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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Wednesday, October 04, 2006

FAO's new vegetable oils statistics

The UN's Food and Agriculture Organisation (FAO) recently launched its new statistical information system on global agricultural production, FAOStat. It is the first revision of the system in more than a decade. “We have redeveloped FAOStat to better serve our users and give them more time for analysis,” the Director of FAO’s Statistics Division, Haluk Kasnakoglu said. “The new FAOSTAT consists of an integrated core database and satellite databases feeding and supporting it. The thematic databases cover areas such as agricultural production, consumption, trade, prices and resources,” Mr Kasnakoglu also said.

The new FAOSTAT is already available from the FAO website. It comes with complete global coverage, cross-domain integration, a fully refined user interface and increased data transparency. A new national version, CountrySTAT, has been under development and is being released in a score of pilot countries. It will offer a two-way bridge between national and international statistics on food and agriculture.

10 million records downloaded every day
FAOStat is currently the world’s largest and most comprehensive statistical database on food and agriculture. It contains over 1 billion data points, 40 million of which are updated annually. The current core of FAOSTAT contains a full matrix of integrated and compatible statistics coverage of 200 countries, a period of 15 years, and more than 200 primary products and input items. The FAOSTAT site receives over 10 000 daily hits and 10 million records are downloaded every day. “This is a twenty-fold increase just over the last 5 years,” Mr Kasnakoglu indicated.

Oils, oil seeds, cakes, meals and protein
We use the FAOStat database often to learn more about the bioenergy potential of a country. One series of data we look at is that of vegetable oil production, to get an overview of the biodiesel production potential (for example, we are analysing the differences in palm oil yields between a highly productive country like Malaysia, and Central African countries; we see that African plantations yield much lower, because of several reasons (bad maintenance, low fertilizer use, low press yields, and so on). This leads us to conclude that old plantations might be replanted with new high-yielding palms, which would boost output. This potential in Africa is large. So without expanding the hectarage, and without new deforestation, old plantations can be replanted and yield much more than they currently do).

In the earlier version of the statistical system, it was difficult to compile one's own databases on this specific topic because data were fused in combined records. In the new version, an entirely dedicated section on oils has been included, where different production indicators are seperately presented. The "Oilseeds, Oils, Fats, Cakes and Meals" database lists yearly maintained entries on gross exports and imports, on indigenous exports, and on production, for the following oils and byproducts (this is a non-exhaustive list): castor beans (oil), coconut (oil, copra meal, copra protein), cotton seeds (cottonseed oil, meal, protein), groundnuts (oil, cake, protein), hempseed (oil), linseed (oil, cake, protein), maize (oil), mustard seed (oil, meal), olive (oil), palm fruits (oil), palm kernels (oil, cake, protein), poppy seed (oil), rapeseed (oil, cake, protein), rice bran (oil), safflower (oil, cake, protein)sesame (oil, cake, protein), soya (oil, cake, proteine), stillingia (oil), sunflower (oil, cake, protein) and tung (oil). Added to this are specialty oils and extracts, plus data on animal oils, meals and cakes. The data are available for all countries, and start from the year 1993. A subsection is devoted to oil seeds with records on crush capacity and rates, imports/exports and production [entry ends here].
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International roundtable looks at building the world's largest dam in Congo

Earlier we sketched the huge but unrealised potential of the Inga dam on the Congo river in the Democratic Republic of Congo. Since the 1970s, engineers have been dreaming of building a dam at the natural rapids some 100 kilometres downstream of the capital Kinshasa. In theory, the 'Grand Inga' would be the world's largest. With its 42,000MW capacity it would be bigger than the Three Gorges (18,000MW) and the Itaipu (14,000MW) combined. The dam could power Africa out of energy poverty, and would even sell excess electricity to Europe and the Middle East.

