• Some highlights from this interview
• Six key issues to deal with to solve the problem
• Where he's placing his bets on new energy
• Europe may be "going down the wrong road" on renewables
• The press worries him more than the oil companies

The U.S. has fallen well behind Europe. Why?

The U.S. has fallen well behind Europe in recognizing climate change and the implications of climate change.

I'm not sure the U.S. is behind Europe in innovative, new technologies to address climate change.

[What has made the difference in Europe?]

In Europe, clearly strong signals from government have made a big difference. I'm not sure they applied the best technologies or the best financial approaches to encouraging renewables, but their implementation has been further along. In fact, I worry they may be going down the wrong road.

Really? Why?

Let me give you an example. Germany has a lot of solar power. In fact, in 2005, some 55 or 57 percent of worldwide installations were photovoltaics in Germany. That's 57 percent of all worldwide solar photovoltaics. Because of the high feed-in tariff, they have a way of allowing you to produce electricity and ship it into the grid at very high prices.

That's the approach they took. It resulted in a lot of solar power being installed. But you have to ask if that was an appropriate technology to encourage for power generation. I believe they encouraged inefficient technologies, technologies that aren't ever going to solve the problem.

What's the evidence that photovoltaics are never going to solve the problem?

The way you have to look at it is, if you're going to replace fossil energy -- and I think many of us believe we have to do that, and do that urgently -- you want technologies that will be adopted broadly and will meet most of your needs for electric power and replace coal. Not only that, even if Germany switched over completely to photovoltaics, unless India and China adopted them, we are not going to see a change in the trajectory of climate change.

Right. Well, that's true for any kind of renewable resource.

Yeah. I believe there's a price I call the "Chindia" price, the price at which India and China would adopt those voluntarily.

The Chindia price -- explain.

If these renewable alternatives are cheaper than the fossil comparatives -- if we have a renewable fuel that's cheaper than oil, if a renewable power source that's cheaper than coal-based power generation -- then India and China and other people will adopt [them]. I believe we should be encouraging the technologies that are cheaper.

Now, we can help those along by having a cap-and-trade system, something Europe has done that I'm very both appreciative of and I think reflects their recognition of the problem much earlier than we did in the U.S. So absolutely, we should have signed up at Kyoto. We did not. Europe did, and that helps a lot. But if inefficient technologies or inappropriate technologies sometimes get adopted, then we're not likely to see their broad adoption.

Photovoltaics are a great technology for certain applications, and, in fact, we invest in photovoltaic technologies. But they're not good substitutes for grid electricity. There's a big difference between needs and requirements for grid-based electricity versus those for distributed rural homes or remote locations, or even rooftop solar, where photovoltaics do OK. The more economical a technology is, the faster we'll see adoption. ...

So what you're saying is that Germany tried to pick winners, and you think they perhaps picked the wrong one.

... If they'd done a renewable portfolio standard [under which] any technology that met certain requirements could enter the market, I think they would have done better. Or let me put it differently: They will use their money more efficiently. They've done us all a great service, but they could have used their money more efficiently.

By that reasoning, if more countries adopted photovoltaics, it would drive the cost of solar energy down further.

Yeah. Solar photovoltaics have appropriate applications, and they have a pretty large market. But if it grew 10,000 percent, that would be 4 percent of worldwide electricity, something like that. The point here is, even as a great investment and even with rapid growth, it doesn't address climate change, because 4 percent of worldwide electricity is just not enough.

Well, it could grow more.

If it's cost-effective. If it's not, there's another alternative technology, solar thermal, that can actually deliver great-quality electricity, and that means electricity deliverable when the utilities need electricity and customers demand electricity, not just when the wind is blowing or the sun is shining.

That's where you take mirrors and you direct the sun's rays to a point and boil water, make steam and drive a turbine.

Those technologies ... are probably 70, 80 percent cheaper than photovoltaics, and could have been better implemented. ...

