Biofuels trajectory to success: the innovation ecosystem at work

Dec 2007

Can we change fuels, feeds, and automobiles in one go? The goal, as we see it, is a liquid fuel for the internal combustions engines - the hundreds of millions of engines that are there or likely to be put on the roads in the next decade or two.
One of the hottest new fields in biotechnology today is synthetic biology. This is the art of applying engineering principles to biology, something that was impossible until the advent of automated DNA sequencing and advanced DNA synthesis technologies.
We have multiple investments and believe that all of them can be successful. The fuels market is comprised of multiple markets: gasoline, diesel, jet fuel, home heating oil and other specialty markets. There will be winners in each segment.
The world has changed but the pundits don't know it. The power of ideas fuelled by entrepreneurial energy has created a whole new world of possibilities, and the “innovation ecosystem” is in full bloom. The utilization of biomass (and potentially waste) as a feedstock offers significant benefits not present with current methods of fuel production; furthermore, the lack of optimization in these feedstocks and other technologies offers room for yields of fuel to increase dramatically. In conjunction with the increased research into agronomy practices the widespread adoption of biofuels will not result in any substantial “crowding out” of traditional agriculture, but can significantly mitigate our climate change risks.
Cellulosic ethanol is ready and cost-effective using today’s technologies and commercial plants are being built right now. In this white paper, Vinod Khosla highlights a selection of approaches towards achieving the goal of environmentally-friendly transportation fuels and an eventual replacement for petroleum.
From the standpoint of biofuels, Khosla believes that that all technologies that can produce a gallon equivalent of ethanol at a $1.25 (or below) will be competitive and have a substantial market. Many technologies will be successful and a number of potential markets exist – gasoline, diesel, aviation fuel, heating oil, and even plastics. The criteria for investment across the various markets is clearly different, but any technology that reaches the $1.25 per gallon (of ethanol equivalent) price point will be successful.
In time, there will certainly be a culling of ideas towards those that prove themselves in more rigorous tests and those that fall aside due to unsatisfactory economics, an inability to scale, a failed process, simply victim to a better fuel chemistry, or maybe even just bad luck. It is certain that there will be setbacks in the process – but it is also certain that their will be successes, accidental discoveries, and developments out of left field.

By: Vinod Khosla

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