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Conditions Necessary for Private Investment in the Ethanol Industry

Published online by Cambridge University Press:  26 January 2015

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

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.

Type
Invited Paper Sessions
Copyright
Copyright © Southern Agricultural Economics Association 2009

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