Filed under: Investing
Saturday’s San Francisco Chronicle ran a solid interview with venture capitalist Vinod Khosla, a co-founder of Sun Microsystems and now a partner at Kleiner, Perkins. Khosla is now heavily invested in concentrated solar power and biofuels.
Among other topics, Khosla discussed the current panic over corn-based ethanol. He said the role of ethanol in driving up food prices is “overblown.” In fact, he attributed much of the fuss to a misinformation campaign by threatened oil companies:
I have no question that in 10 years, there’s no way oil will be able to compete with biofuels. Even in five years. Now it will take a long time to scale biofuels, but I’m the only one in the world forecasting oil dropping in price to $35 a barrel by 2030. I’ll put it on the record: Oil will not be able to compete with cellulosic biofuels. If you do it from food, the food will get so expensive you can’t make fuel out of it.
Food prices have been going up. Biofuels are a very minor contributor to that. But there are massive PR campaigns trying to ascribe most of the blame to biofuels. The fact is, by far the largest contributor to food-price inflation is oil prices. Biofuels are less than 15 percent of it.
Nonetheless, Khosla said, turning corn into ethanol makes no economic sense when cheaper, non-food feedstocks are available. He hopes, within five years, to sell a non-petroleum, non-food-based motor fuel that can retail at $1.99. He’ll distribute it through Wal-Mart, thus competing directly with the oil companies. –Seth Masia
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