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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.