mostly convenient truths

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mostly convenient truths
from a technology optimist
Vinod Khosla Khosla Ventures Mar 2008
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all progress depends on the unreasonable man
-George Bernard Shaw
From Maxims for Revolutionaries The reasonable
man adapts himself to the world the unreasonable
one persists in trying to adapt the world to
himself. Therefore all progress depends on the
unreasonable man.
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IPCC www.conservationcenter.org/assets/docs/Glob
al20Warming.PDF
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The Forecasts are Wrong!

• IEA
• EIA
• Pundits
• economists econometrics
• or
• innovation from endeavors
  technologists

Including Mine!
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Oil price forecasts (1985-2005)
Forecast
Actual
Actual
Forecast
Forecast
Forecast
Actual
Actual
Forecast
Forecast
Forecast
Actual
Actual
Actual
Data/Source World Oil Prices (current /
Barrel)- EIA Office of Integration Analysis and
Forecasting
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Gas price forecasts (1985-2005)
Actual
Actual
Forecast
Forecast
Forecast
Actual
Actual
Forecast
Forecast
Forecast
Forecast
Actual
Actual
Actual
Data/Source Natural Gas Wellhead Prices (current
/1000cf) - EIA Office of Integration Analysis
and Forecasting
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Coal price forecasts (1985-2005)
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Actual
Actual
Actual
Actual
Actual
Forecast
Actual
Actual
Data/Source Coal Prices to Elec. Generating
Plants (current /million btu) - EIA Office of
Integration Analysis and Forecasting
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the power of ideas entrepreneurship

• NASA vs. the X-Prize (billions vs. millions)
• Telecom Goliaths vs. the Internet (free long
  distance)
• Human Genome Project vs. the entrepreneur
• Mobile Phones vs. the alternative assumption

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The US Market for Mobile Subscribers
Source
Actual
Forecasts
Annual Error

• 70
• 606
• 20-30

• Fortune (1984 gt 1989)
• McKinsey for ATT (1980 gt 2000)
• Herschel Shosteck Associates (1994 gt 2004)

• 3.5M
• 109M
• 182M

• 1M
• 0.9M
• 60-90M

The same mistakes are repeated again and again!
Source American Heritage Magazine -
http//www.americanheritage.com/articles/magazine/
it/2007/3/2007_3_8.shtml
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McKinseys Mistake

• The actual market

• McKinseys vision of the market (1980s phone)

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To Predict the Future, Invent it!

• Forecast 2015
• Clean Electricity 7c/kwh
• Cellulosic Biofuels 1.00 per gallon cost
• 100 engine lighting improvement
• Cement negative carbon _at_ half the cost!
• Steel?
• Forecast 2030
• 35 oil!
• 10c/kwh fossil electricity

Invention in Progress!
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technology expands the Art of the Possible
but is seldom recognized in advance
todays unimaginable or tomorrows
conventional wisdom
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Excuse Failure of Imagination
This wireless music box has no imaginable
commercial value. Who would pay for a message
sent to nobody in particular? -David Sarnoffs
associates in response to his urgings for
investment in Radio in the 1920s
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Problem Not Knowing Your Customers
Who the hell wants to hear actors talk? -Harry
M. Warner, Warner Bros, 1927
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Problem Misunderstanding Technology
The telephone has too many shortcomings to be
seriously considered a means of communication
-Western Union Internal Memo, 1876
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Excuse Missing Applications
There is no reason for any individuals to have a
computer in their home -Ken Olsen, President,
Chairman and Founder of DEC, 1977
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Problem Understanding of Physics
Heavier-than-air flying machines are
impossible -Lord Kelvin, President, Royal
Society 1895
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Problem Tunnel Vision
Airplanes are interesting toys but of no
military value -Marshall Ferdinand Foch,
Professor of Strategy, Ecole Superiure de
Guerre
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Problem Underestimating people
"Everything that can be invented has been
invented." -Charles H. Duell, Commissioner, U.S.
Office of Patents, 1899
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Excuse Not recognizing value
100 million dollars is way too much to pay for
Microsoft." -IBM, 1982
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Whats Up? Altering the Balance
Decreasing Marginal Costs!
Increasing Marginal Returns!
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Costs Fall Exponentially with Technology!
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New Techs Can Quickly be Material Solutions
Technology penetration cycles are getting shorter!
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Problem Per Capita Carbon Quota
vs.Opportunity Global Transfer Payments for
Carbon Reduction
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They shouldvs.Call to Personal Action
Self Interest
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The Salve for Africa?

