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Venture capitalist backs biofuel, says country can go down petroleum-free path
Stanford (Univ) Report ^ | 5/10/2006 | ADITI RISBUD

Posted on 05/10/2006 5:51:48 AM PDT by Dark Skies

On the search for alternative fuels, Silicon Valley entrepreneur Vinod Khosla says the answer is clear as gin.

Delivering the keynote address at a Stanford Institute for Economic Policy Research forum, titled "Prosperity Despite Expensive Oil: Energy Solutions for California, America and the World," on April 21, Khosla endorsed ethanol technologies, which produce "biofuels" out of switchgrass, wood chips, corn and recycled fast food oil.

"Within the next five years, we can be irreversibly down a trajectory that doesn't need any petroleum in this country," Khosla said. "We can do this in all of the United States for less than half a billion dollars."

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."

Khosla said those who own fewer than 25 fuel stations would not be included in the 10 percent of stations required to distribute ethanol, to keep "mom and pop" gas stations from bearing the burden of ethanol distribution.

"There are lots of things that make sense but will never happen because the interest groups are not aligned," Khosla said, addressing questions from the audience about "greener" alternatives such as solar, wind or hydrogen power.

"Biofuel is the only viable solution," he said. "It's a faster and lower-risk path to a renewable future." Scientific consensus says global climate change is due to an accumulation of greenhouse gases such as carbon dioxide in the atmosphere. According to the Intergovernmental Panel on Climate Change, fossil fuels like gasoline contribute to two-thirds of this buildup. This points to the need for a cleaner energy source that can be brought to consumers quickly.

Khosla is co-chairing a November ballot initiative in California with Hollywood mogul Stephen Bing to reduce petroleum consumption. By taxing oil production in California, the nation's third-largest oil producing state, the initiative would create funds to boost alternative fuel production.

"This is not a green objective," Khosla said. "This is an economic objective." An alternate fuel source could help curb inflation, create tax revenue and new jobs, lower the risk of costly military interventions abroad and ultimately reduce U.S. dependence on foreign oil.

Considered one of Silicon Valley's most influential venture capitalists, Khosla earned an MBA from Stanford in 1980 and went on to co-found Sun Microsystems with Scott McNealy, Bill Joy and Andy Bechtolsheim. In 2004, he began his own venture capital firm, Khosla Ventures.

Experts speaking about topics spanning from energy to economics preceded Khosla's keynote address. Stanford Professors Michael Boskin, Lawrence Goulder, Franklin Orr Jr., Geoffrey Rothwell, James Sweeney and Frank Wolak were among the 13 speakers, who also included California State Controller and gubernatorial candidate Steve Westly.

Ethanol is the best way to ensure cheaper fuel, create secure and diversified energy sources and maintain farm economies, Khosla said. "Even though they won't acknowledge it today, oil companies are best equipped to build biorefineries on a large scale." Some of the "more progressive" companies, like BP and Shell, are aggressively looking at ethanol, he added.

"My hope is that the oil companies will get convinced that they need to be in the business," Khosla said. "I believe at some point they will be investing. And that would be a wonderful thing."


TOPICS: Business/Economy; Extended News; Foreign Affairs; News/Current Events; US: California; War on Terror
KEYWORDS: alternatefuel; alternatefuels
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1 posted on 05/10/2006 5:51:52 AM PDT by Dark Skies
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To: Dark Skies
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 think this has some merit, but only if the tax is on imported oil and not domestic sources.

If someone can figure out how to extract oil from shale (for example) inexpensively, they should be able to sell it for whatever the market will bear.

Imported oil is a distinctly different animal, since it is price-manipulated already by OPEC.

JMHO...
2 posted on 05/10/2006 5:56:54 AM PDT by CertainInalienableRights
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To: Dark Skies
I love the idea of alternative fuels, but reality demands certain questions be answered before emotion gets the better of us.

What is the energy equation for these fuel sources? How much energy does it take to produce them versus making gasoline from oil? How much energy in the final product versus gasoline? At what price per barrel of oil do they become more cost effective than oil?

3 posted on 05/10/2006 6:00:54 AM PDT by GBA
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To: Dark Skies
Nothing new here.

The Kennedys have been running their cars on alcohol for some time now.

4 posted on 05/10/2006 6:03:14 AM PDT by N. Theknow (Kennedys - Can't drive, can't fly, can't ski, can't skipper a boat - But they know what's best.)
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To: Dark Skies
Image Hosted by ImageShack.us

It's called a Flux Capacitor and Doc Brown already thought of it. (:^D)

5 posted on 05/10/2006 6:05:15 AM PDT by WideGlide (That light at the end of the tunnel might be a muzzle flash.)
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To: Dark Skies
Khosla is co-chairing a November ballot initiative in California with Hollywood mogul Stephen Bing to reduce petroleum consumption. By taxing oil production in California, the nation's third-largest oil producing state, the initiative would create funds to boost alternative fuel production.

Pure guano. It is basically a tax to "research" what has already been done or is being done by either the private sector or a private/government partnership. Anytime you get Hollywood involved, you get crap.
6 posted on 05/10/2006 6:07:47 AM PDT by P-40 (http://www.590klbj.com/forum/index.php?referrerid=1854)
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To: GBA
Here's a link regarding the economics of producing (growing/harvesting) switchgrass. I will try to find a link on the economics of converting it to fuel.

http://www.agecon.uga.edu/~caed/Pubs/switchgrass.html
7 posted on 05/10/2006 6:08:28 AM PDT by Dark Skies
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To: Dark Skies

What are the fertilizer and harvesting and processing costs of this?


8 posted on 05/10/2006 6:09:24 AM PDT by Fitzcarraldo
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To: Dark Skies

Bump


9 posted on 05/10/2006 6:12:18 AM PDT by Darnright (You knew the job was dangerous when you took it, Fred.)
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To: Fitzcarraldo

See post #7 for link.


