Thursday, January 17, 2008

Biofuels and Venture Capital

Recently, venture capitalist Vinod Khosla outlined his support for biofuels on the grist. Khosla is a Silicon Valley venture capitalist, who founded Sun Microsystems and AMD, who now runs Khosla Ventures - a VC fund with a social impact objective. Khosla is currenlty funding Ausura, a solar thermal power company, and many biofuels projects.

In part one of a three part series, Khosla argues against hybrids and plug-in hybrids in favor of biofuels. His main argument is that hybrids cost more to buy upfront than does a car with a slightly modified engine capable of burning petrol or ethanol.
The primary question is one of cost: how many people will pay $5,000 more (today's typical parallel hybrid premium) for a hybrid that reduces carbon emissions by 25%? Especially when they can get a flex-fuel car that costs about the same as a regular ICE car and can reduce emissions by 75% or more when run on cellulosic biofuels?

But Khosla is focusing on up-front cost and not total cost of ownership, especially for plug-in hybrds. He lacks the long view. Total amortized cost of ownership is certainly lower for a plug-n hybrid, but as our economy is stuck in the here and now, it can be an issue. The upfront cost of renewables and efficiency is something we'll have to contend with as a society if we want to see a long term decrease in energy costs.

I contend that, as a good businessman, Khosla understands this and is trying to benefit from it. The car companies don't want electric cars because they require less maintenance and don't make the owner beholden to big oil, which is bad for profits. Khosla sees this and realizes that if he can get you to buy a car that makes you beholden to him for twenty years, it will be very good for business.

Big Oil, biofuels, and hydrogen - all these fuels keep you beholden to a top-down corporate hegemony which concentrates profits upward and out of local communities. When people own their own power (solar panels) and can plug their car into them, the money stays with them in a bottom-up economy with greater income parity and a better chance for long-term economic growth.

But as this distributed wealth can't be captured as easily, its much harder to fund with venture capital. Hence, Khosla.

Khosla does have one laudable outlook:
Our goal has to be solving the global problem in carbon emissions, and we need to pick technologies that will be adopted by market forces worldwide. We will need cost points such that 50-80% of the car buyers worldwide adopt these new "low-carbon" technology automobiles

But, until we can make biofuels that don't harm the environment terribly, this option won't help the global situation. We haven't even figured out the technology to make environmentally benign biofuels here, let alone the cheap and easy technology needed to export to developing countries.

Joe Romm fromg Climate Progress has a great response to Khosla.

Here's a string of more of responses to Khosla's post:

Cost is certainly a question. But as is so typical of efficiency, you have to pay upfront to lock in future savings. Khosla totally ignores the fact that reducing the amount of fuel used over the lifetime of a vehicle may dramatically reduce overall costs. But then, he does understand this, that's why he's investing in biofuels. He wants to keep the top-down oil hegemony and shift some of those profits from the hands of oil companies to his own. Those who want long-term economic growth understand the value of people owning their own power (solar panels to charge your car), which will increase income equality and, in my view, vastly increase long-term economic growth.

Also, Kholsa, you compare hybrids today versus the cellulosic fuels of the indeterminate future. Your point will hold if this comes to pass, and only if. For now, I don't care how many E85 vehicles detroit crams down my throat, because they'll all be filled with gasoline or carbon-intensive(2/3 that of petrol), water-intensive, land-intensive, subsidy-intensive corn ethanol.

Also, these biofuels are going to need a hell of a lot of water, something that will only become more precious. Especially for us Californians who know which way the snowpack is going. Yes, perhaps brackish water can be used. My understanding is that the water needs to be filtered though, which will be an incentive to just hook up to the municipal supply.

Infrastructure, infrastructure, and... oh yeah, infrastructure. Ethanol is too acidic and can't be shipped through existing pipelines. Plug-ins require the plug that is already installed in your garage.

Your point of first costs is understood. But biofuels that don't screw the environment in other ways are a hell of a long way off. I think you'd be better off making this argument after that one gets figured out.

Even though first costs are less, long term economic and social equity costs will be higher. Is your vision for the future really just the same one with you at the top instead of big oil? Wouldn't a more inspired vision of the future be one where people own their own power and efficiency in order to increase their real wages? This is where I hope the future come from, bottom up.

Does your argument about the speed with the car fleet can be replaced matter if the environmentally benign bio-fuel comes along and still requires cars to be built specifically to handle it?

Now, parallel hybrids aren't going to get us anywhere. We can all see that. If every car sold today were a parallel hybrid we would still not be lowering overall emissions from transportation.

Also, the cost premium could be lowered with options like battery leasing and so on.

What about smog in cities? Ethanol has a pretty bad emissions profile.

By the way, I'm from Iowa, and I see monoculture of corn as a problem and ethanol as a way for us to swat at the symptoms and not the sickness. See the Omnivore's Dilemma.

As for the media message, ethanol was a baby doll up until just a few months ago. When some decent reporting finally got done. Its not being positioned as anything its not, and this doesn't seem to be affecting subsidy levels anyway.

Vinod, I understand that you're trying to take the big picture into account, I just think you're doing a poor job of it. And anywhow, reductions on the level we need will likely require bio-fuels and hybrids of all kinds.

Deep Economy Book Review

Essential reading in our climate's 11th hour: Deep Economy: The Wealth of Communities and the Durable Future.

Deep Economy is the latest book by Bill McKibben, organizer of (public demonstrations to tell congress that we need an 80% reduction in carbon by 2050) and author of End of Nature (a book in 1989 that details the problem we face with global warming, an example of true leadership.)

