Want More Bioeconomy Capacity, Sooner? Our 4-Point Plan to Relieve the Investor’s Tour of Terror
by Jim Lane (Biofuels Digest) … But it is only the world’s second-scariest rollercoaster, because the scariest one is the Tour of Terror in building a bioeconomy project.
Strategics bail when oil prices go low; formulator adoption is poorly understood; there’s a disdain for consumer marketing amongst bioeconomy executives that is flabbergasting in scale; the industry focuses on ingredients instead of products and can’t get a green premium. There’s not enough work on the feedstock diversity. Costs are on the dextrose rollercoaster, our standards for carbon sequestration lay at the halfway point between Fantasyland and Potemkin Village, so that you can’t get a low carbon credit for a permanent material made out of a tree but you can get one for planting a tree that will die in next summer’s wildfire.
They are supposed to be thrilling, bioeconomy projects, objects of delight and wonder. People love ‘em from a distance, but when it comes time to write large checks, investors scare away like doomed movie extras fleeing villains of the Marvel Cinematic Universe.
Who could blame them?
The real problem
It’s not the yields from the process. Not the demand for the products. Not the costs of construction. You’ll hear lots of discussion of all of these, but it is all folderol, the truth is elsewhere. It is the Risk. Few take the risks for the same reason that people did not walk the tightrope between World Trade One and Two in the old days of the Twin Towers. It is not the lack of any pleasure in success, it is the sickening plunge back to Planet Earth.
Now, I am about to hear from someone, somewhere that we need more R&D, more pilots, more engineering data to de-risk these technologies. That’s just cow cookies from people conditioned reflexively to think this way. The risks that mater are not internal to the technology, they are internal to the project yet external to the technology. Affordable, abundant feedstock. Distribution. Currency. Policy. Commodity price. Permitting. Tariff. Country risk. Demand for internal combustion.
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The 4-Point Plan
What are we to do about risk? First of all, we might face it — the risks outside of process technology that is. Science provides technology, investors provide capital, but nothing will happen until someone snuffs out the external risk.
Rick must be placed elsewhere.
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Here are four things that have to happen.
1. Capital has to be cleaved from risk.
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2. Since the public sector has to absorb the losses, the public should receive the rewards. Dividends from successful projects should be paid out to taxpayers.
3. Sites should be owned by asset companies, not projects.
4. Projects should be operated as a service business, not entrepreneurial ventures. Just as apartment buildings hire management companies. READ MORE