We referred to the Inga project in the context of biofuels, for a clear reason. The countries bordering the Congo river - the Republic of Congo, the Central African Republic and the Democratic Republic of the Congo - are all potential biofuels superpowers. The Congo river would be the main transport hub bringing biofuels and biomass downstream to Kinshasa, where the green feedstocks would be converted into finished products, notably liquid fuels. But the conversion of biomass requires energy itself, which is why Inga is so important: abundant and cheap electricity would make Congo-basin biofuels very competitive and ready for export to the world market. Of course, for the time being this is a futuristic scenario and much has to be done to turn it into a reality (earlier post).

The first step is being taken, though. Some of the continent's major financial and political bodies are organising an international round table in Johannesburg, South Africa, from October 5-6 in order to arouse donor interest in the hydroelectric potential of the Inga in the Nkokolo valley in the DRC. The African Development Bank (ADB), the African Union (AU), and the the New Partnership for the Development of Africa (NEPAD) are the main organisers and have summarized the objectives of the round table as follows:
  • to mobilize development partners’ support for the development and exploitation of Inga hydropower potential
  • to inform donors, investors and potential consumers of the potential of the hydroelectricity project to provide enough power to meet energy needs and requirements of DRC, a large number of African countries, as well as provide surplus energy that can be exported to Europe and the Middle East
  • to register declarations of interest from investors and potential clients to enable effective and planned development of the Inga
  • to seek the views and input of development partners and all parties (including NGO's and civil society organisations) interested in the project into the orientation of a planned feasibility study for further development of the Inga Hydropower Site.
With the advent of NEPAD and the promise of regional integration it brings with it, and with rising global energy prices, the prospects for the development of the Inga are brighter today than they have ever been and interest in further developing the site is stronger:
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The African Development Bank carried out a study between 1993-1998 to evaluate the feasibility and viability of power interconnectivity between the Inga in DRC, Egypt, the Central African Republic, Chad and Sudan. The World Bank has just completed a study on the rehabilitation of the existing infrastructure, and the ADB is planning a holistic study that will look at the viability of further development of the site.

More than 60 representatives from governments, international organizations, public sectors, private sector, donor agencies, development partners, NGOs and the civil society are expected to participate in the round table.

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France develops 'super maize' for biogas

We are actively following the developments on the front of biogas technology (here, here and here) because the green gas has many advantages over liquid biofuels (earlier post). In Europe, a lot of work is going on, with Scandinavian countries investing in a biogas infrastructure for cars, whereas in Central Europe (mainly Germany and France), the gaseous biofuel is becoming a prime feedstock for the generation of CO2-neutral electricity.

Biogas (biomethane) can be made from the anaerobic digestion of agricultural, household and municipal waste, or from organic industrial residues such as abbatoir waste. More and more, though, dedicated biomass crops are being used as a biogas feedstock (research info below). In Germany, energy crops for the production of biogas already make up 10% of the entire energy crop hectarage. In France, a special 'giant maize' variety [*.french] has now been developed solely for methanisation, by the Arvalis Institut du Végétal, near Rennes.

The maize is a cross between Peruvian highland varieties and continental European varieties. The Peruvian maize is adapted to the harsh climatic conditions of the Andes mountains, but when crossed with his European counterpart, and cultivated in the mild climate of the continent, the maize turns out to grow extremely fast ("in Europe, they literally explode" as one researcher has it). The hybrid produces very high levels of biomass, with a dry matter yield of around 30 tonnes per hectare.

The maize, is not suitable as a fodder, because, as researcher Joël Thierry explains "forage maize has a high cellulose content, whereas the biogas maize is starch-rich. This maize is dedicated to the production of biomethane only". The grain yield of the Euro-Peruvian super hybrid isn't exceptional, but its stalks and leaves are all the more so.

Arvalis is now working on reviving a maize variety with low lignin contents which it developed earlier (lignin is the 'woddy' and 'fibrous' part of plants, which are least degradable.) Unsuitable as a forage crop, it finds a new life as a dedicated energy crop. As Joël Thierry says, "the new maize varieties are also highly efficient in recycling and fixing nitrogen, which decreases fertilizer requirements and which ups their energy balance."

