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Article 19
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One
of the challenges for ethanol as a fuel is that its’ well to wheel
efficiency is approximately 1 to 1.6 when compared to Biodiesel which
is 1 to 3 and sugar cane derived ethanol, which is 1 to 7, gasoline is
approx. 1 to 0.85. This means that corn ethanol as a renewable fuel is
out of favor as it is only just energy positive and means that Iowa’s
ethanol industry is at risk. There is very little fundamental research
going on in Iowa to help the Iowa biofuel industry improve, yet if the
ethanol industry is eliminated due to its technology becoming obsolete,
this will have a devastating effect on Iowa’s economy. The Iowa
ethanol industry is responsible for bringing in 6 billion dollars of
inbound revenue into the state each year, representing a value of
approximately $2,000 per Iowa resident per year. Unfortunately
there is also very little technology being brought out of Iowa’s
university laboratories and into the market to help Iowa’s ethanol
industry improve its efficiency or profitability. Compare that to
states like South Dakota for example that have developed an oil
recovery technology at SDSU that extracts 8 million gallons per year of
corn oil per ethanol facility and is being brought to market by a South
Dakota based company. This single technology could add 1 billion
gallons of feedstock to the nation’s biofuel feedstock supply and be
worth in the order of 3 billion dollars per year in revenue. It
seems natural that the BECON Center should be the mechanism used to
plug that gap. However, the stated goal of the IEC is to “advance
Iowa's energy efficiency and renewable energy use through research,
education and demonstration”. Energy efficiency and displacement of
non-renewable energy is a series of technologies and techniques that
are designed to bring about improvements in existing technology or
practices so that each unit of GDP created by the Iowa economy is
produced by consuming less non-renewable energy. Compounding the
challenge for the IEC is that these two tracks require a set of skills
to bring about that are not aligned with what the BECON Center is
actually doing. The BECON Center has successfully nurtured 2
technologies out of the laboratory, scaled these technologies up at the
BECON facility and successfully placed these technologies into large
corporate ownership to bring to market. These large companies can then
deploy these technologies around the world, creating valuable new
revenue streams and generating valuable entrepreneurial activity in
Iowa. It
appears that the IEC is at a cross roads moment, as the BECON Center
seems better suited to provide an environment that can nurture the
scale up and demonstration of bio-economy technologies, rather than
helping to advance energy efficiency and renewable fuel use in
Iowa. The BECON Center’s unique strengths seem to be at a
miss-match with the IEC’s goals and this seems to be producing a set of
symptoms that are manifesting themselves in current issues facing the
IEC and the BECON Center. For example, the outgoing Director of the IEC
was an architect by background and if you ever attended any of his
talks on energy efficiency and building design, he was clearly an
expert in his field and was responsible for many good energy efficiency
and education things coming to fruit at the IEC. However, the IEC
Director was also responsible for the BECON Center which is seeking to
nurture technologies that are related to bioenergy and these divergent
skill sets have unintended consequences for Iowa. The
IEC was correct by omitting this proposal for funding as it was late
and the IEC Director was correct sticking to his guns and saying “the
rules are the rules”. However, the unintended consequences of applying
those rules is that one of the few proposals that came forward to
advance the technology of Iowa’s ethanol industry was excluded for
funding consideration so its merits cannot even be evaluated by the
funding committee. As a result, the equipment previously funded
by the IEC and a private company will now lay abandoned for the year
till next year’s funding application window opens back up, all the
while the competing South Dakota technology now has a 1 year head
start. Science
does not operate on a yearly schedule that is efficient for a
bureaucratic management process, discoveries happen when they happen.
Fast moving, start-up companies’ need financing when they need it, not
on a calendar to suit a bureaucratic timetable. Facebook,
Groupon, Zenga etc, all multi-billion dollar technology start-up
companies created in the last 5 years, employing thousands of people,
did not have to wait till the next years funding window opened, nor are
the Chinese bio-economy companies waiting around either. To
prevent these kinds of un-intended consequences and enable the BECON
Center to fulfill its potential, the BECON Center’s goals could be
detached from the IEC goals and the BECON Center given its own mission.
