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It
isn't often that venture capitalists (VC) stray into anything connected to the
environment. Indeed, their concerns are usually diametrically opposed, since the
VC invests in anything that turns in a profit, while hard-core environmentalists
look to the needs of people at the bottom of the pyramid rather than the bottom
line.
So
it was intriguing to find a casually dressed white polo-necked Vinod Khosla, who
is based in California, giving a formal dinner address at the Delhi Summit on
Sustainable Development, organized by the Energy & Resources Institute
(TERI) in February. He is a partner at Kleiner, Perkins, and Caufield &
Byers, whose clients include such famous brands as America Online, Sun,
Genentech, Amazon, and Compaq. He was a co-founder of Daisy Systems and founding
Chief Executive Officer of Sun Microsystems, where he pioneered open systems.
According to Wikipedia, "Vinod Khosla is a venture
capitalist considered one of the most successful and influential
personalities in Silicon
Valley."
His
subject was "Biofuels: Think Outside the Barrel," which was itself
unconventional. He came straight to the point by declaring that he was talking
about "energy with a different perspective. There are lots of energy
technologies which are small, niche…You don't need oil for cars and light
trucks." His pitch was to switch to ethanol, which is a biofuel, a la
Brazil. It emits 80-90 percent less carbon, which is the main greenhouse gas.
Volkswagen was thinking of not making any more gasoline cars in Brazil, since
ethanol there was less than $US 35 a barrel. Surprisingly, in California, which
is (as a stand-alone) one of the world's biggest economies, there are as many
cars running on ethanol as on diesel today.
His
formula was Flex(ible) Fuel Vehicles or FFVs – in sharp contrast to the
gas-guzzling and environment-unfriendly SUVs, which are ubiquitous in
California. These can switch from gasoline to ethanol and only require minor
modifications: different gaskets and a rubber hose. By relying on ethanol,
Brazil was able to save $US 50 billion on oil imports. It not only saves 40
percent of the petrol used by cars but in the process provides 22 percent more
farm employment. FFVs there have jumped from just 3 percent of the total number
of automobiles to 71 percent in three years.
Biofuels:
Food for Thought
Being
a persuasive VC, who has convinced hundreds of investors to opt for his pet
projects in the past, he was pro-active enough to come up with three issues
which might be obstacles on the path to biofuels. One was the land use. In the
US, the Natural Resources Defense Council, one of the most reputed environmental
bodies, had calculated that by 2050, the US would need to plant crops on 114
million acres to provide all the energy needed for road transport. This is not
as much as it sounds. For example, the US already pays farmers not to
grow soybean on 40 million acres, simply to support them.
In
Khosla's simple arithmetic, with irrigation and other inputs, it was possible to
grow 20 tons of crops per acre with each ton of crop yielding 100 gallons of
ethanol. Thus 50 million acres would generate as much as 100 billion gallons.
Corn was expensive as the choice of crop; it would do only in the short run. He
recommended switching over to a tall grass called miscanthus in the US, which
would yield a higher profit. Khosla mentioned how President Bush had cited
ethanol in his recent State of the Union message.
The
second stumbling block cited by some critics of biofuels is whether farmers
employ more energy (by way of irrigation, mechanization, fertilizer, and
pesticides) in producing these crops than is produced by them. In other words,
an energy audit would reveal, perhaps, that there would be more calories
expended in growing miscanthus than in the ethanol produced. The economic costs
are distorted by the hidden subsidies in growing many crops.
A
California-based company called Ceres had developed biofuel crops which are
tolerant to increased drought, heat, and salinity, all of which phenomena are to
be expected with climate change in future. What is more, the by-product of
producing ethanol was animal feed. As is well known, countries like India export
a substantial amount of animal feed to industrial countries. According to Khosla,
just 6 percent of India's agricultural waste would supply the country's petrol
needs if converted to ethanol.
The
final consideration was the impact on the environment, which he believed was a
win-win situation, since the crops would both sequester carbon and the fuel
would reduce the greenhouse gas emissions. However, this, when also related to
land use, is where Khosla's vision may not apply to developing countries, while
it may make good sense in the US and Europe. The fact is that any conversion of
land to produce ethanol, particularly if it is with crops like miscanthus which
require fertile soil, could only be at the cost of food and fuel wood. In any
poor country, there is a social dimension: you cannot switch from producing
crops for the public good to those which benefit only the minority of car-owners
or industries.
He
noted that the best "biomass belt" was around the equator, which put
developing countries at the top of the potential list. Better than high-input
crops like miscanthus, there is the wonder crop jatropha, which can be
profitably grown on arid zones in India: its fruit yields a biofuel. A
technologist from India's major cement company told this writer at the Delhi
Summit that the company was already experimenting with this crop as a source of
biofuel for its energy-intensive production process, which could yield multiple
benefits.
Khosla,
in the time-honored fashion of an indefatigable champion of a cause, asked a
seemingly heretical question, at the end of his address. What would happen if
around a third of the current world population – 2 billion people – ran cars
with ethanol? That would seem a recipe for catastrophe because it would amount
to a massive diversion of land to a form of anti-social transport and deprive
people of food and other necessities when the world knows that public transport
is the way to go! However, VCs always look to the business proposition implicit
in any such denouement. At an average output of 15 tons of biomass per acre, 1
billion acres would replace all the world's oil. The US by itself has an area
twice as large and, with increasing productivity (and presumably the use of
genetically modified crops), the yield would increase, requiring less acreage.
Any
takers?
**
Darryl D’Monte is the
founder-president of the International Federation of Environmental Journalists.
He is also the chairperson of the Forum of Environmental Journalists of India (FEJI)
and a syndicated columnist and freelance writer. He has published two books:
“Temples or Tombs? Industry versus Environment: Three Controversies”, Center
for Science & Environment, New Delhi, 1985 and “Ripping the Fabric: The
Decline of Mumbai and its Mills,” Oxford University Press, New Delhi, 2002. He
was previously the resident editor of the “Indian Express” (1979-1981) and
of the “Times of India” (1988-1994) in Mumbai. Your emails will be forwarded
to him by contacting the editor at: ScienceTech@islam-online.net.
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