But Americans aren't adopting solar thermal either.

I'm not suggesting that America has the right policies. There are states in America that have adopted the renewable portfolio standard [RPS] that says X percent -- that's 10, 20 or 30 percent.

And California is pretty aggressive. Our electricity will come from renewable sources. There, solar thermal is being broadly adopted, so many of the utilities are counting on that technology. Just yesterday we announced that Pacific Gas and Electric, the largest utility in Northern California, is going to build a large plant with a company called Ausra. The day before, Florida Power & Light in Florida announced they'd build a large solar tunnel facility with Ausra. So absolutely this is starting to happen, because it's a much more cost-effective technology and much more appropriate for utility requirements.

Europeans are beating the Americans in the installation of wind turbines as well.

Yes, they are. And wind costs have been coming down. But again, wind will never scale to more than 10, 15, maybe 20 percent of electricity. And the reason is, wind is not predictable. You can't enter into a 20-year contract with a utility and say, "We will reliably provide you wind power during your peak demand periods."

But it [reduces] the use of fossil fuels, of natural gas or whatever else you use to run your turbine, and when it's not windy.

It makes a marginal difference, yes. But what we need is solutions that can make a big difference, not a little difference. So when we think of wind, we think of more attractive storage technologies for wind power. If we can crack that nut, then wind power can go mainstream and be much more valuable. ...

If you deliver wind power at 2:00 a.m. at night, nobody needs it. Today, we force utilities to take it, and that's really just a tax. And politicians love it because it feels clean, but in fact, it won't solve the real problems. This is a really important distinction to make.

The environment[alist] community has often pushed solutions that do less for climate change, but [do] some good and make a marginal difference. Because of the urgency of the problem, we have to address mainstream solutions that will replace 30, 50, 80 percent of our oil, that will replace 30, 50 or 80 percent of oil-based power. Going after the technologies that do 5 percent or 10 percent or even 20 percent I believe is the wrong approach. [Those are] things that make you feel good but don't really make a significant impact on climate change. That's a really important distinction to make.

But if one invests in four renewable technologies that bring you 20 percent of the pie, you're 80 percent of the way there.

That's a possibility. I think it's the unlikely trajectory. I suspect we will have a few technologies that will cover lots of area.

Now, there are parts of the country in America, in the Midwest, where wind is a big resource, and we should absolutely use it. But to try and apply it nationally doesn't make sense. There are technologies that will work that are appropriate to certain regions. Geothermal works extremely well in certain regions. And in fact, we haven't invested enough in enhanced geothermal technologies which might actually provide electricity throughout the U.S. in a very reliable and predictable way, the way a coal power plant can. But what we have to do is pick the solutions that really make a difference.

The bulk of the utility industry today believes that coal and nuclear are the only solutions we have. Nuclear is greener, but had the other issues. Coal, they think, can be transformed into the so-called clean coal technologies.

I think that's a good effort. I actually don't believe it will win in every area, because clean coal technologies will be so expensive, many renewables will come in cheaper.

But my point is very simple: These should be technologies that meet the business requirements of utilities for power, or in the case of oil, things that replace oil in the same way that gasoline works in cars or diesel works in cars and trucks.

So it's important to realize that scaling is our biggest problem, and mostly we've been playing around with toys.

You want real-world solutions, is what you're saying.

I want real-world solutions that have high rates of return, that can be pulled into the market by market demand and can attract the hundreds of billions of dollars of new investment we need from Wall Street.

Well, here's what I don't understand. You look at Germany, and they're getting about 6 percent, I think, from solar. You look at a place like North, South Carolina, they have three or four times as much sunshine in those states than Germany does. We all know Germany is a pretty cloudy place. Why wouldn't you be able to derive a lot of solar energy in a place like the Carolinas or throughout the South?

We absolutely can.

So why don't they do it?

