Neal St. Anthony: State must move beyond ethanol, wind investment

Doug Cameron, the chief scientific officer of California's Khosla Ventures, says motor fuels created from crop wastes and grasses, battery-propelled vehicles and solar power will become a jobs-producing, clean-burning economic engine for America.

Venture capitalists, industrialists and financiers invested a record $2.9 billion last year in so-called "clean tech," nearly double the 2006 figure, according to American Venture Magazine, amid a tripling of oil prices from their lows in recent years and the global movement toward fuels that reduce carbon dioxide emissions and global warming.

Cameron, 50, a biochemical engineer educated at the Massachusetts Institute of Technology (MIT), was the chief biotechnology honcho at Minnetonka-based Cargill from 1998 to 2006. He's surprised that, beyond wind power and corn-based ethanol, Minnesota isn't getting much private or federal investment in green technologies.

"I see that Minnesota leads in a lot of renewable policies," Cameron said in an interview during last week's annual venture capital conference of the Collaborative, which brought together nearly 500 investors and entrepreneurs. "But I don't see Minnesota tapping into the venture capital and new technology wave."

No Minnesota firms are among the 13 that Khosla Ventures lists as part of its "biofuels portfolio companies."

To be sure, Minnesota is one of the five biggest states in development of wind energy, which is abundant in the blustery southwest corridor of the state. Last December, Suzlon of India opened a $15 million turbine plant that employs 275 people in Pipestone and supplies Minnesota and several other states.

Minnesota also is a leader in production of corn-based ethanol, with 18 plants operating or under construction, according to the Renewable Fuels Association.

But the ethanol futurists, including Cameron and his boss, Vinod Khosla, the veteran venture capitalist, are placing their bets on next-generation technology designed to produce much more fuel with less energy expended. The sources they are eyeing are "cellulosic," such as crop and wood waste, natural grasses and garbage.

Cameron pointed out that Minnesota was shut out of about $750 million in U.S. Department of Energy grants made this year to three "bioenergy research centers at major universities" and six existing or planned next-generation ethanol plants in other states.

The University of Minnesota, which put together a huge effort, was passed over in June for some of the $375 million from the Energy Department for five-year funding to research centers at the University of Wisconsin; Oak Ridge, Tenn., and Berkeley, Calif.

The grants are designed to speed the "transformational" breakthrough necessary to mass produce ethanol from cellulose material to help achieve the Bush administration's goal of cutting gasoline consumption by 20 percent within a decade.

Robert Elde, dean of the College of Biological Sciences at the University of Minnesota, said the grant specifications were narrowly drawn to focus on "systems biology" and each recipient is tied to a federal research lab in a way that allows the federal government to essentially control the research. That left Minnesota at a disadvantage.

"We only have two systems biologists, and we're still playing catch-up to the likes of MIT and Berkeley," he said.

That said, the university in recent years has moved to integrate its bioenergy research under its "Initiative for Renwable Energy and the Environment," a multicampus effort to promote new fuels and statewide development of bio-based energy, including soy-based diesel.

It was under that umbrella that ecology professor David Tilman got national exposure for his years-long study that showed a mixture of prairie grasses, which require no fertilizer or irrigation, stores a lot more energy than corn or soybeans on a per-acre basis and should require far less energy to synthesize into fuel.

The good news amid all the competition is that policymakers, financiers and technologists, motivated by soaring energy costs and the security and climate issues surrounding imported oil, are focused on cleaner, greener fuels.

More than 300 attendees already have signed up for a one-day conference on Minnesota initiatives involving biofuels, conservation, climate change, technology and state policy at the University of Minnesota's Coffman Memorial Union Nov. 27. The forum is being sponsored by the Initiative for Renewable Energy and other partners.

For more information, go to: www1.umn.edu/iree/e3.

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com