Vinod Khosla slams environmentalists for lacking pragmatism

January 28, 2008

Vinod Khosla published three articles on Gristmill (Parts I, II, and III) under the title “Pragmatists vs. Environmentalists”, in which the noted investor stated his objections to plug-in hybrids and the rationale for his continued support of cellulosic ethanol.

Khosla said that the barriers to improved battery performance and electric grid infrastructure improvements necessary for plug-ins to succeed as a technology were greater than those facing cellulosic ethanol. “I consider replacing coal-based electricity plants (50-year typical life) a much longer, tougher slog than replacing oil with biofuels (15-year car life),” he said.”

The billionaire investor added that marketing campaigns aimed at “greenwashing” were making hybrids popular, although even corn ethanol reduces emissions, mile for mile, as much as hybrids.

Khosla had a quieter year in 2007, a change of pace for the legendary Silicon Valley venture capitalist who has injected more cash and credibility into the US ethanol industry than any other investor.

Like the industry he supports and in some ways commands, it was a year of consolidation at his first-generation ethanol investments, although he made a splash with his partnership with Sir Richard Branson in Cilion, which is building numerous 55 Mgy ethanol plants in California among other locales.

Khosla spent a good part of the year on the stump, advocating continued protection of the US ethanol industry as well as defending ethanol against some the claims by ethanol’s detractors regarding the net energy output from ethanol production.

Among his investments in the news, LS9 is developing a new synthetic biofuel from microorganisms. The venture predicts that its process will yield 50% more energy from the same feedstocks as used today, will use 65% less energy in the process, can be transported by existing oil pipelines and used in non-flex-fuel engines. He joined DAG Ventures , Kleiner Perkins Caufield & Byers and TPG Ventures in a $70 million round for Amyris Biotechnologies. Amyris creates designer microorganisms to increase the efficiency of converting biomass into fuels.

Khosla has not publicly discussed his 2008 investments or plans, but one can be sure that his moves will attract attention and make a difference. He contributed the maximum $2300 to the campaigns of Hillary Clinton, Joe Biden, Barack Obama and John McCain. The McCain contribution is particularly surprising, considering that McCain is the leading Presidential candidate opposed to ethanol subsidies.

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