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It really depends on the cellulosic production path chosen. That said, it will likely make more sense to expand existing facilities with 2nd generation ethanol production paths or cogenerative technologies that improve overall yields and EROEI from renewable waste feedstocks.
"Khosla's hold card seems to be a bunch of secret projects, which of course we are not privy to."
That's hole cards. And no, you won't you see either til the river.
"To what extent will cellulosic ethanol become another way to destroy yet more soil and contribute to the release of carbon dioxide from same?"
This is a non-issue if renewable waste feedstocks are used. DECs -the eventual end game of cellulosic production- do not harm but rather, aid the environment in a multitude of ways.
"Regardless of what path or paths we pursue, we cannot maintain the current average fuel economy and do what we need to do to combat global warming. Most estimates I have seen say that we need to reduce co2 emissions by 70%. Just focusing on the fuel choice end of the equation will not cut it."
Absolutely. Conservation is key. Ethanol is not a silver bullet.
Anyone who has run the numbers knows, beyond any doubt, that biofuels cannot replace the amount of petroleum we use now - let alone coal and gas. That road leads to skyrocketing prices and massive bankruptcy. It's as if they want the American public to go the wrong way until they collapse under debt and expenses.
The super-wealthy might have some scheme to benefit from this (like becoming a de jure as well as de facto ruling oligarchy?), but it scares me silly.