The danger with all evangelists, even of the green variety, is that they become so mesmerised by their message that they ignore any dissent or conflicting points of view. Vinod Khosla, the high-profile California-based venture capitalist and a partner in the well-known firm, Kleiner, Perkins, Caufield & Byers, is on a mission to propagate ethanol as the automobile fuel of the future, and nothing, it would seem, will deflect him from overstating his case.
In Pune recently, he repeated his pitch, pointing out that it was wrong to enter into oil purchase contracts with "unstable" governments like Sudan and Nigeria (which appears to imply that he has no problems with the feudal state of Saudi Arabia, and others of its ilk). "We are increasing our import bill," he told DNA. "We are forcing the consumers to pay more." Instead, he made a case for India to change the way it was handling its energy security. The government and public sector oil refineries should enter into long-term contracts with Brazil, the world's leading manufacturer of ethanol. Brazil has indeed blazed a new trail by making "gasohol" for some years out of cane, which is abundantly produced. Today, as much as half the cane grown in Brazil is converted to this form of energy.
Coincidentally, a new geopolitical formation in the making called IBSA standing for India, Brazil and South Africa, as large, democratic, market economies is shortly entering into trade agreements to lower tariffs between themselves. Discussions at the summit in Brazil on September 13 between these three countries, which Prime Minister Manmohan Singh is attending, will specifically revolve around cooperation on energy, among other issues. While Brazil is far advanced on ethanol, South Africa has expertise in gasifying coal and India is conversant with solar and bio-diesel technology.
No wonder that the venture capitalist in Khosla is brimming with confidence. "It's not very often that we see a new market opening," he says. "It would be worth hundreds of billions of dollars if we can replace petroleum." The prospect of no longer depending on oil supplies from despotic regimes throughout the world must make many investors in industrial countries excited. Khosla was in discussions in Pune with the head of Praj Industries, Promod Chaudhuri, who makes equipment for sugar mills but is also switching to similar equipment for ethanol. In May, Khosla invested Rs 100 crore in this company, presumably also as a token of remembrance for the city in which he was born.
But Khosla ought to heed the warnings by Lester Brown, the founder of the Worldwatch Institute in Washington, who now heads the Earth Policy Institute. He recently wrote about how US service stations may now compete with supermarkets for grain: "Cars, not people, will claim most of the increase in world grain consumption this year. The U.S. Department of Agriculture projects that world grain use will grow by 20 million tonnes in 2006. Of this, 14 million tons will be used to produce fuel for cars in the United States, leaving only 6 million tons to satisfy the world's growing food needs.
"In agricultural terms, the world appetite for automotive fuel is insatiable. The grain required to fill a 25-gallon SUV gas tank with ethanol just once will feed one person for a whole year. Investors are jumping on the highly profitable biofuel-bandwagon so fast that hardly a day goes by without another ethanol distillery or biodiesel refinery being announced somewhere in the world. The amount of corn used in U.S. ethanol distilleries has tripled in five years, jumping from 18 million tons in 2001 to an estimated 55 million tons from the 2006 crop. In some U.S. corn belt states, ethanol distilleries are taking over the corn supply. In Iowa, a staggering 55 ethanol plants are operating or have been proposed. Iowa State University economist Bob Wisner observes that if all these plants are built, they would use virtually all the corn grown in Iowa.
"In Asia, China and India are both building ethanol distilleries. In 2005, China converted some 2 million tons of grainmostly corn, but also some wheat and riceinto ethanol. In India ethanol is produced largely from sugarcane. Thailand is concentrating on ethanol from cassava, while Malaysia and Indonesia are investing heavily in additional palm oil plantations and in new biodiesel refineries. Within the last year or so, Malaysia has approved 32 biodiesel refineries, but recently has suspended further licensing while it assesses the adequacy of palm oil supplies." [see http://www.earth-policy.org/Updates/2006/Update55.htm]
Fuels will enter the global market even if they are produced in developing nations, posing a high risk of food shortages in poor nations. If poor countries start growing bio-fuels on land which can be used to cultivate grain like wheat or sorghum or cash crops like sugar cane, it is bad news for the millions who are undernourished. In another recent study, Brown has pointed out how the world only had 57 days of grain stocks, which can prove perilous if there is a famine in sub-Saharan Africa or anywhere else. Should global food security be sacrificed for cars? If bio-fuels are made from plants like jatropha in India, which is grown on degraded land, there is no problem and will help to green such areas.