Four-Pronged Effort to Promote Ethanol in the U.S.
Last month, Sun Microsystems co-founder and ethanol investor Vinod Khosla outlined four-step strategy that he told fellow venture capitalists would help the U.S. use more ethanol.
I. A government mandate should state that by 2014, 70 % of all cars sold in the U.S. be flex-fuel vehicles, and that 10% of all major-branded gas stations in the U.S. sell E85.
II. The current government ethanol subsidy of 50 cents/gallon should be based on a sliding scale corresponding to the price of oil: 25 cents/gallon if oil is at $75 a barrel ranging up to 75 cents/gallon if oil falls to $25 a barrel. Khosla explained, “It indicates to Saudi Arabia, or (Venezuelan President Hugo) Chavez or whoever your favorite manipulator is that they can’t manipulate the markets,” driving out alternative fuels.
III. Lift tariffs on imports of ethanol from Brazil, which is strongly opposed by U.S. farmers, in exchange for increasing corn-derived ethanol in gasoline from 10- 15%, a move Khosla said was supported by some in the agriculture industry.
IV. The ethanol industry or the government must to pay for these mandates. He said installing the gas pumps would cost something less than a billion dollars and making cars flex-fuel amounts to $35-$100 a vehicle. “We’re spending so much on energy security, spending that kind of money is a worthwhile investment,” Khosla said.