Hostname: page-component-7bb8b95d7b-l4ctd Total loading time: 0 Render date: 2024-09-29T01:25:19.488Z Has data issue: false hasContentIssue false
  • English
  • Français

Conditions Necessary for Private Investment in the Ethanol Industry

Published online by Cambridge University Press:  26 January 2015

Philip Kenkel  and
Rodney B. Holcomb
Philip Kenkel
Affiliation:
Department of Agricultural Economics, Oklahoma State University, Stillwater, OK
Rodney B. Holcomb
Affiliation:
Department of Agricultural Economics, Robert M. Kerr Food and Agricultural Products Center, Oklahoma State University, Stillwater, OK
Get access Rights & Permissions [Opens in a new window]

Abstract

While agricultural economics literature has become rife with the economics of ethanol production and cellulosic ethanol feedstock production, little has been written about capital investment necessary for the magnitude of industry development mandated by the Energy Security and Independence Act of 2007. Financing the development of the ethanol industry to meet the 36 billion gallon production capacity set for 2022 (with 16 billion gallons from cellulosic ethanol) will require capital investments exceeding $100 billion for production facilities, plus extensive investment in feedstock establishment and transportation/handling infrastructure. Federal support associated with political mandates does not address all of the financial issues related with the development of the industry in such a relatively short timeframe. This article addresses the challenges associated with and the conditions necessary for achieving the private investment needed to expand the ethanol industry in the United States.