Why don't [they] do it? Because it doesn't make business sense. Germany has chosen to buy solar power at 40 cents a kilowatt hour. Nobody in this country would pay 10 or 20 cents a kilowatt hour for power.

And we're currently paying how much for coal?

Coal-made power has historically cost a lot less, probably in the average around the country of 5 cents a kilowatt hour or something like that. That cost is increasing as people go to more environmentally strict regulations and more plants complying with these new regulations.

And if you priced carbon and required carbon capture and sequestration, what would the cost of generating electricity from coal be?

It would probably add about 2 cents a kilowatt hour to the price of coal, depending upon the price of carbon. But if you assume recent E.U. prices for ... carbon credits, you'd add about 2 cents a kilowatt hour.

So not very much, if it worked.

It will work. So coal power plants will have the option of buying credits or installing equipment like IGCC [Integrated Gasification Combined Cycle], which is next-generation coal plants where the carbon can be captured and sequestered. That will make coal power expensive -- expensive as in between 8 to 10 cents a kilowatt hour.

But still a lot cheaper than what you're saying solar [would cost], for instance.

A lot cheaper than photovoltaic solar, but not cheaper than solar thermal technologies.

And that's what's so exciting. We'll have in this country, I believe, business solutions. And we will have an alternative to coal that is just as cheap, or cheaper over time, especially compared to the next-generation plants the coal industry is trying to build, the IGCC plants. And that's the key to widespread adoption.

But the primary change, people, boils down to only five or six issues. We need to replace oil. We'll replace it broadly only when we have a cheaper alternative than oil. And I think that's very likely. [We need to replace] coal ... with cleaner, cheaper alternatives. [And we need to replace] building materials like cement and steel, the internal combustion engine and lighting. If we did those six things, we are 80, 90 percent of the way to eliminating carbon.

This is not a complex problem [by] definition, [but] doing these things is hard. The technology to replace the internal combustion engine is hard. I suspect we'll cut its emissions in half over the next five to 10 years if we have the right incentives.

So having a price for carbon is a wonderful idea. And the higher the price, the faster we will go to these alternatives. That's wonderful. In fact, we should all be pushing for that if we really care about this planet.

But [we shouldn't] push inappropriate technologies -- biodiesel is another example -- that make us feel good but aren't scalable. We need kilowatts and kilowatts of energy for electric power generation and our transportation needs. And we need scalable solutions. So my only beef -- and I could agree with all the goals of the environmental organizations -- is let's not push the stuff that won't scale enough to make the difference.

I don't know how much time we have. Is it 10 years, 20, 50 before we reach that tipping point where climate change becomes irreversible? Nobody can know. There's clearly a probability distribution. We need to ensure this planet, and we need to do it quickly. And that means highly scalable solutions that make economic sense. That will happen only because of massive technology breakthroughs. So my personal focus has been on the technology breakthroughs that make these things economical enough that they can compete with their fossil competitors. My work has also been on policy to ensure things like carbon prices, such that these technologies can accelerate to market and be cheaper than fossil [fuels] earlier.

You're a venture capitalist with a very good record. So where are you putting your money?

There [are] four major areas we invest in. One is on alternatives to oil. We have a dozen start-ups inventing brand-new technology, each using a different approach, a different technology, even producing a different fuel -- companies that are producing ethanol, butanol, even biomass space [fuel], gasoline and diesel, aviation fuel, you name it.

Aviation fuel that's not oil-based.

That is not oil-based, yes. That's what they are trying to do. That's one area.

The second set of technologies are focused on replacing coal and power generation, ... stationary power. Oil is mostly transportation and mobile power.

How are we going to replace coal?

In the coal area, we have solar thermal technologies. We are funding photovoltaics. We are funding geothermal. We are funding storage for wind technologies. ... Wind becomes more reliable and predictable and more scalable [when you can store the energy it generates]. So coal replacement is the second area.

