Friday, August 28, 2009

Who is the most gullible venture capitalist in the world?

The prize for the most gullible private venture capitalist maybe goes to Vinod Khosla of Khosla Ventures. Old Vinod whose name in Hindi means Joy or Happy is also the slang name for a clown in certain Indian traditions. This guy who has no basic knowledge of thermodynamics has been the spokes person for alternate biofuels for the venture capital industry. Perhaps even more than Alfalfa Gore another thermodynamic want to be, Vinod has led the US and California governments astray with promises of unlimited bio fuels from all sorts of cellulosic sources with unrealistic expected costs.

On August 27 the Wall Street Journal reported on the fallacy of the biofuel industry and that it is running on empty The Wall Street Journal article focused on a company called Cello Energy of Alabama. Quoting the Wall Street Journal “The sector suffered a major setback this summer after a federal jury ruled that Cello Energy of Alabama, a plant-fiber-based biofuel producer, had defrauded investors. Backed by venture capitalist Vinod Khosla, Cello was expected to supply 70% of the 100.7 million gallons of cellulosic biofuels that the Environmental Protection Agency planned to blend into the U.S. fuel supply next year. The alleged fraud will almost certainly prevent the EPA from meeting its targets next year, energy analysts say. “

I guess old Vinod was taken by Cello. The story gets even more interesting and again quoting the Wall Street Journal article “This year, Khosla representatives took samples of diesel produced at the new Cello plant and sent them off for testing. The results showed no evidence of plant-based fuel: Carbon in the diesel was at least 50,000 years old, marking it as traditional fossil fuel.

The EPA wasn't told about the test, and continued to rely on Mr. Boykin's original claims when it asserted in the Federal Register in May that Cello could produce 70% of the cellulosic fuel targets set by Congress that are due to take effect next year.”

The question then should be asked is why did Vinod not reveal to the EPA the results of his test of Cello biodiesel that was carbon dated to long before when Fred Flintstone drove his foot mobile? Maybe Vinod had egg on his face or maybe he was trying to recover the millions of dollars he invested in Cello? My conclusion is that the US government is the most gullible venture capitalist in the world and the EPA stands for Easily Prayed Animals. The sad truth is for years I have been saying biofuel is biofool and Mother Nature never intended photosynthesis to provide liquid fuel for a billion internal combustion engines. Perhaps Vinod and Alfalfa will write a book tilted the “Convenient Untruth” when they reflect upon the nonsense they sold the EPA, CARB, and the US public on biofools.

This comment came from a Reader Phil Borland

Subject: Vinod Koshla retortDear Lindsay,I’m unsuccessful in trying to add the following to your article on our “friend” Vinod Koshla, can you help, please? Many, many thanks. As a point of personal reference, we met several times years ago at Marin Professions. I still remember you holding up you pressure vessel for filling up celebratory balloons! Hope that you made a killing on it!"There have been many more than Vinod Khosla who have been sucker-punched/duped by the expectations of bushels of money flowing into their pockets by supposedly cashing in on “helping” the environment. There are very few people, now, who actually believe that ethanol derived from corn is a sensible business or environmental solution – save those who are still trying to fund their failing and ever-subsidized ethanol ventures before the jig is up! Why do we insist on using food crops for fuel when there are other options? For your reference, please review the following article on Mr. Vinod Koshla: field, Koshla is investing in – cellulosic ethanol – is most probably also doomed. The large scale of the conversion plants and the massive amounts of biomass required to constantly feed them are standing in contradiction to the low energy contents of biomass. The logistics just do not pencil out. A Japanese scientist has recently presented at a symposium on biomass-derived fuels that the threshold for transporting biomass is at 30km or about 18 miles. Another point is that the ethanol pocess can only convert the cellulose, but not the lignin, which is a large share of the biomass. This is burned in boilers to provide the process heat. This again show the bad energy balance this process has. So even if it ever can become cost competitive, it is environmental nonsense – too little energy from too much feedstock transported and converted in an inefficient way. We have calculated that with the process explained now, it is possible to yield more than two times the energy from the same feedstock, which reduces the transport distance by 50%.There is a scientist in Germany who spent over 30 years working for the giant company, Siemens, pioneering in the development of a waste-to-fuel technology that mimics what took Mother Nature 300 million years to develop but is now done in a continuous three minute closed-loop cycle. This tried and proven technology, called the KDV is an acronym which means low pressure and low temperature catalytic depolymerization – that’s a mouthful, better use the letters, KDV! Dr. Christian Koch has, in effect, dedicated his life’s work in finding a way to convert almost all organic waste into a fuel that can be used worldwide. In case of biomass as feedstock, the fuel is an ultra low sulfur diesel fuel oil, a synthetic oil because it’s not derived from fossil fuel like other petroleum products. Dr. Koch has managed to convert all matter of hydrocarbon wastes: waste oil, bunker oil, cardboard, construction waste, plastics, and crop wastes (corn, sugar cane, African palm, pineapple, banana, etc., etc.) into this high grade diesel fuel oil which has both an extremely high lubricity and clean burn rate – a far cry from conventional diesel fuel AND no additives are needed or being blended like bio-diesel or ethanol is; it can be used straight from the tap, as is!Here’s my gripe: for obvious reasons, oil companies detest this technology, and members of our esteemed U.S. “bureaucracy” prefer to spend $385 million for a questionable technology, while they will not heed the call to convert organic “waste” into a very useable, in many cases carbon-neutral fuel that is less expensive than “regular” diesel, has obvious environmental benefits, is socially responsible, and can create more U.S. jobs. Interestingly, our foreign neighbors to the north, east, south and west are more strategic, they immediately see the value of diverting their waste stream into diesel fuel instead of going to the ever over-filling garbage dump. Moreover and here’s the worldwide clincher: the KDV technology can process, convert the hydrocarbon content in pre-sorted MSW, municipal solid waste, too. Yes, it’s more complicated and more costly (a longer ROI, Return On Investment) than a fast-track bean counter would like to see BUT the global benefits are what we’ve all been waiting for, praying to see for many years AND this alternative energy development couldn’t be more timely.If you are interested in learning more, please visit and you will see that the future is here, now.Phil Boland"Phil BolandPresident & CEOEnergy Visions, Inc.55 Rodeo Ave, Suite 25Sausalito, CA 94965 +1 415.298.3582 Direct +1 415.499.8242 Office philipboland Skype