Keywords

biofuel policycellulosic ethanolindustry legitimacyprivate investmentQ13Q42Q43Q48
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 41 , Issue 2 , August 2009 , pp. 455 - 464
Copyright
Copyright © Southern Agricultural Economics Association 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aldrich, H., and Auster, E. “Even Dwarfs Started Small: Liabilities of Age and Size and Their Strategic Implications.” Research in Organizational Behavior, Volume 8. Straw, B. and Cummings, L., eds., pp. 165–98. Greenwich, CT: JAI Press, 1986.Google Scholar
Aldrich, H., and Fiol, M. “Fools Rush In? The Institutional Context of Industry Creation.” Academy of Management Review 19(1994): 645–70.Google Scholar
Alexander, T., and Alcala, M.L. (2006) “New Issues Arise as the Size of Ethanol Plants Increase.” Ethanol Producers Magazine. Internet site: http://www.ethanolproducer.com/article.jsp?article_id= 1943&q=&page=all (Accessed November 12, 2008).Google Scholar
Bangsund, D.A., DeVuyst, E.A., and Leistritz, F.L. “Evaluation of Breakeven Farm-Gate Switch-grass Prices in South Central North Dakota.” Agribusiness and Applied Economics Report No. 632, North Dakota State University, Fargo, ND, July 2008.Google Scholar
Bryan, T. (2003) “Banking on Ethanol.” Ethanol Producers Magazine. Internet site: http://www.ethanol-producer.com/article.jsp?article_id= 1423&q=&page=all (Accessed November 3, 2008).Google Scholar
Carmody, J.M “Rural Electrification in the United States.” The Annals of the American Academy of Political and Social Science 201(1939):82–88.Google Scholar
Chaddad, F.R., and Cook, M.L. “The Emergence of Non-Traditional Cooperative Structures: Public and Private Issues.” Presented paper at NCR-194 Research on Cooperatives Annual Meeting, Kansas City, MO, October 29, 2003.Google Scholar
Collins, K. “The New World of Biofuels: Implications for Agriculture and Energy.” Presentation at the EIA Energy Outlook, Modeling, and Data Conference, Washington, DC, March 28, 2007.Google Scholar
Crooks, A., and Dunn, J. “Farmer-Owned Ethanol and the Role of Information Technology.” Rural Cooperatives (Sept/Oct 2005):8–13.Google Scholar
Flora, C.B., Bregendahl, C., and Fey, S. “Mobilizing Internal and External Resources for Rural Community Development.” Perspectives on 21st Century Agriculture: A Tribute to Walter J. Armbruster. Knudson, R., Knudson, S., and Ernstes, D. eds. Oak Brook, IL: Farm Foundation Press, 2007, pp. 210–20.Google Scholar
Haque, M., Epplin, F.M., Aravindhakshan, S., and Taliaferro, C. “Cost to Produce Cellulosic Bio-mass Feedstock: Four Perennial Grass Species Compared.” Presented paper at the Southern Agricultural Economics Association Annual Meeting, Dallas, TX, February 2-6, 2008.Google Scholar
Hensley, R., and Swanson, D. “Minnesota Legislature Adopts New Cooperative Association Act: Coops Should Carefully Review Options to Avoid Pitfalls.” News Alert Dorsey and Whitney LLP Agribusiness Cooperation and Rural Electric Group, 2003. Internet site: http://www.dorsey.com/files/tbl_s21Publications%5CPDFUpload141%5C353%5CMNLegislatureMay2003.pdf (Accessed November 16, 2008).Google Scholar
Herrick, J.A “Federal Financing Instruments for Biomass: Balancing Public/Private Risks.” Presentation made at U.S. Department of Energy's Biomass 2008: Fueling Our Future, Alexandria, VA, April 17, 2008. Internet site: http:// www.biomass2008.net/Track3_Day 1_Herrick.pdf (Accessed November 12, 2008).Google Scholar
Jordan, C., and Landen, P. (2008) “Cellulosic Ethanol Collaborations: Matchmaking Isn't Easy.” Ethanol Producers Magazine. Internet site: http://www.emanolproducer.com/article.jsp7article_id-4881 (Accessed November 16, 2008).Google Scholar
Koplow, D. “Biofuels—At What Cost? Government Support for Ethanol and Biodiesel in the United States.” Report prepared by Earth Track, Inc. for The Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (USD), Geneva, Switzerland, October 2006.Google Scholar
Lawrence, T.B “Institutional Strategy.” Journal of Management 25,2(1999): 161–88.Google Scholar
Morgan, G.R “Legal Issues/Tips for Facilitating Biofuels Financing.” Presentation made at U.S. Department of Energy's Biomass 2008: Fueling Our Future, Alexandria, VA, April 17, 2008. Internet site: http://www.biomass2008.net/Track3_Dayl_Morgan.pdf (Accessed November 12, 2008).Google Scholar
Perrin, R., Vogel, K., Schmer, M., and Mitchell, R. “Farm-Scale Production Cost of Switchgrass for Biomass.” Bioenergy Research 10.1007/ sl2155-008-9005-y, 2007. Internet site: http://www.springerlink.com/content/f85977006m871205/fulltext.pdf (Accessed November 16, 2008).Google Scholar
Popp, M.P. “Assessment of Alternative Fuel Production from Switchgrass: An Example from Arkansas.” Journal of Agricultural and Applied Economics 39,2(2007:373–80.Google Scholar
Renewable Fuels Association. 2008. Internet site: http://www.ethanolrfa.org/industry/statistics/#C. (Accessed November 12, 2008).Google Scholar
Schill, S.R (2008) “Making the Switch.” Ethanol Producers Magazine. Internet site: http://ethanol producer.com/article.jsp?article_id=4868 (Accessed November 16, 2008).Google Scholar
Shane, S., and Foo, M.D. “New Firm Survival: Institutional Explanations for New Franchisor Mortality.” Management Science 45,2(1999): 142–59.Google Scholar
Taheripour, F., and Tyner, W.E. “Ethanol Policy Analysis - What Have We Learned So Far?” Choices 23,3(2008). Internet site: http://www.choicesmagazine.org/magazine/article.php?article=38 (Accessed October 27, 2008).Google Scholar
United States Department of Energy (DOE). “DOE Selects Six Cellulosic Ethanol Plants for Up to $385 Million in Federal Funding.” February 28, 2007. Internet site: http://www.energy.gov/news/4827.htm (Accessed November 3, 2008).Google Scholar
Wallace, R., McAloon, A., Ibsen, K., and Yee, W. “Feasibility Study for Co-Locating and Integrating Ethanol Production Plants from Com Starch and Lignocellulosic Feedstocks” United States Department of Energy (2005-01). Internet site: http://www.nrel.gov/docs/fy05osti/37092.pdf.Google Scholar