The enthusiasm for biogas in France is due to active government support, with a regime allowing producers to feed the electricity they generate into the national grid:
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They get a good compensation for it, because the CO2-emission reductions value of the green gas is taken into account. The national electricity company, Electricité de France, has set the price for this green electricity twice as high as that of regular electricity. Farmers are obviously jumping on the opportunity.

This price regime allows farmers to difversify their revenue sources. Biogas installations are fairly simple and not too capital intensive. A digester is basically a big pit where the maize (and other substrates) are mixed, heated and then left to degrade by bacteria. Compare it to a simple artificial stomach of a cow, with an electricity generator attached to it at the end. After 20 days of fermentation, the producer obtains biogas with a methane content of around 60-70%, CO2 and a solid matter rich in organic matter which makes for a green fertilizer. A liquid with a high ammoniac content (feedstock for N-fertilizer) is also obtained as a byproduct.

More information:

Le magazine agricole des grandes cultures: Un maïs géant pour faire du méthane - Oct. 1, 2006

Arvalis Institut du Végétal: Institut du Végétal prépare le maïs du futur: faisons confiance à l'innovation - Sept. 21, 2006

Thomas Amon, Vitaliy Kryvoruchko, Barbara Amon, Werner Zollitsch, Erich Pötsch: Biogas production from maize and clover grass estimated with the methane energy value system - [*.pdf] Department of Sustainable Agricultural Systems, Division of Agricultural Engineering, University of Natural Resources and Applied Life Sciences, University of Vienna.

Pia Mähnert, Monika Heiermann, and Bernd Linke: Batch- and Semi-continuous Biogas Production from Different Grass Species,[*.pdf] Leibniz-Institute of Agricultural Engineering Potsdam-Bornim, Agricultural Engineering International: the CIGR Ejournal. Manuscript EE 05 010. Vol. VII. December, 2005.

Annimari Lehtomaki: Biogas production from energy crops and crop residues [*.pdf], Dissertation, Jyvaskyla Studies in Biological and Environmental Science (163), Faculty of Mathematics and Science, University of Jyvaskyla, 2006.

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Central African states to enact science plan

Central African countries have the potential to become bioenergy and biofuels 'superpowers'. However, for this to happen, strong scientific, technological and policy frameworks have to be in place, which analyse and steer the development of this sector. After all, biofuels and bioenergy are riddled with questions about sustainability, which only science can analyse in depth.

This scientific framework is gradually taking shape now, when Central African countries' position on science and technology was brought in line with that of the rest of the continent last week. Science ministers from the region who met in Cameroon on 26-27 September said they would implement Africa's Science and Technology Consolidated Plan of Action [*.pdf].

The plan was endorsed last September (see Support urged for US$160m plan for African science) and will be the focus of discussions at the next African Union summit in January 2007. You can participate in the lively discussions at the 2007 AU Summit discussion group on science which has an ongoing debate about this plan, and about the challenges of science in Africa. (We opened a discussion there about the urgent need for sustainability planning and for more research into the potential and risks of biofuels and bioenergy in Africa. See also: Biosciences facility for east and central Africa opens).

Central African nations have so far lagged behind other countries in implementing the plan. By contrast, the Southern African Development Community has met several times to agree ways of enacting it, and according to the Cameroon Tribune, West African countries plan to meet next month to agree their strategy.

At the close of last week's meeting Cameroon's minister of scientific research and innovation Madeleine Tchuinte said Central Africa was ready to follow the plan.

John Mugabe, scientific advisor to the New Partnership for Africa's Development (NEPAD), said: "The emphasis was on countries starting to put in place science and technology policies and strategies" with the support of the African Ministerial Council on Science and Technology (AMCOST):
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He said the Central African ministers also promised to invest and contribute to national, regional and continental science and technology programmes.
This, said Mugabe, will eventually take place through a new African Science and Innovation Facility (see Africa-wide facility to fund science takes shape). But even before this is created, countries will contribute to creating regional 'networks of excellence'.