  1. From the New Republic posted by Lindsay

    How Big A Deal Is The Alabama Biofuel Scandal?
    Author Info Needed
    Author Info NeededPlaceholder Authorview bioBusiness as Usual An Evening in Support of the Bahais of Iran Blair Ghost Project July 8, 2009 | 12:45 pm
    .In 2007, a tiny Alabama start-up called Cello Energy was running around telling people that it had devised a way to produce cellulosic ethanol at $16 per barrel, using material like hay, switchgrass, and wood chips. Investors perked up and started plunking down millions of dollars for the venture. Cellulosic ethanol, after all, is a promising concept—a low-carbon biofuel that wouldn't have all the problems associated with using corn or soy as feedstock. True, cellulosic ethanol isn't commercial quite yet, but scientists are perennially insisting that it's just around the corner.

    Well, turns out the whole thing was too good to be true. Not only were Cello's promises overblown, but an Alabama jury just found the start-up guilty of fraud, ordering the company to by $10.4 million to one of its investors, pulpmaker Parsons & Whittemore. At Earth2Tech, Josie Garthwaite sorts through the court documents and points out that most of Cello's backers, including P&W and noted Silicon Valley venture capitalists Khosla Ventures, didn't really do due diligence on Cello at all. (A lot of venture capitalist are lavishing money on next-generation biofuels, and Khosla is one of the most hyperactive.)

    Anyway, if this was just a case of a few investors losing their shirts, it would be mundane news. But there's a policy angle, too. It turns out the EPA may not have done its due diligence, either. The EPA's Renewable Fuel Standard, which is currently being updated, mandates 36 billion gallons worth of biofuel to be produced in the United States by 2022 (up from 9 billion this year). As part of the revised standard, the EPA is expecting 100 million gallons worth of cellulosic ethanol to be produced in 2010. But, as Garthwaite reports, the agency was counting on 70 million of those gallons to come from… Cello Energy. And Cello's not going to get anywhere near that amount—a best-case scenario is about 20 million gallons, assuming the technology even works.

    So the EPA basically has two options: either offer up new subsidies to ethanol makers or reassess whether the targets in the revised Renewable Fuel Standard are too ambitious (the EPA's comment period for the updated standard is still ongoing). There's already been a great deal of concern that the frantic push for corn- and soy-based ethanol has been counterproductive from an emissions standpoint—since, if diverting crops for fuel leads to farmers elsewhere cutting down forests for crop land, some types of ethanol may actually be worse for the environment than gasoline. And there are worries that the push to increase the required ethanol blend in gasoline may damage motors or reduce mileage. Add to all that new questions about whether the EPA's targets for next-generation biofuels are unrealistic, too.

    --Bradford Plumer

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