Entrepreneur says green tech must first make economic sense
Vinod Khosla spoke at the Business School on Nov. 10 as part of an annual lecture series on the environment.
BY MICHELE CHANDLER
Venture capitalist Vinod Khosla warned that the world cannot simply conserve its way out of the current environmental crisis and must instead create technology alternatives that are both affordable and widely accepted by consumers across the globe.
Khosla hammered that message home to the audience of roughly 275 people who attended the 18th annual Conradin von Gugelberg Memorial Lecture on the Environment at the Stanford Graduate School of Business on Nov. 10.
The founding chief executive officer of technology giant Sun Microsystems, Khosla went on in 2004 to launch a venture capital firm that supports investments in both conventional companies and social impact initiatives.
During his Business School appearance, Khosla took issue with the wisdom of zero-emission buildings and hybrid vehicles, saying any climate change solution must first make economic sense in order to truly be effective. "Free market capitalism is in fact the only thing that will solve the problem," he said. "There is such a thing as too much green, falling so in love with green that we waste our resources trying to do un-economic things."
He presented data showing that while the all-electric powered GM Volt, expected to be sold starting in 2010, would emit 144 grams of carbon dioxide per mile, it would also cost a hefty $623 a month to drive, and much of the electricity required to power the car would be created by burning coal.
"A Prius might save you, depending on your calculations, a half a ton to 2 tons of carbon a year," Khosla said, referring to the battery-and-gasoline-powered Toyota car. But, he added, "Just painting your [home's] roof white saves you 10 tons of CO2. That's good economics. Instead of spending $5,000 extra for that Prius, you could spend a few hundred dollars to replace the light bulbs in your house with more efficient ones and save a lot more carbon."
He also highlighted a three-year pilot project in Oakland involving zero-emission hydrogen fuel cell buses that found it cost $1.61 per mile to operate a diesel vehicle but more than 30 times that amount—$51.66 per mile—to run a zero-emission hydrogen fuel cell bus. "If, as environmentalists, we keep pushing these ideas, we'll end up on the fringe," Khosla warned.
Another of his examples of questionable climate change solutions were zero-emission or green buildings, which Khosla called "the latest fashion." He explained: "It is so much more efficient to generate power centrally. To try and make each building self-sufficient is just fundamentally a bad idea. If it happens that a building is zero emission because it is the best economics, great, go for it. But let's not make zero emission the goal. Let's make low-cost green the goal."
His Menlo Park-based venture firm has invested in about 45 early-stage, environmentally friendly ideas, including a ceramic battery that can produce 10 times the energy density of its lead-based counterpart at one-tenth the cost and a technology that seeks to convert algae to ethanol.
He calls them potential "Black Swans"—beneficial discoveries that are beyond the realm of normal expectations.
In response to a question from the audience about where incoming President Barack Obama channel a proposed $150 million earmarked for development of green technology, Khosla said the upcoming administration should direct that money to universities, where more students than ever are researching energy solutions and new technologies.
Energy, Khosla said, "is the hottest field now for new graduate students picking their majors. Because the best talent, the best brains, will be in energy five or 10 years from now, that's very encouraging to me."
Khosla, who earned an MBA from the Graduate School of Business in 1980, also holds a bachelor's degree in electrical engineering from the Indian Institute of Technology in New Delhi and a master's degree in biomedical engineering from Carnegie Mellon University.
The annual Conradin von Gugelberg Memorial Lecture series was founded to motivate and support students interested in environmental issues and was presented by the Public Management Program of the Graduate School of Business and Stanford's Woods Institute for the Environment.
Michele Chandler is assistant director of communications at the Graduate School of Business.