Efficiency is the third area. If you can double the efficiency of the internal combustion engine, that would cut oil use in half on this planet. We think that's possible. ... And efficiency includes everything from engines to lighting.

And the fourth area is new materials. What do I mean by new materials? Cement is one of the biggest producers of greenhouse gases. Every ton of cement produces a ton of carbon dioxide. ... We are now trying to produce greener cement, where we think we can get much smaller carbon emissions and possibly even negative carbon emissions for each ton of cement produced. That's very attractive.

We're working on water technologies that will cut the cost of desalination for freshwater by 75 percent and reduce energy consumption by 75 percent. Those are just some examples.

Now, you've invested heavily in ethanol.

We've invested heavily in ethanol, in butanol, in cellulosic gasoline, in cellulosic diesel and so on, so across the range in all biofuels. And I believe there will be a mix of biofuels in the marketplace.

And what does that world look like that relies on butanol, ethanol and these other alternative fuels?

If you're going to replace oil, the one thing we have to realize is the only source of liquid transportation fuel which we'll be dependent on for many, many decades, the only scalable feedstock for producing a replacement, is biomass. Nothing else makes sense. Not only [do] we have to use biomass, we have to use biomass that is extremely land-efficient. So we look at technologies that can produce four or five times as much fuel per acre. That's important to us. ...

And that moves us from corn-based ethanol toward the cellulosic-based ethanol, ... to get more bang for the buck.

Yes. It moves us from grain-based ethanol, like corn ethanol, to cellulosic ethanol, but it also moves us to ethanol and butanol and other fuels that are cheaper than gasoline. And I believe once the technology for that matures, which will happen in the next few years -- two or three or four; it won't be 15 years -- then the world will have a model to adopt, and adoption and replacement of oil will be voluntary.

[Are you] getting any cooperation from oil companies?

I think the oil companies today are in a position where they don't believe this is possible. ... They want to keep their business stable and as-is. But many of the forward-thinking oil companies, like Shell and BP, have started to look at these alternative fuels and said, "We should be experimenting." ... So they are in that experimental phase, not believing, not committing, but including it as a risk to their business models. And that's a good thing. Once these technologies get proven, I believe the oil companies will be willing and massive participants in this new area. ...

The thing to remember is oil companies don't own most of the oil on this planet. Eighty percent of the oil on this planet is owned by the national oil companies, the Saudi Arabia Aramco, the Venezuelan oil company [PDVSA]. These are nations that own the oil. So those Exxons and Chevrons don't own that much oil, and it won't be that painful for them to take their massive ability to both invest [in] as well as execute projects, their operational skills, and apply them to this new area.

But they're invested heavily in oil exploration and extraction. They're invested heavily in their oil-based refineries.

Yes, they are.

Even the companies that are forward-thinking like BP and Shell -- you mentioned them -- are not really massively investing in alternative fuels.

They're not massively investing in alternative fuels, that's right.

Is that shortsighted in your view?

They're making decisions that they think are right, based on the information they have. I don't believe they're used to innovation and the rate of innovation we are likely to see in this business, and so they are being shortsighted in my view. But that's OK. It gives new innovators the opportunity to establish the marketplace and then have [the oil companies] be participants.

In every other large business area where there has been technical innovation, the little companies get most of the innovation. They've proved their business models and often partnered with the larger companies in the later stages of that deployment. That's a natural process. Some of those [big] companies will never believe it until it's too late for them, and their shareholders will suffer.

You're being very kind today here. I've looked back at some of your blogs, one in particular [about] big oil's big profits. You say the oil interests are willing to publish any myth and put any amount of money behind anyone who will support their untenable position.

Absolutely. I believe today a massive amount of PR money is being funded by various oil interests. There's some from oil companies, some from institutes like the American Petroleum Institute.

Which is supported by the oil companies.

Which is supported by the oil companies and foreign sources, I suspect. [These companies and institutes are] playing a role in a massive PR campaign to delay the onset of biofuels.