Cameroon was applauded for the example it set earlier this year when it gave US$100,000 to a regional biosciences facility launched in 2004.

The ministers chose the Central Africa Republic, Congo and Equatorial Guinea to represent the region at AMCOST and agreed to meet annually to monitor progress.
Other resolutions included creating a database of scientists in the region to help build collaborative projects, and developing intellectual property regimes to support the use of science and technology for development.

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Vinod Khosla: My big biofuels bet

The road to America's energy independence starts in a cornfield in Nebraska. Wired Magazine lets venture capitalist Vinod Khosla, founder of Sun Microsystems, explain why he’s betting on biofuels.

It may surprise you to learn that the most promising solution to our nation’s energy crisis begins in the bowels of a waste trough, under the slotted concrete floor of a giant pen that holds 28,000 Angus, Hereford, and Charolais beef cattle. But for some time now, I’ve been searching for a renewable fuel that could realistically replace the 140 billion gallons of gasoline consumed in the US each year. And now I believe the key to producing this fuel starts with cow manure – because this waste powers a facility that turns corn into ethanol.

I’m standing on a grassy hill in the middle of an 880-acre commercial feedlot just outside Mead, Nebraska, which is a long way from my home turf of clean labs and wood-paneled conference rooms in Silicon Valley. In front of me are four open-air cattle sheds. Each is the width of a giant barn and a full half-mile in length. From up here, they look more like jumbo-jet landing strips than animal pens. Beyond the sheds are several hundred acres of cornfields, from which much of the animals’ feed is harvested.

It may look like a typical, if huge, cattle feedlot – but for the glittering white four-story structure below that resembles the Centre Pompidou in Paris. Indeed, until recently this operation just off Mead’s County Road 10 was not unlike any other finishing ground for Nebraska’s beef cattle: a last stop before the abattoir. But starting in November, Oscar Mayer will no longer be the marquee product here. A company called E3 Biofuels is about to fire up the most energy-efficient corn ethanol facility in the country: a $75 million state-of the-art biorefinery and feedlot capable of producing 25 million gallons of ethanol a year. What’s more, it will run on methane gas produced from cow manure. The super-efficient operation capitalizes on a closed loop of resources available here on the prairie – cattle (fed on corn), manure (from the cows), and corn (fed into the ethanol distiller). The output: a potential gusher of renewable, energy-efficient transportation fuel.

Of course, 25 million gallons of ethanol is a drop in the tanker when it comes to our 140 billion-a-year oil habit. And ethanol itself is a subject of controversy for all sorts of reasons. Many of the criticisms, while true in some small ways, are aggressively promoted by the oil lobby and other interested parties in an effort to forestall change. Most are myths. Challenges certainly exist with ethanol, but none are insurmountable, and – with apologies to Al Gore – the convenient truth is that corn ethanol is a crucial first step toward kicking our oil addiction. I believe we can replace most of our gasoline needs in 25 years with biomass from our farmlands and municipal waste, while creating a huge economic boom cycle and a cheaper, cleaner fuel for consumers:
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Which is why this Mead, Nebraska, farm is so exciting to me: The ethanol made here is not only clean but also cheap – this is perhaps the first ethanol plant to achieve both. More important, it is an early demon­stration of the great potential of biohols – liquid fuels derived from biomass for internal combustion engines. The facility is the first data point in what I call the biohol trajectory. (See “March of the Biohols,” page 143.) Like Moore’s law, this trajectory tracks a steady increase in performance, affordability, and, importantly, yield per acre of farmland. A number of biohols appear along this performance curve, among them corn ethanol, cellulosic ethanol, higher-energy-content butanol, and other biomass-derived fuels that are even more energy-rich than butanol. We’ll see fuels with higher energy density and better environmental characteristics, and we’ll develop engines better optimized for biohols. Ethanol and the newer fuels will yield better fuel efficiency as innovations like higher compression-ratio engines make their way into vehicles. In addition, we can count on the emergence of complementary technologies like cheaper hybrid vehicles, better batteries, plug-in hybrids, and more efficient, lighter-weight cars.

