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Summary:

Cleantech venture capitalist Vinod Khosla used his penchant for writing long editorials in the media this week to weigh in on the future of the U.S. biofuels mandate, the portion of the energy bill that calls for the production of 36 billion gallons of biofuels annually […]

Cleantech venture capitalist Vinod Khosla used his penchant for writing long editorials in the media this week to weigh in on the future of the U.S. biofuels mandate, the portion of the energy bill that calls for the production of 36 billion gallons of biofuels annually by 2022. His thesis in the Washington Post op-ed: Reducing the country’s biofuels mandate “could be disastrous for energy security and the environment.”

With food prices rising along with concern over the sustainability of corn-based biofuels, a growing chorus of critics has been calling for a rethinking of the biofuel regulation. Just last week the Food Before Fuel Campaign (made up of environmentalists and retail groups including grocery stores and restaurant chains) urged Congress to “revisit” and “restructure” the policy.

But a reduced biofuels mandate could also be ruinous to Khosla’s portfolio, which is more than enough motivation to fight the backlash. He fully acknowledges the potential conflict with his investments:

I have many investments in biofuels companies. Some say I believe in biofuels because I have invested in them. The truth is that I invest in biofuels because I believe they can help our environment, economy and national security.

But that conflict is understated. Khosla has what he himself has referred to as “the largest cleantech portfolio on the planet,” and a very large portion of which consists of more than a dozen startups looking to develop both corn-based and next-generation biofuel technology. If the biofuel mandate is reduced Khosla could lose significant money.

So while we believe that cellulosic flex-fuel vehicles will play a part in the future of transportation, any article written by Khosla on the subject, particularly one placed in the mainstream press, should always be read through the lens of his investments. Period.

Notably, Khosla continues to claim “the only cost-effective option (measured in cost per ton of carbon emissions avoided or grams of carbon emissions per mile driven) likely to achieve broad market acceptance in the next 20 years is cellulosic-fuel cars.” We don’t disagree, but a longer-term, costlier play, (no matter how much better for the planet) isn’t good for return on his investment.

By Katie Fehrenbacher

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  1. I think continuing the ethanol revolution is going to bring the innovation back in rural farmlands and in widespread america than limiting to the technology labs in HP or microsoft. This single most change is going to redistribute vast income in rural america creating new jobs and economy which is going to be sustainable in long run. This will be deconstruction of a value chain (oil and gas) which were large monopolistic industries by controlling the natural mining rights

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  2. JOHN A HEMMER Tuesday, June 17, 2008

    Reducing Biofuels mandate would be a disaster to Vinod Khosla because he has so muck invested in the mankind congress stupidist peice of legislation. For the rest of us it would be a boon!

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  3. JOHN A HEMMER Tuesday, June 17, 2008

    Correction to last post…Reducing Biofuels mandate would be a disaster to Vinod Khosla because he has so much invested in the congresses stupidist peice of legislation. For the rest of us it would be a boon!

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  4. I imagine Vinod must’ve made some good investments in his life but this investment will be his Waterloo. Let it rain, let it rain, let it rain!

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  5. The biofuels mandate should remain but should be amended to prohibit use of food crops (i.e. corn). Technology is advancing in the filed of cellulosic biofuels and Khosla is a very big backer of this. Just look at Brazil. They did ethanol the right way and are now ripping the benefits. This is one of the most promising way to break big oil’s back.

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  6. When ethanol is made from corn 19% of the corn is consumed and 81% is converted to brewers mash. Brewers mash is a high protein product used to feed animals.

    See National Public Radio segment (http://www.npr.org/templates/ story/story.php?storyId=89598524) where cattle ranchers say ethanol production has increased the availability of feed mash at lower prices. The cost reduction of feed mash resulted in $40 to $50 per animal reduction in the cost of raising livestock.

    Merrill Lynch recently produced the results of a study of ethanol. The Merrill Lynch study determined that the availability of ethanol reduced the retail cost of gasoline by $.50 per gallon during 2007. In other words, the retail price of gasoline for the past year would have been $.50 more per gallon if ethanol had not been available as a fuel additive.

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  7. Is it really any worse to produce ethanol from corn than it is to produce beer from barley, rice and hops or vodka and other liquors from wheat. Each bottle of beer is made from enough grain to feed a starving person for a day.

    If you drink a beer or vodka or any other liquor you are part of the problem. Think of a starving person every time you drink a beer.

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  8. I just checked my bottle of Grey Goose and guess what, it is made from wheat. My bottle of Tennessee whiskey is made from corn, wheat and barley. Talk about diverting food to non-food uses! ! !

    How many millions of acres of land are having their food production capacity diverted to beer, vodka, gin, whiskey, etc., etc., etc?

    I think we need a Food Diversion tax on beer and liquor to encourage the public to drink less beer and liquors and stop the food diversion. I suggest a $1.00 Food Diversion tax on a bottle of beer and $5.00 Food Diversion tax per bottle of vodka or other liquor.

    We simply must reduce the diversion of food into totally non useful things such as beer, vodka, gin, whiskey, etc. If these taxes are not enough to accomplish this then they should be increased until the public feels the pain and begins to stop the diversion of food into beer and liquors.

    Food is more important than beer.

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