So people like the Saudis are supporting this kind of information, what you would [call] disinformation.

I don't have enough information to name the Saudis, but oil interests are definitely spreading disinformation, seeding doubts and mounting campaigns against first-generation products like ethanol from corn.

ExxonMobil, which has been a leader in this kind of disinformation campaign, says they're not going to do that anymore. Do you believe them?

It's a great step. I would take them at their face value.

What gets under your skin the most? And let's talk examples here of what [the oil companies] do.

To be honest, I worry more about the press than about the oil companies. The oil companies do what they have to do for their business interests, and I don't begrudge them that. There is a lot of disinformation in the press itself, and they like sensational stories.

When biofuels were not popular, [the press] were very much [saying], "Oh, what a wonderful fuel." That's no longer the exciting story. It's not the story that gets the front page and more column inches from the editors or lead stories in newscasts. And so they're doing the contrarian story now: "Look how bad it is." And that will switch again.

To be fair, the press has given attention to some scientists who have attacked you on the ethanol front. I think that's what you're referring to without saying so.

No, that's really not what I'm referring to. I don't feel like I've been attacked. As you know, my focus has been on more cellulosic products. That's where I am going very aggressively, and the larger share of our investment goes into that.

But that's where there has been controversy, I mean, with the [Pimentel-]Patzek study, for instance, [which found that biofuel and ethanol require more energy input than they produce as output].

I believe there's been relatively little controversy on cellulosic ethanol. Most of it had been focused on corn ethanol, often unwarranted, I think. ... I think corn ethanol is doing us a great service. The first thing you have to keep in mind is the average corn ethanol plant reduces carbon emissions [at] about the same percentage -- 20 percent -- as hybrids do. And hybrids cost 100 times as much. So who wants to pay 100 times as much for the same carbon reduction for every mile driven?

I'll tell you why there's misperception. Corn ethanol has been pushed and positioned by the petroleum companies as a negative thing. Hybrids have been positioned by Toyota as a nice thing. So the same carbon reduction feels very different to people. And both result in, typically, a 20 percent reduction or so in carbon emissions per mile driven. That's the dramatic difference that media and media funding does -- positive funding on one side, with hybrids from Toyota, negative funding on the other side.

Are you saying that Patzek is getting his money from the oil companies?

No, I'm not suggesting Patzek is getting his money from the oil companies. Look, if you're looking for extreme scientists with a view, no matter what view you want to take -- God exists, God doesn't exist -- you can find a scientist who will validate that. There are plenty of scientists who are not paid by anybody who believe climate change doesn't exist.

Well, plenty is a bit of a stretch. The vast minority of scientists believe that climate change is not a problem.

And the vast majority of scientists would not agree with Patzek in his assessments. The vast majority of scientists will tell you that these have 20 to 30 percent [carbon reduction]. And Argonne National Labs, a major national lab, has done fairly objective studies on this. A reduction in carbon in a good plant can do as much as 40 or 50 percent reduction in carbon with corn ethanol. It's just they've been positioned poorly. Very few scientists debate the carbon reduction of 80 percent with cellulosic ethanol, very few scientists.

Now, let me be clear. Almost anything we do -- it could be solar power, wind power, biofuels, ethanol -- we can do it well, and we can do it poorly. So we could do cellulosic ethanol and cause massive -- 80 percent or so -- reduction in carbon emissions, but there are other considerations. The cultivation of the crops could be done sustainably. It could be done with polyculture, ... or they could be done with monoculture, ... in poor soil conditions and [producing] high nitrogen runoff that ruins the waterways.

So any of these things can be done well, and they can be done poorly. And it is up to us, as a nation, to have the right policies to make sure these are done well. You can produce corn-based power [that's] cleaner relative to other pollutants, or do it poorly, like we did 30 years ago. The amount of mercury, carbon dioxide, sulfur dioxide, nitrogen dioxide we spewed into the air in 20-year-old plants was humungous. That's been cleaned up. That's part of the reason coal-based power, even without the new technologies, is going up in cost, because of criteria-pollutant legislation.

