Ethanol Basics:
* Vinod Khosla challenges the notion of ethanol as an alternative fuel, arguing that gasoline should be the alternative.
* He emphasizes that ethanol production does not require new car engines, designs, or distribution systems.
* Khosla aims to demonstrate how an irreversible change in our fuel trajectory can be achieved with minimal costs to consumers, automakers, and without government subsidies.

Brazil’s Success:
* In just three years, without subsidies, Brazil transitioned from 4% to 80% of new cars being flex-fuel vehicles driven purely by consumer demand.
* This success challenges the claim that such a transition would take 15 years or more, as suggested by major automakers.
* The production cost of ethanol is significantly lower than gasoline, approximately $0.70 per gallon, making it more cost-effective for consumers.

Flex Fuel Vehicles:
* Despite the lack of E85 pumps in the USA, there are already five million flex-fuel cars on the roads, nearly as many as diesel vehicles.
* There is no chicken-and-egg problem, as both the cars and the fuel are available, but distribution is lacking due to the reluctance of oil companies to embrace ethanol.
* Flex-fuel cars cost only about $30 more to produce compared to gasoline-only vehicles.

Political Alignment:
* Ethanol has the unique ability to align diverse political interests, including automakers, environmentalists, farmers, and neoconservatives.
* It addresses concerns regarding cheaper fuel, national security, energy security, farm incomes, and environmental sustainability.

Comparison with Hydrogen:
* Khosla presents a chart comparing the cost per mile and environmental costs of various fuels, including oil, hydrogen, and biofuels.
* The chart demonstrates that biofuels have a clear advantage over other options, especially when considering the political feasibility of implementing change.

Challenges and Kickstarting the Effort:
* Khosla acknowledges potential challenges, such as interest groups and land use concerns.
* He emphasizes the importance of addressing these concerns and finding a way to kick-start the transition to ethanol.

Interest Groups’ Positions:
Automakers, particularly GM, are actively pursuing biofuel adoption with FlexFuel technology. Agricultural interests support biofuels due to increased income and reduced subsidy pressure. Environmental groups strongly support biofuels. Oil companies are not currently supportive, but some progressive companies are exploring biofuels research.

Recommendations:
Require 70% of new cars to be flex-fuel capable. Provide incentives to cover the cost of yellow gas caps for flex-fuel car owners to raise awareness. Require E85 ethanol distribution at 10% of gas stations, with a focus on larger operators. Enact a cheap oil tax for price stabilization, with a price floor at $40 per barrel to prevent price manipulation. These recommendations aim to give investors confidence in the biofuel market, encouraging investments in production facilities and ensuring the success of the transition.

Urgent Recommendations:

Loan Guarantees for New Cellulosic Ethanol Technologies:
Facilitate the development of sustainable cellulosic ethanol technologies by offering loan guarantees for the construction of plants. This will enable the production of ethanol from agricultural waste or biomass, reducing greenhouse gas emissions.

Tax-free Ethanol Imports:
To promote the use of ethanol, allow imports of foreign ethanol above the RFS standard tax-free. This will help meet demand and make a substantial difference in transitioning to sustainable fuel sources.

Redirect Crop Subsidies to Energy Crops:
Redirect existing subsidies from traditional crops to energy crops to encourage farmers to grow crops for ethanol production. This will help reduce the reliance on corn, which has a limited green impact.

Additional Recommendations:

Direct Subsidies:
If ethanol subsidies are deemed necessary, ensure that the subsidies go directly to farmers or ethanol producers to incentivize the expansion of ethanol production capacity rather than benefiting oil refineries.

Petroleum Mileage Standards:
Rename CAFE standards to “petroleum mileage” standards to encourage automakers to promote ethanol and renewable fuel use. By reducing the amount of petroleum required per mile driven, automakers can benefit from the standards.

Synthetic Biology for Energy:
Consider the potential of synthetic biology to address energy problems by developing new metabolic pathways and technologies for efficient and sustainable fuel production.

Land Use and Potential:

Biomass Production:
Evaluate the feasibility of dedicating additional land for biomass production, considering factors such as available acreage, attainable yields per acre, and the potential impact on food production.

Alternative Sources:
Explore alternative sources of ethanol besides corn, such as municipal waste, forest thinnings, and animal waste, to diversify feedstocks and reduce land-use pressure.

Technology Advancements:
Recognize the role of technology in improving yields and reducing land requirements, enabling a transition to energy crops without compromising food security.

Land for Bioenergy:
Utilizable acreage for food export crops exceeds 130 million acres, with only a fraction required for significant biofuel production. Crop rotation schemes benefit soil health by restoring topsoil and enriching carbon content.

Idle Land and Energy Crops:
The United States allocates approximately 40 million acres of land for non-agricultural purposes. Dedicated intensive energy crops offer a promising approach for biofuel production.

Benefits of Switchgrass:
Switchgrass, a native Midwestern prairie grass, serves as a suitable feedstock for biofuel production. When converted to cellulose, switchgrass byproduct includes valuable animal protein. Switchgrass cultivation enhances environmental sustainability by improving soil quality and promoting biodiversity.

DOE Report Findings:
According to a DOE study, existing agricultural practices can yield sufficient biomass for producing 130 billion gallons of biofuel annually, equivalent to one year’s growth of miscanthus. In addition to biofuel production, miscanthus cultivation enriches soil nutrients and sequesters carbon in both the plant and the soil.

