The government of British Columbia, Canada, recently imposed a controversial carbon tax on all fuels, including jet fuel. According to AVWeb, (free registration required) the tax raises Jet A fuel up 2.61 cents per liter (10.15 cents a U.S. gallon), and 100 LL up 2.46 cents a liter (9.56 cents a U.S. gallon). The article also states the rates are calculated based on $10/metric ton (CAD) of carbon produced, and vary based on each fuel’s carbon emissions.

Vinod Khosla has been named the #1 VC by Forbes and Fortune labeled him as one the nation’s most influential ethanol advocates.

At the 2008 Future in Review Conference, he gave an insightful presentation at the opening dinner covering his investments and philosophies.

A member of the audience (not me!) asked about green jet fuel:

Can you explain how will see a replacement for jet fuel? Since cellulosic ethanol has lower energy density is it an option?

Khosla’s response was that biodiesel made from vegetable oil, palm oil, soybean oil has two problems, first — it’s an expensive crop that competes with food. More importantly, he doesn’t see how it has a decreasing cost with scale. It never reaches market competitive pricing without government subsidy.

Sugars which are produced from cellulosic (not from corn) material can be converted biologically into hydrocarbons. From that you can get jet fuel or diesel.

A second way is to find substitutes like Butenol. This is a solution that he and Richard Branson have invested in with a startup named Gevo.

A third completely different way is chemical conversion of biomass into biofuel which can be fed into existing refineries. This is the approach that one of his portfolio companies (KiOR) takes.

Bottom line is, you’re not going to use corn or vegetable oils to power your G5…