In the past, when supplies were high and prices were low for basic U.S. commodities like corn and soybeans, public interest surged to find "new uses" for agricultural commodities. Today there is an even stronger reason for rising interest in finding “new uses” of agriculture raw materials: the high cost of energy.
The consistent price of oil in excess of $55 a barrel and last year’s gas prices approaching $4 a gallon is driving “new uses” research. Disruptions in the world oil supply could cause a price jump to $100-$120 a barrel, industry experts tell us. They also say of the past trends of petroleum price hikes being followed by receding prices, “Not this time.” Competition from emerging nations like China and India for finite petroleum supplies will sustain the upward price trend, despite today’s lull. Clearly the age of cheap oil is over.
Producing ethanol from cellulose, a “new use”, has been talked about by American scientists as far back as the 1920’s. Action is now replacing talk, and scientists have increased research efforts to determine how we can produce ethanol from cellulose at affordable prices. The four regional research laboratories of the U.S. Department of Agriculture are part in this and other research efforts, to find new chemical and technical uses for farm commodities.
What else can be done? James Woolsey, former CIA director, argues that in addition to shifting to more fuel-efficient and plug-in hybrid vehicles, we must “encourage biofuels and other alternative and renewable fuels that can be produced from inexpensive and widely-available feedstocks -- wherever possible from waste products.”
Past efforts by the federal government to support biofuels production have been frequently viewed as a welfare program for farmers. However, tax breaks have helped biofuels hold their own in the marketplace, making the “welfare” view much less prevalent. Also, new farm legislation is helping stimulate the search for American sources of renewable raw materials to supplant imported petroleum feedstock that fuel chemical and manufacturing industries…and our vehicles.
Biofuels production, particularly ethanol and biodiesel, has accelerated in the last two years. Facilities are going up about as quickly as building and environmental permits can be obtained. The number of quarter-billion dollar ethanol plants being brought into production is making “renewable energy financing” a very hot topic in the private capital community. Many have assessed the risks and potential upsides, and then invested significant funding amounts. Corn-based ethanol has now burst into the marketplace so strongly that the old “food versus fuel” controversy has again heated up.
But renewable energy is more than corn-based ethanol and the U.S. Departments of Agriculture and Energy have invested hundreds of millions of dollars, making loans and grants available in substantial amounts to assist in creating a new U.S. renewable energy infrastructure. Despite this support the need is still great, and some supporters are advocating a new American energy “Manhattan Project”, much like the nation’s program to create the bomb that ended World War II. Indeed, such a project, coupled with adequate financial assistance, could steer our economy in a new direction.
Federal government action, while important, is only part of the solution. Lasting breakthroughs in new technology are generated by serial entrepreneurs with upstart new companies. They seize the initiative and commit the energy needed to develop technologies that can represent the future, not just what is possible today. Out there somewhere are new and perhaps radical ideas that need backing from financial risk takers. The partnership of the risk-taking investor and entrepreneur can turn “only an idea” into a bold new product, and bring it into the marketplace to address the energy problems … and make a profit for the investors along the way.