Ethanol Plant Construction Checklist
Ethanol feedstock sources: Check
Government Subsidies: Check
Investor Funding: Check
Local Community Support: __________? (this is when you hear crickets chirping and see tumbleweeds rolling across the landscape)
Once again we are seeing a familiar situation where “big business” wants to move into a town where the residents want nothing to do with them. Joe Barrett of the WSJ describes in “Ethanol Reaps a Backlash in Small Midwestern Towns” the problems ethanol investors face when they are not wanted.
While investors seem to focus on the end result, little attention is given as to how that result is achieved. Sure, we have selected the stellar management team, purchased key IP, and secured key components of the value chain to ensure profitability. What we tend to forget is the acceptance of our investments in local economies that they directly affect.
Local residents are our number one ally. They are usually tight-knit and very close with the state-legislature. Getting them on-board before an investment decision is made should be an investor’s top priority.
Time is money, and time lost “battling” residents in local or federal court pushes your ROI further out into the future, and creates the possibility of losing your investment altogether. We must accept that our investments do impact the communities they are based in and that their buy-in is necessary to project completion.
Business Week commented on this topic as well in “Ethanol’s Growing List of Enemies”. This article focused specifically around the resentment farmers have for the corn-based ethanol industry because of its effect on corn futures. I have commented on numerous occasions that the US cannot put the ethanol industry at the mercy of corn production. It affects too many downstream economies. The cost of raising livestock increases as more farmers choose to make corn for fuel instead of feed. At this point, it looks as if our energy “independence” is actually a dependence on corn. Where are the cellulosic ethanol guys these days anyways? We need you!