The Clean Air Act and the scrubbers.

Yeah.

Patzek says there's not enough biomass to support what you're proposing.

Patzek is dead wrong. I completely disagree with his assessments, and there's a reason for it. He looks backward and does his assessments. I look forward and say, "What can we do?"

If you look at 1920 yields of corn and say, "We need to feed 300 million people in the U.S.," we don't have enough land. Yields have increased sevenfold because of good technology and good engineering. And they're getting better. We expect to double them again to 14 times what we had 75 years ago.

Can the same happen in biomass? Absolutely. More importantly, can biomass be cultivated in a sustainable, polyculture way? Absolutely. I think we should insist it be done that way. ...

There's another important question. The important question is, if we don't want to do biofuels, what else should we do? We have to have a solution. Should we mandate nobody drive more than 3,000 miles a year? That's not going to fly. We could mandate that everybody pay thousands of dollars, $10,000 a car more, for plug-in hybrids, and then [mandate] that the electricity be expensive because we are [producing] it with [cleaner technologies].

Look, we have to make tough choices. The practical fact is we will make economical choices. And I'm not suggesting that there's a choice that's perfect. Far from it. The question we have to answer is, which risks do we take?

We could go on as business as usual and take the climate change risk. I don't recommend that. There are people who think the risk is small enough that we ought to do that. Should we take the biofuels cultivation risk, one that I believe can be addressed by stringent requirements on feedstocks and crop cultivation schemes? ... Or should we take some other risk? Should we take the risk that will hurt the economy, because we charge twice as much for expensive technologies? To replace the car fleet of 200 million cars in this country and pay $10,000 extra per car for a plug-in hybrid -- that's trillions of dollars. Do we want to spend that kind of money? Is that the best investment?

Well, if you listen to [economist] Nicholas Stern, he says that if we don't make such investments, we're going to end up paying more in adaptation, mitigation.

I agree with Nicholas Stern that we will pay a lot more if we don't do something about carbon. Once we've decided to do something about carbon, should we force all cars to be plug-in hybrids? Or should we bank on biofuels? I actually believe 50 years from now, we'll probably go to all electric cars.

And what will the world look like if we're growing [enough] biofuel to supply 10 billion people, or whatever the population of the planet is going to be at that point? What's the surface of the planet going to look like?

Let's take America, which is 25 percent of worldwide oil consumption, roughly. It's a huge percentage. I actually don't remember the exact percentage.

Of course, by 2050, it might not be the biggest.

Yeah, it might not. But today, we have a good example of a very, very large -- by far the largest consumer. I believe 50 million acres of land in this country could supply all our biofuel needs. Now, how much is 50 million acres? It's a fraction of the land we use for just exporting crops. Not only just exports, it's a fraction of the land we've converted over to soybeans in the last few decades. It's about the land that we have in our Conservation Reserve Program [CRP].

Let me put it another way. That's without dramatic increases in [crop yields]. ... If we double [yields], that amount of land gets cut in half again -- 25 million acres. That's peanuts to supply a country like America.

And what are we going to grow there?

We are going to grow horticulture, grasses and prairies. ... Professor [David] Tilman at the University of Minnesota has done some wonderful work on how you do horticulture cultivation that results in very biodiverse communities with almost no imports of water and fertilizer, and can yet result in pretty good yields.

... There was one report that you sat down with Tad Patzek at [the University of California at] Berkeley in October of '06. True?

Yes.

Tell me about the conversation.

We couldn't agree on our assumptions, you know.

How long did you talk? What did you say to each other?

We talked for probably an hour. And we had a very cordial conversation. We agreed on the basics. The science part is easy to agree on. But when you're making a forecast for 25 years in the future, you have to make some assumptions.

