore, there was no need to address it. There were a number of companies that Khosla didn't mention that also were omitted from the "cross-examination."

Further, the fact that you feel that a facility that has yet to produce a drop of product should be addressed as a success is just mind-boggling. Here is a facility that has had to get loan guarantees from the federal government in order to finish their facility, and you are applauding "success"? You truly have a bizarre metric for measuring success. But if Range Fuels fails to deliver – and I don't think for a second that they will be producing economic ethanol in 5 years – then you have an example of exactly what I was talking about: A head fake that caused a lot of time and money to be diverted; time and money that could have been better utilized on things that have far better chances of succeeding.

Let me guess... waiting to strawman that one away as not being cellulosic?

It is no straw man to say that gasification is not cellulosic ethanol. It is just like explaining that a bat isn't a bird. It doesn't matter if you call it one, or Congress defines it as one. A bat will never be a bird. But while I do think gasification will make it long-term, it won't be the Range Fuels approach. So, the only straw men you have to worry about are the ones you dreamed up.

RR (currently in Hawaii working on things that I believe will be long-term sustainable).

Thank you for the reply... you’ll note I was careful to qualify my glee assertion.

On Achievements: It would appear that you are moving the goal posts i.e. the first, commercial cellulosic ethanol plant operating in the US –must now– also meet the benchmark of being profitable. Moreover, I suspect that even IF profitable, the proverbial goal posts would continue their march pending our determination of what profitable is and already alluded to in your response (government subsidization).

On Range Fuels: While I maintain that the enterprise and specifically the production facility are achievements i.e. NREL approved, demonstration-level technologies incorporated into the first, US commercial cellulosic ethanol operation – I would not purport Range Fuels to be a success and I certainly didn’t ‘applaud’ it as one in my response. Suffice to say, IF, from a technical standpoint the Range platform fails, then ethanol production of meaningful contribution in North America is in all likelihood... sunk. (Note: I’ll reserve one or two caveats for future deliberations with you on this statement but I speculate that you recognize the implications behind what I’m saying)

GTL vs. Fermentation: We’ve covered this. Ethanol is and will continue to be defined by its feedstock – not by its production path.

EL (currently in BC representing those who believe what will be long-term sustainable).

well, well well . .. What time is it ?

It would appear that you are moving the goal posts i.e. the first, commercial cellulosic ethanol plant operating in the US –must now– also meet the benchmark of being profitable.

No, to be "commercial" implies that it should be on average profitable (i.e., there can be some unprofitable quarters or even years, but generally profitable). Something that is commercial only with a continued infusion of cash isn't really commercial. That isn't moving goal posts, that's just what is normally meant by commercial. If we define commercial as simply operating at scale, then all sorts of things could be classified as commercial that don't have a snowball's chance of actually operating on their own.

Ethanol is and will continue to be defined by its feedstock – not by its production path.

Apparently we didn't cover it well enough. Not all production paths are equal. By blurring the distinction, some production paths may pull in government funds that they really don't warrant. Gasification is gasification and cellulosic is cellulosic.

Loved your presentation as usual, RR

Are you maybe working on a sustainable way of getting out to the islands? God I hope so! I usually do feel a little guilty about how I get there at least until I'm out of earshot of the airport ;-)

Let me guess... waiting to strawman that one away as not being cellulosic?

Incidentally, someone e-mailed me the following response when they had trouble posting it here.


I concur. Let's discuss this project and invite Range's management and largest private investor to publically participate. OK?

This is a GTL liquid fuels project mis-classified under a 'ligno-cellulosic' label. The initial conversion of cellulose contained in wood chips via thermal gasification (not acid enzymatic hydrolysis) isn't gonna last very long therein. If you read skinny hard-to-locate-details you'll learn that wood chips will soon exhaust themselves in this district and whole new living trees will be needed instead. Same GTL mixed alcohols project will probably switch to using gasified coal or tires as a carbon-bearing feedstock within a year which is very much in the correct direction too.

I just think that certain nameplate biofuels projects have been hunkering and qualifying for gov't subsidies using an overused, little understood buzzword of 'ligno-cellulosic ethanol' for far too long while reaping multi-million dollar grants and loan guarantees actually written for other true ligno-cell processes. Especially when such projects are not ligno-cellulosic at all by the classic bio-bug conversion via longer-term batch fermentation definations.

As "Old Farmer Mac' said above - "Now I will admit right up front that I know next to nothing about the actual manufacture of cellulosic alcohol, but I do know a little about farming and forestry."

VK's particular project under construction in Soperton, Georgia, is nothing like the true definition of ligno-cellulosic conversion of corn stover or cobs which employs extra acidic, extra expensive bio-bugs on it's front-end, is a 7-day batch process vs: 4 day batch with corn, is far less efficient methodology on it's back-end thus producing far less volumes of ethanol than corn kernels per unit volume of feedstock AND finally mother nature's bugs contaminate every third ligno-cell batch. Just ask Iogen. This is what 'ligno-cellulosic' conversion into low volume ethanol actually is dear Farmer Mac. It is something in newfound nomenclature which isn't gonna pencil - but it sure has captivated lots of folks who know absolutely nothing about how this ligno-cell fermentation process physically works...

Robert: Thanks for taking all of your personal time to painstakenly transcribe this particular interview as well as to provide the public with your own opinions as well. A few leaders, lotsa followers herein... And go ahead, be that strawman you are being accused of if and when it suits you! :-)

IBC Advanced Alloys, A.K.A International Beryllium is a company which should be on the radar of anyone with more than a passing interest in energy of the future. They have an on-going project with Purdue University which is hoping to prove that Beryllium can be used in both current and new reactors to dramatically prolong the life of uranium used. Ticker is IB.V.
Another company, International Isotopes ( Ticker INIS.OB) has the technology to process nuclear waste. They both merit looking at IMHO.

RR: thanks for the commentary.

I met with Alex Kimmel at Khosala Ventures last year and he was claiming yields of 1200 gallons per acre per year. This is frankly bunk. I think Vinod's strategy is to pump up companies by spreading media stories and then sell them off before people realize they are science experiments.

Perhaps the investors are starting to figure out that a founder at Sun microsystems may not understand biofuels.

Truth in a quote-box !

Perhaps the investors are starting to figure out that a founder at Sun microsystems may not understand biofuels.

I watched the entire interview - and I felt more nervous afterwards .. all (most) bio-fuel lobbyists have a problem with 'this scaling-thing' - Volume - mass and pace or in one word : Thermodynamics. Also their calculator is never equipped with a EROEI function button, why do they save on their calculators ?

Obviously Khosla is an intelligent computer wizzard, but that does not make him a particularly great philosopher nor realist and the interview proved him quite lousy in both regards, IMHO.