But the single most critical variable in the biohol trajectory is the coming rise in the number of gallons of fuel produced per acre. As we migrate from biomass derived from corn to biomass from so-called energy crops like switchgrass and miscanthus, I estimate that biomass yield will reach 20 to 24 tons per acre, a fourfold increase. At the same time, new technologies will enable us to extract more biohols from every ton of biomass, potentially to 110 gallons per ton. The result: We’ll be extracting 2,000 to 2,700 gallons of fuel per acre (as opposed to about 400 gallons with today’s technology). With better fuels and more-efficient engines improving mileage by about 50 percent, we can safely predict a seven- to tenfold gain in miles driven per acre of land over the next 25 years. Given this biohol trajectory, a future of independence from gasoline becomes not only possible but probable. And the trajectory begins with garden-variety corn ethanol.

We learned to formulate corn ethanol way back – it’s nothing more than moonshine. What makes the E3 Biofuels facility so novel isn’t its spectacular equipment but the way the equipment is fueled. The most important structures here happen also to be the least beautiful: a pair of four-story, 4 million-gallon fuel tanks, each filled to the brim with cow manure. Historically, ethanol plants were fired by coal or natural gas. But methane, produced from manure, powers this operation. Not only do no fossil fuels go into the plant, very little pollution comes out. It’s nearly a closed energy loop (some corn has to be bought from other farms).

E3 Biofuels achieves what’s known as a positive energy balance. For every BTU of energy used to run the ethanol plant, five BTUs are produced. A typical corn ethanol plant produces 1.3 to 1.8 BTUs for every BTU of fossil fuel input, including the energy required to grow the corn. (Gasoline has half the efficiency of corn ethanol, producing 0.8 BTUs for every BTU input.)

Here in Mead, almost nothing goes to waste: Components of the corn kernel that aren’t good for ethanol – the protein – are valuable additions to the cattle feed. The biodigestor waste left after methane production from cow manure is processed to produce ammonia fertilizer for the cornfields. The system is also environmentally friendly. Normally, groundwater pollution from cattle feedlots is a serious problem. But the process of producing fertilizer from the cattle manure keeps the phosphates out of the groundwater. Significantly, the energy system also prevents the venting of methane into the atmosphere, which is notable because methane is 23 times worse than carbon dioxide as a greenhouse gas. Another benefit: Even under a blazing mid-August sun, I can barely smell the cattle.

I BECAME FAMILIAR with ethanol in 2003, when a business plan for a startup called BCI (now known as Celunol) crossed my desk. I had begun to look into alternative fuel technologies, but I couldn’t get comfortable with the economics of some of the trendy clean-energy technologies like hydrogen fuel cells.

I was impressed with Celunol’s technology for producing cellulosic ethanol (made from the cellulose, or “stalk,” of a plant rather than the sugar or starch “seed”), but I didn’t think the business was commercially viable. Still, I couldn’t bring myself to toss out the plan. It sat on a corner of my desk for nearly 18 months while I read everything I could about petroleum and its alternatives and what it would take to produce a replacement fuel for gasoline from a renewable resource.

In 2004, I began hearing about the ethanol market in Brazil, where the government had been unsuccessfully promoting ethanol cars. Consumers wanted a car that could use the much cheaper ethanol fuel but were reluctant to get locked into using ethanol only. When a car that offered the choice of either gasoline or ethanol as a fuel was introduced in 2003 by Volkswagen, sales took off, far surpassing expectations. Today, more than 70 percent of new cars sold in Brazil are so-called flex-fuel vehicles, which can run on gas or ethanol; three years ago, less than 4 percent of new cars were flex-fuel vehicles.

