Page One

Biofuel, Green Tech Boosters See Promise of Green Riches

By Richard Brenneman
Tuesday March 11, 2008

For investors, biofuels and other green technology could be the Next Big Thing, Al Gore’s business partner told Berkeley faculty and students Friday.  

“We’re on the brink of something that’s bigger than the Internet,” said John Doerr, a partner at Kleiner Perkins Caufield & Byers (KPCB), one of the nation’s leading high-tech venture capital firms. Gore joined the team in November, which also includes Colin Powell as a “strategic limited partner.” 

Equally bullish was Doug Cameron, chief scientist for Khosla Ventures, who joined the investment side of the biotech business from his previous post at Cargill, a giant of the agrobusiness world. 

Khosla and KPCB are throwing big dollars at biofuel—or agrofuel, as critics like UC Berkeley’s Miguel Altieri and Ignacio Chapela prefer to call them. 

Both KPCB and Khosla have placed bets on corporations created by the two men who head UC Berkeley’s biggest synthetic fuel programs, Chris Somerville of the Energy Biosciences Institute (EBI) and Jay Keasling of the Joint BioEnergy Institute (JBEI). 

Both firms are backing the Somerville-created LS9, which has trademarked the phrase “the Renewable Petroleum Company,” and the Keasling-founded Amyris Biotechnologies. Doerr serves on the Amyris board, and Cameron briefly served as the company’s CEO. And according to the LS9 website, Keasling was also present at the meeting which resulted in the creation of that Somerville-founded company. 

Amyris and the Keasling-run JBEI have both leased space in the same new Emeryville lab complex. 

Another Somerville-created company, Mendel Biotechnology, is receiving funds from biofuel development funding from two corporate giants, Monsanto and BP—the latter, a British oil company, also being the source of the $500 million in funds for the Somerville-headed EBI. 

Mendel also owns the world’s largest collection of miscanthus germ plasm, the genetic code for the crop that EBI research is focusing on as a leading candidate as the perennial source for “feedstock” for fuel, thanks to its acquisition last March of Tinplant Biotechnick, a German company. That sale was announced two months after BP and UC Berkeley announced the award of the EBI grant. 

Madhu Khanna, a University of Illinois, Urbana-Campaign agricultural economist, said miscanthus is the most promising crop now under investigation at her school, which is a partner with UC Berkeley and Lawrence Berkeley National Lab in the EBI project. 

Mendel is also working with another major biotech firm, Bayer. 


Other players 

In addition to these deep-pocket investors, the UC Berkeley Energy Symposium brought together leading scientists and some political heavy hitters to address technologies that could transform the future of energy, ranging from nuclear to solar and building design. 

Politics entered the picture early on, with the keynote address from David Sandalow, chair of the Clinton Global Initiative’s Energy & Climate Working Group, a Brookings Institution Senior Fellow and former Assistant Secretary of State and Senior Director of Environmental Affairs for the National Security Council. 

“It is no accident we are fighting in the region that has half the world’s oil supply,” he said, before advocating getting cars off of petroleum and hooked up to the nation’s electrical grid. And while waste problems have yet to be resolved, he said, “closing the door on nuclear is a mistake.” 

Doerr trained as an electrical engineer, then earned a Harvard MBA. He joined KPCB in 1980. 

Articulate and comfortable with an audience, he devoted his time to fielding questions, starting with the obvious: What do venture capitalists look for on college campuses? 

“I’m a glorified recruiter,” he said. “The best thing I can do is find super-scientists at UC Berkeley working in synthetic biology under Jay Keasling,” then build a company to take the technology to market, while “making a great deal of money at the same time.” 

Doerr’s firm, KPCB, has helped build some of the best known of the nation’s new companies, including, Google, Palm, Genentech and Sun Microsystems. Gore joined the team last November. Earlier this month the company also announced a $100 million iFund to bankroll technology related to the iPhone and iPod. 

To build up a company like Amyris, Doerr said, may take an investment of $250 million, but the potential earnings of new energy companies could dwarf Internet giants, he said, with the value of the new generation of energy giants potentially ranking in the trillions of dollars compared to the billions of leading online firms. 

He said climate change is KPCB’s biggest-ever challenge, with investments to date of $300 million for the college and university endowment funds who invest with the company. 

Green tech is “the mother of all markets,” he said, and “going green should be the largest economic opportunity of the 21st century.” 

Doug Cameron is at home with biofuels, having earned a doctorate from the Massachusetts Institute of Technology with a thesis on ethanol. 

One Khosla investment, Calera, is a start-up by a former Stanford professor which claims to have developed a process that will transform cement from a generator of seven percent of earth’s carbon dioxide emissions into a material that will actually grab the gas out of the air and sequester it, helping to reduce the level of planetary greenhouse gases. 

Khosla invests in a variety of biofuel ventures and is looking for more, he said. 

In addition to drawing fuels out of plants, Khosla has invested in companies that want to produce chemicals similar to those that constitute a small but profitable section of the output of today’s petroleum refineries, he said. 

One of the investment fund’s goals is to find and fund pathways to replace all petroleum by 2030 without using any more land that is used today to plant crops for ethanol, the leading biofuel currently in use. 

And while Khosla is a major funder of ethanol projects, the company is less excited about biodiesel, he said. 


Upbeat messages 

The upbeat messages of the investment bankers were echoed by speaker after speaker, fitting in with the message of local politicians like Berkeley Mayor Tom Bates, Richmond Mayor Gayle McLaughlin and others who are working to create an East Bay Green Corridor to rival similar efforts in Silicon Valley. 

Another bioboomer on hand in a disembodied electronic form was Sen. Barbara Boxer, who said in a recorded message that she is “working hard to introduce global warming legislation” during the current congressional session. 

“I have no doubt the next administration will be far more friendly” to green tech initiatives, she said. 

Somerville appeared in the day’s final panel, offering an overview of the EBI project. 

He said the program received about 250 three-page research proposals, which were winnowed down to about 85, which were then submitted to an international team of academics who finally settled on about 50 for the initial funding phase, ranging from the design of farm implements to the social and political impacts of biofuel and other energy projects. 

EBI has cast a wider net than JBEI, which has been funded with $135 million Department of Energy grant, and has already teamed up with corporate partners, said Blake Simmons, who is in charge of the new lab’s deconstruction program. (Deconstruction here means molecular breakdown.) 

While EBI is looking at such issues as carbon sequestration, the use of genetically modified organisms to harvest hard-to-reach oil and to break down coal into fuels, JBEI is specifically tasked with developing non-petroleum fuel sources. 

The JBEI’s task is to conduct “high-risk, high-return research” leading to the “revolutionary breakthroughs needed to make cellulosic biofuels reach their full potential,” he said. 

Though the 61,000-square-foot Emeryville lab will be officially open for business in April, he said research is already under way. 

Unlike the EBI, which will have research efforts in Illinois and Berkeley, all the JBEI research will take place under one roof, he said, featuring scientists from UC Berkeley, UC Davis and three Berkeley-related national labs: Lawrence Berkeley, Lawrence Livermore and Sandia. 

The upbeat mood at Friday’s symposium has been reflected more broadly in student enrollments in green tech programs, which a Haas Business School professor said is drawing “the best and the brightest.” 

Critical voices were virtually non-existent in sessions attended by one reporter, in part because of the self-selected nature of the audience. 

By the end of the day, there was little reason to doubt that UC Berkeley has set out to be one of the leading—if not foremost—of players on an issue where technology and big money are fusing with politics to back what believers have no doubt will be the first major boom of the new millennium.