This would enable the BECON Center to re-orient itself away from
focusing on the most efficient use of the administrator’s time managing
the funding program and be configured to best fit around the needs of
the scientists, engineers and entrepreneurs that bring these inventions
alive. This would enable the BECON Center to have its own
discrete set of goals and be oriented towards the scientists and
entrepreneurs that can bring fantastic inventions out of Iowa’s
universities and into the market place. With a new set of goals, the
BECON Center can be re-configured and expanded to help break down the
barriers that new inventions face before they get to the market place,
rather than create its own set of hurdles that need to be overcome by
the scientists and entrepreneurs. A
bioenergy and biomaterials revolution is currently underway creating
the opportunity for a whole new industry to be born. The Kaufman
Institute says that most of US GDP growth is created by new companies
starting up and growing rather than existing, large companies growing
to expand output. A new industry being born is the ideal
cultivation ground for new company start-ups. A new industry will be
centered somewhere, and Iowa, with its current leadership in biofuel
production, can be the heart of this transformation of the world’s
energy and materials economy and the center of this new industry. The
Silicon Valley and KSU models are excellent ones to look to for
guidance. Kansas based KSU incubates a number of new start-ups in a
wide range of fields and has a very successful model in the form of
NISTAC that might be another suitable structure or operation model to
emulate. NISTAC (www.nistac.org) is a not for profit organization that
is paired with a for-profit organization to bring inventions created at
KSU into the market place and has been very successful so far. NISTAC
is now working with other universities and might make a great partner
for the BECON Center as part of a mid-western bioenergy
coalition. In
Silicon Valley, the huge pipeline of graduating human talent that comes
out of Stanford University each year can go out the main gate and up to
Sand Hill road, where in less than a 5 mile stretch, can see nearly one
hundred venture capital firms to source the funding they need. Once the
funding has been secured, these start-ups are then set loose in the
Silicon Valley, where all the talent and infrastructure exists to
support the birth of new companies resulting in new company start-up
performance that is the envy of the world. The funding of the Silicon
Valley start-up culture was largely derived from the cash flow
generated by the IPO exit of start-up companies via the “4 horsemen”
investment banks of Silicon Valley which were doing an average of 130
IPO’s per year in the dot com era. This created a tremendous number of
wealthy individuals in a concentrated area and put a huge amount of
money into the Silicon Valley economy, plus helped foster an
entrepreneurial culture that is now legendary worldwide. Similar
wealth creation has just occurred in Iowa with the price of corn and
soy over the last 2 years which in effect has given mid-western farmers
the equivalent of winning the lottery. Some estimates put the bonanza
at close to $50 billion dollars in clear profit for these two
industries just for 2011. This means that there is a tremendous amount
of capital now available in Iowa in the hands of folks that understand
the agricultural sector as well as the Silicon Valley mavens know the
computer industry. Silicon
Valley has been very successful in creating a “sticky” environment for
the talent that graduates from the likes of Stanford and Berkley each
year and making sure those highly educated people stay in the valley
for at least the early part of their careers. Currently, a great deal
of these kinds of talented people graduating from Iowa’s universities,
have the drive to startup companies but move away from Iowa as soon as
they graduate as Iowa does not have such a “sticky” entrepreneurial
environment. Combining
the huge capital pool now available in Iowa, with the huge fountain
head of science, engineering and business talent graduating every year
from Iowa’s universities, there is the potential to create a “sticky”
environment and create something really special in an I30 bio-economy
corridor. Iowa
does not have the climate or the scenery like the Silicon Valley, but
it has the best agricultural land in the country and a fantastic pool
of citizens, known around the country as some of the most trustworthy
and hardworking citizens in America. A “bioenergy prairie”
corridor can be built on top of those two natural resources along the
I30 corridor between Nevada and Boone. At only 1/10 the size of the
Silicon Valley but in an equal proportion to the 3 million residents of
Iowa compared to the 38 million residents of California, a “bioenergy
prairie” I30 corridor could have an equally positive transformational
effect on the state of Iowa that the Silicon Valley has had on the
economy of California. The BECON Center can be the eastern cornerstone of an I30 bioenergy corridor that starts in Nevada and is bookended in the west at the Bio-Century Farm in Boone. A great place to start fostering such a bioenergy economy is at the BECON Center as it has all the ingredients already in place, good facilities, a track record, a good working relationship with ISU, good relationship with the Fuel Labs at Ft. Dodge and experience bringing in industrial partners. Now is the time to build up the BECON Center so that at least 10 companies nurtured at the BECON Center will appear on the 50 Hottest Companies in Bioenergy list come 2015. Appendix THE 50 HOTTEST COMPANIES IN BIOENERGY - 2011-2012 1. Solazyme |
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