Brazil’s example made me think that replacing oil in the US was plausible, perhaps even possible. How, I wondered, could the possible be turned into the probable? Naturally, the US market is significantly different from Brazil’s. US consumers use six times as much oil as Brazilians per capita. Brazil gets its ethanol from sugarcane, but the US can’t grow much sugarcane (which has an exceptionally high energy efficiency) in our climates. Still, considering the technological creativity and capital at our disposal, I felt certain that the most powerful country in the world could achieve something a country with an economy one-eighth our size had successfully embarked on.

The business opportunity loomed as large as anything I’d ever seen. The key to turning the possible into the probable – and dislodging the oil companies – would be to convince Wall Street that there were substantial profits to be made. To me, it seemed ethanol and other biohols could eventually replace all our gasoline needs – and they would not need subsidies to outcompete fossil fuels. Just because ethanol gets subsidies doesn’t mean it needs them. Biohols were the only kind of alternative energy that I believed met two essential criteria: They would scale to solve a material problem, and they could economically compete with fossil fuels without subsidies. In 2004, I formed Khosla Ventures. One of our early investments was Celunol.

WHEN IT COMES TO TECHNOLOGY, the best way to change the world is not by revolution but by evolutionary steps. Change must follow from step to step, from innovation to innovation, as technology matures, each step justifying its economic viability and attracting investment. So while ethanol may not be ideal, I’m convinced it’s the best first step on the biohol trajectory. Ethanol offers one thing no other oil substitute can: a clear path from where we are to where we hope to be.

There are other scenarios we can imagine – say, wind-driven hydrogen generators powering our cars – but they are just that: blue-sky flights of imagination from academics and dreamers with no notion of reality. Then there are those tunnel-vision skeptics who refuse to believe that there is a trajectory to energy independence. I invite those folks to sit on the sidelines and watch the show or to go work on a better solution. Twenty-five years ago such doubters were dismissive of personal computing, the Internet, and biotechnology.

Ethanol is the first step on the biohol trajectory for three reasons. The first is economic: Ethanol can be produced and sold cheaper than gasoline. Most ethanol facilities can produce their fuel for about $1 a gallon – almost half the production cost of gasoline. And innovative producers like E3 Biofuels claim to make it for 75 cents a gallon. It’s true that American ethanol today benefits from agricultural subsidies for corn farmers. I would like to eliminate ethanol subsidies gradually in conjunction with the removal of tariffs on imported ethanol. For kicks, we might consider removing the substantial direct subsidies to oil, too. Free markets demand level playing fields.

Meanwhile, ethanol at the pump can be relatively cheap. Recently, in Aberdeen, South Dakota, E85 – a blend of 85 percent ethanol and 15 percent gasoline – was selling at gas stations for just $1.95 a gallon. Wal-Mart is now considering selling it. Imagine if every Wal-Mart offered $1.99-a-gallon fuel! The switch to cars and trucks that can run on E85 would be relatively economical, too. There are already 6 million such flex-fuel vehicles on the road in the US. It costs a paltry $35 to make a new car capable of handling both ethanol and gasoline.

The second reason is scientific: New breakthroughs make it eminently feasible to scale up ethanol to national and even global proportions. Today, corn yields about 400 gallons of ethanol per acre of cropland. While corn yields will increase over time thanks to genetic modification (a new variety from Monsanto may yield 750 gallons per acre), corn can get us only so far. The real promise for ethanol lies in cellulose, which can be derived from plants like switchgrass and miscanthus, a tropical grass native to southeast Asia. Cellulosic ethanol technology promises to deliver as much as 2,700 gallons per acre by 2030. This is the key to achieving scale, substantially lower costs, and manageable land-use scenarios. Biotechnology, plant breeding, chemical process technologies, synthetic biology, energy crop engineering, systems biology, computational modeling, and new fuel chemistries will all offer tools, approaches, and possibilities for improvement. Failure to use them will be a failure of imagination.

