Location

Logan, UT

Event Website

http://restoringthewest.org/

Streaming Media

Abstract

The Biomass Industry has many characteristics of an infant industry but unlike an infant industry its products are primarily energy commodities that can be obtained from many sources. These characteristics create a multitude of risks. Risks are in three main areas. The first set of risks are market risks. The second set of risks are technology risks. The third set of risks are public policy risks. Market risks include prices received, prices paid and price volatility. Technology risks include current densification technology costly. Most biomass technology was developed if the late 19th and early 20th centuries. Technology is changing with resent renewed interest in biomass. Therefore, there is the risk of stranded investment as new technologies displace current technologies. Public policy risks are in three areas. First is withdrawal of public funding for biomass. Second is policy changes effecting harvesting biomass on public lands. Third is changes in environmental policies including CO² regulation. Risk management is key to success in the biomass industry. Market risks can be reduced through forward contracting. Technology risks can be reduced by investing in technologies that have multiple uses and spreading costs over many shareholders on single use technologies. Public policy risks are difficult to manage but must be evaluated in every business plan. Sensitivity analysis is essential in determining the magnitude of risk associated with changes in any element of the biomass enterprise.

Comments

Presentation may be streamed above, or downloaded by clicking the "Download" button.

Share

COinS
 
Oct 18th, 12:00 AM

Biomass Business Principles of Success

Logan, UT

The Biomass Industry has many characteristics of an infant industry but unlike an infant industry its products are primarily energy commodities that can be obtained from many sources. These characteristics create a multitude of risks. Risks are in three main areas. The first set of risks are market risks. The second set of risks are technology risks. The third set of risks are public policy risks. Market risks include prices received, prices paid and price volatility. Technology risks include current densification technology costly. Most biomass technology was developed if the late 19th and early 20th centuries. Technology is changing with resent renewed interest in biomass. Therefore, there is the risk of stranded investment as new technologies displace current technologies. Public policy risks are in three areas. First is withdrawal of public funding for biomass. Second is policy changes effecting harvesting biomass on public lands. Third is changes in environmental policies including CO² regulation. Risk management is key to success in the biomass industry. Market risks can be reduced through forward contracting. Technology risks can be reduced by investing in technologies that have multiple uses and spreading costs over many shareholders on single use technologies. Public policy risks are difficult to manage but must be evaluated in every business plan. Sensitivity analysis is essential in determining the magnitude of risk associated with changes in any element of the biomass enterprise.

http://digitalcommons.usu.edu/rtw/2011/Breakout2/2