Vinod Khosla\'s talk on the power of technology to revolutionize the alternative fuels industry

1. Renewable Energy: Maintech, not Cleantech Vinod Khosla Khosla Ventures Feb 2009

2. “ all progress depends on the unreasonable man” George Bernard Shaw

3. “A crisis is a terrible thing to waste.”

5. “ There is no reason for any individuals to have a computer in their home” -Ken Olsen, President, Chairman and Founder of DEC, 1977 Excuse: Missing Applications

6. “ Heavier-than-air flying machines are impossible” -Lord Kelvin, President, Royal Society 1895 Problem: Understanding of Physics

8. “ It is the mark of an educated person to look for precision only as far as the nature of the subject allows.” Aristotle

9. oil price forecasts (1985-2005) Data/Source: World Oil Prices (current $ / Barrel)- EIA Office of Integration Analysis and Forecasting Forecast Forecast Forecast Forecast Forecast Forecast Forecast Actual Actual Actual Actual Actual Actual Actual 10-yr Forecast Error 5-yr Forecast Error

10. gas price forecasts (1985-2005) Data/Source: Natural Gas Wellhead Prices (current $ /1000cf) - EIA Office of Integration Analysis and Forecasting Forecast Forecast Forecast Forecast Forecast Forecast Forecast Actual Actual Actual Actual Actual Actual Actual 10-yr Forecast Error 5-yr Forecast Error

11. coal price forecasts (1985-2005) Data/Source: Coal Prices to Elec. Generating Plants (current $ /million btu) - EIA Office of Integration Analysis and Forecasting Actual Actual Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast 10-yr Forecast Error 5-yr Forecast Error

15. “ extrapolation of the past” vs. “inventing the future”

17. 1990: Chindia ≈ 13% of CO 2 emissions 2005: Chindia ≈ 23% of CO 2 emissions 2030: Chindia ≈ 34% of CO 2 emissions EIA

18. “ China and India together account for 79 percent of the projected increase in world coal consumption from 2005 to 2030” EIA

19. …” relevant cost ” …” relevant scale ” …” relevant adoption ”

20. … the chindia test only scalable if competitive unsubsidized

21. … the scaling model brute force or exponential, distributed…

22. … the adoption risk financial, consumer acceptance, market entry

25. … cost and carbon trajectory

26. Cost trajectory: Undesirable (hydrogen fuel cell?) Subsidy/Support Needed Cost Fossil Fuel Cost Fossil + Carbon Cost Time

27. cost: driving down the cost curve Source: “The Carbon Productivity Challenge”, McKinsey – Original from UC Berkely Energy Resource Group, Navigant Consulting

28. cost: not all technology curves are the same Cheapest now does not mean cheapest later! Trajectory Matters! Solar PV Wind Coal

29. declining technology cost … Crystalline Silicon Amorphous Silicon Thin-Film Thin-Film Multi-Junction Generations of Solar Photovoltaics…

30. but tech cost decline isn’t enough… Construction Cost Inputs (Feedstock/Land) Technology Cost Total Cost Total cost decline is based on relative proportion of cost “types”…

31. Carbon trajectory: Undesirable (natural gas?) Carbon Emissions Trajectory Desired Goal (80% below fossil?) Time

32. … the adoption risk financial, consumer acceptance, market entry

33. adoption risk - $2,500 nano Internal combustion engine or Hydrogen / electric?