• Carbon Price (100s billion per year?)
• Biomass based Energy (500 billion a year?)
• Opportunities for resource poor (Solar
  Biomass?)
• vs. Aid, Debt Forgiveness, Trade Treaties

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Junkies find veins in their toeshumans are
looking for tar sandsthe sub-prime carbon
debt! -Al Gore
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History Presents us an Opportunity as the
worlds next 3 Billion people are ready
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Demographic Transformations
Population 2003
Population 2050
N-America
N-America
Africa
Africa
S-America
S-America
Europe
Europe
Oceania
Largest Segment
Oceania
Asia
Asia
6.3 billion
8.9 billion
source United Nations
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Annual Energy Demand (1971-2003)
Fastest Growing

• Source IEA, 2004 (Exclude biomass)

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• First they ignore you, then they laugh at you,
  then they fight you, then you win.
• Mahatma Gandhi

We are here
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relevant cost relevant scale relevant
adoption
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the chindia test only scalable if competitive
unsubsidized
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the scaling model brute force or exponential,
distributed
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Cardinal Rules

• Land efficiency!
• Cost (plug-ins, hydrogen)
• Pragmatics PUG power vs. Greenies
• Regulation permanent Subsidies transient
• Economics Capital Formation Business

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• real solutions (cost, adoption, scale,)
• Land efficient fuels 2000 gallons/acre
• Niche electricity vs. Fossil alternative
• Efficiency at high Internal Rate of Return

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irrelevant scale solutions

• hybrids
• biodiesel
• food based ethanol
• wind photovoltaics
• geothermal

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relevant scale solutions for

• oil
• coal
• materials
• efficiency

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Biomass Biofuels
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How? or Why Not?

• CLAW Criteria Rating Carbon, land, Air, Water
• . Carbon 75 lower
• . Land use Minimal Additional land
• . Air Same or better than oil
• . Water Lower than refining
• . Food vs. Fuel
• or
• . oil, wars, flooding, fires, drought,
  dislocations, glacier melts, water

WE CAN DO IT POORLY or WE CAN DO IT SUSTAINABLY!
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Biofuel Myths

• Food CPI is affected by oil 2-3X more than corn
  prices
• Corn usage 16oz steak 1 gallon of ethanol
• Carbon reduction Hybrid Corn Ethanol (at 1 of
  cost!)
• Choice Biofuels or tar sands?
• Biofuels vary a cocaine and aspirin drug of
  biofuels

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150B gallons of cellulosic ethanol by 2030!

• 2030 Assumptions (Production)
• 50 of annual crop land used for winter cover
  crops (159M Acres)
• 70 of forest excess waste utilized (158M tons
  of biomass)
• 10 of 2030 demand met by waste products (15B
  gallons)
• Yields of 110 gallons per acre
• No recovery of degraded land is modeled
• 2030 Assumptions (Demand)
• 2030 AOE projections reduced by 20 to reflect
  CAFE / Energy Bill
• Ethanol mileage discount of 15
• 90 of fleet is FFV

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Biofuels Feedstocks Pathways
Glycerin
Natural Oils
Transesterification
BioDiesel (FAME or FAEE)
Methanol/Ethanol
Ethanol, Butanol, Renewable Petroleum FermDiesel
Fermentation
ETG via catalysis
Biogasoline
Sugars/ Starch
Dimethylfuran
Catalytic Conversion
Gasoline, Diesel, Hydrocarbons
Catalysis and Aqueous phase Reforming
Algae
Sunlight CO2
Cell Mass
BioDiesel (FAME or FAEE)
Hydrocracking
Ethanol
Cellulose/ Hemicellulose
Acid or Enzyme Hydrolysis
Fermentation
Saccharification
Butanol
Diesel
Mixalco Process
Mixed Higher Alcohol
Biomass
Microbial cultures
Methane
Ethanol/Butanol
Fermentation
Gasification
Syngas
Catalytic Conversion
Ethanol
Fischer-Tropspch catalysis
BTL Diesel
Waste
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Biofuels Feedstocks Pathways
Glycerin
Natural Oils
Transesterification
Ethanol Sugar Fermentation
BioDiesel (FAME or FAEE)
Methanol/Ethanol
Ethanol, Butanol, Renewable Petroleum FermDiesel
Fermentation
ETG via catalysis
Biogasoline
Sugars/ Starch
Dimethylfuran
Catalytic Conversion
Gasoline, Diesel, Hydrocarbons
Catalysis and Aqueous phase Reforming
Algae
Sunlight CO2
Cell Mass
BioDiesel (FAME or FAEE)
Hydrocracking
Ethanol Cellulose Hydrolysis Fermentation
Ethanol
Cellulose/ Hemicellulose
Acid or Enzyme Hydrolysis
Fermentation
Saccharification
Butanol
Diesel
Fermdiesel, Butanol
Gevo
Mixalco Process
Mixed Higher Alcohol
Biomass
Biocrude Catalysis/ Pyrolysis
Microbial cultures
Methane
Feedstock Supply Volume
Ethanol Syngas Fermentation
Ethanol/Butanol
Fermentation
Gasification
Syngas
Biodiesel, Ethanol FT and Catalysis
Catalytic Conversion
Ethanol
Fischer-Tropspch catalysis
BTL Diesel
Increasing Technological Difficulty
Waste
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Coskata

• ethanol for under 1.00 a gallon
• Three-step process conversion technology
• Biomass, waste and/or coal gasification to syngas
  (Gasification)
• Biofermentation of syngas to ethanol
  (Biofermentation)
• Separation and recovery of the ethanol