Yeah. And he makes the forecast that we're going to reduce greenhouse gases [by] maybe 20 percent, or we're going to increase greenhouse gases through biofuels by 50 percent. That's a big difference.

Well, I just completely disagree with him. He is dead wrong. I don't know what else to tell you. …

Well, here's the problem. I'm a consumer of this information, and I'm a reporter, and I'm trying to hack my way through a thicket. I don't doubt your sincerity for a minute. But you're telling me one thing, and a group of scientists at Berkeley are telling me another thing, and the future hangs in the balance.

Well, absolutely. That's the choice we make every day. And I have the following recommendation. I'm suggesting a path, and I should be pursuing it. More importantly, I'm investing in the technologies through my point of view. And, by the way, there [are] other approaches.

Let's take battery technology. I'm also investing in that, because if we had major breakthroughs there, we wouldn't need biofuels. I'm not taking a unilateral approach or one-solution approach: reinvesting in solar power, reinvesting in solar thermal and ... reinvesting in batteries, reinvesting in engine efficiency to cut down the amount of fuel or power we need, reinvesting in multiple approaches. If other people have other solutions, it would be really nice for them to make real serious investments of their time, money and technology in it so we have a range of options available.

Since we are talking about the future, there is a degree of uncertainty involved here. And I could be completely wrong. I acknowledge that. I've been wrong often in my life. And if we have multiple choices and multiple points of view behind those choices, we will get to test them out.

Does your investment in technologies skew your objectivity?

It's the other way around. I would not invest in those technologies if I didn't have a belief that this was the right approach.

But once you've invested in a technology, and once you've sunk millions or billions of [dollars from] people who are listening to you in a certain technology, you have a vested interest in making sure that that technology works, even if an objective analysis told you that it was a mirage.

If you found another approach that I thought was better, I would be foolish not to invest in that. So I may invest in one thing, but then if I find something better, I'll invest in that. We do invest in multiple technologies in the same area.

I don't know today whether ethanol or butanol or cellulosic diesel or cellulosic gasoline will be better. I can't tell you which will work better, so we invest in all those approaches. In fact, I will categorically say we invest in all approaches that we think might be viable.

You say you might be wrong, but you're pretty bullish on ethanol, cellulosic ethanol. You said in your blog, "I can guarantee that the ethanol will be produced in a way that has materially positive energy balance and reduces both petroleum consumption and greenhouse gases."

I'm absolutely sure about those things. No question. Now remember, that statement did not include the other fact I mentioned, which is sustainable cultivation of feedstocks. And that's where I think we need strong policy and regulation. I think it's important. It's important not only to have a sustainable planet. It's also important to prevent backlash against these newer technologies, because if we do them poorly, we will see backlash.

Unpack that for me. What do you mean?

I mean we need regulations to make sure that we don't [take] lots of land [that's] currently, say, rain forests and convert it over to monoculture cultivation. That would be a bad thing for this planet. I don't believe for these technologies to be successful we have to do it that way. But that does mean we will have to have regulation to prevent those kinds of things happening.

Regulation and policy are extremely important in this area. And that's a place where the environmental groups are doing a pretty good job -- not being heard as much as they should be, but they are doing a pretty good job.

You talked about the China/India price, which you call the Chindia price. I don't see how we're going to get there if all of these new technologies are going to cost more than a dirty coal plant. And the Chinese and the Indians have made clear they're not signing on to a Kyoto-like protocol that restricts their ability to move forward.

I'll get to what China and India might or might not sign up to in a minute. But let me address this issue. If what you say is right, then we are toast anyway. Goodbye, Florida. If they don't sign up, we're done. There is nothing we can do in the West that will alter the trajectory of this planet. We might delay it by a decade or two, but if India and China continue to be massive polluters -- if India and China get to 20 tons of carbon emissions per capita, as we have -- this planet is history the way we know it today. ... We have to get India and China to change their trajectory. The easiest way to get them to change their trajectory is to have these alternatives be cheaper than their fossil [fuel] competitors.

