Venture Capitalist and Business Analyst Predict Rapid Expansion of Biofuels Industry, Dramatic Reductions in Carbon Emissions

Vinod Khosla, Jens Riese Deliver Keynotes at BIO’s World Congress on Industrial Biotechnology and Bioprocessing

Busness Wire News Release -- A top venture capitalist and a prominent biotechnology industry business consultant today both said that the biofuels industry is poised for exceptional growth and that ethanol from cellulose appears to be the most promising alternative fuel over the long-term. During keynote speeches at the World Congress on Industrial Biotechnology and Bioprocessing, Vinod Khosla of Khosla Ventures and Dr. Jens Riese of McKinsey & Co. also highlighted the significant reductions in greenhouse gas emissions achievable with ethanol from cellulose. The fourth annual World Congress runs March 21-24 at the Walt Disney World Swan and Dolphin Resort in Orlando, Fla.

In a speech titled “The Role of Venture Capital in Developing Cellulosic Ethanol,” Khosla outlined the range of technologies currently being commercialized to convert cellulosic biomass to transportation fuels. Khosla said that the U.S. Department of Energy’s recent grants to cooperatively fund biorefineries that produce ethanol from cellulose is an acknowledgment that the technology is moving faster than expected. He said that a 100 percent replacement of petroleum transportation fuels with biofuels is achievable, and predicted that ethanol from cellulose technology will be cost competitive with current ethanol production by 2009.

Khosla also stated that ethanol from cellulose can significantly reduce carbon dioxide emissions, even achieving a net gain in greenhouse gas reduction. Khosla is the head of Khosla Ventures, a company that actively invests in breakthrough scientific work in clean technology areas, such as biorefineries for energy and bioplastics, solar, and other environmentally friendly technologies.

Dr. Jens Riese of McKinsey & Co. also addressed the World Congress plenary session with a speech titled “Beyond the Hype: Global Growth in the Biofuels Industry.” Riese predicted that global annual biofuel capacity would double to 25 billion gallons over the next five years and could reach 80 billion gallons – meeting 10 percent of world transportation fuel demand, enough to replace the annual oil production for fuel of Saudi Arabia – by 2020. According to McKinsey & Company’s model, biofuels can economically replace 25 percent of transportation fuel with crude oil above $50 per barrel. He concluded that the race is on to build a biofuels industry and that companies should invest now.

Further, Riese pointed out that ethanol from cellulose is the most cost-effective way of achieving greenhouse gas reductions, following measure to reduce demand for energy. Riese is a partner at McKinsey & Co., a leading global management consulting firm and is a top expert in industrial biotechnology.

“We are excited to see industry leaders echo our long-held enthusiasm and optimism about the exciting opportunities presented by ethanol from cellulose,” said BIO’s Brent Erickson. “Indeed, we are optimistic about the opportunities presented from multiple sources of ethanol as a means to reduce reliance on fossil fuels and our environmental footprint.” BIO supports the production of ethanol from all feedstocks. Agricultural biotechnology is helping to increase corn yields, while industrial biotechnology is helping to convert corn starch and crop residues into ethanol more efficiently. With ongoing advances in biotechnology, biofuels can help America meet nearly half its transportation-fuel needs by the middle of this century.

The World Congress is hosted by the Biotechnology Industry Organization (BIO), the American Chemical Society, the National Agricultural Biotechnology Council, the European Federation of Biotechnology, BIOTECanada and EuropaBIO.

About BIO

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the annual BIO International Convention, the world’s largest biotechnology conference and exhibition

Comments

[GreyFlcn]

Well of course Kholsa "predicts" biofuel expansion. Since they are funding so many of them.

Thats like Burger King predicting the success of their new Hamburger.

Real issue is, compared to say, solar panels. Terrestrial crops are only 1-2% effecient at capturing sunlight.

And thats before you even turn it into a biofuel. Which loses about 62% of the energy. (Ficher Trophe Fuel)

And about a 12% lose of energy for travel. (On average)

And then if it's used in a gasoline engine, which loses about 80% of the energy. (Gasoline Engine)

At best, we're talking somewhere along the lines of 0.14% sunlight conversion effeciency.

_

Pretty pathetic compared to 35% effecient solar thermal arrays.

[Tony Belding]

I'm a fan of electric cars, so defending ethanol doesn't come easily to me. However, I will observe that some things would be hard to power from batteries: construction machinery, farm machinery, "big rigs", military vehicles, and aircraft. So yeah, I can see a possible role for biofuels going way into the future.

A better question might be ethanol or biodiesel? If the production of biodiesel from cultivated algae can be mastered, it could have significant advantages over ethanol.