34. adoption risk: U.S. mill closures

35. … optionality

36. Pyrolisis optionality: biofuels feedstocks & pathways … Mixalco Process Glycerin Natural Oils BioDiesel (FAME or FAEE) Methanol/Ethanol Gasification Syngas Fermentation Ethanol/Butanol BTL Diesel Mixed Higher Alcohol Methane Microbial cultures Dimethylfuran Gasoline, Diesel, Hydrocarbons Ethanol, Butanol, Renewable Petroleum FermDiesel Sugars/ Starch Fermentation Biogasoline ETG via catalysis Biomass Cellulose/ Hemicellulose Acid or Enzyme Hydrolysis Saccharification Ethanol Algae + Sunlight – CO2 Cell Mass Hydrocracking Waste Fischer-Tropspch catalysis BioDiesel (FAME or FAEE) Catalytic Conversion Butanol Diesel Transesterification Catalysis and Aqueous phase Reforming Fermentation Catalytic Conversion Ethanol Biocrude

37. optionality: hybrids or biofuels? Time % of power from liquid fuel % of power from electric sources 0% 0% 100% 100% Fast (relative) battery tech development Slow battery tech development

38. … capital formation

40. … carbon reduction capacity

41. Carbon Productivity Growth Required = 5.6%/yr World GDP Growth = 3.1%/yr Source: “The Carbon Productivity Challenge”, McKinsey – Original GDP projection from Global Insight through 2037 Less reduction now, but greater capacity to respond in the future? Carbon Productivity = GDP / Emissions World GDP Growth Emission decrease to 20GT CO 2 e by 2050 = - 2.4%/yr carbon reduction capacity: 10X increase in carbon productivity!

42. Growth Offers the Greatest Carbon Reduction Opportunity ! carbon reduction capacity is key Improvement of current stock Replacement of old stock Growth stock

43. goal: cost, carbon reduction capacity, carbon & scaling trajectory, capital formation, low adoption risk, & optionality

47. irrational ideas: eat kangaroos, not cows! Source – http://www.reuters.com/article/environmentNews/idUSSYD8867720080808 “ SYDNEY (Reuters) - Farming kangaroos instead of sheep and cattle in Australia could cut by almost a quarter the greenhouse gases produced by grazing livestock, which account for 11 percent of the nation's annual emissions, said a new study.”

54. “ no change bigotry” vs. “environmental everything” vs. pragmentalists

56. … technology expands the “Art of the Possible” … today’s “unimaginable” or tomorrow’s “conventional wisdom” … the power of ideas driven by entrepreneurial energy

57. “ Black Swans” and forecasting

61. Biocrude Crude oil Refinery Kior: “biocrude” replaces crude Millions of Years

62. Kior: Millions of years  Minutes! 0 5 10 15 20 25 30 35 40 45 50 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 TAN ( mgKOH/g ) Oxygen (wt %) Biomass Thermal Cracking (Pyrolysis- seconds) Geo Thermal Conversion (Million of years) Catalytic Cracking (BCC in minutes)

64. Soraa/Kaai/Lumenz: lasers and lighting

68. … our renewable portfolio

69. Cellulosic Ethanol Sugar Feedstocks Starch Feedstocks Tools Solar Natural Gas Mechanical Efficiency Electrical Efficiency Cellulosic Future Fuels Plastics Water Materials Sequestration Tools EPC Waste Water Water Desalination PVC Plasticizers Polyurethane Polyethylene Glass Cement Distributed Solar Utility Scale Solar Coal Efficiency Oil Homes Engines Appliances Pumps Lighting Batteries Motors Engineered Geothermal Wind Storage Synthetic Natural Gas Corn/ Sugar Fuels Wind Building Materials Geothermal Butanol Cellul. Diesel Cellul. Gasoline Cellul. Jet Fuel Khosla Ventures Renewable Portfolio

70. Mascoma Range Coskata Lanza Cilion Tools Solar Natural Gas Mechanical Efficiency Electrical Efficiency Cellulosic Future Fuels Plastics Water Materials Nanostellar Codon NanoH2O Draths Segetis Soladigm Calera Stion Ausra Infinia PVT Coal Efficiency Oil PAX Streamline EcoMotors Transonic Tula Hybradrive Seeo Kaai Soraa Lumenz Topanga GIV Gridshift AltaRock Great Point Energy Corn/ Sugar Fuels Wind Building Materials Geothermal Amyris LS9 Gevo KiOR Khosla Ventures Renewable Portfolio Sakti3 Firefly Ramu

