New distillation method fuels investor interest in ethanol
Research has cut the cost of converting nonfood
plant matter like grasses and wood chips into alcohol. Cellulosic ethanol will
eventually be cheaper to produce than either gasoline or corn-derived
ethanol.
Vinod Khosla was a founder of Sun Microsystems, and then as a venture capitalist he helped a host of other technology companies get off the ground. These days, Khosla is still investing in technology, but much of it has nothing to do with the world of network computing in which he made his name. He is particularly excited about new ways of producing ethanol, which he says could rapidly displace gasoline.
“I am convinced we can replace a majority of petroleum used for cars and light trucks with ethanol within 25 years,” he said. He has already invested “tens of millions of dollars,” he said, in companies that are developing methods to produce ethanol using plant sources other than corn.
Khosla is not the only one with a big stake in ethanol: add the names Richard Branson and Bill Gates to the list.
The excitement over ethanol derives from research that has cut the cost of converting nonfood plant matter like grasses and wood chips into alcohol. Khosla says such cellulosic ethanol will eventually be cheaper to produce than either gasoline or corn-derived ethanol.
Some publicly traded companies with operations linked to ethanol include Novozymes and Danisco, both based in Denmark, and Diversa of San Diego; all three have said they have made major gains in reducing the cost of the enzymes needed to produce ethanol from cellulose.
Corn ethanol has been around for years, and even with a current spike in demand, the industry commands only a 3 percent share of the market. Khosla counters that soaring energy prices have made corn-based ethanol more competitive, while research advances in breaking down cellulose into simple sugars have cut the cost of making ethanol from other sources.
“Ethanol is cheaper to produce, unsubsidized, than gasoline today,” he said. “As these technologies ramp up, they will be cheaper, unsubsidized, than gasoline even if petroleum drops to $35 a barrel.”
Both sides of the equation — based on renewable crops resulting in energy — are moving forward. I don’t know if there’s significant benefit to whether they are edible crops or not. The whole cost of production will probably be the driving force in early days.
Posted: Sun - March 26, 2006 at 09:08 AM