Top investor sees Bush embracing biofuels

LOS ANGELES (Reuters) - A top Silicon Valley venture capitalist specializing in alternative energy and clean technology expects President George W. Bush to strongly endorse biofuels and hopes he uses next week's State of the Union address to lay out an ambitious plan.

"I would like him to set a very aggressive target for renewable fuels with a price relief valve for consumers," Vinod Khosla told the Reuters Global Biofuels Summit on Tuesday.

The White House said earlier Tuesday that Bush will outline a policy on global warming, although he will not drop his opposition to mandatory limits on greenhouse gas emissions.

Bush has backed alternative energy sources like hydrogen and ethanol amid criticism from Europe that the United States -- the world's biggest polluter -- is not doing enough to combat global warming.

Khosla said that promoting biofuels is a good political bet for Bush because it addresses climate change and national security issues linked to dependence on Middle East oil.

The president can also score points with a Congress controlled by Democrats who have made acting on global warming a priority on their agenda ahead of the 2008 presidential election.

"For President Bush, this is one area where he and the Democrats will agree," said Khosla, a co-founder of Sun Microsystems SUNW.O who now runs Khosla Ventures.

Khosla said he has investments in 25 ventures and is a big proponent of cellulosic ethanol, which uses forest waste rather than the corn that now provides the bulk of U.S. ethanol.

He said the United States could replace all oil consumption with biofuels in 25 years.