language parallax

The Oil Drum had a large post from Vinod Khosla. Apparently he has been pushing the idea of ethanol as the first step in avoiding the looming energy problems.

I remember seeing Vinod in a dunk tank outside the old Excite building early in the company’s history at a party/bbq. Small world.
The most important paragraphs from the article seem to be these:

What can be with hydrogen is also great, but there is no way to incrementally get there from what is to what can be. The most likely path for hydrogen is co-producing it from ethanol, running it in today’s internal combustion engines, getting hydrogen distribution, and then replacing internal combustion engines with higher efficiency fuel cells or improving the internal combustion engines.

A more likely path is ethanol in today’s internal combustion engines, followed by better hybrid technology to make hybrids more broadly acceptable, to increasing the amount of battery storage on cars to make them more “plug-in” capable and over time to reduce the size of the ethanol driven internal combustion engine, thereby reducing the amount of liquid fuel we need for our automobiles.

The more we use batteries the cheaper and better they will get, the more investment and R&D interest they will attract, and the faster the cost performance curve will improve. Batteries will get cheaper and we will use more capacity in our cars, enabling longer range, making such cars cheaper and better and driving towards lower percentage use of liquid fuels. If you tell me we should replace today’s cars with sixty mile range cars (since that is what most consumers use), I wish you good luck getting in getting it done. And the energy ratio of electricity is far worse than that of corn ethanol. If we get more wind and solar we should be replacing coal plants with that additional capacity, assuming it is cost competitive.

In parallel we will see better liquid fuels, fuels I call biohols. Butanol has already been proposed by BP and DuPont, and other liquid fuels have been discussed among researchers. They are superior to ethanol in many ways but will use the same or similar feedstocks and run interchangeably with gasoline or ethanol in today’s engines. Some will require minor engine modifications and others will not. But if we tried to legislate butanol today it probably would not happen.

The bigger the ethanol market, and we must move it from a blend of only fifteen billion gallons a year US market to a primary fuel 200 billion gallons a year market, the more investment and R&D it will attract to reduce cost, improve engine performance to find additives and alternatives like butanol, to make it even better. With ethanol and biohols in general it is very possible to get there incrementally without disturbing a lot of current investment, vested interests (like automakers), and natural market forces.

The oil industry spends hundreds of billions in investments in oil every year and to find a replacement it must attract the same kind of capital. The only source of such capital is Wall Street. If we want to make change happen, make it worthwhile for the entrenched interests without making it easy enough for them to rest on their laurels. Make it attractive for Wall Street. In the end I do believe the oil companies will be big players in the biofuels game.