Potential Yields and Economic Viability:
Current yields of switchgrass range from 10 to 12 tons per acre, with potential to increase to 40 to 50 tons per acre. Such high yields could reduce the land required for biofuel production to 30 to 40 million acres. Economic analysis suggests that switchgrass cultivation can generate more income for farmers compared to traditional crops, eliminating the need for subsidies.

Energy Balance:
Corn ethanol has an energy output of 1.2 to 1.8 times the energy input, while sugarcane ethanol in Brazil has an energy output of 8 times the energy input. Cellulosic ethanol, when using fossil fuels for the refining process, has an energy output of 10.3 times the energy input. Petroleum’s energy output is 0.8 times the energy input due to transportation and refining costs.

Environmental Issues:
Greenhouse gas reductions for cellulosic ethanol range from 50% to 90%, while corn ethanol using dry mill processes has a reduction of 20% to 30%. E85 (85% ethanol, 15% gasoline) is comparable to gasoline in terms of emissions and is better on most metrics. Emissions from E20 (20% ethanol, 80% gasoline) are higher than E5 (5% ethanol, 95% gasoline) due to evaporative emissions. The California Air Resources Board and the NRDC have communicated that E85 is a positive fuel choice.

Technological Progress:
There is potential for significant improvements in ethanol production technology, including gasification of biomass, algae-based fuel production, and synthetic biorefineries. Companies are working on increasing drought and heat tolerance, improving soil tolerance, increasing tons per acre, reducing the cost of production and fertilizer intensiveness, and increasing the gallons per ton.

The Promise of Biofuels:
Vinod Khosla, an expert in the field, emphasizes the immense potential of biofuels to revolutionize the energy sector and revitalize rural economies. He believes that biofuels can significantly reduce oil imports, bolster rural communities, and positively impact the environment.

Brazil’s Success in Ethanol Production:
Khosla cites Brazil’s success in ethanol production as a model for the US. He presents data showing a steady decline in ethanol production costs and increasing yields in Brazil. This demonstrates the potential for cost-effective biofuel production.

Public Support for Biofuels:
Khosla presents public opinion poll results indicating that a significant majority of Americans support the use of gasoline taxes to reduce foreign oil dependence and combat global warming. This suggests a strong public demand for biofuels.

The Renewable Fuel Standard (RFS):
The RFS, mandated by the last energy bill, has significantly increased biofuel production capacity in the US, even before its implementation. This highlights the growing momentum behind biofuels.

Cost Analysis of Biofuel Production:
Khosla presents detailed cost breakdowns for ethanol and crude oil production. He emphasizes that the solar energy required for both processes costs roughly $0.50 per gallon, excluding feedstock costs. This highlights the economic viability of biofuels.

Conclusion:
Khosla concludes by inviting questions and provides references for further exploration. His presentation underscores the potential of biofuels to transform the energy landscape and create a more sustainable and energy-independent future.

Three Required Steps Involving the Federal Government:
The federal government is unlikely to proactively support initiatives for converting oil to gas stations in California.

Alternative Approaches to Drive Change:
Seeking cooperation from oil companies by offering incentives that align with their interests. Advocating for policies that mandate the use of alternative fuels. Promoting labeling systems to differentiate between cellulosic and corn-based ethanol. Establishing voluntary or mandatory labeling standards for renewable fuel sources.

Market Dynamics and Industry Incentives:
High oil prices disincentivize oil companies from actively transitioning to alternative fuels. Oil companies may be motivated to participate when the market demand for alternative fuels increases. Making alternative fuels more affordable through innovation and economic incentives is crucial.

Cellulosic Ethanol and Sustainability:
Labeling cellulosic and corn-based ethanol can increase consumer awareness and transparency. Pasture lands in Brazil offer suitable conditions for growing sugarcane for ethanol production. Miscanthus, a prairie grass, can be cultivated to reduce the environmental impact of monocultures. Synthetic biology advancements hold long-term potential for sustainable fuel production.

Addressing Concerns and Future Trends:
Short-term price spikes may occur due to increased demand for alternative fuels. Long-term cost efficiency favors cellulosic ethanol production. The global biomass belt coincides with regions facing poverty, creating potential opportunities for socioeconomic development.

Brazil’s Strategic Ethanol Choice:
Brazil aimed to reduce dependence on oil-rich Venezuela and assert regional influence. Ethanol production took off due to consumer demand when oil prices exceeded $30-35/barrel.

Economic Considerations:
Khosla emphasizes that economic arguments assume a level playing field, but it’s often not the case. Oil companies’ profits and political influence challenge fair competition. A price floor mechanism is recommended to prevent oil price manipulation by industry players.

Addressing Concerns:
Biodiesel efficiency: Biodiesel yields fewer gallons per acre compared to ethanol and may not have the same long-term land efficiency. Aviation fuels: Certifying aircraft to run on new fuel is a complex and lengthy process, making it a smaller market segment. Greenhouse gas balance: Crops like miscanthus and switchgrass fix carbon in the soil while growing, resulting in a net reduction of greenhouse gases.

Call to Action:
California Kickstart: Khosla seeks $4 billion in voter-approved funds to support the development of ethanol infrastructure. Effective Marketing: The campaign needs effective marketing and outreach, including internet marketing and blogging efforts.