The current boom in ethanol today in the USA is unhealthy. Refineries (i.e. stills) are being built like mad, so there will soon be overcapacity for the amount of feedstocks available, the government is subsidizing the stuff, corn prices have already doubled, car makers are using flex-fuel vehicles to cheat the CAFE standards. Something has to give. When it does, it may give ethanol a black eye that will take some while to recover from.

[Kevin]

ethanol from cellulose is perhaps one of the least known producer of ethanol. I would love to see and hear more from companies who produce ethanol this way.

[Cervus]

Grey:

The overall energy conversion efficiency does not matter as much as ease of use and portability. How long will it take for my EV's batteries to charge on solar? A few hours? I can refuel my car with gasoline in less than five minutes and drive 400 miles right after.

And of course the sun only shines part of the time.

Don't overlook the convenience factor.

[GreyFlcn]

Well Algae is the best,
But even Algae is only 6-8% efficient at converting sunlight into energy.

Which given a best case scenario, when used in a turbo diesel engine.

8% efficient conversion of sunlight
62% loss for fisher-trophe refining
12% loss for transport
59% loss for the diesel engine

8*0.38*0.88*0.41 = 1.096%

Pretty pathetic compared to 10-35% efficient solar.
_
And it gets even worse when Algae isn't going to be used.

Taxpayers end up getting charged to subsidize the cost of gasoline.

In addition everyone gets forced to pay massive prices for food crops.

All of this then ends up being corporate welfare toward the farm middleman giant Archer Daniels Midland.

Might even be counterproductive if they tear down rainforrests to grow low carbon fuels.....

Lastly, even any other fast ground terrestrial feedstock is going to be an invasive species, and screw with biodiversity.

_

All in all,
Why should we be subsidizing the status quo?

Subsidies are supposed to be investments for innovation.

[GreyFlcn]

Oh I agree with the portability factor

Trick is you have batteries coming out which can recharge in under 10 minutes, and drive for hundreds of miles.

If we have so much money to be tossing around, wouldn't it make more sense to advance those.

_

Hell, assuming CO2 is "free" from coal fired powerplants.

I wonder what the efficiency of
1. Electrocuting water into oxygen and hydrogen
2. Reforming the CO2 and H2 into a liquid fuel

Would certainly skip over a lot of the unnecessary steps of creating a hydrocarbon fuel.

[Cervus]

Trick is you have batteries coming out which can recharge in under 10 minutes, and drive for hundreds of miles.

If we have so much money to be tossing around, wouldn't it make more sense to advance those.

I've been watching that technology with great interest. But unless it's cheap enough for a reasonably-priced car or mini-SUV, it won't be able to compete economically with liquid biofuels.

Just because X technology is more energy efficient at converting sunlight it does not follow that X technology is also more economical

[GreyFlcn]

Well when you say reasonably priced.
At least take into consideration the drastically reduced fuel and maintenance costs of electric vehicles.

For instance, electric offers the equivalent of 9cents per gallon on "fuel" costs.
And the maintenance of the car is almost nonexistent.

But then again, if EEStor pans out, we'll get the best of both worlds :)

Since they are claiming the same cost scale as lead acid batteries, but with massive charge density.

[GreyFlcn]

Oh yeah, duh.

I forgot about the more logical path.

Make an electric SUV with 40 mile range
With a backup gasoline generator that gets 50mpg.

Takes a few hours to recharge, but the cost of fuel is only 9cents per gallon.

_

Unlike a Prius, which is a parrallel hybrid which has a full gasoline, and full electric transmission. It switches back and forth depending on speed.

A serial plugin hybrid would basically be an electric car, with only an electric drivetrain. And as a backup, it would have a gasoline Generator to provide more electricity.

_

So for the long haul, you get uber gas mileage.

For the daily grind, you get almost free mileage.

[Nathan]

Ethanol is purely a political stunt to appease farmers and enviro nuts. Ethanol may produce slightly fewer CO2 emissions per gallon, but it also contains less energy, forcing you to burn more gallons over a given distance. In the long run the difference is trivial compared to electric vehicles. The pendulum is shifting. Many, many articles are pointing out the wasteful nature of ethanol, and even in the maximum streamlined theoretical situation it is still woefully inefficient.

[Paul Dietz]

Ethanol may produce slightly fewer CO2 emissions per gallon, but it also contains less energy, forcing you to burn more gallons over a given distance.

So what? If the ethanol is sufficiently cheaper -- and Bluefire claims a cost of slightly over $1/gallon from low-quality cellulose feedstocks -- then this means the vehicle cost no more to drive per mile and just needs to have a somewhat larger fuel tank to achieve a given range.

[GreyFlcn]

re: Paul Dietz
Trick there being.

Would it still be profitable without the Volumetric Ethanol Excise Tax Credit?

Since thats obviously not sustainable.

