Co-op business model well suited for next-generation biofuel development
By Agri-Pulse Staff
© Copyright Agri-Pulse Communications, Inc.
Writing in the March-April issue of USDA’s “Rural Cooperatives” magazine, Tonsager explains that “second-generation biofuel technologies will need to become commercially viable, including those that turn crop residue such as corn stover and energy crops such as switchgrass into ethanol. Third-generation biofuel technologies that turn feedstocks into advanced biofuels will also be needed.” To make it all happen, he adds, “We should focus on a diverse group of dedicated feedstocks, including: 1. perennial grasses; 2. energycane similar to sugarcane; 3. biomass sorghum; 4. oil seed crops and algae; 5. woody biomass.”
Tonsager also sees co-ops playing an important role in meeting the nation’s goal of increasingly replacing imported fossil energy with home-grown biofuels. “A business model similar to how we developed the ethanol industry can be used in this effort,” he writes. “Capital was found for ethanol projects in the 1990s by issuing proposals that asked for public participation in a project. With the membership fees paid, business plans were developed and prospectuses were issued to sell stock in a company. If enough people were willing to invest, we would be able to complete a project. We could spread the investor risk and the credit risk as widely as possible. . . To encourage public support, cooperatives are a great business model. New-generation cooperatives, unlike traditional cooperatives, are financed through the sale of delivery rights. Delivery rights represent a member’s right to deliver a specific amount of commodities to the cooperative.”
As an
example, Tonsager points to a new-generation cooperative operating a
producer-owned ethanol plant in
To read the March-April 2010 issue of USDA’s “Rural Cooperatives” magazine, go to: www.rurdev.usda.gov/rbs/pub/mar10/mar10.pdf
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