Take a broader look at local ownership of biofuels

Both Minnesota and Iowa can lay claim to early local ownership successes in the biofuels industry. We also can lay claim to some early successes in other locally owned renewable-energy development, notably wind.

Unfortunately, local ownership has now become an increasingly divisive topic that threatens to slow the rate of renewable-energy development more broadly, just as the scientific community is telling us we have to accelerate the deployment of zero-carbon energy. Much of the divisiveness stems from how we think about this issue.
Here are a few thoughts to consider:

1. Local ownership does not have to be tied to scale: Minnesota built its locally owned ethanol industry, in part, by subsidizing plants only up to a certain scale. There are, however, many successful models in the region, nation and world that create a variety of local ownership opportunities through commercial-scale projects that also bring with them important economies of scale.

2. Think beyond ownership: The benefits and challenges that communities face in the emerging biofuels industry go well beyond “ownership” alone. Communities can benefit from increased tax base, increased business development and the accompanying jobs, and payments for sale of their products (biomass feedstock) or use of the renewable resource (leasing land for wind). These areas also require focused policy attention if the biofuels industry is to fulfill its promise to add value to our local communities.

3. Local involvement: Similarly, communities have a stake in the changes that emerging biofuels technologies could drive on their landscapes. Many of the biofuels plants of our future are likely to be even larger than today’s, have different feedstock quality requirements and make a much larger impact on how land gets used. Landowner and community expertise about growing conditions, weather, soils, environmental concerns and competing local needs for biomass resources may drive different technological choices and will be critical to ensuring the long-term success of such plants.

Additionally communities in Europe are creating comprehensive plans for what landscapes should get used or be protected against development (for their historic, cultural or ecological value for example). Such planning could mitigate future siting conflict and/or missteps by businesses that create unnecessary community backlash.

4. The burden of risk: While there are obvious benefits to local ownership, it is also important to consider the risks. Larger corporations may be better equipped to weather the substantial technology, feedstock, market and policy risks associated with at least the first phase of next-generation biofuels. Perhaps shared ownership projects that are embraced by communities are best equipped to bear the burden of risk while ensuring additional risk does not stem from community dissatisfaction with the project.

5. Policy horizon: Market forces are wonderful things, but good public policy can also help new technologies into the marketplace. This will certainly be true with advanced biofuels. It is similarly true with local ownership. The proportion of the biofuels industry in Iowa – or any other state, for that matter – that is locally owned is a direct result of public policy.

One consideration here, however, is ensuring that the fate of local ownership incentives can be planned on over the long term (either setting long-term policy or transparently sun-setting the incentives). Large and unexpected shifts in such incentives can hurt the locally owned projects as well as the industry as a whole if communities begin to see less benefit.

Des Moines Refsiter