Posts tagged “Vinod Khosla”
In January of this year, as I do each year, I made several predictions for 2014. One was that natural gas prices would be higher. That prediction is looking pretty solid, with natural gas inventories this week dropping below 1 trillion cubic feet for the first time since 2003 — 49% below the level of one year ago. As I have argued in recent articles, this is likely to mean a year of higher natural gas prices than what we have become accustomed to over the past couple of years.
Among the other predictions I made for 2014 was “KiOR will declare bankruptcy in 2014.” While it is still a bit early to write KiOR’s (NASDAQ: KIOR) obituary, the patient is looking pretty unhealthy. I have been getting a lot of emails asking for comment on their recently released annual report, and I would have had something posted already, but I was traveling during the first half of the week. So let’s dissect what has happened. CONTINUE»
What 60 Minutes Got Right
Following the recent 60 Minutes story The Cleantech Crash, Katie Fehrenbacher at Gigaom wrote a very good article called What 60 Minutes got right and wrong in its story on the “cleantech crash”.
In contrast to some who reacted with righteous indignation against the notion of any troubles in the world of cleantech, Katie noted, “60 Minutes got some key things right in the story”, notably that cleantech HAS crashed from a venture capital (VC) perspective.
Cleantech often requires much longer time horizons and higher capital expenditures before a VC has a chance of seeing a return on the investment. And as I have explained in the past, you can’t really afford to have a 10 percent success rate if that entails building 10 capital intensive biofuel plants before achieving success. It’s a very different model than a couple of guys starting an Internet company in their garage. You run out of money pretty quickly when building plants that fail to perform. CONTINUE»
In the previous article, I graded the 2013 predictions that I made a year ago. I scored well on the direction of oil and gas prices, the shrinking Brent-West Texas Intermediate (WTI) differential, and continued growth in US oil production (although it grew even faster than I expected). My only complete miss was that I expected approval for the northern leg of the Keystone XL pipeline. (The southern leg, incidentally, is scheduled to begin shipping oil this week from the major crude oil storage hub at Cushing, Oklahoma to the Gulf Coast near Houston).
Today I offer up my predictions, and the reasoning behind them, for what I think will transpire in 2014. One thing I have learned in making predictions is that they must be specific, and not subject to interpretation at the end of the year.
“The US oil industry will continue to thrive” is much too vague. “The price of crude will rise” is also too vague, because perhaps crude rises for part of the year, or perhaps some crudes rise and some don’t. On the other hand, “The average price of Brent crude will be higher in 2014 than in 2013” is specific and measurable. CONTINUE»
As a result of Sunday night’s 60 Minutes story about cleantech, a lot of people are emailing me or clicking in here for the first time. I will have a more in-depth report on my contribution to the story — including bits that didn’t survive the editing process for a more complete context of my positions — but for now let me offer some quick answers to some questions/comments that are coming up frequently. First, if you have no idea what I am talking about, here is the story that aired last night:
Ask and Ye Shall Receive
Last week, The Economist posed the following question: “What happened to biofuels?” The biofuels in question are so-called second generation biofuels that are produced from trees, grasses, algae, — in general, feedstocks that don’t also have a use as food. The appeal is obvious to anyone concerned about the world’s dependence on petroleum, and further worried that a major shift to biofuels will cause food prices to rise. So let’s address that question.
Entrepreneurs Revive a Century-Old Idea
About a decade ago, a number of entrepreneurs began to use their political influence to convince the US government that the only things keeping the US from running our cars on advanced biofuels was lack of government support, and interference from oil companies. These advocates eventually won over enough political support that state and federal governments began to funnel large amounts of taxpayer dollars into advanced biofuel ventures. President Bush spoke of running cars on switchgrass in his 2006 State of the Union address.
The federal government sought to deal with supposed oil company intransigence with a mandate requiring gasoline blends to contain growing volumes of corn ethanol initially, but starting in 2010 advanced biofuels as well. The federal government mandated that by the year 2022 the fuel supply had to use 36 billion gallons of biofuels, with 21 billion gallons coming from advanced biofuels. CONTINUE»
First Qualifying Cellulosic Ethanol
Last year, to much fanfare, the first batch of qualifying cellulosic ethanol was produced (i.e., it qualified for credits under the EPA program for certifying ethanol for sales). I reported on the development at that time.
Western Biomass Energy LLC, a subsidiary of Blue Sugars Corporation (previously KL Energy) reported the major milestone of claiming the first cellulosic ethanol tax credits under the RFS2 for a 20,069 gallon batch of cellulosic ethanol produced from bagasse (sugar cane waste) in April 2012.
However, regular readers are aware that for years I have been deeply skeptical that cellulosic ethanol as envisioned by — and ultimately mandated by — the US government will be an economic and scalable fuel option. The obstacles to success are significant, and I have described them in detail on many occasions.
In this week’s episode of R-Squared Energy TV, I answer a few questions about pathways to biofuels, cellulosic ethanol, and Vinod Khosla. I have to apologize this week, because the microphone was a bit away from my mouth, so the volume is lower than normal.
Some of the topics discussed this week are:
- Some of the commercially viable pathways for turning biomass into energy
- The prospects for drop-in fuels
- The shift in Vinod Khosla’s optimism over the past 5 years
- What I think Vinod’s statements to the Wall Street Journal really signal
With the recently announced foreclosure of Vinod Khosla venture Range Fuels, followed by the fire sale of Range Fuels’ assets to Vinod Khosla venture LanzaTech, I have been getting a lot of calls from reporters wanting to discuss exactly what happened here. After all, well over $300 million was invested into Range Fuels — including tens of millions of taxpayer dollars — and what resulted were assets that were ultimately bought by LanzaTech for about $5 million. Two articles were published over the weekend by journalists I spoke with last week: Georgia failure not the only ethanol misadventure Range Fuels fiasco: Finding renewal energy in Georgia forests didn’t work out This quote caught my eye from one of the articles:… Continue»
Recently it was announced that Range Fuels has gone into foreclosure, thus marking the official end of their story. For all practical purposes, the company has been finished since early 2011, but the foreclosure puts an end to the notion that they will yet rise triumphant from the ashes. Last week, Heather Duncan — a reporter for The Telegraph in Macon, Georgia — called me to discuss the Range story. She has just published an excellent summary of what went wrong at Range Fuels, and what lessons might be learned from their failure: Range Fuels failure raises the question: How much risk should the government take with taxpayer dollars? Here I want to excerpt some of the highlights from her… Continue»
Battle Over the Definition of Success in the ‘Cleantech’ Industry This past week PayPal co-founder Peter Thiel — who was also an early investor in Facebook — made headlines when he declared that “Cleantech is an increasingly large disaster that people in Silicon Valley aren’t even talking about any more. The failure in energy and transportation points to a larger failure in clean energy — we aren’t moving any faster, literally, than we were when modern airplanes first came out.” Those comments ruffled the feathers of Cleantech VC Vinod Khosla, who responded “Cleantech is not a disaster.” So who is correct? It depends entirely upon how one defines success: Over the last 12 months, Khosla has generated more than $1… Continue»