Posted by Martin LaMonica | 2 comments
WASHINGTON--Famed venture capitalist Vinod Khosla told energy and
environmental ministers from around the world they greatly
underestimate how rapidly energy is moving toward renewable sources.
Khosla was a speaker during the ministerial plenary at the Washington
International Renewable Energy Conference (WIREC) 2008 here on
Tuesday, where he argued that the energy industry is undergoing a
technology disruption, much the way that telecom and computing did
decades ago.
Vinod Khosla argues that people underestimate the pace of technology
change in energy.
(Credit: Martin LaMonica/CNET Networks)
The reason people don't appreciate the pace of change is faulty
projections, he said. Government officials and businesspeople trust
market forecasts which have consistently been far off-base.
People believed that it would take decades for mobile phones to become
widespread, but it happened much quicker because they had mistakenly
assumed that the phones would remain the same as the original clunky
prototypes. McKinsey forecast that there would be less than 1 million
cell phones sold between 1980 and 2000, when the actual number was
more like 109 million.
"We are repeating the same mistakes in energy," Khosla said. "It's
hard for people to imagine what energy will look like in 10 or 15
years."
Because technology change happens faster than most people anticipate,
he believes that several renewable energy technologies will become
cost-competitive within five or ten years.
He forecast electricity production at the same price as fossil fuel
power plants, biofuels from non-food sources at $1 a gallon,
high-efficiency engines and lighting, and carbon neutral cement
production.
"All these technologies are in development today. Oil will have to be
$35 per gallon to compete," he said.
Underlying his assumptions, however, is a rapid adoption of these
energy technologies.
To achieve these cost efficiencies, new energy technologies have to
pass what Khosla calls the "Chindia test." That is, the need to be
cheap enough for China, India, and other developing countries to
purchase.
That scale will accelerate technology development and adoption, he
argued. Expensive products like plug-in hybrid cars, which may be the
darlings of environmentalists, simply won't drive large-scale change,
he said.
"Plug-in hybrids are irrelevant because they are too expensive. Unless
you can make 500 million or 800 million of those, it won't matter," he
said.
His contention that plug-in hybrids are irrelevant, or "toys," a case
he made late last year at a conference, brought fierce criticism from
environmentalists.
Although a longtime denizen of Silicon Valley, Khosla is no stranger
to Washington, D.C., where he has presented to congresspeople and
lobbied for supportive policies.
The U.S. government should boost investment in research and technology
and implement regulations that put a price on carbon emissions, he
said.
Clearly an optimist, Khosla ticked off a number of technologies he has
invested in that could shift the energy industry from fossil fuels,
including solar thermal power, cellulosic ethanol, advanced
geothermal, synthetic liquid fuels, and energy efficiency.
"We are mounting a war on oil, a war on coal, a war for efficiency and
renewable materials," he said.
WASHINGTON--Famed venture capitalist Vinod Khosla told energy and
environmental ministers from around the world they greatly
underestimate how rapidly energy is moving toward renewable sources.
Khosla was a speaker during the ministerial plenary at the Washington
International Renewable Energy Conference (WIREC) 2008 here on
Tuesday, where he argued that the energy industry is undergoing a
technology disruption, much the way that telecom and computing did
decades ago.
Vinod Khosla argues that people underestimate the pace of technology
change in energy.
(Credit: Martin LaMonica/CNET Networks)
The reason people don't appreciate the pace of change is faulty
projections, he said. Government officials and businesspeople trust
market forecasts which have consistently been far off-base.
People believed that it would take decades for mobile phones to become
widespread, but it happened much quicker because they had mistakenly
assumed that the phones would remain the same as the original clunky
prototypes. McKinsey forecast that there would be less than 1 million
cell phones sold between 1980 and 2000, when the actual number was
more like 109 million.
"We are repeating the same mistakes in energy," Khosla said. "It's
hard for people to imagine what energy will look like in 10 or 15
years."
Because technology change happens faster than most people anticipate,
he believes that several renewable energy technologies will become
cost-competitive within five or ten years.
He forecast electricity production at the same price as fossil fuel
power plants, biofuels from non-food sources at $1 a gallon,
high-efficiency engines and lighting, and carbon neutral cement
production.
"All these technologies are in development today. Oil will have to be
$35 per gallon to compete," he said.
Underlying his assumptions, however, is a rapid adoption of these
energy technologies.
To achieve these cost efficiencies, new energy technologies have to
pass what Khosla calls the "Chindia test." That is, the need to be
cheap enough for China, India, and other developing countries to
purchase.
That scale will accelerate technology development and adoption, he
argued. Expensive products like plug-in hybrid cars, which may be the
darlings of environmentalists, simply won't drive large-scale change,
he said.
"Plug-in hybrids are irrelevant because they are too expensive. Unless
you can make 500 million or 800 million of those, it won't matter," he
said.
His contention that plug-in hybrids are irrelevant, or "toys," a case
he made late last year at a conference, brought fierce criticism from
environmentalists.
Although a longtime denizen of Silicon Valley, Khosla is no stranger
to Washington, D.C., where he has presented to congresspeople and
lobbied for supportive policies.
The U.S. government should boost investment in research and technology
and implement regulations that put a price on carbon emissions, he
said.
Clearly an optimist, Khosla ticked off a number of technologies he has
invested in that could shift the energy industry from fossil fuels,
including solar thermal power, cellulosic ethanol, advanced
geothermal, synthetic liquid fuels, and energy efficiency.
"We are mounting a war on oil, a war on coal, a war for efficiency and
renewable materials," he said.
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