Vinod Khosla and a prominent biotechnology industry business consultant both took to a stage in Orlando, Florida yesterday and asserted that the cost to produce cellulosic ethanol will match that of conventional ethanol by 2009.

Khosla and Jens Riese of McKinsey & Co. also highlighted what they called significant reductions in greenhouse gas emissions achievable with ethanol from cellulosic sources.

In a speech titled “The Role of Venture Capital in Developing Cellulosic Ethanol,” Khosla said that the U.S. Department of Energy’s recent grants (see Cleantech.com's U.S. government granting $385M to six cellulosic ethanol plants) to cooperatively fund biorefineries that produce ethanol from cellulose is an acknowledgment that the technology is moving faster than expected.

He said that a 100 percent replacement of petroleum transportation fuels with biofuels is achievable, and predicted that ethanol from cellulose technology will be cost competitive with current ethanol production by 2009.

Khosla also stated that ethanol from cellulose can significantly reduce carbon dioxide emissions, even achieving a net gain in greenhouse gas reduction.

In another speech, Riese predicted that global annual biofuel capacity would double to 25 billion gallons over the next five years and could reach 80 billion gallons—meeting 10 percent of world transportation fuel demand, enough to replace the annual oil production for fuel of Saudi Arabia—by 2020.

Riese said McKinsey's model shows that biofuels can economically replace 25 percent of transportation fuel with crude oil above $50 per barrel.

Riese also opined that ethanol from cellulose was the most cost-effective way of achieving greenhouse gas reductions.

The two spoke at the fourth annual World Congress of the the Biotechnology Industry Organization (BIO), the American Chemical Society, the National Agricultural Biotechnology Council, the European Federation of Biotechnology, BIOTECanada and EuropaBIO.

Khosla has heavily invested in cellulosic ethanol, backing companies such as Mascoma, Range Fuels, LS9 and others.