Khosla's Four Steps to Promote Ethanol

CNNMoney.com reports that, speaking at a Cleantech Venture Forum conference in New York City, Sun Microsystems co-founder and ethanol investor Vinod Khosla outlined four steps he said would help the country use more ethanol.

• a government mandate that 70 percent of all cars sold in the U.S. be flex-fuel - which is having the ability to run on gas, ethanol or other alcohol-based fuels - by 2014, and that 10 percent of all major-branded gas stations in the U.S. sell E85, a fuel that contains 85 percent ethanol.
• the current government ethanol subsidy of 50 cents a gallon should be based on a sliding scale corresponding to the price of oil: 25 cents a gallon if oil is at $75 a barrel ranging up to 75 cents a gallon if oil falls to $25 a barrel.
• lifting tariffs on imports of ethanol from Brazil, a move strongly opposed by U.S. farmers, in exchange for increasing corn-derived ethanol in gasoline from 10 to 15 percent, a move he said was supported by some in the agriculture industry.
• it would be up to to industry or the government to pay for these mandates. He said installing the gas pumps would cost something less than a billion dollars and making cars flex-fuel amounts to $35-$100 a vehicle.

"The president loves biomass, the farmers love biomass, even evangelicals love biomass" because it decreases the county's reliance on the Middle East, he said. "As investors we should make this happen because its good for the country."

Comments

[Chuck the Lucky]

"70 percent of all cars sold in the U.S. be flex-fuel - which is having the ability to run on gas, ethanol or other alcohol-based fuels - by 2014, and that 10 percent of all major-branded gas stations in the U.S. sell E85, a fuel that contains 85 percent ethanol."

How difficult would this be? Would it undermine certain green car projects? For instance, would hybrids that run on gas but get better fuel efficiency than ethanol only cars be at a disadvantage? I think that incentives that favor one technology over another might be short sighted.

The sliding scale system might be a good idea. The greatest worry I have for alternative energy is that the oil prices will stabilize and alternatives will face another dark-age like that after the last oil crisis. It seems that only fear and investment will push energy research forward.

"lifting tariffs on imports of ethanol from Brazil, a move strongly opposed by U.S. farmers, in exchange for increasing corn-derived ethanol in gasoline from 10 to 15 percent, a move he said was supported by some in the agriculture industry."

Free trade is great. Anything to reduce tariffs is welcome for global development but I wonder if Brazil will be able to prevent their farmers from cutting down more jungle.

"SWITCH GRASS!!!"

[Engineer-Poet]

Khosla attempts to line his own pockets.  No surprises there.

[C. Scott Miller]

Interesting that he left out taxing the oil companies to pay for new governmental bureaucracies that would be responsible for managing the development of renewable fuels. This is precisely the approach of the $4 Billion tax-scheme called California Prop 87 - for which Khosla is one of the two principal backers.

I, for one, am surprised Khosla has so little faith in VCs and private enterprise to exploit the opportunities represented by ethanol's potential.

A governmental bureaucracy could really be counter-productive - squandering much of the tax income collected while further enabling environmental idealists and special interests to stall the deployment of practical solutions. It's happening already in Sacramento even without the $4 Billion fund.

[Dave]

If something requires that much government support to make it work, does it really work at all?

[david foster]

Why should biomass-based ethanol be privileged over other non-petroleum-based fuels--say, the coal-to-liquids process? Does ethanol production, including all activities, really result in more energy use and pollution than an equivalent amount of coal-derived fuel?

It (corn-based ethanol) certainly has a large built-in political constituency.