Vinod Khosla lashes back at Wall Street Journal over accusation that famed VC is living on “federal dole”

Vinod Khosla responded to a scathing Wall Street Journal editorial which accused the famed venture capitalist of living on the “federal dole” and was advised to “take a vow of embarrassed silence” regarding biofuels.

Khosla replies: “I have not advocated subsidies for food-based ethanol. In fact, I strongly believe any nascent technology that cannot exist without subsidies beyond an introductory period will not gain market penetration and is not worth supporting. I have consistently argued that food-based ethanol cannot scale beyond roughly 15 billion gallons or so in the US, and that making a material impact on replacing oil requires cellulosic or other advanced biofuels. The corn ethanol subsidies that exist today were part of the 2005 Energy bill, a time when I had no contacts with Washington.”

The complete text of the Khosla post on CNet is here.

Writing in Forbes earlier this year, Vinod Khosla said that the best way to frame the renewables policy question was: “What is the cheapest way in dollars per ton to reduce carbon emissions from automobiles?”

He said that hybrids are a “PR gesture” because they can’t pay back their upfront investment in a reasonable amount of time, and added that McKinsey found that hybridization costs $90 per ton of carbon offset, the most expensive of all technologies. He added that battery technology is not moving fast enough to make electric cars feasible, except plug-in hybrids that will use coal-fired electricity that will increase emissions, not decrease them. Khosla said that GM’s Hummer V6 flex-fuel vehicle, running on Coskata cellulosic ethanol, would have half the emissions of a Prius running on gasoline.

Earlier this week, Khosla and Big Oil started a “food fight” at the Wall Street Journal’s ECO:nomics conference, where Khosla accused the American Petroleum Institute of hyping the link between food price increases to ethanol production, saying “The API started issuing press releases about food. Suddenly they got interested in the welfare of poor Africans.”

“We have never said anything about ethanol being responsible for food prices,” said American Petroleum Institute President Red Cavaney. “It was Federal Reserve Chairman Ben Bernanke in recent Congressional testimony who linked a 4.5% increase in food prices to rising worldwide demand and the amount of corn going to ethanol.”

Recently, “Vinod you are still totally clueless” and “there will be pie in the sky by-and-by” were among comments hurled at Khosla in response to a three-part series of articles posted at Grist.

The second series focused on Biomass, including regulatory standards , “better agronomy for energy crops” , and “cellulosic ethanol yields“.

Among dozens of responses, writers accused Khosla turning “self delusion” on carbon cycles into a “mass delusion”, adding comments such as “cellulosic ethanol is such BS and that’s not just for the fertilizer.”

Among other proposals, Khosla endorsed a CLAW standard for sustainable production of biomass:

C — COST below gasoline

L — low to no additional LAND use; benefits for using degraded land to restore biodiversity and organic material

A — AIR quality improvements, i.e. low carbon emissions

W — limited WATER use,

Last December, the Biofuels Digest Editorial Board voted Khosla a bronze Biofuels Digest Medal for Highest Achievement in Biofuels in 2007, along with George W. Bush, Elliott Mannis (CEO, D1 Oils), Bob Dineen (President, Renewable Fuels Association), Jeff Broin (CEO, Poet), Al Gore, Dr. Chris Somerville (scientist, University of California) and Ban Ki-moon (Secretary-General, United Nations). Luiz Inácio Lula da Silva, the President of Brazil, received the silver, and Don Endres, CEO of VeraSun Energy, received the Gold medal.

Moreover, I look forward to the WSJ’s complaints about oil’s subsidy bonanza, from tax breaks for drilling, loopholes that allow royalty-free offshore oil leases, manufacturing tax breaks, as well as roughly $7 billion in subsidies in the wake of the Katrina disaster. At a recent WSJ Conference, 75 percent of its erudite audience “voted” (rightly) that oil was more highly subsidized than ethanol.” Khosla’s extensive answer to the Wall Street Journal, as well as links to calculations supporting his conclusions, are here.

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