1
2
3
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LANZA Waste Gas to Fuel
Carbon monoxide gas
LanzaTech Process
Steel mill waste gas


Ethanol Butanol fuels
OR
Biomass syngas
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Hydrocarbon BiosynthesisNatures Energy
Storage
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Synthetic Biology
Fermentation Diesel
Synthetic Biology Fermentation DieselX
Anti-Malarial
Gene 3
Gene 1
Gene 4
Gene 2
Gene 1
Custom-Built Microbe
Source of genes
Artimisinin
Recombinant Small Molecule Bio-Synthetic Pathway
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Biocrude replaces crude
Crude oil
Bio Crude
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Transonic Combustion

• Gasoline engines at high compression ratios
• New injector technology is multi-fuel capable
• Precision ignition timing
• Minimizes waste heat generation, reduces
  greenhouse gas
• 50-100 mileage improvement
• Near term goal 100mpg diesel Prius

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• Producing 1 ton of Portland cement results in 1
  ton of CO2 emissions
• The 1.5 billion tons of cement produced
  responsible for 7 of global CO2 production
• Calera makes cement production lower cost and
  negative on carbon!

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Ausra CLFR

• Benefits of CLFR
• Sturdy, low cost construction
• Primary components steel, glass, water
• Efficient use of land
• Air cooled minimal water use
• No toxic materials
• Easily protected from hail and dust storms
• Can by hybridized with fossil fuel plants

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Biomass, Geopolitics Poverty
Biomass Poverty Belt
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solar thermal (CSP)
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Scalability Land For All Electricity
All Worldwide Electricity
Carlo Rubbia, SolarPACES2006
earthobservatory.nasa.gov
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Area requirements to power the USA
(150 km)2 of Nevada covered with 15 efficient
solar cells could provide the USA with
electricity
½ as much land with 30 efficient turbines
Source J.A. Turner, Science 285 1999, p. 687.
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Three Gorges Dam
CSP 1.7x power, same land area, lower capital
cost and faster construction time
18 GW generating capacity gt25 years planning
and construction 1.3 million people
displaced 630 sq km reservoir gt50B estimated
actual construction cost
Source Concentrated Solar Power Potential in
China, Deepak Boggavarapu PhD
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Enhanced Geothermal Technology
Source MIT
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Not Your Niche Markets Anymore!
The New Green
The Markets You Think Of

• Cement (100B)
• Water (500B)
• Glass (40B)
• BioPlastics (10sB)

• Engines (200B)
• Lighting (80B - US)
• Appliances (10sB)
• Batteries Flow Cells (50B)

• Corn Ethanol
• Biodiesel
• Solar PV
• Wind
• Geothermal

• Generation - 250B - US
• Solar Thermal
• EGS
• Clean Coal
• New Nukes

• Gasoline (500B)
• Diesel (500B)
• Jet Fuel (100B)

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Khosla Ventures Renewable Portfolio
Sequestration Tools EPC
Distributed Solar Utility Scale Solar
Enhanced Geothermal Wind Storage Synthetic
Natural Gas
Waste Water Water Desalination
Solar
Wind
Tools
Geothermal
Water
PVC Plasticizers Polyurethane Polyethylene Glass
Cement
Natural Gas
Coal
Plastics
Materials
Electrical Efficiency
Lighting Batteries Motors
Efficiency
Building Materials
Oil
Mechanical Efficiency
Corn/ Sugar Fuels
Future Fuels
Cellulosic
Homes Engines Appliances Pumps
Sugar Feedstocks Starch Feedstocks
Butanol Cellul. Diesel Cellul. Gasoline Cellul.
Jet Fuel
Cellulosic Ethanol
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Khosla Ventures Renewable Portfolio
Stion Ausra Infinia
Nanostellar Codon Praj
Quos NanoH2o
Altarock Great Point Energy
Solar
Wind
Tools
Geothermal
Water
Natural Gas
Draths Segetis Soladigm Calera
Coal
Kaai Soraa Topanga Lumenz GIV Seeo
Plastics
Materials
Electrical Efficiency
Efficiency
Building Materials
Oil
Mechanical Efficiency
Corn/ Sugar Fuels
Future Fuels
Cellulosic
PAX Streamline Living Homes EcoMotors Transonic
Altra Cilion Hawaii Bio Ethos
Lanza Mascoma Verenium Range Coskata
LS9 Gevo Amyris Kior
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What Can We Do?

• Create a 100 Venture Portfolios
• Harness the power of ideas fueled by
  entrepreneurial energy
• Fund energy sustainability research at
  Universities
• Institute policies that price carbon prevent
  manipulation

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Ready for Replacement

• Oil based Transportation
• Traditional Coal-based Power
• Internal Combustion Engine
• Incandescent Light Bulbs
• Portland Cement
• Energy Intensive Desalination
• Batteries
• Nuclear Waste
• Non-biodegradable Plastics
• Tar Sand extraction

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or get to work
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