SAO PAULO (Reuters) - Billionaire Vinod Khosla took Big Oil to task on Monday for taking more risk on a long-odds deepwater oil well than on the future of biomass energy that he says will change the world within decades.
Speaking the 2011 Brazilian Ethanol Summit in Sao Paulo, the co-founder of Sun Microsystems said that the world is on the verge of a technological breakthrough in cost-effectively converting crops like sugarcane into most of the fuels and consumer products that petroleum now provides.
He bluntly chastised executives from energy companies such as Royal-Dutch Shell and Britain’s BP, who were sitting on stage with him before a crowd of 2,000 people, for what he said was a failure to sufficiently embrace biofuels.
“It’s not that oil companies don’t take risks. They will sink tens of millions into drilling new deep-water oil wells, some 3,000 meters below the ocean floor, with only 25 percent chance of success. That is risk taking,” he said.
“But when it comes to biomass, they only jump in when the technology has been well proven,” the Indian-born American venture capitalist, who has plowed his own money into new biotechnology ventures in recent years, chided.
The winners in his vision of the future world will be those who took the risks to invest in winning technologies, and those in possession of ample reserves of arable land to grow biomass crops, such as Brazil and the United States.
He said the coming technological breakthroughs could “actually create great risk for those companies like oil majors unwilling to take risks on new technologies at this point.”
Venture capital fund Khosla Ventures is the lead investor in the U.S.-based biotechnology firm Amyris that has teamed up with Brazilian sugarcane mills to produce advanced biofuels and biochemicals — including bio-jet fuel, biodiesel, plastics and cosmetics from cane by employing bioengineered yeasts.
But the oil executives in his panel were quick to rebut Khosla’s assessment of their investment plans and nearly all agreed with him that sugarcane had the most promising future for scalable biofuels production of all commercial crops.
Phillipe Goisseau, chief executive of gas and power at France’s Total said his company has committed $1.4 billion to becoming the world’s top three in cellulosic biofuels production. The company even has a 22 percent stakeholder in Khosla’s Amyris.
“Our largest allocation in the research and development budget is in biofuels,” Mark Gainsborough, vice-president of strategy and alternative energy at Shell, added.
BP’s chief executive of biofuels, Phil New, said his company had hundreds employed in the area of risk management and pointed out that oil majors had invested tens of billions in the biofuels sector.
“Biomass is the future. Hydrocarbons will remain the fuel of choice but biomass will be the source,” predicted Khosla. “The future is likely to hold cheaper hydrocarbons, cheaper than conventional ethanol, cheaper than petroleum and made from biomass.”
Editing by Jonathan Leff