At the California Clean Tech Open event Tuesday, Khosla Ventures founder Vinod Khosla said the ultimate fuel probably won’t be ethanol.

“Contrary to what you might believe, I think it’s extremely unlikely that in 20 years we will be using any ethanol in cars,” he said.

That’s a surprising statement from one of ethanol’s most enthusiastic backers. Mr. Khosla has invested millions in ethanol companies such as Altra, Mascoma, and Cilion.

Mr. Khosla said he believes biomass can make a real difference, not only for transportation fuels, but also for making plastics and for bringing more wealth to rural areas.

“Biomass is going to be an important tool in fighting poverty and generating wealth in a meaningful way,” he said. “It’s not only good for this country, but it’s good for the planet.”

But corn-based ethanol—and even cellulosic ethanol, made from plant waste—are only steps along a larger trajectory toward other fuels, he said.

After all, BP and DuPont are already working on biobutanol, and other companies Khosla Ventures is investing in have come up with fuels that are better than both ethanol and butanol, he said (see The Fuel of the Future?).

Solar Doubt

Mr. Khosla also said he thinks solar is going in the wrong direction. While everyone seems to be focused on lowering the cost of photovoltaic cells—which convert sunlight into electricity—much of the cost is outside the cells themselves, he said.

“If I were working on solar cells, I wouldn’t be working on lower-cost solar cells, but on higher efficiency,” he said.

Solar is still uncompetitive with coal, even with subsidies, Mr. Khosla said. “Being a Republican, I don’t like subsidies,” he said. “I like level, free markets. Without technologies that can be competitive with fossil-fuel alternatives, we are not going to get mass adoption.”

Mr. Khosla said the industry should also take a fresh look at thermal solar technologies, which use the sun’s heat instead of its light. “To me, solar thermal has much more promise to be competitive with the fossil-fuel alternative; that is, coal,” he said. “Coal is $0.04 a kilowatt hour, and I think thermal can get competitive, especially when accounting for the carbon emissions of coal.”

The Importance of Being Efficient

But California Energy Commissioner Art Rosenfeld said solar photovoltaic systems do make sense in remote areas that are not connected to the grid. In his speech at the Clean Tech Open, Mr. Rosenfeld emphasized the importance of energy efficiency.

Energy efficiency improvements in buildings, lighting, and air-conditioning have made a huge difference in the last 30 years, he said. “We are saving $700 billion a year because our energy policy is smarter than it was in the 1970s,” he said. “I assert if it’s been true the last 30 years, and the world changes slowly, it’s going to be true for the next 30 years.”

Some examples? LED lights, which are 300 times more efficient than kerosene lamps, he said. Replacing kerosene lamps around the world with LED lights would save 1.3 billion gallons of gasoline a day—enough to convert all the SUVs in the United States to regular cars—and would bring a return in a few months, he said.

Both Mr. Khosla and Mr. Rosenfeld also said water is another place where innovation is needed. Water is “a resource even more scarce than oil on this planet,” Mr. Khosla said.

Mr. Rosenfeld said water purification technologies that can reduce the amount of wood people burn to boil water can make a big difference to climate change. He estimated that some villages emit 5 to 10 tons of carbon dioxide per day by burning wood. (A car burns about 5 tons a year, he said.)

Governmental Nudge

All these clean technologies can be spurred on by government policies, said San Francisco Mayor Gavin Newsom. San Francisco has built up the largest alternative municipal fleet of vehicles in the country, and gives payroll tax exemptions and expedited permits to cleantech companies, he said.

The city of San Francisco alone spends $1 billion a year, giving it some power to encourage the companies it buys from to be greener. “Can you imagine the power if we connected the dots?” he said. The city initiated the Urban Environmental Accords, a “treaty” between more than 50 cities agreeing to take steps to become greener.

“We don’t need to wait for permission from the president of the United States,” he said, to laughter and applause.

Contact the Writer:JKho@RedHerring.com

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