10 posted on 05/10/2006 6:18:45 AM PDT by Dark Skies
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To: Dark Skies
"""One of the important concerns about wide-scale development of biodiesel is if it would displace croplands currently used for food crops. In the US, roughly 450 million acres of land is used for growing crops, with the majority of that actually being used for producing animal feed for the meat industry. Another 580 million acres is used for grassland pasture and range, according to the USDA's Economic Research Service. This accounts for nearly half of the 2.3 billion acres within the US (only 3% of which, or 66 million acres, is categorized as urban land). For any biofuel to succeed at replacing a large quantity of petroleum, the yield of fuel per acre needs to be as high as possible. At heart, biofuels are a form of solar energy, as plants use photosynthesis to convert solar energy into chemical energy stored in the form of oils, carbohydrates, proteins, etc.. The more efficient a particular plant is at converting that solar energy into chemical energy, the better it is from a biofuels perspective. Among the most photosynthetically efficient plants are various types of algaes. The Office of Fuels Development, a division of the Department of Energy, funded a program from 1978 through 1996 under the National Renewable Energy Laboratory known as the "Aquatic Species Program". The focus of this program was to investigate high-oil algaes that could be grown specifically for the purpose of wide scale biodiesel production1. The research began as a project looking into using quick-growing algae to sequester carbon in CO2 emissions from coal power plants. Noticing that some algae have very high oil content, the project shifted its focus to growing algae for another purpose - producing biodiesel. Some species of algae are ideally suited to biodiesel production due to their high oil content (some well over 50% oil), and extremely fast growth rates. From the results of the Aquatic Species Program2, algae farms would let us supply enough biodiesel to completely replace petroleum as a transportation fuel in the US (as well as its other main use - home heating oil) - but we first have to solve a few of the problems they encountered along the way. """

The University of New Hampshire has a very interesting site on comparisons, and they are looking at the problem differently than the midwest farmers are.

Algae biofuel

11 posted on 05/10/2006 6:21:50 AM PDT by Abathar (Proudly catching hell for posting without reading since 2004)
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To: Dark Skies

Increasingly, I am starting to believe that a better solution than ethanol is electric vehicles, or at least they will be if we can get batteries that are cheap enough, light enough, and have sufficient storage capacity for an operating range and speed comparable to conventional autos. Once we have that just build nuclear plants to meet the higher power demand. Problem solved.


12 posted on 05/10/2006 6:25:34 AM PDT by JamesP81
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To: All
This blurb is from an Iowa State study (the info in this site was not dated)...

Ethanol from Cellulose (e.g. switchgrass or corn stover)

The energy balance from corn, then, is slightly positive. However, ethanol can also be derived from another source, namely, cellulosic feedstocks such as corn stover or switchgrass. In this case, the energy balance is much improved, as shown in Table 1 of this paper by McLaughlin and Walsh. Their data show that while the energy gain from corn grain is 21%, the energy gain from converting switchgrass to ethanol is 343%! The downside, of course, is that conversion technologies are not ready for primetime yet, as shown in the the USDA-DOE study mentioned above--the cost per gallon of ethanol from cellulose fermentation is about $1.50.

Source: http://www.public.iastate.edu/~brummer/ag/biomass2.htm


13 posted on 05/10/2006 6:26:50 AM PDT by Dark Skies
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To: Abathar

http://www.hemp4fuel.com/nontesters/hemp4fuel/main.html


14 posted on 05/10/2006 6:27:14 AM PDT by eyeamok
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To: GBA
"How much energy in the final product versus gasoline?"

Less than gasoline.

15 posted on 05/10/2006 6:31:12 AM PDT by cake_crumb (Leftist Credo: One Wing to Rule them All and to the Darkside Bind them)
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Though the idea of runing a car on gin must have merit. Pat's been running his car (into walls and other cars) on alcohol for quite a few years now. He might actually get some decent fuel mileage if he'd quit using obstacles to stop his car and learn to use his brakes instead....


16 posted on 05/10/2006 6:33:50 AM PDT by cake_crumb (Leftist Credo: One Wing to Rule them All and to the Darkside Bind them)
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To: N. Theknow
"The Kennedys have been running their cars on alcohol for some time now."

Darn, ya beat me to it.

17 posted on 05/10/2006 6:34:37 AM PDT by cake_crumb (Leftist Credo: One Wing to Rule them All and to the Darkside Bind them)
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To: JamesP81
I agree that nuclear plants are a big part of the solution. I am optimistic that we are about to turn a corner regarding our reliance on foreign oil. If oil remains above $70-80 a barrel, the breakeven for many other technologies tips into positive territory and once they become attractive to the market, their cost of production will begin to improve vis-a-vis oil.

By the way, I like this VC's idea of putting a tariff on imported oil to prevent manipulation by OPEC.

18 posted on 05/10/2006 6:36:18 AM PDT by Dark Skies
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To: Dark Skies
"I agree that nuclear plants are a big part of the solution."

Agreed, but the problem is implimenting it. It's part of President Bush's energy policy, but an amazingly diverse number of "no nukes-NIMBYs" special interests keep closing the door on building more.

19 posted on 05/10/2006 6:40:15 AM PDT by cake_crumb (Leftist Credo: One Wing to Rule them All and to the Darkside Bind them)
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To: Dark Skies
By the way, I like this VC's idea of putting a tariff on imported oil to prevent manipulation by OPEC.

Agreed. And I think one of technologies we should also be looking at is the conversion of coal into synthetic oil. If we go to nuclear for power production, it frees our coal up for fuel.
20 posted on 05/10/2006 6:43:27 AM PDT by JamesP81
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