Last Word: Vinod Khosla.(Interview)

Byline: Barrett Sheridan

Betting Big on Green Since making a fortune as a founder of sun microsystems, Vinod Khosla has built on it as an investor with pre-eminent venture-capital firm Kleiner Perkins Caufield & Byers. Now he's emerged as Silicon Valley's biggest enthusiast of green technologies--no mean feat in an industry where nearly everyone is going gaga over green. Khosla has already invested millions in almost 30 clean tech start-ups in areas ranging from geothermal energy to synthetic biology. But his most notable bets have been on ethanol. Most ethanol comes from corn, but if the technology becomes readily available, nearly any biological material--even grass--could create a viable alternative fuel called cellulosic ethanol. At least that's the way ethanol proponents would have it. As the ethanol movement continues to grow, so does criticism from the likes of the Union of Concerned Scientists and the Sierra Club; they argue that ethanol will simply allow automakers to avoid making more-efficient vehicles. NEWSWEEK's Barrett Sheridan asked Khosla for his view of energy's future. Excerpts:

SHERIDAN: You started a new venture-capital firm, Khosla Ventures, in order to focus on clean technologies. And you're using your own money.

KHOSLA: Lots of people say lots of things about clean investing, but they don't put their money where their mouth is. It's easy to pontificate when you don't have to bet with your own money. I have to be really objective about what I believe, because otherwise I'll lose money.

Everyone's talking about corn ethanol. But its emissions aren't all that clean.

Even in our corn efforts, we try and achieve at least a 50 percent reduction in greenhouse-gas emissions, relative to oil. That's twice as much as a hybrid does.

Cellulosic ethanol is where the real potential lies. One of your companies, Range Fuels, is building a manufacturing center.