This book begins with the idea that economic growth has ceased making us happy. Since 1950 we have been getting more but we've been getting steadily less happy. At the same we've gotten in our cars more often to drive to increasingly isolated homes. Also, he notes a study that found that the end price of goods very closely matches the total embodied energy within that good, meaning that the idea of an infinitely expanding economy might be myth.

The second chapter is recount of McKibben's year spent eating only locally produced food in his home of Vermont. This becomes a foil for his trip to Cuba, where trade embargoes created something truly unheard of in modern times: a physical and economic island. This caused them to be default organic and local farmers, and they've proven that local food economies do work.

The third chapter is a meditation on our societies individualism, what he calls hyper-individualism. The example given is when a Wal-Mart comes to a small town, each individual benefits from lower prices on their own goods, but the community suffers greatly. The community loses jobs and wages, and profit gets funneled to corporate accounts instead of staying in the community, while all the other shops close down. Other cultures might deplore this outcome, but not our hyper-individualist one.

The fourth chapter, The Wealth of Communities, makes the argument that local economies and communities don't work well for growth, but they do increase happiness and more equitable income distribution. It also so happens that they dramitcally reduce energy consumption.

The fifth chapter, The Durable Future, talks about what a world with an increasing quality of life for all people would look like. The current growth models for ending poverty won't work, as the world is already buckling under the weight of just one America. This is a synthesis of the entire book into the notion that what is good for the planet will turn out to be better for people's quality of life.

This book is a wonderful read; inspiring and necessary.

Friday, January 11, 2008

Inertia / Resistance / Tipping Points

Ecosystems are not linear systems. Neither are human societies. They are both complex systems, and I will posit here that they function in a similar manner.

Ecosystems tend to accept pollutants and continue functioning until a certain threshold is reached, the tipping point. Once this point is reached the system quickly deteriorates, often with positive feedback, meaning degradation begets degradation.

An example we all remember from An Inconvenient Truth is that as polar ice melts, there is less ice to reflect away the sun, meaning that the remaining ice melts faster.

It certainly seems reasonable to assume that our climate system works in the same way.

Yet, given all that we know, our society has not reached a point where it will commit to solving this problem. Our society still has a great inertia traveling in the direction of fossil fuels, inefficiency, and pollution. Our collective minds, thus, have a resistance to accepting this change of consciousness due to this societal inertia.

Hope resides in the capacity for this film to spur movement on the issue. When sufficient momentum is achieved we will break through this societal inertia, the societal tipping point. When we have passed this tipping point, people will not be satisfied with half-measures and placating solutions. This is the most important movement of a generation, critical mass is not a question of if but when.

The biggest question our culture has ever faced:

Will the societal tipping point precede the climate's tipping point?

Politics, Media, and Linear Thinking

Politics and Media

We no longer can view "environmental" policy as a single issue. Do we want stop importing foreign oil because it will reduce CO2 emissions, to ensure stable energy prices, to keep investment in the U.S., or to stop funding despotic regimes? We want all these outcomes, but is any one of them a single policy decision? If all environmental crises are interconnected, then so must the solutions.

I suppose this begs the question of whether our political landscape is ready to look at problem fundamentally and make fundamental changes. I'm not sure if its there yet. But the people are ready to open their minds to this. If this change in attitude can sustain momentum, it will result in a social and environmental justice movement like none seen since the civil rights movement. But in the near term of this presidential election, the focus must be to force every candidate to accept the basic truth of ecological crises, and then have the debate turn to their best solutions. This is the model we've seen in England, if only we could catch up to them.

We must apply the lessons of the past to the structure of the media today. A few years ago, there were people lining the streets saying there was no proof of WMD. The media marginalized these comments in favor of official memoranda in their reporting to the public. In the aftermath, the media has been blamed and taken partial responsibility for its role in the Iraq war. We must not let the media be the stone that sinks this ship. The media will be resistant to reporting the truth as it does not support entrenched interests. In fifty years, when there are 200 million environmental refugees, will it be acceptable for the media to wash their hands and apologize?

Linear thinking and Web based thinking

Our culture is based on the tradition of linear thinking. We seek to quantify and delineate processes. Linear thinking aims to create desired outcomes by controlling factors in reduced systems. Native cultures are more often use web-based thinking. Where understanding of how systems work is not necessary to observe what happens to inputs and outputs.

M. Pollen gives a great example of reductionist thinking in The Omnivore's Dilemma, where we "discovered" what makes plants grow: phosphorous, nitrogen, and potassium P-N-K. Thinking that we had solved the riddle of soil, we starting slapping PNK on our fields and getting great results. The green revolution has greatly increased food ouput and therefore human population, but it turns out that we hadn't really figured out the mystery of soil. Our lack of understanding has lead to the contamination of water, eroded soil, dead zones, and incipient nitrogen pollution in the air. What we found out is that soil is not so simple as we want it to be.

To this day, science can not identify all the organisms in a cubic foot of healthy soil. What we failed to understand is that soil, like so many living systems, is a complex system. We honestly can't claim to understand exactly how good soil is produced, but a permaculturalist can halt erosion, fix carbon, and reap nutrition by simply respecting that system.

It is reductionist thinking to state that we completely understand the climate system. But, like the permaculturalist, we know that we must respect this system and its vast complexity. Web based thinking will lead to the conclusion that we lack the ability to control the climate system and therefore must stop dumping base constituents into it and thinking that nothing will change.