The third reason is pragmatic: Ethanol is already here – and in use! We know how to produce it, we know how to distribute it, and we already have cars that can use it. So why reinvent the wheel? Today in the US, there are 925 stations that dispense E85. Expanding that number to just 20,000 would be sufficient to make E85 broadly available – an investment I estimate at much less than a billion dollars. Just the subsidy decrease I have proposed would more than pay for this infrastructure. The sooner E85 corn ethanol primes the alternative-energy pump, the sooner we can progress to the next steps on the biohol trajectory. Several entrepreneurs are already working on cheaper, more energy-efficient biofuels that will ultimately replace corn ethanol. Mascoma, one of my investments, is developing new cellulosic ethanol technology. Richard Branson’s Virgin Group is engineering an ethanol-like fuel robust enough for jet engines. Greenfuel Technologies is harnessing algae farming for ethanol and biodiesel production. Human genome pioneer J. Craig Venter is busy developing a synthetic chromosome that may be able to produce ethanol. Another Khosla Ventures company called LS9 is applying synthetic biology to produce a new biofuel.

All of these fuels will be derived from biomass, share similar manufacturing and distribution processes, and power improved internal combustion engines, so all of them will benefit from the trailblazing, market acceptance, and established infrastructure of corn ethanol.

There is a problem, however. There are folks who don’t want us to have cheaper alternatives, at least not quickly. With the oil companies and their nearly unlimited financial and political resources fighting the development of new fuels, and in the absence of any sort of national Manhattan Project for energy, a new Silicon Valley of energy development has yet to get off the ground.

The oil interests fought the increased mileage requirements for new cars and trucks. They lobbied Congress for tax breaks and environmental waivers. Oil companies have received direct subsidies that add up to more than $120 billion, according to the General Accounting Office, and substantially more in indirect subsidies. When the EPA decided that the lead in gasoline was a serious health hazard and pushed for its removal, the oil companies spent millions fighting the change.

Today they are fighting for waiver from MBTE pollution liability and avoiding responsibility for carcinogenic benzene in our air. When municipalities in California decided to purchase cleaner natural gas buses, the diesel industry sued to block the switch. At every turn in the history of our oil dependence, the oil companies have spent their considerable fortune to make sure that we as a nation remained dependent on oil. They did this in large part by lobbying Congress, by providing congressmembers with large amounts of campaign cash, and by trying to suppress cleaner, cheaper alternatives to oil. I hope they realize soon that alternative energy is a major business opportunity for them.

In November 2005, at the invitation of a number of environmentalists, economists, and the National Resources Defense Council, I agreed to support California ballot measure 87, which will be put to voters in the November 7 statewide election. The measure proposes to charge oil companies a fee on oil they extract from California state lands. (Oil companies pay such a fee in every other major petroleum-producing state. They are fighting hard not to pay their fair share in California.) The proceeds – estimated at $4 billion by 2017 – will principally go toward reduction of petroleum use and to promote research in alternative energy technologies at universities.

Critics of Prop 87 like to point out that Khosla Ventures stands to benefit financially if the measure passes. I have committed to donate all of my profits from any company that receives money from this initiative just so we can focus the campaign on the real issues.

More than a million Californians signed the petitions to put Proposition 87 – the Clean Energy Initiative – on the California ballot. If enacted, it’s estimated that the measure will reduce the state’s dependence on oil by 25 percent over the next 10 years. But the money put into alternative energy research will benefit not only California but the whole nation. Besides providing a role model, California’s reduced oil demand will decrease gas prices nationwide. The technologies and companies that emerge will change the US and the world, making clean technology economical everywhere. Prop 87 will not raise gas prices as the oil companies would have you believe. Market forces ensure that world oil prices, not production costs in California, determine gas prices. Besides, the California attorney general has confirmed that Prop 87 makes it illegal for oil companies to raise gas prices or pass the fee on to consumers. The US Supreme Court has already ruled that states can prohibit oil companies from passing drilling fees on to consumers. But oil company dollars in a massive advertising campaign will try to scare consumers into believing otherwise.