I've seen some figures tossed around that that would be something like 350$ billion yearly if we met that 2017 renewable fuels mark.

[Ruben Willmarth]

I agree completely that electric is the direction we need to head, but we have trillions of dollars tied up in our existing vehicles, over 99% of which use gasoline. Ethanol can be blended to 10% in all cars, and 85% for the FFV's. This buys us time, to deal with oil supply issues, and to get electrics on the road. Even if all Mfr's were to magically switch to electrics tomorrow, the ~16.5 Million cars sold last year would be on the road for the next 15 years. Remember Ford's experience: When they decided to triple production rate on the Escape hybrid, they were held to approx. 20% for a while since their supplier of transmissions maxed out. (http://mixedpower.com/modules.php?name=News&file=article&sid=717 )
This will happen for all kinds of parts & materials as we go through a complete paradigm shift in transportation & energy. It's gonna be a bumpy road, but Ethanol can play a part to help get us there, so let's not let the perfect be the enemy of the good.

[GreyFlcn]

Well at the very least, Butanol or something more similar to gasoline would be far more ideal than Ethanol.

Ethanol can't be shipped through existing pipelines, and using it in existing cars is problematic in high doses.

What would probably be more ideal is Butanol-16%

Since it carries the same ammount of renewable energy content as E20, but with the backwards compatibility of E10.

_

But if we're designing NEW cars.
Then focusing on biofuels is rather dumb.

Efficiency, and better drivetrains alone would yield far better carbon and oil barrel reductions.

Hell, early 2008 they are gonna start releasing diesel cars that challenge a Prius in mileage.

Although Prius model 3 coming out in 2009 is supposed to offer more than double it's current mileage due to better batteries.

_

But I guess the real question in all this.
Given the massive amount of dollars that would be put toward biofuels.

Could that same amount of dollars achieve a greater carbon reduction else how?

Especially when biofuels are basically just indirectly subsidizing the cost of gasoline,
with a large glut of it ending up as corporate welfare to ADM.

For instance, a car that gets 2x better mileage would be superior over a car that runs on 100x switchgrass ethanol.

Biofuels seems to be an issue of merely raising supply.
When what we really need is a decrease in demand.

[amazingdrx]

Conversion to serial plugin hybrid is the way to go. Replacement of all internal combustion vehicles will take too long and would cost too much.

Fuel farming is no solution to GHG climate change. In fact it will make it worse.

[GreyFlcn]

You mean serial hybrids for new cars, right?

Serial hybrids for old cars would be rather.... akward to say the least.

The transaction cost would be way too high.

[Peter]

I saw an interesting aricle a few days ago about using hydrogen from cheap overnight wind (abundant in the farm belt) in a biorefinery. Biofuels sythesized with hydrogen carry a higher BTU per gallon, and triple the output of the refinery for the same feedstock.

[GreyFlcn]

Well duh, thats because biofuels, and liquid fuels in general are hydrocarbons.

A mixture of hydrogen and carbon.

All they are doing is taking the excess CO2 and mixing in more hydrogen to create more hydrocarbons.

It's basically the same process of getting hydrogen from natural gas, except in reverse.

[amazingdrx]

Uhh no, conversion is fairly simple. it could be done on mass production lines with mass produced parts.

Certain models for a few weeks then switch to another model. A mass produced electric motor with controller replaces the engine and transmission. A battery pack and charger, then a backup generator is installed.

I will opt for a diesel generator so I can use waste biodiesel from cooking grease. Eventually sofcs maybe available for backup.

The mass conversion process could be setup as a contract deal where onership of the vehicles is not transferred, individual owners, renewable energy coops that l;ease vehicles to members, and car dealers would actually own the cars converted. Maybe even government agency vehicle fleets could be converted? NYC is getting cabs converted.

[Engineer-Poet]

Peter:  I have written an analysis of that Purdue paper on H2CAR.  It's scheduled to appear on The Oil Drum on Tuesday.

[Engineer-Poet]

And now it's up. H2CAR: Another blind alley.

[amazingdrx]

Good job comic! Keep borrowing my ideas, imitation is the sincerest... whatevah,hehey

[Engineer-Poet]

You'd have to have ideas first.

[Kit P.]

EP, it would appear that your idea is getting its share of attention for R&D dollars even though it will again be another blind alley.

[Saif Ishoof]

Vinod Khosla is spot on about the US DOE Grant being a validation of cellulosic ethanol technology as the future for Biofuels Sector. This wake up-call should propel state lawmakers in agricultural state's to increase their own funding of state projects in this arena to increase the competitivenes of their farmers. At present state level funding remains marginal and limited to endeavors which are of a purely academic and non-real world nature. Florida does stand out in this respect with successive administrations emphasizing the importance of funding for not only research but productive capacity. - Saif Ishoof

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