Due to the economic downslide of recent years, finding funding for renewable energy projects is harder than ever. The current trend in the sustainable energy sector involves companies virtually waiting for the right kind of financing to come through for their projects. Whether they end up being funded by the federal government, state grants or bank-financed loans, a lot of environmental-development projects are being put on the back burner until the economy bounces back. For small businesses to get the right financing from banks, the banks also want to see evidence that these bioenergy companies will be successful. But it is hard to prove something like that when the bioenergy revolution is fairly new and hasn't gained much exposure. In addition, these small businesses don't have the funds to advertise or really make themselves known. While banks are interested in advanced environmental technologies to some degree, they are also hesitant to invest in a startup venture involving bioenergy-these projects are viewed as being a high risk in the eyes of most banks.
While awaiting funds, these companies often change their development plans. In order to remedy this situation that arises for bioenergy start-ups in need of funding for newly developing projects, companies have tried obtaining loans from banks for a portion of the overall project cost. For example, the U.S. based company, Seneca BioEnergy, was in need of an estimated $40 million to construct an Agbio facility along with equipment. This company decided to pursue a loan of just $5 to $10 million to fund a portion of the project. This ensured that the company was not just simply waiting without moving forward on their bioenergy plans, they could at least get started on a portion of the project.
For businesses in the United States, the U.S. Department of Energy (DOE), the U.S. Department of Agriculture and federal lawmakers are all legitimate sources for locating the appropriate funding for bioenergy start-up projects. Grant funding is another source of capital for bioenergy businesses.
A company like Bluefire Ethanol, which was listed as one of the "50 Hottest Companies in Bioenergy," has been awarded a series of grants from the U.S. Department of Energy. The company was selected as one of four to construct a cellulosic ethanol production facility on a commercial scale-to be completely funded by the U.S. Department of Energy.
The Environmental Protection Agency has also recently awarded $2.83 million to 34 different endeavors within the Small Business Innovative Research program, four of which fall under the biofuels and vehicle emissions category for research and development firms working on technology related to biofuels.
In Europe, small businesses looking to develop in the bioenergy industry might be able to secure funding through their national government. However, many still face the same problem as do companies within the U.S.-with an uncertain economy, investments in unfamiliar business ventures are few and far between. One way for businesses to get in front of major decision-makers is to attend some of the world bioenergy conferences or expos that offer businesses the opportunity to demonstrate and speak about their bioenergy technologies and capabilities. In such a setting, businesses have an open forum and the ear of potential investors. In addition, financers have the opportunity to learn about bioenergy and the huge promise this field holds for the future. For example, the European Bioenergy Conference held in Brussels, Belgium from 30 June to 1 July 2010 offers a platform for this type of interaction between innovative bioenergy business prospects and investors.
In Canada, a major source of funding for small businesses in need of support for bio energy enterprises is Sustainable Development Technology Canada (SDTC). According to a press release issued in February 2010, "Since its creation in 2001, SDTC has allocated $464 million to 183 clean technology projects." Start-up bioenergy businesses can send the SDTC a 'statement of interest' outlining what funding is required. The SDTC is a non-profit organization that was initiated by the Canadian government to provide grants for Canada groups at the pre-commercial phase.
One exciting promise for the future of bioenergy companies is included in President Obama's commitment to making bio-fuels a primary component of the future energy enterprises of America. He has pledged to follow through on the plan laid out by the Renewable Fuels Standard, which calls for U.S. production of biofuels to triple by 2022. Obama has stated, "There shouldn't be any doubt that renewable, home-grown fuels are a key part of our strategy for a clean energy future." Hopefully, this type of thinking will continue to spread around the world.
About this Author
Andrea Marino is an editor for Energy Digital, a pioneering digital media site exploring energy issues and opportunities facing top executives, with revealing, intelligent news delivered daily. Among Energy Digital's suite of media brands is the Energy Digital magazine, an all digital publication that busy, on-the-go energy executives turn to for their monthly dose of thought-provoking, rich and meaningful reading.
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