Vinod Khosla is a venture capitalist considered one of the most successful and influential personalities in Silicon Valley. He is one of the co-founders of Sun Microsystems and became a general partner of the venture capital firm Kleiner, Perkins, Caufield & Byers in 1986. In 2004 he formed Khosla Ventures. Vinod was featured on Dateline NBC on Sunday, May 7, 2006. Mr. Khosla is pushing the practicality of the use of Ethanol as a gasoline substitute. He is known to have bought huge stakes in ethanol companies, in hopes that Californians will pay more tax to adopt green fuel. He cites Brazil as an example of a country who has totally ended their dependence on foreign oil. I sent Mr. Khosla several questions and he was kind to respond.

Konrad Imielinski: Which technology has the biggest chance to replace oil eventually? Some say that ethanol is a short term solution and that hydrogen has true long term potential. What is your comment on this?

Vinod Khosla: I don’t see hydrogen as superior to ethanol as a basic fuel in any reasonable time frame.

KI: Major oil companies can easily enter the ethanol industry as it is technically simple to produce. Why haven’t they yet? What affect will it have on smaller companies such as PEIX or XTHN? Will those small companies be squashed or acquired?

VK: I believe they will at some point enter the business. They will do so to please the public that they are being progressive but it will be a while before they buy into the notion that ethanol or another liquid fuel can completely replace oil based transportation fuels.

KI: What is your favorite alternative energy company? Do you foresee a similar bubble in the alternative energy market as we have experienced in internet or maybe it's already taking place?

VK: I don’t comment on public companies but I do worry about a bubble.

KI: Why doesn’t the US institute a policy similar to Brazil in mandating the usage of ethanol in all cars sold in the U.S?

VK: Politics is a complex process here and the oil companies are very influential.

KI: In one of my recent posts, a reader of my blog stated that E85 makes no mathematical sense as the US should focus and commercialize E10 instead. What is your view on this?

VK: I disagree. E10 makes no sense and we should go directly to E85.