71. Together, our products will improve the way all people live

72. Calera Corporation Built on carbon negative cement

73. Living Homes And prefabricated, environmentally friendly, cheaper, LEEDS homes

74. Soladigm Using electrochromatic windows

75. Amyris LS9 Gevo Kior Mascoma Range Fuels Coskata LanzaTech Fueled from renewable sources

76. Ramu EcoMotors Transonic Firefly Seeo Sakti3 Nanostellar Tula Technologies With reduced fuel consumption and CO 2 emissions Hybradrive

77. Topanga Lit by high intensity, low power discharge lighting

78. Ausra Altarock Infinia Stion PVT Solar Using renewable electricity

79. Great Point Energy Cooking with natural gas from clean coal & biomass

80. Group IV Lumenz Reading with LED lighting Soraa

81. Kaai Watching HD laser TV

82. NanoH2O Drinking desalinated water

83. Segetis Safely using biobased plastics and chemicals

84. Draths Biobased materials for your home

85. Pax Streamline Staying comfortable with more efficient air conditioning

86. Change every aspect of daily living

88. … or get to work [email_address] khoslaventures.com/resources.html

89. Biofuels Case Study

94. energy crops: Sorghum 25 tons/acre (Prof. Holtzapple- Texas A&M)

95. the perennial advantage

96. Previously Switchgrass Previously Fallow

98. Companies

100. pilot plant

102. Steel mill waste gas Biomass syngas Ethanol & Butanol fuels OR + LanzaTech Process waste gas to fuel Carbon monoxide gas +

103. separation Milling Enzymes Nutrients Fermentation Gasoline Blend stock Chemical Precursor Feed Products Feedstock Gevo Biocatalyst Retrofit of ethanol plants Proprietary Bio-processing Future: Any bio-based sugar source Create market options Start with Jet Fuel Iso-Octane Proprietary Chemical processing Diesel Blend stock Regional Fuel and Chemical Biorefinery Diesel Chemical Products Materials gevo Advancing the New Era of Renewables

104. Synthetic Biology Recombinant Small Molecule Bio-Synthetic Pathway Gene 4 Gene 2 Gene 1 Gene 3 Gene 1 Artimisinin Source of genes Custom-Built Microbe Fermentation Diesel Synthetic Biology = Fermentation Diesel X Anti-Malarial

105. Hydrocarbon Biosynthesis Nature’s Energy Storage Metabolic modeling + Synthetic biology Renewable Feedstock LS9 Designer Biofuels & Chemicals X X X X X X X X >90% Energetic Yield From Feedstock Hydrocarbons

106. Biocrude Crude oil Refinery Kior: “biocrude” replaces crude Millions of Years

107. Kior: Millions of years  Minutes! 0 5 10 15 20 25 30 35 40 45 50 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 TAN ( mgKOH/g ) Oxygen (wt %) Biomass Thermal Cracking (Pyrolysis- seconds) Geo Thermal Conversion (Million of years) Catalytic Cracking (BCC in minutes)

108. biomass, geopolitics, and poverty Biomass & Poverty Belt

110. … or get to work [email_address] khoslaventures.com/resources.html

113. livestock – the numbers Source: “The Climate Healers”, Saliesh Rao What is the real culprit in land use increase?

114. trajectory: biodiesel vs. ethanol vs. cellulosic Diesel “ Classic” Biodiesel Carbon reduction - 2008 80% Carbon reduction – 2012 80% Scalability (2030 Gallons/acre) 600-900 Sustainability (2030) Poor Unsubsidized 10 yr market competitiveness Poor (@ $45 oil price) Ethanol 20-30% 80% 2500 (cellulosic) High Good (@ $45 oil price) Cellulosic Diesel Not Available 80% 2500 (cellulosic) High Good (@ $45 oil price)