My focus on technology development is to make that happen. I may or may not be successful at it, but my goal and the sure-shot way to avoid India and China going down the increasing-carbon-emissions-per-capita route is to make green technologies cheaper. I am convinced we can do it with oil. I hope we can do it with coal, too. ...

The ... moral position of every human being [having] an equal right to pollute this planet is not a feasible solution. And that creates a query.

That's not a feasible path?

It's a feasible path if we agree then to buy those quotas from the people who are not polluting, like we do in this country. If you're a sulfur dioxide emitter, you can buy a credit from somebody who is not emitting. That kind of cap-and-trade exists in sulfur dioxide emissions that cause acid rain in this country. Europe has that for carbon dioxide. People are proposing a worldwide system. But the basis of allocating quotas, from day one, [has to be,] how much are you entitled to emit? What should it be based on? Do you want to reward the highest polluters and say, "You get that quota"? Or do you want to reward the most efficient ones?

Forgetting India and China, there are a bunch of utilities in this country that are rushing to build coal plants because they think they'll all be grandfathered in, and they'll have a higher quota. So more pollution will become a huge economic asset in this country. ... We will then give America a huge advantage over the Europeans, who have been working hard to reduce emissions.

What's fair? Is that the right thing to do, to give the biggest polluters the highest quota and the biggest economic value for their pollution? I think the people who believe that are on trajectory to dramatically increase their emissions so they can have a large quota.

Back to this business of ethanol, conventional wisdom in the media and in some of the scientific community, you would say a minority --

A small minority.

A small minority. But that's not the perception in the public. The perception is out there that ethanol is a boondoggle.

First you have to realize that a country like Saudi Arabia, which has a smaller population than California, gains or loses a trillion dollars in asset values every time the price of oil changes by $4. They have a lot to lose and to gain from the value of oil and the potential replacement of oil. Do you believe they act in their economic interest? Absolutely. Are there massive PR campaigns by various oil interests, and it's hard to pin down who? I am absolutely convinced that that is the case.

So this is your "war on oil."

This is my war on oil. We have to fight this. They have massive amounts of money.

And there [are] some genuine problems with the current way of producing ethanol that can be blown out of proportion or kept in perspective relative to first generation. Remember, for the first 15 years we built solar voltaic cells, they took far more energy to produce than we ever got out of them in their lifetime.

But yet they're darlings of the environmental community.

Right. We went past that stage because we counted on them to become more efficient both in energy consumption in its production, as well as the efficiency of the cells [themselves] to convert solar light into getting more electricity for us. Every technology gets out of the block stumbling, stuttering like a little baby, and gets better and better; then it can run and compete and accelerate.

I guess the difference is that people are willing to pay more for wind energy or photovoltaic energy or solar thermal energy because it's clean. It's entirely clean, whereas ethanol, it's murkier. You say it's cleaner; others say it's dirtier. Others say the energy balance is not what we need.

I would disagree with you that Americans in general are willing to pay more for solar energy or wind energy. Five percent of the population, absolutely. I'll pay any price for the cleaner energy. I wish there was a mandate, and everybody had to pay more.

Well, you can afford it.

Right. And it's not fair to ask people who are struggling with basic needs to pay more, because environment is not their priority, and many say it's not their problem. So are we, as a country, willing to pass a gas tax, which would be a wonderful idea? So far it hasn't happened. Are we, as a country, willing to pay more for power? Every senator will tell you generally no. Twenty percent of Californians, maybe. So these are hard economic choices. And we do need an environment where multiple ideas can get tested.

I do believe over time more and more people will be willing to pay more, and at some point we'll reach a tipping point. Then legislation will be enacted forcing us to pay more. But I don't believe we are there today.