The oil companies are hiding behind the moniker Californians Against Higher Taxes, a group funded almost completely by oil companies and that has so far taken in more than $30 million to campaign against the measure. It’s going to fight Prop 87 tooth and nail. Prop 87 is clearly the David in the fight against Goliath. We have no illusions about what we’re up against. We have 138,000 troops in Iraq, gas is $2.85 a gallon, and 90 percent of Californians live in places that don’t meet federal air quality requirements. And global oil production can’t keep up with rising demand from countries like India and China.

By forcing the oil companies to finally pay their fair share, Proposition 87 will help launch the next Silicon Valley phenomenon, the Googles and Yahoos of clean technology. These new energy companies will go on to create jobs, wealth, and economic growth everywhere. And they will help change the planet’s destiny.

IN THE CORNER of an unmarked warehouse tucked away in an industrial neighborhood north of Denver, a new company called Kergy has what is, to my knowledge, the first anaerobic thermal conversion machine (which explains why Khosla Ventures is a seed investor). It’s a 6- by 4-foot contraption that stands about 8 feet high. It looks vaguely like a souped-up potbellied stove. But it runs cleanly enough to operate indoors.

Kergy’s machine is special because it makes cellulosic ethanol through anaerobic thermal conversion rather than through fermentation or acid hydrolysis. It does not need organisms or enzymes to do its work. Biomass is heated in an oxygen-free environment to produce carbon monoxide and hydrogen. Once that happens, “the world is your oyster,” says Bud Klepper, the engineer who invented this device. The carbon monoxide and hydrogen are then reconstituted into various alcohols – like ethanol. Better still, fermentation and acid hydrol­ysis can take days to occur, but thermal conversion breaks down organic matter and converts it to ethanol in minutes.

And here’s the really exciting part: Because all organic matter contains carbon, Klepper can make ethanol out of cellulose or any form of organic matter. This means the usual suspects such as corn, switchgrass, sugarcane, and miscanthus but also any waste product such as wood chips, paper pulp, cow manure, and even human waste. Municipal sewage has been tested already, as has hog manure. “We could double the ethanol output of the Mead facility,” Klepper says. It’s a big leap forward on the biohol trajectory, and it is right in front of us.

In back of Kergy’s warehouse, workers are busy putting the finishing touches on a beautified and expanded version of his original thermal convertor. The new one is made out of lustrous red I-beams, shiny metal tanks and coils, bright blue metallic joints, and a porous metal-grating floor. The whole thing is 14 feet high, 40 feet long, and 25 feet wide and is capable of producing 15,000 gallons of ethanol a day. And the machine can be scaled for far more capacity.

And cost is a big advantage. “Our ethanol from biomass should be competitive in costs with corn ethanol,” says Kergy CEO Mitch Mandich, who gave up several CEO opportunities at large public companies to run Kergy. The technology is exciting enough that Arie Geertsema – director of the University of Kentucky’s Center for Applied Energy Research and formerly managing director of the corporate R&D Division of Sasol, the most experienced gasification com­pany in the world – was excited enough by the tech­nology to give up his position and join Kergy.

Mandich and his team are right to be enthusiastic. Ethanol – and soon cellulosic ethanol and its successors – offers not only a cleaner, cheaper alternative to gasoline but one that’s made in America. The environment can no longer sustain fossil-fuel emissions, and the US economy and foreign policy would be far better off without our dependence on foreign oil.

We don’t need far-off technologies like hydrogen fuel cells to achieve a future that is more environmentally and economically secure. And we don’t have to pay more for cleaner transportation energy. We have the fuel in ethanol, and we have the technology to produce it, the distribution systems to move it, the pumps to dispense it, and the cars to run on it – all in place and ready to go today. The doorway to a future with fewer economic and environmental risks is before us. All we need do is step through it.

Vinod Khosla (www.khoslaventures.com/resources.html) is a founder of Sun Microsystems. He was formerly a general partner at Kleiner Perkins Caufield & Byers and is currently a partner at Khosla Ventures.

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