The Oil Debate, Round II: Khosla vs. Patzek

If there’s one technology challenge most important to the country’s future, it is the technology of energy.

Energy reserves, and the need to secure them, is a good part of the reason we’re in Iraq, losing lives. It’s why we are so interlocked in the Israel-Middle East conflict. It is why we have terrorists on our hands. It’s why the state of California is suing automakers and saying ocean levels are rising along the state coast.

And now Californian taxpayers have to decide: If we vote to pump $4 billion into alternative energies, as Prop. 87 would have us do during elections next month, will it be the right thing to do. Or a waste of money?One man leading the political investment charge in favor of all this is well-known Silicon Valley venture capitalist Vinod Khosla. He made more money by investing telecommunications start-ups over the past decade than just about anyone. Now he’s switched focus, to energy. He thinks ethanol is where we need to begin to wean ourselves from oil addiction • and advocates a massive build up of ethanol facilities.

In round one of Oil Drum Debate, last month, we pitted him against Robert Rapier, who was deft at criticizing Khosla’s assumptions about ethanol’s viability. We concluded that round saying Rapier came out the stronger — at least, based on science that was argued (science being different from ethics). Khosla failed to appreciate how much energy it takes to produce ethanol, Rapier said, and quite convincingly.

Now we’re moving to round two. We’re going to pass on hashing through the science again; there are pleny of papers out there, and as many differences of opinion on the viability of ethanol.

But Khosla has since written a piece in Wired, where, like a chess-master, he maneuvered from being a point down to laying out a different argument — and he may have set the game even. In a nutshell, he says the real focus should be on what is achievable in a few years — say five or ten — and not on today’s technology limits. While Rapier still dismisses Khosla’s repeated support of ethanol as a viable energy source, Khosla says he’s missing the point.

patzek.jpgSo here is round two of the oil debate. This time, we take Khosla’s latest argument, and pit it against the argument of another critic: Tad Patzek (pictured here), a professor of civil and engineering at Berkeley. Those two met recently for a private debate at the offices of Richard Newton, the dean of engineering at UC Berkeley. Newton was at hand to take it all in, and he told us his verdict. Newton said both sides had ample time to consider each other’s arguments, and that he came down in favor of Khosla.

richardnewton.jpgThe debate came about after Khosla gave a speech criticizing a now-famous Patzek paper written by Patzek and colleague David Pimentel. Their paper stirred controversy because it suggested that ethanol isn’t net energy positive. In other words, you don’t get any more energy out of ethanol than you put into it to produce it. However, that paper also listed several caveats, and the science community roundly criticized it, although could not dismiss it. So Newton (pictured here) approached Khosla to see if he’d consider debating Patzek. They meet on Sept 28, for an hour and a quarter. They ended debating for more than two hours, Newton said.

Here’s how Newton summarized the debate to VentureBeat in an interview:

The real big difference, Newton told us, is that Patzek is an engineer’s engineer — he’s thorough, thoughtful and considered. He wants to get “the right answer.” What frustrates Patzek, Newton explains, is when people form arguments that don’t include all the facts. Inconvenient facts that people want ignore, or brush off as “second-order,” will often have long-term devastating effects. As such, Patzek believes it is naïve to think ethanol can become the viable energy alternative that its advocates say it can, without negative repercussions.

Khosla, however, argued that while Patzek’s perspective is important, it’s not about the status-quo — it is about the trajectory, or direction that science is going in.

Now, both Newton and Khosla know what riding the trajectory means. Together, they rode Moore’s Law in their careers. Moore’s Law says the number of transistors and resistors on a chip doubles every 18 months. This exponential progress led to impressive breakthroughs in technology, helping the telecommunications revolution, and creating substantial wealth (which Khosla knows, because he invested in these companies. Newton, meanwhile, helped found several). People were skeptical of Moore’s Law when it was first proposed, Newton explains. “Who would have thought we’d have a billion transistor on a chip, starting with just four or five on a chip a few decades ago?” Khosla argues that the science behind whether ethanol is net energy positive itself is uncertain by “a factor of two or three here or there”. But that’s not important anyway. If you dwell on this, you’re missing the important factors related to innovation.

“If I had to summarize it, Tad sees the glass half-empty. To every argument, he says ‘yeah, but…’” says Newton. “And Vinod looks at this as an entrepreneur and very successful investor in technology, and says the glass is half-full. Vindod always has an answer: ‘It depends on innovation.’”

Newton sides with Khosla on this: “Absolutely correct.”

Patzek admitted, too, that if Khosla’s assumptions about innovation are accurate, most of Khosla’s arguments would also be accurate. Khosla argues that advances will be made in biofuels, batteries and material efficiencies (making lighter cars, for example).

Here’s an example of the sort of argument the two had:

If you do the math on the source of biomass in U.S., you’ll find there’s not enough land to produce all the material you need for ethanol to be an adequate alternative, according to Patzek. Considering current energy densities in crops, the only way to produce biofuels efficiently is by growing it in the tropics. To do that, however, you’re going to have to displace existing important resources growing there, namely tropical rainforest. This would create yet another kind of imbalance, and there’s a consensus on this. So Patzek argues that we’d be causing additional long-term problems we may not fully understand yet.

Khosla agrees that is important. However, through innovation in materials used, and in ways to process them, he believes we can solve these problems. While ethanol is critically important for the first step of the process of displacing oil, even Khosla doesn’t believe that ethanol is the final answer. Ethanol will, though, help break the back of the traditional distribution model of petro-chemicals. And then, if you can produce a higher order hydrocarbon, like butanol, you can solve the rest of the problems.

Ethanol, for example, absorbs water easily, and so it is difficult to pipe (if it absorbs water during the transportation phase, it becomes useless). So you have to produce special pipelines. Or you consume it locally. Also, ethanol is produced by being dissolved in water, and it takes energy to distill it. (This is where Rapier criticized Khosla). However, if you can produce butanol (and Dupont and BP are working on this, via a joint venture), which is not water-soluble, and also takes less energy to produce, you can pump it using conventional technologies. “It is a ways off,” explains Newton. “But it is an example of ‘let’s get going with ethanol and move the technology forward.’”

Newton concludes: “I’m with Vinod on this, having had experience with Moore’s Law. But it’s such an easy one to target if you’re on the other side of the fence.”

Newton said the two left with Patzek agreeing to review Khosla’s papers and give him specific feedback so that Khosla could develop more answers for Patzek.

So where do we stand now? Like the end of round one, we’ve decided science is not the only factor on which to judge policy decisions– or at least, not current science. With Newton’s considered endorsement, we’re feeling a lot better about Khosla’s arguments than we did at the end of round one. At the same time, though, if the state is going to spend $4 billion (under Prop 87, if it passes) on ways to promote these alternative fuels like ethanol, when there’s so much uncertainty about the science — we’d better have some very good public oversight to make sure it gets spent wisely. And we’re not sure there’s enough public oversight — but we’ll leave that for another time.